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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) April 28, 1996
SYSTEMED INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-5118 95-2544661
(Commission File Number) (I.R.S. Employer Identification No.)
970 W. 190 ST., TORRANCE, CALIFORNIA 90502
(Address of Principal Executive Offices) (Zip Code)
310 538-5300
(Registrant's Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On April 28, 1996, Registrant entered into an Agreement and Plan of
Merger ("Agreement") by and among Registrant, Merck & Co., Inc. ("Merck"),
Merck-Medco Managed Care, Inc. ("Medco") and S Acquisition Corp.
(Subsidiary"). Subject to the approval of Registrant's shareholders and the
appropriate government agencies and other conditions, Registrant will merge
with and into Subsidiary, with Registrant being the surviving corporation.
Subsidiary is a wholly owned subsidiary of Medco.
The Agreement provides that upon consummation of the merger, each share
of Registrant's Common Stock, par value $.001 per share, issued and outstanding
shall be converted into the right to receive $3 cash.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The following exhibit is filed with this report:
2. Agreement and Plan of Merger dated April 28, 1996 by and
among Merck & Co., Inc., Merck-Medco Managed Care, Inc.,
S Acquisition Corp., and Systemed Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SYSTEMED INC.
(Registrant)
Date May 3, 1996 By: /s/ KENNETH J. KAY
--------------------------------
Kenneth J. Kay
Senior Vice President,
Finance and Administration,
and Chief Financial Officer
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EXHIBIT 2
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MERCK & CO., INC.
MERCK-MEDCO MANAGED CARE, INC.
S ACQUISITION CORP.
AND
SYSTEMED
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TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I THE MERGER.................................................. 1
SECTION 1.01 The Merger........................................ 1
SECTION 1.02 Effective Time.................................... 1
SECTION 1.03 Effect of the Merger.............................. 1
SECTION 1.04 Certificate of Incorporation; By-Laws............. 2
SECTION 1.05 Directors and Officers............................ 2
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF
CERTIFICATES................................................ 2
SECTION 2.01 Conversion of Securities.......................... 2
SECTION 2.02 Payment for Shares................................ 3
SECTION 2.03 Stock Transfer Books.............................. 4
SECTION 2.04 Stock Options, Payment Rights..................... 4
SECTION 2.05 Dissenting Shares................................. 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY..................................................... 6
SECTION 3.01 Organization and Qualification; Subsidiaries...... 6
SECTION 3.02 Certificates of Incorporation and By-Laws......... 6
SECTION 3.03 Capitalization.................................... 6
SECTION 3.04 Authority......................................... 8
SECTION 3.05 No Conflict; Required Filings and Consents........ 9
SECTION 3.06 Permits; Compliance............................... 9
SECTION 3.07 Reports; Financial Statements..................... 10
SECTION 3.08 Absence of Certain Changes or Events.............. 11
SECTION 3.09 Absence of Litigation............................. 12
SECTION 3.10 Employee Benefit Plans, Labor Matters............. 12
SECTION 3.11 Taxes............................................. 14
SECTION 3.12 Disclosure........................................ 14
SECTION 3.13 Certain Business Matters.......................... 14
SECTION 3.14 Opinion of Financial Advisor...................... 14
SECTION 3.15 Vote Required..................................... 14
SECTION 3.16 Brokers........................................... 15
SECTION 3.17 Certain Agreements................................ 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT
AND PARENT SUB.............................................. 16
SECTION 4.01 Organization and Qualification; Subsidiaries...... 16
SECTION 4.02 Certificate of Incorporation and By-Laws.......... 17
SECTION 4.03 Capitalization.................................... 17
SECTION 4.04 Authority......................................... 17
SECTION 4.05 No Conflict; Required Filings and Consents........ 17
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<TABLE>
<S> <C>
SECTION 4.06 Permits; Compliance............................... 18
SECTION 4.07 Absence of Litigation............................. 18
SECTION 4.08 Ownership of Parent Sub; No Prior Activities...... 19
SECTION 4.09 Brokers........................................... 19
ARTICLE V COVENANTS................................................... 19
SECTION 5.01 Affirmative Covenants of the Company.............. 19
SECTION 5.02 Negative Covenants of the Company................. 20
SECTION 5.03 Access and Information............................ 23
SECTION 5.04 Confidentiality................................... 23
SECTION 5.05 Rights Agreement.................................. 23
ARTICLE VI ADDITIONAL AGREEMENTS....................................... 23
SECTION 6.01 Meeting of Stockholders........................... 23
SECTION 6.02 Proxy Statement................................... 24
SECTION 6.03 Appropriate Action; Consents; Filings............. 25
SECTION 6.04 Public Announcements.............................. 26
SECTION 6.05 Indemnification of Directors and Officers......... 26
SECTION 6.06 Obligations of Parent Sub......................... 27
SECTION 6.07 Supplemental Indentures; Assumption of Certain
Obligations to Issue Company Common Stock......... 27
SECTION 6.08 Employment Agreements and Benefit Plans........... 27
ARTICLE VII CLOSING CONDITIONS.......................................... 28
SECTION 7.01 Conditions to Obligations of Each Party Under
This Agreement................................... 28
SECTION 7.02 Additional Conditions to Obligations of Parent.... 28
SECTION 7.03 Additional Conditions to Obligations of the
Company........................................... 29
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER........................... 30
SECTION 8.01 Termination....................................... 30
SECTION 8.02 Effect of Termination............................. 31
SECTION 8.03 Amendment......................................... 31
SECTION 8.04 Waiver............................................ 31
SECTION 8.05 Fees, Expenses and Other Payments................. 32
ARTICLE IX GENERAL PROVISIONS.......................................... 33
SECTION 9.01 Effectiveness of Representations, Warranties and
Agreements........................................ 33
SECTION 9.02 Notices........................................... 33
SECTION 9.03 Certain Definitions............................... 34
SECTION 9.04 Conveyance Taxes.................................. 35
SECTION 9.05 Headings.......................................... 35
SECTION 9.06 Severability...................................... 35
</TABLE>
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<TABLE>
<S> <C>
SECTION 9.07 Entire Agreement.................................. 36
SECTION 9.08 Assignment........................................ 36
SECTION 9.09 Parties in Interest............................... 36
SECTION 9.10 Failure or Indulgence Not Waiver; Remedies
Cumulative........................................ 36
SECTION 9.11 Governing Law..................................... 36
SECTION 9.12 Counterparts...................................... 36
</TABLE>
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AGREEMENT AND PLAN OF MERGER dated as of April 28, 1996 (this
"Agreement"), among MERCK & Co., Inc., a New Jersey corporation ("M"),
MERCK-MEDCO MANAGED CARE, INC., a Delaware corporation ("MC", together with M,
"Parent"), S ACQUISITION CORP., a Delaware corporation ("Parent Sub") and a
wholly owned subsidiary of Parent, and SYSTEMED INC., a Delaware corporation
(the "Company").
WHEREAS, the Company, upon the terms and subject to the conditions of
this Agreement and in accordance with the General Corporation Law of
the State of Delaware ("Delaware Law"), will merge with Parent Sub (the
"Merger");
WHEREAS, the Board of Directors of the Company has determined that the
Merger is fair to, and in the best interests of, the Company and the holders of
Company Common Stock (as defined in Section 2.01(a)) and has approved and
adopted this Agreement and the transactions contemplated hereby, and recommended
approval and adoption of this Agreement by the stockholders of the Company;
WHEREAS, the Board of Directors of Parent has approved and adopted this
Agreement and the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Delaware Law, at
the Effective Time (as defined in Section 1.02), Parent Sub shall be merged with
and into the Company. As a result of the Merger, the separate corporate
existence of Parent Sub shall cease and the Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation"). The name of
the Surviving Corporation shall be Systemed, Inc.
SECTION 1.02 Effective Time. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, Delaware Law (the date and time of
such filing being the "Effective Time").
SECTION 1.03 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of Parent Sub and the
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Company shall vest in the Surviving Corporation, and all debts, liabilities and
duties of Parent Sub and the Company shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.04 Certificate of Incorporation; By-Laws. At the
Effective Time, the Certificate of Incorporation and the By-Laws of Parent Sub,
as in effect immediately prior to the Effective Time, shall be the Certificate
of Incorporation and the By-Laws of the Surviving Corporation.
SECTION 1.05 Directors and Officers. The directors of Parent
Sub immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-Laws of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01 Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Parent Sub,
the Company or the holders of any of the following securities:
(a) Subject to the other provisions of this Section 2.01, each
share of common stock, par value $.001 per share, of the Company ("Company
Common Stock") issued and outstanding immediately prior to the Effective Time
(excluding any treasury shares, shares held by Parent or any direct or indirect
wholly owned subsidiary of Parent and Dissenting Shares (as defined in Section
2.05)) shall be converted into the right to receive $3.00 in cash, without
interest (the "Merger Consideration").
(b) All such shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each certificate previously evidencing any such shares shall
thereafter represent the right to receive the Merger Consideration. The holders
of such certificates previously evidencing such shares of Company Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock except as otherwise
provided herein or by law. Such certificates previously evidencing shares of
Company Common Stock shall be exchanged for the Merger Consideration upon the
surrender of the certificates representing such shares.
(c) Each share of Company Common Stock held in the treasury of
the Company and each share of Company Common Stock owned by Parent or any direct
or indirect wholly owned subsidiary of Parent or of the Company immediately
prior to the Effective Time shall be canceled and extinguished and no payment
shall be made with respect thereto.
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(d) Each share of capital stock of Parent Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchangeable for 23,000 (or such lesser number as Parent may elect by notice in
writing to the Company) shares of the common stock, par value $.001, of the
Surviving Corporation.
SECTION 2.02 Payment for Shares.
(a) Prior to the Effective Time, Parent shall authorize one or
more commercial banks (acceptable to the Company) organized under the laws of
the United States or any state thereof with capital, surplus and undivided
profits of at least $500,000,000 to act as Paying Agent hereunder (the "Paying
Agent"). When and as needed, Parent shall make available to the Paying Agent
sufficient funds to make the payments pursuant to Section 2.01 hereof to holders
(other than Parent Sub or any of its subsidiaries) of shares of Company Common
Stock that are issued and outstanding immediately prior to the Effective Time
(such amounts being hereinafter referred to as the "Exchange Fund"), and to make
the appropriate cash payments, if any, to holders of Dissenting Shares. The
Paying Agent shall, pursuant to irrevocable instructions, make the payments
provided for in the preceding sentence out of the Exchange Fund. The Exchange
Fund shall not be used for any other purpose, except as provided in this
Agreement.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Parent will instruct the Paying Agent to mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time evidenced outstanding shares of Company Common Stock (other than
Dissenting Shares) (the "Certificates"), (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 proper delivery of the Certificates to the
Paying Agent and shall be in such form and have such other provisions as Parent
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for payment in cash therefor. Upon surrender of
a Certificate for cancellation to the Paying Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor cash in an amount equal to the product
of the number of shares of Company Common Stock represented by such Certificate
multiplied by the Merger Consideration, and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of shares of
Company Common Stock which is not registered in the transfer records of the
Company, cash may be paid in accordance with this Article II to a transferee if
the Certificate evidencing such shares of Company Common Stock is presented to
the Paying Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.02, each Certificate
shall represent for all purposes after the Effective Time only the right to
receive upon such surrender the Merger Consideration in cash multiplied by the
number of shares of Company Common Stock evidenced by such Certificate, without
any interest thereon.
(c) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of shares of Company Common
Stock for six months after
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the Effective Time shall be delivered to Parent, upon demand, and any holders of
shares of Company Common Stock who have not theretofore complied with this
Article II shall thereafter look only to Parent for payment of their claim for
the Merger Consideration to which they are entitled pursuant to this Agreement.
(d) Withholding Rights. Parent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of shares of Company Common Stock such amounts as Parent is
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Parent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by Parent.
(e) No Liability. Neither Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock for
any cash or cash from the Exchange Fund delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
SECTION 2.03 Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. On or after the Effective Time, any certificates
presented to the Paying Agent or Parent for any reason shall be converted into
the Merger Consideration.
SECTION 2.04 Stock Options, Payment Rights. As soon as
practicable following the date of this Agreement, the Board of Directors of the
Company (or, if appropriate, any committee administering the Employee Option
Plans (defined in Section 3.03(a)(i)) shall (except to the extent that Parent
and the holder of a Stock Option otherwise agree prior to the Effective Time)
adopt such resolutions or take such other actions as may be required to provide
that, at the Effective Time, each Stock Option (as defined in Section
3.03(a)(i)) outstanding immediately prior to the Effective Time of the Merger
shall:
(a) if such Stock Option is vested before or as a consequence
of the Merger and exercisable and the holder of such Stock Option shall have
elected by written notice to Parent prior to the date five (5) business days
prior to the Effective Time to receive the payment contemplated by this clause
(a), be cancelled in exchange for a payment from the Surviving Corporation
(subject to any applicable withholding taxes) equal to the excess of the Merger
Consideration over the exercise price per share of Company Common Stock subject
to such Stock Option, payable in cash immediately following the Effective Time
of the Merger; provided, however, that with respect to any person subject to
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") any such amount to be paid shall be paid as soon as practicable after the
first date payment can be made without liability for such person under Section
16(b) of the Exchange Act; or
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(b) with respect to any Stock Option not cancelled pursuant to
clause (a) above, be deemed to constitute an option to acquire, on the same
terms and conditions as were applicable under such Stock Option, the number of
shares of common stock, no par value per share, of M ("M Common Stock") equal to
the product of (1) the number of shares of Company Common Stock issuable upon
exercise of such Option and (2) the Merger Consideration divided by the average
of the closing sales prices of M Common Stock on the New York Stock Exchange for
the ten (10) consecutive days immediately prior to and including the day
preceding the Effective Time, at a price per share equal to (1) the aggregate
exercise price for the shares of Company Common Stock otherwise purchasable
pursuant to such Stock Option divided by (2) the number of shares of M Common
Stock issuable per share of Company Common Stock upon exercise of such Option
set forth above, provided, however, that in the case of any option to which
Sections 422 and 423 of the Code applies by reason of its qualification under
any of Sections 422-424 of the Code ("qualified stock options"), M shall use
reasonable efforts to cause the option price, the number of shares purchasable
pursuant to such option and the terms and conditions of exercise of such option
to be determined in order to comply with Section 424(a) of the Code.
M shall (i) reserve for issuance the number of shares of M
Common Stock that will become issuable upon the exercise of such Stock Options
pursuant to this Section 2.04 and (ii) at the Effective Time, execute a document
evidencing the assumption by M of the Company's obligations with respect thereto
under this Section 2.04. As soon as practicable after the Effective Time, M
shall file a registration statement on Form S-8 (or any successor form), or
another appropriate form with respect to the shares of M Common Stock subject to
such options and shall use its best efforts to maintain the effectiveness of
such registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
options remain outstanding.
SECTION 2.05 Dissenting Shares. Notwithstanding any other
provisions of this Agreement to the contrary, shares of Company Common Stock
that are outstanding immediately prior to the Effective Time and which are held
by stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such shares in accordance with Section 262 of Delaware Law (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders shall be entitled to
receive payment of the appraised value of such shares of Company Common Stock
held by them in accordance with the provisions of such Section 262, except that
all Dissenting Shares held by stockholders who shall have failed to perfect or
who effectively shall have withdrawn or lost their rights to appraisal of such
shares of Company Common Stock under such Section 262 shall thereupon be deemed
to have been converted into and to have become exchangeable, as of the Effective
Time, for the right to receive, without any interest thereon, the Merger
Consideration, upon surrender, in the manner provided in Section 2.02, of the
certificate or certificates that formerly evidenced such shares of Company
Common Stock.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by the Company
to Parent concurrently with the execution of this Agreement (the "Company
Disclosure Schedule"), which shall identify exceptions by specific Section
references, the Company hereby represents and warrants to Parent that:
SECTION 3.01 Organization and Qualification; Subsidiaries.
Each of the Company and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, has all requisite power and authority to own,
lease and operate its properties and to carry on its business as it is now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary, other
than where the failure to be so duly organized, validly existing and in good
standing, or to have such power and authority, or to be duly qualified and in
good standing, as the case may be, would not have a Company Material Adverse
Effect. The term "Company Material Adverse Effect" as used in this Agreement
shall mean any change or effect that, individually or when taken together with
all other such changes or effects, would be, or would be reasonably likely to
be, materially adverse to the financial condition, assets, liabilities, business
or operations of the Company and its subsidiaries, taken as a whole. Section
3.01 of the Company Disclosure Schedule sets forth, as of the date of this
Agreement, a true and complete list of all the Company's directly or indirectly
owned subsidiaries, together with (A) the jurisdiction of incorporation of each
subsidiary and the percentage of each subsidiary's outstanding capital stock or
other equity interests owned by the Company or another subsidiary of the
Company, and (B) indication of whether each such subsidiary is a "Significant
Subsidiary" as defined in Section 9.03(f). There are no partnerships or joint
venture arrangements or other business entities in which the Company or any
subsidiary of the Company owns an equity interest that is material to the
business of the Company and its subsidiaries, taken as a whole.
SECTION 3.02 Certificates of Incorporation and By-Laws. The
Company has heretofore furnished to Parent complete and correct copies of the
Certificates of Incorporation and the By-Laws or the equivalent organizational
documents, in each case as amended or restated, of the Company and its
subsidiaries. Neither the Company nor any of its subsidiaries is in violation
of any of the provisions of its Certificate of Incorporation or By-Laws.
SECTION 3.03 Capitalization.
(a) The authorized capital stock of the Company consists of
30,000,000 shares of Company Common Stock and 2,000,000 shares of 8% Convertible
Preferred Stock, par value $.001 (the "Convertible Preferred"). As of April 17,
1996, (i) 22,324,773 shares of Company Common Stock were issued and outstanding,
all of which are duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights created by statute, the
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Company's Certificate of Incorporation or By-Laws or any agreement to which the
Company is a party or is bound; (ii) 161,325 shares of Convertible Preferred
were issued and outstanding, (iii) 3,734,050 shares of Company Common Stock were
reserved for future issuance pursuant to (1) outstanding employee stock options
(the "Company Stock Options") granted pursuant to the following plans: the
Company's 1986 Employee Non Qualified Stock Option Plan, the Company's 1987
Employee Stock Option Plan, the Company's 1993 Non-Employee Director Stock
Option Plan and the Company's 1993 Employee Stock Option Plan (collectively, the
"Employee Option Plans"), and (2) outstanding stock options granted to certain
directors and key employees of the Company outside of any Employee Option Plans
(the "Executive Stock Options," together with the Company Stock Options,
collectively, the "Stock Options"); (iv) 375,234 shares of Company Common Stock
were reserved for issuance pursuant to the Company's 1990 Employee Stock
Purchase Plan; (v) 1,073,253 shares of Company Common Stock were reserved for
future issuance pursuant to the Company's 10% Senior Secured Convertible Notes
due 2002 ("Convertible Notes"); (vi) 143,750 shares were reserved for issuance
in connection with warrants to purchase Company Common Stock (the "Warrants");
and (vii) 217,789 shares of Company Common Stock were reserved for issuance
pursuant to the Convertible Preferred. Except as described in this Section 3.03
or in Section 3.03 of the Company Disclosure Schedule, as of the date of this
Agreement, no other shares of Company capital stock are issued and outstanding
and no shares of Company Common Stock are reserved for any other purpose.
Between April 17, 1996 and the date of this Agreement, no shares of Company
Common Stock have been issued by the Company, except pursuant to the exercise of
Stock Options, or Warrants or the conversion of Convertible Notes or Convertible
Preferred prior to the date of this Agreement, in each case in accordance with
their terms. Since April 17, 1996, the Company has not granted any options in,
or other rights to purchase, shares of Company Common Stock or Convertible
Preferred. The Company has outstanding preferred stock purchase rights of the
Company (the "Rights") issued pursuant to the Rights Agreement, dated August 17,
1994, between the Company and the First National Bank of Boston (the "Company
Rights Agreement"). Each of the outstanding shares of capital stock of, or
other equity interests in, each of the Company and its subsidiaries is duly
authorized and validly issued, and, in the case of shares of capital stock,
fully paid and nonassessable, and except as disclosed in Section 3.03 of the
Company Disclosure Schedule, such shares or other equity interests owned by the
Company or its subsidiaries are owned free and clear of all security interests,
liens, claims, pledges, voting rights, charges or other encumbrances of any
nature whatsoever. Neither the execution, delivery, and performance of this
Agreement nor the consummation of the transactions contemplated hereby will
result in any change in the conversion price, conversion ratio, exchange ratio
or other similar term of any outstanding security (including any preferred stock
or convertible debt security) of the Company or any of its subsidiaries.
(b) Except as set forth in Section 3.03(a) above, there are
no options, warrants or other rights (including registration rights),
agreements, arrangements or commitments of any character to which the Company or
any of its subsidiaries is a party relating to the issued or unissued capital
stock of the Company or any of its subsidiaries or obligating the Company or any
of its subsidiaries to grant, issue or sell any shares of the capital stock of
the Company or any of its subsidiaries, by sale, lease, license or otherwise.
Except as set forth in Section 3.03 of the Company Disclosure Schedule, there
are no obligations, contingent or otherwise, of the
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Company or any of its subsidiaries to (x) repurchase, redeem or otherwise
acquire any shares of Company Common Stock or Company preferred stock, or the
capital stock or other equity interests of any subsidiary of the Company or (y)
(other than advances to subsidiaries in the ordinary course of business) provide
material funds to, or make any material investment in (whether in the form of a
loan, capital contribution or otherwise), or provide any guarantee with respect
to the obligations of, any subsidiary of the Company or any other person.
Neither the Company nor any of its subsidiaries directly or indirectly owns, or
has agreed to purchase or otherwise acquire, any capital stock of, or any
interest convertible into or exchangeable or exercisable for any capital stock
of, any corporation, partnership, joint venture or other business association or
entity (other than the subsidiaries of the Company set forth in Section 3.01 of
the Company Disclosure Schedule). Except as set forth in Section 3.03 of the
Company Disclosure Schedule and except for any agreements, arrangements or
commitments between the Company and its subsidiaries or between such
subsidiaries, there are no agreements, arrangements or commitments of any
character (contingent or otherwise) pursuant to which any person is or may be
entitled to receive any payment based on the revenues or earnings, or calculated
in accordance therewith, of the Company or any of its subsidiaries. There are
no voting trusts, proxies or other agreements or understandings to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound with respect to the voting of any shares of capital
stock of the Company or any of its subsidiaries.
(c) The Company has made available to Parent complete and
correct copies of (i) the Employee Option Plans and the forms of Company Stock
Options issued pursuant to the Employee Option Plans, including all amendments
thereto and (ii) the forms of the Warrants and the Executive Stock Options
including all amendments thereto. The Company has previously provided to Parent
a complete and correct list setting forth as of April 17, 1996, (i) the number
of Stock Options and Warrants outstanding, (ii) the exercise price for the
outstanding Stock Options and Warrants, and (iii) the number of Stock Options
and Warrants exercisable.
SECTION 3.04 Authority. The Company has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated hereby
and thereby to be consummated by the Company (other than with respect to the
Merger, the approval and adoption of this Agreement by the holders of a majority
of the outstanding shares of Company Common Stock and the Convertible Preferred,
voting together). The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby has
been duly authorized by all necessary corporate action and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby (other than with respect
to the approval and adoption of this Agreement, approval by the holders of a
majority of the outstanding shares of Company Common Stock and the Convertible
Preferred, voting together, in accordance with Delaware Law). This Agreement
has been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by Parent and Parent Sub,
constitutes a legal, valid and binding obligation of the Company.
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SECTION 3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by
the Company does not, and the performance of this Agreement by the Company will
not, (i) conflict with or violate the Certificate of Incorporation or By-Laws,
or the equivalent organizational documents, in each case as amended or restated,
of the Company or any of its subsidiaries, (ii) conflict with or violate any
federal, state, foreign or local law, statute, ordinance, rule, regulation,
order, judgment or decree (including, without limitation, the Prescription Drug
Marketing Act, the Federal Controlled Substances Act of 1970, tit. II, 84 Stat.
1242, the Food, Drug and Cosmetic Act, 21 U.S.C. Sections 301 et seq., and any
applicable state Pharmacy Practice Acts, Controlled Substances Acts, Dangerous
Drug Acts and Food, Drug and Cosmetic Acts) (collectively, "Laws") applicable to
the Company or any of its subsidiaries or by which any of their respective
properties is bound or subject to or (iii) except as set forth in Section 3.05
of the Company Disclosure Schedule, result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or require payment under, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
interest 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 is bound or subject to, except for any such conflicts or
violations described in clause (ii) or breaches, defaults, events, rights of
termination, amendment, acceleration or cancellation, payment obligations or
liens or encumbrances described in clause (iii) that would not have a Company
Material Adverse Effect. Assuming the accuracy of the representation contained
in the last sentence of Section 4.05(a), the Board of Directors of the Company
has taken all actions necessary under Delaware Law, including approving the
transactions contemplated in this Agreement, to ensure that Section 203 of
Delaware Law does not, or will not, apply to the transactions contemplated in
this Agreement.
(b) The execution and delivery of this Agreement by
the Company does not, and the performance of this Agreement by the Company will
not, require the Company to obtain any consent, approval, authorization or
permit of, or except as set forth in Section 3.05 of the Company Disclosure
Schedule, to make any filing with or notification to, any governmental or
regulatory authority, domestic or foreign ("Governmental Entities"), except (i)
for applicable requirements, if any, of the Securities Act of 1933, as amended
(the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), state securities or blue sky laws ("Blue Sky Laws"), the NASD
and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the filing and recordation of appropriate Merger documents as
required by Delaware Law and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not, either individually or in the aggregate, prevent the Company from
performing its obligations under this Agreement and would not have a Company
Material Adverse Effect.
SECTION 3.06 Permits; Compliance. Except as set forth in
Section 3.06 of the Company Disclosure Schedule or the SEC Reports, each of the
Company and its subsidiaries is
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in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Company Permits"), and there is
no action, proceeding or investigation pending or, to the knowledge of the
Company, threatened regarding suspension or cancellation of any of the Company
Permits, except where the failure to possess, or the suspension or cancellation
of, such Company Permits would not have a Company Material Adverse Effect.
Except as set forth in Section 3.06 of the Company Disclosure Schedule or the
SEC Reports, neither the Company nor any of its subsidiaries is in conflict
with, or in default or violation of, or is permitting to exist any condition
that is in conflict with or default of, (a) any Law and all rules of
professional conduct applicable thereto and applicable to the Company or any of
its subsidiaries or by which any of their respective properties is bound or
subject to or (b) any of the Company Permits, except for any such conflicts,
defaults or violations which would not have a Company Material Adverse Effect.
Except as set forth in Section 3.06 of the Company Disclosure Schedule, since
January 1, 1996, neither the Company nor any of its subsidiaries has received
from any Governmental Entity (including, without limitation, any state board of
pharmacy) any written notification with respect to possible conflicts, defaults
or violations of Laws, except for written notice relating to possible conflicts,
defaults or violations, which conflicts, defaults or violations would not have a
Company Material Adverse Effect.
SECTION 3.07 Reports; Financial Statements.
(a) Since December 31, 1993, (x) the Company has filed all
forms, reports, statements and other documents required to be filed with (i) the
Securities and Exchange Commission (the "SEC"), including, without limitation,
(A) all Annual Reports on Form 10-K, (B) all Quarterly Reports on Form 10-Q, (C)
all proxy statements relating to meetings of stockholders (whether annual or
special), (D) all Reports on Form 8-K, (E) all other reports or registration
statements and (F) all amendments and supplements to all such reports and
registration statements (collectively referred to as the "SEC Reports") and (ii)
any other applicable state securities authorities and (y) the Company and its
respective subsidiaries has filed all forms, reports, statements and other
documents required to be filed with any other applicable federal or state
regulatory authorities where the Company has a Company Permit, including,
without limitation, state boards of pharmacy, the U.S. Drug Enforcement
Administration, the U.S. Food and Drug Administration, state insurance and state
and federal health regulatory authorities, except where the failure to file any
such forms, reports, statements or other documents would not have a Company
Material Adverse Effect (all such forms, reports, statements and other documents
in clauses (x) and (y) of this Section 3.07(a) being referred to herein,
collectively, as the "Reports"). The Reports, including all Reports filed after
the date of this Agreement and prior to the Effective Time, (i) were or will be
prepared in all material respects in accordance with the requirements of
applicable Law (including with respect to the SEC Reports, the Securities Act
and the Exchange Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such SEC Reports) and (ii) did not at the time they
were filed, or will not at the time they are filed, 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 the light of
the circumstances under which they were made, not misleading.
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Except as and to the extent set forth on the consolidated balance sheet of the
Company and its subsidiaries at December 31, 1995, including all notes thereto,
or as set forth in the SEC Reports or Section 3.07(a) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which, individually or in the aggregate, would have a Company Material Adverse
Effect.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the SEC Reports filed
prior to or after the date of this Agreement (i) have been or will be prepared
in accordance with the published rules and regulations of the SEC and generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except (A) to the extent required by changes in generally
accepted accounting principles and (B) with respect to SEC Reports filed prior
to the date of this Agreement, as may be indicated in the notes thereto) and
(ii) fairly present or will fairly present the consolidated financial position
of the Company and its subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated
(including reasonable estimates of normal and recurring year-end adjustments),
except that (x) any unaudited interim financial statements were or will be
subject to normal and recurring year-end adjustments, and (y) any pro forma
financial statements contained in such consolidated financial statements is not
necessarily indicative of the consolidated financial position of the Company and
its subsidiaries, as the case may be, as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated.
SECTION 3.08 Absence of Certain Changes or Events. Except as
disclosed in the SEC Reports filed prior to the date of this Agreement or as
contemplated in this Agreement or as set forth in Section 3.08 of the Company
Disclosure Schedule, since January 1, 1996 the Company and its subsidiaries have
conducted their respective businesses only in the ordinary course and in a
manner consistent with past practice and there has not been: (i) any material
damage, destruction or loss (not covered by insurance) with respect to any
material assets of the Company or any of its subsidiaries which resulted in a
Company Material Adverse Effect; (ii) any change in the accounting methods,
principles or practices of the Company or any of its subsidiaries; (iii) except
for dividends by a subsidiary of the Company to the Company or another
subsidiary of the Company, any declaration, setting aside or payment of any
dividends or distributions in respect of shares of Company Common Stock or the
shares of stock of, or other equity interests in, any subsidiary of the Company
or any redemption, purchase or other acquisition of any of the Company's
securities or any of the securities of any subsidiary of the Company;
(iv) except as permitted pursuant to Section 5.02(a), any increase in the
benefits under, or the establishment or amendment of, any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any increase in the compensation
payable or to become payable to directors, officers or employees of the Company
or its subsidiaries, except for (A) increases in salaries or wages payable or to
become payable in the ordinary course of business and consistent with past
practice or (B) the granting of stock options
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<PAGE> 16
in the ordinary course of business to employees and directors of the Company or
its subsidiaries; or (v) a Company Material Adverse Effect.
SECTION 3.09 Absence of Litigation. Except as set forth in
Section 3.09 of the Company Disclosure Schedule, there is no claim, action,
suit, litigation, proceeding, arbitration or, to the knowledge of the Company,
investigation of any kind, at law or in equity (including actions or proceedings
seeking injunctive relief), pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries or any properties or
rights of the Company or any of its subsidiaries (except for claims, actions,
suits, litigations, proceedings, arbitrations, or investigations which
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect), and neither the Company nor any of its
subsidiaries is subject to any continuing order of, consent decree, settlement
agreement or other similar written agreement with, or, to the knowledge of the
Company, continuing investigation by, any Governmental Entity, or any judgment,
order, writ, injunction, decree or award of any Governmental Entity or
arbitrator, including, without limitation, cease-and-desist or other orders,
except as disclosed in the SEC Reports filed prior to the date of this Agreement
and except for matters which, individually or in the aggregate, would not have a
Company Material Adverse Effect.
SECTION 3.10 Employee Benefit Plans, Labor Matters.
(a) Section 3.10 of the Company Disclosure Schedule contains a
true and complete list of each employee benefit plan, program, arrangement and
contract (including, without limitation, any "employee benefit plan," as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), which is now or previously has been sponsored, maintained or
contributed to or required to be contributed to by the Company or any of its
subsidiaries, and with respect to which the Company or any of its subsidiaries
has or may have liability, contingent or otherwise, (the "Benefit Plans"), and
the Company has provided to Parent with respect to each Benefit Plan a true and
correct copy of (i) the most recent annual report (Series 5500) filed with the
Internal Revenue Service (the "IRS"), (ii) all material documents embodying or
relating to each Benefit Plan, (iii) each trust agreement relating to such
Benefit Plan, (iv) the most recent summary plan description for each Benefit
Plan for which a summary plan description is required, (v) the most recent
actuarial report or valuation prepared for each Benefit Plan, (vi) if the
Benefit Plan is funded, the most recent annual and periodic accounting of the
assets of the Benefit Plan and (vii) the most recent determination letter, if
any, issued by the IRS with respect to any Benefit Plan intended to be qualified
under Section 401(a) of the Code.
(b) With respect to each Benefit Plan (i) except as would not
have a Company Material Adverse Effect, the Company and each of its subsidiaries
have performed all obligations required to be performed by them under each
Benefit Plan and neither the Company nor any of its subsidiaries is in default
under or in violation of any Benefit Plan, (ii) except as would not have a
Company Material Adverse Effect, each Benefit Plan has been established and
maintained in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including but not limited to
ERISA and the Code, (iii) each Benefit Plan
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<PAGE> 17
intended to qualify under Section 401 of the Code is, and since its inception
has been, so qualified and a determination letter has been issued by the IRS to
the effect that each such Benefit Plan is so qualified and that each trust
forming a part of any such Benefit Plan is exempt from tax pursuant to Section
501(a) of the Code and no circumstances exist which would adversely affect this
qualification or exemption; (iv) there are no actions, proceedings,
arbitrations, suits or claims pending, or to the knowledge of the Company,
threatened or anticipated (other than routine claims for benefits) with respect
to any Benefit Plan; (v) each Benefit Plan can be amended, terminated or
otherwise discontinued without liability to the Company, or any of its
subsidiaries; and (vi) no Benefit Plan is under audit or investigation by any
governmental agency, and to the knowledge of the Company or any of its
subsidiaries, no such audit or investigation is pending or threatened.
(c) No "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA is now or previously has been sponsored, maintained,
contributed to or required to be contributed to by the Company or any of its
subsidiaries.
(d) Neither the Company nor any subsidiary has any liability,
contingent or otherwise, to or with respect to any employee benefit plan,
program or arrangement other than the Benefit Plans.
(e) The Company and its subsidiaries are not parties to any
collective bargaining or other labor union contracts applicable to persons
employed by the Company or its subsidiaries and no collective bargaining
agreement is being negotiated by the Company or any of its subsidiaries. There
is no pending or threatened labor dispute, strike or work stoppage against the
Company or any of its subsidiaries which may interfere with the respective
business activities of the Company or its subsidiaries except where such
dispute, strike or work stoppage would not have a Company Material Adverse
Effect. To the knowledge of the Company, the Company and its subsidiaries and
their respective representatives or employees, are in compliance with all
applicable federal, state and local laws, rules and regulations (domestic and
foreign) respecting employment, employment practices, labor, terms and
conditions of employment and wages and hours, in each case, with respect to
employees, except where failure to be in compliance would not have a Company
Material Adverse Effect.
(f) The Company has provided to Parent (i) copies of all
employment agreements with officers of the Company; (ii) copies of all
agreements with consultants who are individuals obligating the Company to make
annual cash payments in an amount exceeding $100,000; (iii) a schedule listing
all officers of the Company who have executed a non-competition agreement with
the Company; (iv) copies of all severance agreements, programs and policies of
the Company with or relating to its employees which are not Benefit Plans; and
(v) copies of all plans, programs, agreements and other arrangements of the
Company with or relating to its employees which contain change in control
provisions which are not Benefit Plans.
(g) No Benefit Plan provides retiree medical or retiree life
insurance benefits to any person and except as provided in the employment
agreements referred to in clause (i) of Section 3.10(f), the Company is not
contractually obligated (whether or not in writing) to provide
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<PAGE> 18
any person with life insurance or medical benefits upon retirement or
termination of employment, except as required under Section 4980B of the Code.
Except as set forth in Section 3.10 of the Company Disclosure Schedule, no
payment or benefit which will or may be made by the Company or any of its
subsidiaries or by Parent, Parent Sub or Surviving Corporation with respect to
any employee of the Company or any of its subsidiaries will be characterized as
an "excess parachute payment," within the meaning of Section 280G(b)(1) of the
Code.
SECTION 3.11 Taxes. Except for such matters that would not
have a Company Material Adverse Effect, the Company and its subsidiaries have
timely filed or will timely file all returns and reports required to be filed by
them with any taxing authority with respect to Taxes for any period ending on or
before the Effective Time, taking into account any extension of time to file
granted to or obtained on behalf of the Company and its subsidiaries and all
Taxes arising with respect to taxable periods or portions thereof ending on or
prior to the Effective Time have been paid or will be paid, whether or not shown
to be due on such returns. No deficiency for any material amount of Tax has
been asserted or assessed by a taxing authority against the Company or its
subsidiaries. All liability for Taxes of the Company or its subsidiaries that
are or will become due or payable with respect to periods covered by the
financial statements referred to in Section 3.07(b) hereof have been paid or
adequately reserved for on such financial statements.
SECTION 3.12 Disclosure. Neither this Agreement nor any
certificate or schedule furnished or made to Parent or Parent Sub by or on
behalf of the Company or any of its subsidiaries pursuant to this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not
misleading.
SECTION 3.13 Certain Business Matters. Neither the Company
nor any of its subsidiaries nor any directors, officers, agents or employees of
the Company or any of its subsidiaries has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment. Section 3.13 of the
Company Disclosure Schedule sets forth certain information relating to the
Company's operations in Costa Rica, Panama and Peru. The information set forth
on Section 3.13 of the Company Disclosure Schedule is true and correct.
SECTION 3.14 Opinion of Financial Advisor. The Company has
received the oral opinion of Morgan, Stanley & Co. Incorporated ("Morgan
Stanley") on the date of this Agreement to the effect that the Merger
Consideration to be received by the holders of Company Common Stock in the
Merger is fair, from a financial point of view, to such holders.
SECTION 3.15 Vote Required. The affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock and the
Convertible Preferred, voting
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<PAGE> 19
together, is the only vote of the holders of any class or series of Company
capital stock necessary to approve the Merger.
SECTION 3.16 Brokers. Except as set forth in Section 3.16 of
the Company Disclosure Schedule, no broker, finder or investment banker (other
than Morgan Stanley) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. Prior to the date
of this Agreement, the Company has made available to Parent a complete and
correct copy of all agreements between the Company and Morgan Stanley pursuant
to which such firm will be entitled to any payment relating to the transactions
contemplated by this Agreement.
SECTION 3.17 Certain Agreements.
(a) Except as set forth in Section 3.17(a) of the Company
Disclosure Schedule, during the twelve months immediately prior to the date
hereof, no Significant Customer has or Significant Customers have cancelled or
otherwise terminated or threatened in writing to terminate its or their
relationship with the Company or its subsidiaries. For purposes of this Section
3.17, "Significant Customer" or "Significant Customers" shall mean any customer
or customers of the Company's pharmacy management business which, individually
or in the aggregate, accounted for 7.5% or more of the consolidated revenues of
the Company during the fiscal year ended December 31, 1995. The information set
forth in Section 3.17 of the Company Disclosure Schedule is true and correct.
(b) Section 3.17(b) of the Company Disclosure Schedule sets
forth a true and correct list of all contracts, agreements and understandings
(as of the date hereof with respect to (i) and (ii)) (whether or not executed by
the parties) (a "Contract") to which the Company and/or its subsidiaries is a
party or by which the Company or any of its subsidiaries or any of their
respective properties is bound or subject to, in the following categories: (i)
Contracts with the Company's 25 largest mail service customers and 10 largest
retail customers, (ii) any Contracts with pharmaceutical manufacturers or
wholesalers, (iii) any material leases for real property (including, without
limitation, the lease with Summit Office Park Limited Partnership relating to
the facility in Independence, Ohio and the lease with Mid-America Development
Company relating to the facility in West Des Moines, Iowa), (iv) Contracts which
restrict the Company and/or its subsidiaries from doing business anywhere in the
world or from engaging in or competing in any line of business or with any
person and (v) any other Contract that is material to the business and
operations of the Company and its subsidiaries taken as a whole. The Company
has heretofore furnished to Parent all of the Contracts required to be set forth
in Section 3.17(b) of the Company Disclosure Schedule requested by Parent. With
respect to each Contract required to be set forth in Section 3.17(b) of the
Company Disclosure Schedule, (i) there has been no breach or default under any
such Contract by the Company or any of its subsidiaries or, to the knowledge of
the Company, by any other party which breach or default would have a Company
Material Adverse Effect; (ii) except as set forth in Section 3.09 of the Company
Disclosure Schedule, there are no material disagreements with respect to any of
the terms and conditions under which the parties to any Contract are being
serviced; (iii) such
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<PAGE> 20
Contract is a valid and binding obligation of the Company and/or its subsidiary
party thereto, is in full force and effect with respect to the Company and/or
its subsidiary party thereto and is enforceable against the Company and/or its
subsidiary party thereto in accordance with its terms, except as the
enforceability thereof may be limited by (A) applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or similar laws in effect
which affect the enforcement of creditors' rights generally or (B) general
principles of equity, whether considered in a proceeding at law or in equity;
and (iv) no action has been taken by the Company or any subsidiary and no event
has occurred which, with notice or lapse of time or both, would give to others
any rights of termination, amendment, acceleration or cancellation of, or
require payment under, or result in the creation of a lien or encumbrance on any
of the properties or assets of the Company or any of its subsidiaries under, any
such Contract except for events, rights of termination, amendment, acceleration
or cancellation, payment obligations or liens or encumbrances that would not
have a Company Material Adverse Effect.
(c) There are no pending, or to the knowledge of the Company,
threatened condemnation proceedings relating to any parcel of real property
leased by the Company and/or any of its subsidiaries (including, without
limitation, the leased facilities in Independence, Ohio and West Des Moines,
Iowa) other than with respect to any immaterial facility leased by the Company
and/or any of its subsidiaries.
(d) Except as set forth in Section 3.17(b)(ii) of the Company
Disclosure Schedule, each pharmaceutical manufacturing Contract required to be
set forth on such Schedule is terminable or cancelable by the Company or its
subsidiary party thereto upon no more than 90 days notice without any penalty or
increased cost.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PARENT SUB
Except as set forth in the Disclosure Schedule delivered by Parent and
Parent Sub to the Company prior to the execution of this Agreement (the "Parent
Disclosure Schedule"), which shall identify exceptions by specific Section
references, Parent and Parent Sub hereby jointly and severally represent and
warrant to the Company that:
SECTION 4.01 Organization and Qualification; Subsidiaries.
Each of Parent and Parent Sub is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted and
Parent is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary, other
than where the failure to be so duly qualified and in good standing would not
have a Parent Material Adverse Effect. The term "Parent Material Adverse
Effect" as used in this Agreement shall mean any change or effect that,
individually or
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<PAGE> 21
when taken together with all such other changes or effects, would prevent Parent
or Parent Sub from performing their obligations under this Agreement.
SECTION 4.02 Certificate of Incorporation and By-Laws. Parent
has heretofore furnished to the Company a complete and correct copy of the
Certificates of Incorporation and the By-Laws, as amended or restated, of each
of Parent and Parent Sub. Neither Parent nor Parent Sub is in violation of any
of the provisions of its Certificate of Incorporation or By-Laws.
SECTION 4.03 Capitalization. The authorized capital stock of
Parent Sub consists of 1,000 shares of Parent Sub common stock, 100 shares of
which are duly authorized validly issued, fully paid and nonassessable and all
of which are owned by Parent.
SECTION 4.04 Authority.
(a) Parent has all requisite corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
to consummate the transactions contemplated hereby and to be consummated by
Parent. The execution and delivery of this Agreement by Parent and the
consummation by Parent of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Parent are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and, assuming the due authorization, execution and delivery
thereof by the Company, constitute the legal, valid and binding obligation of
Parent.
(b) Parent Sub has the requisite corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby to be consummated by Parent
Sub. The execution and delivery of this Agreement by Parent Sub and the
consummation by Parent Sub of the transactions contemplated hereby have been
duly authorized by all necessary corporate action and no other corporate
proceedings on the part of Parent Sub are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent Sub and, assuming the due authorization,
execution and delivery thereof by the Company, constitutes a legal, valid and
binding obligation of Parent Sub.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Parent Sub does not, and the performance of this Agreement by Parent and Parent
Sub will not (i) conflict with or violate the Certificate of Incorporation or
By-Laws or the equivalent organizational documents, in each case as amended or
restated, of Parent or Parent Sub, (ii) conflict with or violate any Laws in
effect as of the date of this Agreement applicable to Parent or Parent Sub or by
which any of their respective properties is bound or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the properties or assets of Parent or Parent Sub
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit,
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<PAGE> 22
franchise or other instrument or obligation to which Parent or Parent Sub is a
party or by which Parent or Parent Sub or any of their respective properties is
bound or subject to, except for any such conflicts or violations described in
clause (ii) or breaches, defaults, events, rights of termination, amendment,
acceleration or cancellation or liens or encumbrances described in clause (iii)
that would not have a Parent Material Adverse Effect. Neither Parent nor any of
its affiliates or associates (as each such term is defined in Section 203 of
Delaware Law) is an "interested stockholder" (as such term is defined in Section
203 of Delaware Law) of the Company.
(b) The execution and delivery of this Agreement by Parent and
Parent Sub does not, and the performance of this Agreement by Parent and Parent
Sub will not, require Parent or Parent Sub to obtain any consent, approval,
authorization or permit of, or to make any filing with or notification to, any
Governmental Entities, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, Blue Sky Laws and the HSR Act and the filing
and recordation of appropriate Merger documents as required by Delaware Law and
(ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not, either
individually or in the aggregate, prevent Parent or Parent Sub from performing
its obligations under this Agreement.
SECTION 4.06 Permits; Compliance. Each of Parent and its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
identification numbers, approvals and orders (collectively, the "Parent
Permits") necessary to own, lease and operate its properties and to carry on its
business as it is now being conducted, and there is no action, proceeding or
investigation pending or, to the knowledge of Parent, threatened regarding
suspension or cancellation of any of the Parent Permits, except where the
failure to possess, or the suspension or cancellation of, such Parent Permits
would not have a Parent Material Adverse Effect. Neither Parent nor any of its
subsidiaries is in conflict with, or in default or violation of (a) any Law and
all rules of professional conduct applicable thereto applicable to Parent or any
of its subsidiaries or by which any of their respective properties is bound or
subject to or (b) any of the Parent Permits, except for any such conflicts,
defaults or violations which would not have a Parent Material Adverse Effect.
SECTION 4.07 Absence of Litigation. Except as disclosed in
the forms, reports, statements and other documents filed by M with the SEC
("Parent SEC Reports") prior to the date of this Agreement, (a) there is no
claim, action, suit, litigation, proceeding, arbitration or, to the knowledge of
Parent, investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), pending or, to the knowledge of Parent,
threatened against Parent or any of its subsidiaries or any properties or rights
of Parent or any of its subsidiaries (except for claims, actions, suits,
litigations, proceedings, arbitrations or investigations which, individually or
in the aggregate, would not have a Parent Material Adverse Effect) and (b)
neither Parent nor any of its subsidiaries is subject to any continuing order
of, consent decree, settlement agreement or other similar written agreement
with, or, to the knowledge of Parent, continuing investigation by, any
Governmental Entity, or any judgment, order, writ, injunction, decree or award
of any Governmental Entity or arbitrator, including, without limitation,
cease-
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<PAGE> 23
and-desist or other orders, except for such matters which would not have a
Parent Material Adverse Effect.
SECTION 4.08 Ownership of Parent Sub; No Prior Activities.
(a) Parent Sub was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement.
(b) Except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions
contemplated by this Agreement and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement, Parent Sub has not
and will not have incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any business activities
or any type or kind whatsoever or entered into any agreements or arrangements
with any person.
SECTION 4.09 Brokers. No broker, finder or investment. banker
is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent or Parent Sub.
ARTICLE V
COVENANTS
SECTION 5.01 Affirmative Covenants of the Company . The
Company hereby covenants and agrees that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement or consented to in writing
by Parent, the Company will and will cause its subsidiaries to:
(a) operate its business to the extent commercially reasonable
only in the usual and ordinary course consistent with past practices;
(b) use its commercially reasonable efforts to preserve
substantially intact its business organization, maintain its rights and
franchises, retain the services of its respective officers and key employees and
maintain its relationships with its respective customers and suppliers;
(c) use its commercially reasonable efforts to maintain and
keep its properties and assets in as good repair and condition as at present,
ordinary wear and tear excepted, and maintain inventories in quantities
consistent with its customary business practice; and
(d) use its commercially reasonable efforts to keep in full
force and effect insurance and bonds comparable in amount and scope of coverage
to that currently maintained;
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<PAGE> 24
provided, however, that in the event the Company deems it necessary to take
certain actions that would otherwise be proscribed by clauses (a)-(d) of this
Section 5.01, the Company shall consult with Parent and Parent shall consider in
good faith the Company's request to take such action and not unreasonably
withhold its consent to such action.
SECTION 5.02 Negative Covenants of the Company. Except as
expressly contemplated by this Agreement and except as set forth in Section 5.02
of the Company Disclosure Schedule, or otherwise consented to in writing by
Parent, from the date of this Agreement until the Effective Time, the Company
will not do, and will not permit any of its subsidiaries to do, any of the
following:
(a) (i) increase the compensation payable to or to become
payable to any director or executive officer, except for increases in
salary or wages payable or to become payable in the ordinary course of
business and consistent with past practice; (ii) grant any severance or
termination pay (other than pursuant to the normal severance policy or
practice of the Company or its subsidiaries as in effect on the date of
this Agreement or employment or severance agreements in effect on the
date of this Agreement) to, or enter into any employment or severance
agreement with, any director, officer or employee, provided that the
Company may adopt a retention bonus program (the "Retention Plan") that
provides for the payment of a retention bonus of up to three month's
base salary to such employees of the Company (other than senior
management) as may be determined by the Company with the consent of the
Parent which shall not be unreasonably withheld subject to (a) an
employee's receipt of a retention bonus being conditioned on such
employee either being terminated by the Company without cause following
the Effective Time or remaining as an employee of the Company for not
less than six months following the Effective Time and (b) the aggregate
amount of all retention bonuses payable to all employees not exceeding
$500,000 or (iii) establish, adopt, enter into or amend any employee
benefit plan or arrangement except as may be required by applicable Law
or existing contracts;
(b) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock, except
for dividends by a subsidiary of the Company to the Company or another
subsidiary of the Company;
(c) (i) redeem, purchase or otherwise acquire any shares of
its or any of its subsidiaries' capital stock or any securities or
obligations convertible into or exchangeable for any shares of its or
its subsidiaries' capital stock (other than any such acquisition
directly from any wholly owned subsidiary of the Company in exchange
for capital contributions or loans to such subsidiary), or any options,
warrants or conversion or other rights to acquire any shares of its or
its subsidiaries' capital stock or any such securities or obligations
(except in connection with the exercise of outstanding Stock Options
and Warrants referred to in Section 3.03(a) in accordance with their
terms or in connection with the conversion of Convertible Notes and
Convertible Preferred in accordance with their terms); (ii) effect any
reorganization or recapitalization; or (iii) split, combine or
reclassify any of its or its respective subsidiaries' capital stock or
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<PAGE> 25
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its or its
respective subsidiaries' capital stock;
(d) (i) except as are described in Section 3.03(b) of the
Company Disclosure Schedule, issue, deliver, award, grant or sell, or
authorize or propose the issuance, delivery, award, grant or sale
(including the grant of any security interests, liens, claims, pledges,
limitations in voting rights, charges or other encumbrances) of, any
shares of any class of its or its subsidiaries' capital stock
(including shares held in treasury), any securities convertible into or
exercisable or exchangeable for any such shares, or any rights,
warrants or options to acquire, any such shares (except for the
issuance of shares upon the exercise of outstanding Stock Options,
Warrants or the conversion of Convertible Notes and Convertible
Preferred in accordance with their terms); or (ii) amend or otherwise
modify the terms of any such rights, warrants or options the effect of
which shall be to make such terms more favorable to the holders
thereof;
(e) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets
of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
(other than a wholly owned subsidiary) thereof, or otherwise acquire or
agree to acquire any assets of any other person (other than the
purchase of assets from suppliers or vendors (i) for resale or use by
or for customers which assets do not constitute capital items, (ii)
that consist of office supplies or materials not constituting capital
items or (iii) in an amount not to exceed $250,000 in the aggregate (or
such greater amount as may be consented to by the Parent which consent
shall not be unreasonably withheld), in each case, in the ordinary
course of business and consistent with past practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of, any of its assets, except as
set forth in Section 3.13 of the Company Disclosure Schedule or for
dispositions of inventories and of assets in the ordinary course of
business and consistent with past practice;
(g) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing
Transaction, or enter into discussions or negotiate with any person or
entity in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of the officers, directors or employees of the
Company or any of its subsidiaries or any investment banker, financial
advisor, attorney, accountant or other representative retained by the
Company or any of the Company's subsidiaries to take any such action
and the Company shall promptly notify Parent of all relevant terms of
any such inquiries and proposals received by the Company or any of its
subsidiaries or by any such officer, director, investment banker,
financial advisor or attorney, relating to any of such matters and if
such inquiry or proposal is in writing, the Company shall deliver or
cause to be delivered to Parent a copy of such
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<PAGE> 26
inquiry or proposal; provided, however, that nothing contained in this
subsection (g) shall prohibit the Board of Directors of the Company
from (i) furnishing information to, or entering into discussions or
negotiations with, any persons or entity in connection with an
unsolicited bona fide proposal by such person or entity to acquire the
Company pursuant to a merger, consolidation, share exchange, business
combination or other similar transaction or to acquire all or
substantially all of the assets of the Company or any of its
Significant Subsidiaries, if, and only to the extent that (A) the Board
of Directors of the Company, after consultation with independent legal
counsel (which may include its regularly engaged independent legal
counsel), determines in good faith that such action is required for the
Board of Directors of the Company to comply with its fiduciary duties
to stockholders imposed by Delaware Law and (B) the Company (x)
promptly provides notice to Parent to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such
person or entity and (y) receives a customary confidentiality agreement
from such person or entity; or (ii) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a Competing
Transaction. For purposes of this Agreement, "Competing Transaction"
shall mean any of the following involving the Company or any of its
subsidiaries: (i) any merger, consolidation, share exchange, business
combination, or other similar transaction (other than the transactions
contemplated by this Agreement); (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 15% or more of the
assets of the Company and its subsidiaries, taken as a whole, in a
single transaction or series of transactions, other than in the
ordinary course of business; (iii) any tender offer or exchange offer
for 15% or more of the outstanding shares of capital stock of the
Company or the filing of a registration statement under the Securities
Act in connection therewith; (iv) any person shall have acquired
beneficial ownership or the right to acquire beneficial ownership of,
or any "group" (as such term is defined under Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder)
shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 15% or more of the then outstanding
shares of capital stock of the Company (other than through the vesting
of Stock Options granted prior to the date of this Agreement or
acquisitions in arbitrage transactions); or (v) any public announcement
of a proposal, plan or intention to do any of the foregoing;
(h) propose or adopt any amendments to its Certificate of
Incorporation or By-Laws that would have an adverse impact on the
consummation of the transactions contemplated by this Agreement;
(i) (A) change any of its methods of accounting in effect at
December 31, 1995, or (B) make or rescind any express or deemed
election relating to taxes, settle or compromise any claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to taxes, or change any of its methods of
reporting income or deductions for federal income tax purposes from
those employed in the preparation of the federal income tax returns for
the taxable year ending December 31, 1995, except, in the case of
clause (A) or clause (B), as may be required by Law or generally
accepted accounting principles;
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<PAGE> 27
(j) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond,
debenture or similar instrument;
(k) enter into or amend (i) any material contract with any
supplier that is not terminable or cancelable by the Company or its
subsidiary party thereto upon notice of 90 days or less without penalty
or increased cost; or (ii) any contract which restricts the Company
and/or its subsidiaries from doing business anywhere in the world or
from engaging in or competing in any line of business or with any
person; or
(l) agree in writing or otherwise to do any of the foregoing.
SECTION 5.03 Access and Information. Subject to
confidentiality agreements to which the Company or any of its subsidiaries is a
party, the Company shall, and shall cause its subsidiaries to (i) afford to
Parent and its officers, directors, employees, accountants, consultants, legal
counsel, agents and other representatives (collectively, the "Parent
Representatives") reasonable access at reasonable times upon reasonable prior
notice to the officers, employees, agents, properties, offices and other
facilities of the Company and its subsidiaries and to the books and records
thereof and (ii) furnish promptly to Parent and the Parent Representatives such
information concerning the business, properties, contracts, records and
personnel of the Company and its subsidiaries (including, without limitation,
financial, operating and other data and information) as may be reasonably
requested, from time to time, by Parent.
SECTION 5.04 Confidentiality. The parties will comply with
all of their respective obligations under the Confidentiality Agreement
dated June 29, 1995.
SECTION 5.05 Rights Agreement. The Company shall take all
necessary action prior to the Effective Time to cause the dilution provision of
the Company Rights Agreement to be inapplicable to the transactions contemplated
by this Agreement, without any payment to holders of rights issued pursuant to
such Rights Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Meeting of Stockholders. The Company shall,
promptly after the date of this Agreement, take all action necessary in
accordance with Delaware Law and its Certificate of Incorporation and By-Laws to
convene a meeting of the Company's stockholders to act on the Merger Agreement
(the "Stockholders' Meeting"). The Company shall use its reasonable best
efforts to solicit from stockholders of the Company proxies in favor of the
approval and adoption of the Merger Agreement and to secure the vote or consent
of stockholders required by Delaware Law to approve and adopt the Merger
Agreement, unless otherwise required by the applicable fiduciary duties of the
directors of Company, as determined by such directors in good faith after
consultation with independent legal counsel (which may include the Company's
regularly engaged legal counsel).
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<PAGE> 28
SECTION 6.02 Proxy Statement.
(a) As promptly as practicable after the execution of this
Agreement, the Company shall prepare and file with the SEC a proxy statement,
and a form of proxy, in connection with the vote of the Company's stockholders
with respect to the Merger (such proxy statement, together with any amendments
thereof or supplements thereto, in each case in the form or forms mailed to the
Company's stockholders, being the "Proxy Statement"). Each of Parent and the
Company shall furnish all information concerning it and the holders of its
capital stock as the other may reasonably request in connection with the Proxy
Statement. As promptly as practicable after the date hereof, the Company shall
mail the Proxy Statement to its stockholders. The Proxy Statement shall include
the recommendation of the Company's Board of Directors in favor of the Merger
unless otherwise required by the applicable fiduciary duties of the directors of
the Company, as determined by such directors in good faith after consultation
with independent legal counsel (which may include the Company's regularly
engaged legal counsel).
(b) The information supplied by the Company for inclusion in
the Proxy Statement to be sent to the stockholders of the Company in connection
with the Stockholders' Meeting shall not, at the date the Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to stockholders, at
the time of the Stockholders' Meeting or at the Effective Time, 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
the light of the circumstances under which they are made, not misleading. If at
any time prior to the Effective Time any event or circumstance relating to the
Company or any of its affiliates, or its or their respective officers or
directors, should be discovered by the Company which should be set forth in a
supplement to the Proxy Statement, the Company shall promptly inform Parent. All
documents that the Company is responsible for filing with the SEC in connection
with the transactions contemplated herein will comply as to form and substance
in all material respects with the applicable requirements of the Securities Act
and the rules and regulations thereunder.
(c) The information supplied by Parent for inclusion in the
Proxy Statement to be sent to the stockholders of the Company in connection with
the Stockholders' Meeting shall not, at the date the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to stockholders, at the
time of the Stockholders' Meeting or at the Effective Time, 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 the
light of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event or circumstance relating to Parent or
any of its respective affiliates, or to their respective officers or directors,
should be discovered by Parent which should be set forth in a supplement to the
Proxy Statement, Parent shall promptly inform the Company. All documents that
Parent is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.
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<PAGE> 29
SECTION 6.03 Appropriate Action; Consents; Filings.
(a) The Company and Parent shall cooperate with each other in
every way and shall each use their commercially reasonable efforts to (i)
consummate and make effective the transactions contemplated by this Agreement,
(ii) obtain from any Governmental Entities any consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or made by
Parent or the Company or any of their subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated herein, including, without limitation, the Merger,
(iii) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under (A)
the Exchange Act and the rules and regulations thereunder, and any other
applicable federal or state securities laws, (B) the HSR Act and (C) any other
applicable Law; provided that Parent and the Company shall cooperate with each
other in connection with the making of all such filings, including providing
copies of all such documents to the nonfiling party and its advisors prior to
filing and, if requested, to accept all reasonable additions, deletions or
changes suggested in connection therewith. In connection with the foregoing,
each of the Company and the Parent shall file their respective notifications
under the HSR Act within five business days of the date hereof and shall, if
there is a "second request" for additional information, work diligently to
comply with such request. The Company and Parent shall furnish all information
required for any application or other filing to be made pursuant to the rules
and regulations of any applicable Law (including all information required to be
included in the Proxy Statement) in connection with the transactions
contemplated by this Agreement.
(b) (i) Each of the Company and Parent shall
give (or shall cause their respective subsidiaries to give) any notices to third
parties, and use, and cause their respective subsidiaries to use, its
commercially reasonable efforts to obtain any third party consents (A)
necessary, proper or advisable to consummate the transactions contemplated in
this Agreement, (B) disclosed or required to be disclosed in the Company
Disclosure Schedule, (C) otherwise required under any contracts, licenses,
leases or other agreements in connection with the consummation of the
transactions contemplated herein or (D) required to prevent a Company Material
Adverse Effect from occurring prior to or after the Effective Time.
(ii) In the event the Company shall fail to
obtain any third party consent described in subsection (b)(i) above, the Company
shall use its commercially reasonable efforts, and shall take any such actions
reasonably requested by Parent to mitigate any adverse effect upon the Company
and Parent, their respective subsidiaries, and their respective businesses
resulting, or which could reasonably be expected to result after the Effective
Time, from the failure to obtain such consent.
(c) Notwithstanding anything contained in this
Section 6.03 or elsewhere in this Agreement, in connection with the consummation
of the Merger or any other transaction contemplated by this Agreement, Parent
and its subsidiaries and their affiliates shall not be required (i) to take any
action which involves substantial cost or expenses or has any impact or effect
on their businesses or operations, (ii) to institute, prosecute, defend or
appeal any judicial or administrative action, (iii) to sell, hold separate or
dispose of any assets or operations
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<PAGE> 30
or to withdraw from doing business in any jurisdiction or (iv) to enter into any
consent or administrative decree or order.
SECTION 6.04 Public Announcements. Unless otherwise required
by applicable Law or stock exchange requirements or the requirements of the NASD
(and in each such event only if time does not permit), Parent and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to the Merger and shall not issue any
such press release or make any such public statement prior to such consultation.
SECTION 6.05 Indemnification of Directors and Officers.
(a) The Certificate of Incorporation and By-Laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Certificate of Incorporation and By-Laws of the
Company on the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of six years after the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who at any time prior to the Effective Time were directors or
officers of the Company in respect of actions or omissions occurring at or prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement), unless such modification is required by Law.
(b) From and after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless the present and former
officers and directors of the Company (collectively, the "Indemnified Parties")
against all losses, expenses, claims, damages, liabilities or amounts that are
paid in settlement of, with the approval of Parent and the Surviving Corporation
(which approval shall not unreasonably be withheld), or otherwise in connection
with any claim, action, suit, proceeding or investigation (a "Claim"), based in
whole or in part on the fact that such person is or was a director or officer of
the Company and arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), in each case to the full extent permitted under Delaware Law
(and shall pay expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the fullest extent permitted under
Delaware Law, upon receipt from the Indemnified Party to whom expenses are
advanced of the undertaking to repay such advances contemplated by Section
145(e) of Delaware Law). Parent shall guarantee the Surviving Corporation's
obligations pursuant to this Section 6.06(b).
(c) Without limiting the foregoing, in the event any Claim is
brought against any Indemnified Party (whether arising before or after the
Effective Time) after the Effective Time (i) the Indemnified Parties may retain
the Company's regularly engaged independent legal counsel, or other independent
legal counsel satisfactory to them provided that such other counsel shall be
reasonably acceptable to Parent and the Surviving Corporation, (ii) the
Surviving Corporation shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefor are received and
(iii) the Surviving Corporation will use its commercially reasonable efforts to
assist in the vigorous defense of any such matter, provided that the Surviving
Corporation shall not be liable for any settlement of any Claim effected
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<PAGE> 31
without its written consent, which consent shall not be unreasonably withheld.
Any Indemnified Party wishing to claim indemnification under this Section 6.06,
upon learning of any such Claim, shall notify the Surviving Corporation
(although the failure so to notify the Surviving Corporation shall not relieve
the Surviving Corporation from any liability which the Surviving Corporation may
have under this Section 6.06 except to the extent such failure materially
prejudices the Surviving Corporation), and shall deliver to the Surviving
Corporation the undertaking contemplated by Section 145(e) of Delaware Law. The
Indemnified Parties as a group may retain one law firm (in addition to local
counsel) to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct (as determined by counsel to
the Indemnified Parties), a conflict on any significant issue between the
positions of any two or more Indemnified Parties, in which event, such
additional counsel as may be required may be retained by the Indemnified
Parties.
(d) For a period of three years after the Effective Time,
Parent shall cause to be maintained in effect the current policies of directors'
and officers' liability insurance maintained by the Company (provided that
Parent may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are no less advantageous) with
respect to Claims arising from facts or events which occurred before the
Effective Time (at an aggregate cost no greater than one and one-half times the
current annual premium paid by the Company for its existing coverage).
(e) This Section 6.05 is intended to be for the benefit of,
and shall be enforceable by, the Indemnified Parties, their heirs and personal
representatives and shall be binding on Parent and Parent Sub and the Surviving
Corporation and their respective successors and assigns.
SECTION 6.06 Obligations of Parent Sub. Parent shall take all
action necessary to cause Parent Sub to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions
set forth in this Agreement.
SECTION 6.07 Supplemental Indentures; Assumption of Certain
Obligations to Issue Company Common Stock. As of the Effective Time, Parent
shall enter into such supplemental indentures as may be required under the terms
of the indenture for the Convertible Notes. Holders of Convertible Notes who
convert after the Effective Time shall be entitled to receive cash based on the
Merger Consideration.
SECTION 6.08 Employment Agreements and Benefit Plans. Parent
shall cause the Surviving Corporation to honor all employment agreements,
individual severance arrangements, the Retention Plan and the Company's existing
severance policy for any employee who is terminated by the Company without cause
within six months following the Effective Time. Nothing contained herein shall
limit the right of the Surviving Corporation to amend or terminate any Benefit
Plan.
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ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01 Conditions to Obligations of Each Party Under
This Agreement. The respective obligations of each party to effect the Merger
and the other transactions contemplated herein shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
or all of which may be waived, in whole or in part, to the extent permitted by
applicable Law:
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the
stockholders of the Company.
(b) No Order. No Governmental Entity or federal or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) which is
in effect and which has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger.
(c) HSR Act. The applicable waiting period under the HSR Act
shall have expired or been terminated.
SECTION 7.02 Additional Conditions to Obligations of Parent.
The obligations of Parent to effect the Merger and the other transactions
contemplated herein are also subject to the following conditions:
(a) Representations and Warranties. Except where the
inaccuracies of any representations and warranties of the Company would not, in
the aggregate of all such inaccuracies, have a Company Material Adverse Effect,
the representations and warranties of the Company set forth in this Agreement,
shall have been true and correct in all respects as of the date of this
Agreement and as of the Effective Time as if made at such time (except that
those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date except where the
failure to be so true and correct would not have a Company Material Adverse
Effect). Parent shall have received a certificate of the President or Chief
Financial Officer of the Company to such effect.
(b) Agreements and Covenants. The Company shall have
performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time, except where the failure to so comply would not have a Company Material
Adverse Effect. Parent shall have received a certificate of the President or
Chief Financial Officer of the Company to that effect. The Company shall have
performed or complied with its obligations under the last paragraph of Section
3.13 of the Company Disclosure Schedule.
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(c) Consents and Approvals. All consents, approvals and
authorizations legally required to be obtained to consummate the Merger shall
have been obtained from and made with all required Governmental Entities.
(d) Governmental Actions. No action, suit, or proceeding by
any Governmental Entity shall be threatened or pending (i) challenging the
consummation of any of the transactions contemplated herein, (ii) seeking
recission of the transactions contemplated herein following consummation or
seeking to cause the Parent to hold the Surviving Corporation or its assets
separate, (iii) seeking relief which would adversely effect the right of Parent
to own the Company Common Stock and to control the Surviving Corporation and its
subsidiaries, or (iv) seeking relief which would adversely effect the right of
any of the Surviving Corporation and its subsidiaries to own its assets and to
operate its businesses (and no such order, decree, injunction, judgment, ruling
or charge with respect to the matters set forth in Section 7.02(d) shall be in
effect).
SECTION 7.03 Additional Conditions to Obligations of the
Company. The obligation of the Company to effect the Merger and the
other transactions contemplated in this Agreement is also subject to
the following conditions:
(a) Representations and Warranties. Except where the
inaccuracies of any representations and warranties of the Parent or the Parent
Sub would not, in the aggregate of all such inaccuracies, have a Parent Material
Adverse Effect, the representations and warranties of Parent set forth in this
Agreement shall have been true and correct in all respects as of the date of
this Agreement and as of the Effective Time as if made at such time (except that
those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date except where the
failure to be so true and correct would not have a Parent Material Adverse
Effect). The Company shall have received a certificate of the Chief Financial
Officer of Parent to such effect.
(b) Agreements and Covenants. Parent shall have performed or
complied with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, except where
the failure to comply would not have a Parent Material Adverse Effect. The
Company shall have received a certificate of the Chief Financial Officer of
Parent to that effect.
(c) Consents and Approvals. All consents, approvals and
authorizations legally required to be obtained to consummate the Merger shall
have been obtained from and made with all required Governmental Entities.
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<PAGE> 34
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval
of this Agreement and the Merger by the stockholders of the Company:
(a) by mutual consent of Parent and the Company;
(b) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, such that the conditions set forth in Section 7.02(a) or
Section 7.02(b) would not be satisfied (a "Terminating Company
Breach"), provided that, if such Terminating Company Breach is curable
by the Company through the exercise of its commercially reasonable
efforts and for so long as the Company continues to exercise such
commercially reasonable efforts, Parent may not terminate this
Agreement under this Section 8.01(b);
(c) by the Company, upon breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, such that the conditions set forth in Section 7.03(a) or
Section 7.03(b) would not be satisfied ("Terminating Parent Breach"),
provided that, if such Terminating Parent Breach is curable by Parent
through the exercise of its commercially reasonable efforts and for so
long as Parent continues to exercise such commercially reasonable
efforts, the Company may not terminate this Agreement under this
Section 8.01(c);
(d) by either Parent or the Company, if there shall be any
Order which is final and nonappealable preventing the
consummation of the Merger;
(e) by either Parent or the Company, if the Merger shall not
have been consummated before September 30, 1996, provided that, if the
Parent shall have received a "second request" for additional
information under the HSR Act, the Company shall have the right to
terminate this Agreement as of July 7, 1996 upon at least two (but not
more than five) days prior written notice of termination to Parent if
the Company in its reasonable judgment exercised in good faith
determines that based upon all relevant facts and circumstances the
Merger will not be consummated because of the failure of the conditions
set forth in Section 7.01(b) and (c) and 7.02(d);
(f) by either Parent or the Company, if the Agreement shall
fail to receive the requisite vote for approval and adoption by the
stockholders of the Company at the Stockholders' Meeting or if the
Company shall have failed to receive (after using all commercially
reasonable efforts) an updated fairness opinion from Morgan Stanley as
of the date on which the Proxy Statement would have been mailed had
such opinion been received (the "Updated Opinion").
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<PAGE> 35
(g) by Parent, if (i) the Board of Directors of the Company
withdraws, modifies or changes its recommendation of this Agreement or
the Merger in a manner adverse to Parent or Parent Sub or shall have
resolved to do any of the foregoing or the Board of Directors of the
Company shall have recommended to the stockholders of the Company any
competing transaction or resolved to do so; (ii) if the Board of
Directors of the Company shall have recommended to the shareholders of
the Company a Competing Transaction; or (iii) a tender offer or
exchange offer for 50% or more of the outstanding shares of capital
stock of the Company is commenced, and the Board of Directors of the
Company recommends that shareholders tender their shares into such
tender or exchange offer or; (iv) any person shall have acquired
beneficial ownership or the right to acquire beneficial ownership of,
or any "group" (as such term is defined under Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder),
shall have been formed which beneficially owns, or has the right to
acquire beneficial ownership of more than 30% of the then outstanding
shares of capital stock of the Company; and
(h) by the Company, if the Board of Directors of the Company
determines in good faith after consultation with independent legal
counsel (which may include the Company's regularly engaged legal
counsel) that it is required by Delaware Law to enter into a definitive
agreement for a Competing Transaction which the Board has determined is
financially superior to the transactions contemplated by this Agreement
and is reasonably likely to be consummated.
The right of any party hereto to terminate this Agreement
pursuant to this Section 8.01 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any party
hereto, any person controlling any such party or any of their respective
officers or directors, whether prior to or after the execution of this
Agreement.
SECTION 8.02 Effect of Termination. Except as provided in
Section 8.05 or Section 9.01, in the event of the termination of this Agreement
pursuant to Section 8.01, this Agreement shall forthwith become void, there
shall be no liability on the part of Parent, Parent Sub or the Company or any of
their respective officers or directors to the other and all rights and
obligations of any party hereto shall cease, except that nothing herein shall
relieve any Party for any breach of this Agreement, other than for breach of
representations and warranties.
SECTION 8.03 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after approval of the Merger by the stockholders of the Company, no amendment
may be made which would reduce the amount or change the type of consideration
into which each share of Company Common Stock shall be converted pursuant to
this Agreement upon consummation of the Merger. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
SECTION 8.04 Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties of the other party
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<PAGE> 36
contained herein or in any document delivered pursuant hereto and (c) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
SECTION 8.05 Fees, Expenses and Other Payments.
(a) Except as provided in Sections 8.05(c) and (d), all
Expenses (as defined in paragraph (b) of this Section 8.05) incurred by the
parties hereto shall be borne solely and entirely by the party which has
incurred such Expenses; provided, however, that the allocable share of each of
Parent and the Company for all Expenses related to printing, filing and mailing
the Proxy Statement and all SEC and other regulatory filing fees incurred in
connection with the Proxy Statement shall be one-half.
(b) "Expenses" as used in this Agreement shall include all
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and mailing of
the Proxy Statement and the mailing of the Proxy Statement, the solicitation of
stockholder approvals and all other matters related to the closing of the
transactions contemplated herein.
(c) In the event of a termination of this Agreement (A) by the
Company pursuant to Section 8.01(h) or (B) for any reason other than a breach by
Parent or Parent Sub and, with respect to a termination under clause (B) only,
(i) the Board of Directors of the Company shall have withdrawn its
recommendation of (or encouraged stockholders not to approve) the Merger or
shall have recommended (or encouraged stockholders to support) any Competing
Transaction, or shall have resolved to do any of the foregoing (and such
withdrawal, recommendation or encouragement is not the result of a material
breach by Parent or Parent Sub of any representation, warranty or obligation
under this Agreement), (ii) prior to such termination, the Company shall have
received any proposal for a Competing Transaction which the Board of Directors
has determined is more favorable to the Company's stockholders than the
transactions contemplated by this Agreement, or (iii)(A) at any time prior to
the termination of this Agreement (I) the stockholders of the Company shall have
failed to approve this Agreement at the Stockholders' Meeting, (II) the
Agreement shall have been terminated pursuant to Section 8.01(f) on account of
the failure of the Company to receive the Updated Opinion, (III) the Company
shall have terminated this Agreement as of July 7, 1996 pursuant to Section
8.01(e) hereof or (IV) any person (other than Parent or any of its subsidiaries)
shall have publicly announced any proposal for a Competing Transaction and (B)
at any time on or prior to one year after the date of this Agreement, any person
(other than Parent or any of its subsidiaries) shall either (I) become the
beneficial owner of 50% or more of the outstanding shares of Company Common
Stock or (II) consummate a Competing Transaction, then the Company shall
promptly, but in no event later than two business days after the first of such
events set forth in (A) or (B) to occur, (x) pay Parent the sum of $2,000,000 in
cash and (y) reimburse Parent for all documented out-of-pocket costs and
expenses (including, without limitation, all documented legal, investment
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<PAGE> 37
banking, printing and related fees and expenses) incurred by Parent or Parent
Sub or on their behalf in connection with this Agreement or the transactions
contemplated hereby, up to a maximum of $250,000 and the Company and its
subsidiaries and affiliates shall have no other liabilities or obligations (and
the Parent and Parent Sub shall have no other claim or right against the Company
or any of its subsidiaries of affiliates) in connection with this Agreement and
the transactions contemplated hereby.
(d) If the Company has not exercised its right to terminate
this Agreement as of July 7, 1996 pursuant to Section 8.01(e) hereof and in the
event of a termination of this Agreement by the Parent on account of the failure
of the conditions set forth in Section 7.01(b) or (c) or Section 7.02(d), the
Parent shall reimburse the Company for all documented out of pocket Expenses
incurred by the Company or on its behalf in connection with this Agreement or
the transactions contemplated hereby, up to a maximum of $500,000, and the
Parent shall also pay the Company $500,000 in cash and the Parent and its
subsidiaries and affiliates shall have no other liabilities or obligations (and
the Company shall have no other claim or right against the Parent or any of its
subsidiaries or affiliates) in connection with this Agreement and the
transactions contemplated hereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Effectiveness of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Article VIII, except that the agreements set forth in Articles I and
II and Section 6.05 shall survive the Effective Time and those set forth in
Sections 5.04, 8.02, 8.05 and Article IX hereof shall survive termination.
SECTION 9.02 Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made as of the date delivered, mailed or transmitted, and
shall be effective upon receipt if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission to the telecopier
number specified below:
(a) If to Parent or Parent Sub:
MERCK-MEDCO MANAGED CARE, INC.
100 Summit Avenue
Montvale, New Jersey 07645
Attention: Bert Weinstein, Esq.
Telecopy: (201) 358-5773
with a copy to:
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<PAGE> 38
MERCK & CO.
One Merck Drive
Whitehouse Station, New Jersey 08889
Attention: Mary M. McDonald, Esq.
Telecopy: (908) 423-1501
and a copy to
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Gary P. Cooperstein, Esq.
Telecopy: (212) 859-8586
(b) If to the Company:
SYSTEMED INC.
970 W. 190th Street, Suite 400
Torrance, California 90502
Attention: Samuel Westover
Telecopy: (310) 538-1522
with a copy to:
Munger, Tolles & Olson
355 South Grand Avenue, 35th Floor
Los Angeles, California 90071
Attention: Robert B. Knauss, Esq.
Telecopy: (213) 687-3702
SECTION 9.03 Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
(b) "business day" means any day other than a day on which
banks in the State of New York are authorized or obligated to be closed;
(c) "control" (including the terms "controlled", "controlled
by" and "under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause the
direction of the management or policies of a person, whether through the
ownership of stock or as trustee or executor, by contract or credit arrangement
or otherwise;
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<PAGE> 39
(d) "knowledge" or "known" shall mean, with respect to any
matter in question, if an executive officer of the Company or Parent, as the
case may be, has actual knowledge of such matter;
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity
or group (as defined in Section 13(d) of the Exchange Act);
(f) "Significant Subsidiary" or "Significant Subsidiaries"
means any subsidiary of the Company or Parent, as the case may be, that would
constitute a Significant Subsidiary of such party within the meaning of Rule
1-02 of Regulation S-X of the SEC and, in the case of the Company, including
without limitation, Systemed Pharmacy Inc., an Ohio corporation, and Systemed
Pharmacy Inc., a Delaware corporation.
(g) "subsidiary" or "subsidiaries" of the Company, Parent, the
Surviving Corporation or any other person, means any corporation, partnership,
joint venture or other legal entity of which the Company, Parent, the Surviving
Corporation or such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, 50% or more
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity; and
(h) "Tax" or "Taxes" shall mean any and all taxes, charges,
fees, levies, payable to any federal, state, local or foreign taxing authority
or agency, including, without limitation, (i) income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, ad valorem, value added,
sales, use, service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall profits,
transfer and gains taxes, (ii) customs duties, imposts, charges, levies or other
similar assessments of any kind, and (iii) interest, penalties and additions to
tax imposed with respect thereto.
SECTION 9.04 Conveyance Taxes. The Parent shall be liable for
and shall hold the holders of shares of Company Common Stock harmless against
any New York State Real Property Gains Tax, New York State Real Estate Transfer
Tax and the New York City Real Property Transfer Tax which become payable in
connection with the transactions contemplated by this Agreement.
SECTION 9.05 Headings. 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.
SECTION 9.06 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other
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<PAGE> 40
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 9.07 Entire Agreement. This Agreement (together with
the Exhibits), and the Confidentiality Agreement constitute the entire agreement
of the parties and supersede all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof.
SECTION 9.08 Assignment. This Agreement shall not be assigned
by operation of law or otherwise.
SECTION 9.09 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied (other than the provisions of Section
6.05) is intended to or shall confer upon any other person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 9.10 Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party hereto in the exercise
of any right hereunder shall impair such right or be construed to be a waiver
of, or acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
SECTION 9.11 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of
Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law.
SECTION 9.12 Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to
be an original but all of which taken together shall constitute one and
the same agreement.
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<PAGE> 41
IN WITNESS WHEREOF, Parent, Parent Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
MERCK & CO., INC.
By: /s/ Mary M. McDonald
----------------------------------------------
Name: Mary M. McDonald
--------------------------------------------
Title: Senior Vice President and General Counsel
-------------------------------------------
MERCK-MEDCO MANAGED CARE,
INC.
By: /s/ Per G. H. Lofberg
----------------------------------------------
Name: Per G. H. Lofberg
--------------------------------------------
Title: President
-------------------------------------------
S ACQUISITION CORP.
By: /s/ Per G. H. Lofberg
----------------------------------------------
Name: Per G. H. Lofberg
--------------------------------------------
Title: President
-------------------------------------------
SYSTEMED INC.
By: /s/ Sam Westover
----------------------------------------------
Name: Sam Westover
--------------------------------------------
Title: President and CEO
-------------------------------------------
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