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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9/A
AMENDMENT NO. 1
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
SYSTEMED INC.
(NAME OF SUBJECT COMPANY)
SYSTEMED INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(TITLE OF CLASS OF SECURITIES)
COMMON STOCK 871853107
(CUSIP NUMBER OF CLASS OF SECURITIES)
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SAM WESTOVER, PRESIDENT AND CHIEF EXECUTIVE OFFICER
SYSTEMED INC.
970 WEST 190TH STREET
TORRANCE, CALIFORNIA 90502
(310) 538-5300
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING
STATEMENT)
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WITH A COPY TO:
ROBERT B. KNAUSS, ESQ.
MUNGER, TOLLES & OLSON
355 SOUTH GRAND AVENUE, 35TH FLOOR
LOS ANGELES, CALIFORNIA 90071-1560
(213) 683-9137
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1 Press Release dated April 29, 1996 announcing the Merger
2 Amended and Restated Agreement and Plan of Merger by and among Merck &
Co., Inc., Merck-Medco Managed Care, Inc., S Acquisition Corp and the
Company, dated as of June 10, 1996
</TABLE>
14
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Systemed Inc.
/s/ Sam Westover
By __________________________________
Name: Sam Westover
Title: President and Chief
Executive Officer
Dated: June 11, 1996
15
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MERCK-MEDCO MANAGED CARE TO ACQUIRE SYSTEMED
Montvale, NJ, April 29, 1996 - Merck-Medco Managed Care, Inc., a subsidiary of
Merck & Co., Inc., announced that it has reached a definitive agreement with
Systemed Inc. (NASDAQ:SYSM) to acquire Systemed in a merger for $3.00 per share
in cash for a total of approximately $67 million. The agreement has been
approved by the Boards of Directors of both Merck and Systemed and is expected
to be completed subject to regulatory reviews and the approval of Systemed's
shareholders.
Systemed, based in Torrance, California, develops and administers pharmacy
benefit programs for employers, insurers and governmental agencies throughout
the United States. It operates a mail service pharmacy located in Des Moines,
Iowa, and a claims processing operation in Cleveland, Ohio. In 1995, the company
had sales of $152 million and net income of $4.3 million.
"Systemed brings Merck-Medco Managed Care important new customers who now
will benefit from the significant investments we've made in advanced clinical
and health-management programs since our acquisition by Merck-investments which
enable us to provide patients with the safest, most effective and economical
pharmaceutical care," said Per G.H. Lofberg, President, Merck-Medco Managed
Care.
"We believe that combining our operations with those of Merck-Medco Managed
Care is in the best long-term interests of our shareholders, customers and
employees," said Mr. Sam Westover, President and Chief Executive Officer,
Systemed. "Merck-Medco shares our commitment to providing patients with
high-quality pharmaceutical care, while at the same time helping benefit
sponsors reduce overall health-care costs."
Systemed said a meeting will be scheduled for its shareholders to vote on
the proposed acquisition. The acquisition is also subject to Hart-Scott-Rodino
antitrust clearance and other customary conditions.
Merck-Medco Managed Care, Inc., is the leading pharmacy benefit manager in
the United States. It serves employers, unions, health maintenance
organizations, Blue
<PAGE>
Cross/Blue Shield plans and insurance companies, providing pharmaceutical
benefits to more than 47 million Americans.
###
<PAGE>
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MERCK & CO., INC.
MERCK-MEDCO MANAGED CARE, INC.
S ACQUISITION CORP.
AND
SYSTEMED INC.
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TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE I THE OFFER AND THE MERGER........................................ 1
SECTION 1.01 The Offer................................................ 1
SECTION 1.02 Company Actions.......................................... 2
SECTION 1.03 The Merger............................................... 3
SECTION 1.04 Effective Time........................................... 3
SECTION 1.05 Effect of the Merger..................................... 3
SECTION 1.06 Certificate of Incorporation; By-Laws.................... 4
SECTION 1.07 Directors and Officers................................... 4
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES............. 4
SECTION 2.01 Conversion of Securities................................. 4
SECTION 2.02 Payment for Shares....................................... 4
SECTION 2.03 Stock Transfer Books..................................... 5
SECTION 2.04 Stock Options, Payment Rights............................ 6
SECTION 2.05 Dissenting Shares........................................ 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 7
SECTION 3.01 Organization and Qualification; Subsidiaries............. 7
SECTION 3.02 Certificates of Incorporation and By-Laws................ 7
SECTION 3.03 Capitalization........................................... 7
SECTION 3.04 Authority................................................ 9
SECTION 3.05 No Conflict; Required Filings and Consents............... 9
SECTION 3.06 Permits; Compliance...................................... 10
SECTION 3.07 Reports; Financial Statements............................ 10
SECTION 3.08 Absence of Certain Changes or Events..................... 11
SECTION 3.09 Absence of Litigation.................................... 11
SECTION 3.10 Employee Benefit Plans, Labor Matters.................... 12
SECTION 3.11 Taxes.................................................... 13
SECTION 3.12 Disclosure............................................... 13
SECTION 3.13 Certain Business Matters................................. 13
SECTION 3.14 Opinion of Financial Advisor............................. 13
SECTION 3.15 Vote Required............................................ 14
SECTION 3.16 Brokers.................................................. 14
SECTION 3.17 Certain Agreements....................................... 14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PARENT SUB........ 15
SECTION 4.01 Organization and Qualification; Subsidiaries............. 15
SECTION 4.02 Certificate of Incorporation and By-Laws................. 15
SECTION 4.03 Capitalization........................................... 15
SECTION 4.04 Authority................................................ 15
SECTION 4.05 No Conflict; Required Filings and Consents............... 16
SECTION 4.06 Permits; Compliance...................................... 16
SECTION 4.07 Absence of Litigation.................................... 17
SECTION 4.08 Ownership of Parent Sub; No Prior Activities............. 17
SECTION 4.09 Brokers.................................................. 17
ARTICLE V COVENANTS....................................................... 17
SECTION 5.01 Affirmative Covenants of the Company..................... 17
SECTION 5.02 Negative Covenants of the Company........................ 18
SECTION 5.03 Access and Information................................... 20
SECTION 5.04 Confidentiality.......................................... 20
SECTION 5.05 Rights Agreement......................................... 20
ARTICLE VI ADDITIONAL AGREEMENTS.......................................... 20
SECTION 6.01 Meeting of Stockholders.................................. 20
</TABLE>
i
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<TABLE>
<C> <S> <C>
SECTION 6.02 Proxy Statement........................................ 21
SECTION 6.03 Board Representation................................... 22
SECTION 6.04 Appropriate Action; Consents; Filings.................. 22
SECTION 6.05 Public Announcements................................... 23
SECTION 6.06 Indemnification of Directors and Officers.............. 23
SECTION 6.07 Obligations of Parent Sub.............................. 24
SECTION 6.08 Supplemental Indentures; Assumption of Certain
Obligations to Issue Company Common Stock............. 24
SECTION 6.09 Employment Agreements and Benefit Plans................ 24
ARTICLE VII CLOSING CONDITIONS.......................................... 25
Conditions to Obligations of Each Party Under This
SECTION 7.01 Agreement............................................. 25
SECTION 7.02 Additional Conditions to Obligations of Parent......... 25
SECTION 7.03 Additional Conditions to Obligations of the Company.... 25
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.......................... 26
SECTION 8.01 Termination............................................ 26
SECTION 8.02 Effect of Termination.................................. 27
SECTION 8.03 Amendment.............................................. 27
SECTION 8.04 Waiver................................................. 27
SECTION 8.05 Fees, Expenses and Other Payments...................... 27
ARTICLE IX GENERAL PROVISIONS........................................... 28
Effectiveness of Representations, Warranties and
SECTION 9.01 Agreements............................................ 28
SECTION 9.02 Notices................................................ 29
SECTION 9.03 Certain Definitions.................................... 29
SECTION 9.04 Conveyance Taxes....................................... 30
SECTION 9.05 Headings............................................... 30
SECTION 9.06 Severability........................................... 30
SECTION 9.07 Entire Agreement....................................... 30
SECTION 9.08 Assignment............................................. 31
SECTION 9.09 Parties in Interest.................................... 31
SECTION 9.10 Failure or Indulgence Not Waiver; Remedies Cumulative.. 31
SECTION 9.11 Governing Law.......................................... 31
SECTION 9.12 Counterparts........................................... 31
</TABLE>
ii
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Amended and Restated Agreement and Plan of Merger dated as of June 10, 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, Parent, Parent Sub and the Company entered into an Agreement and
Plan of Merger, dated as of April 28, 1996 (the "Initial Agreement");
Whereas, the parties herein desire to amend the Initial Agreement and
accordingly the parties agree to amend and restate the Initial Agreement in
its entirety to read as set forth below;
Whereas, the respective Boards of Directors of Parent, Parent Sub and the
Company have each approved the acquisition of the Company on the terms and
subject to the conditions set forth herein;
Whereas, in furtherance of such acquisition, Parent agrees to cause Parent
Sub to make a tender offer to purchase all the issued and outstanding shares
of Common Stock, par value $0.001 per share, of the Company (the "Company
Common Stock"), at a price of $3.00 per share net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth
herein (such tender offer, as it may be amended or supplemented from time to
time as permitted under this Agreement, the "Offer"); and the Board of
Directors of the Company has adopted resolutions approving the Offer and
recommending that the Company's stockholders accept the Offer;
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 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 Offer and the Merger
Section 1.01 The Offer
(a) Sbject to the provisions of this Agreement, as promptly as practicable
(but in no event later than five business days after the date of this
Agreement), Parent Sub shall, and Parent shall cause Parent Sub to, commence,
within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Offer at a cash price of $3.00 per share,
net to the seller in cash, without interest. The obligation of Parent Sub to,
and of Parent to cause Parent Sub to, consummate the Offer and accept for
payment and pay for any shares of Common Stock tendered shall be subject to
the satisfaction of the conditions set forth in Annex I and to the terms and
conditions of this Agreement.
(b) On the date of commencement of the Offer, Parent and Parent Sub shall
file with the Securities and Exchange Commission (the "SEC") with respect to
the Offer a Tender Offer Statement on Schedule l4D-l (as
<PAGE>
amended and supplemented from time to time, the "Schedule 14D-1"), which shall
comply in all material respects with the provisions of applicable federal
securities laws, and shall contain the offer to purchase relating to the Offer
and the form of the related letter of transmittal (which documents, as amended
or supplemented from time to time, are referred to collectively as the "Offer
Documents"). Parent shall deliver copies of the proposed forms of the Schedule
14D-1 and the Offer Documents to the Company within a reasonable time prior to
the commencement of the Offer for review and comment by the Company and its
counsel (who shall provide any comments thereon as soon as practicable).
Parent agrees to provide in writing to the Company and its counsel, promptly
after receipt thereof, any comments that either Parent, Parent Sub or their
counsel may receive from the SEC or its staff with respect to the Schedule
14D-1 or the Offer Documents. Parent and Parent Sub shall promptly correct any
information in the Schedule l4D-l or the Offer Documents that shall become
false or misleading in any material respect, and shall take all steps
necessary to cause the Schedule 14D-1 or the Offer Documents as so corrected
to be filed with the SEC and disseminated to the stockholders of the Company
as and to the extent required by applicable laws.
(c) The Offer shall initially expire 20 business days after the date of its
commencement, unless this Agreement is terminated in accordance with Article
VIII, in which case the Offer (whether or not previously extended in
accordance with the terms hereof) shall expire on such date of termination.
Neither Parent nor Parent Sub shall, without the prior written consent of the
Company, decrease the price per share of Company Common Stock payable in the
Offer, change the form of consideration payable in the Offer, decrease the
number of shares of Company Common Stock sought pursuant to the Offer, change
or impose additional conditions to the Offer or otherwise amend the Offer in
any manner adverse to the Company's stockholders. Notwithstanding the
foregoing, Parent Sub may, without the consent of the Company, extend the
Offer (i) if at the then scheduled expiration date of the Offer any of the
conditions to Parent Sub's obligation to accept for payment and pay for shares
of Company Common Stock set forth in Annex I hereto shall not be satisfied or
waived, until such time as such conditions are satisfied or waived; (ii) for
an aggregate period of not more than ten business days beyond the initial
expiration date of the Offer if all conditions have been satisfied but less
than 90% of the outstanding shares of Company Common Stock have been validly
tendered and not withdrawn (not including shares covered by notices of
guaranteed delivery); and (iii) for any period required by any rule,
regulation, interpretation or position of the SEC or the staff applicable to
the Offer. Assuming the prior satisfaction or waiver of the conditions of the
Offer set forth in Annex I hereto and subject to clauses (ii) and (iii) of the
preceding sentence, Parent Sub shall, and Parent shall cause Parent Sub to,
accept for payment and pay for shares of Company Common Stock validly tendered
and not withdrawn pursuant to the Offer as soon as legally permitted after the
commencement thereof.
(d) Parent shall provide or cause to be provided to Parent Sub on a timely
basis the funds necessary to purchase any shares of Company Common Stock that
Parent Sub becomes obligated to purchase pursuant to the Offer and shall be
liable on a direct and primary basis for the performance by Parent Sub of its
obligations under this Agreement.
Section 1.02 Company Actions.
(a) The Company hereby approves of and consents to the Offer and represents
that (i) the Board of Directors of the Company, at a meeting duly called and
held, has adopted resolutions (A) determining that this Agreement and the
terms of each of the Offer and the Merger are fair to and in the best
interests of the Company and its stockholders, (B) approving the Offer, the
Merger and this Agreement and acknowledging that such approval is effective
for purposes of Section 203 of Delaware Law and (C) recommending acceptance of
the Offer and approval of the Merger and this Agreement by the Company's
stockholders and (ii) Morgan, Stanley & Co. Incorporated ("Morgan Stanley")
has delivered to the Board of Directors of the Company its opinion that the
proposed consideration to be received by the Company's stockholders pursuant
to the Offer and the Merger is fair to such stockholders from a financial
point of view. The Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Board of Directors of the Company
described in the first sentence of this Section 1.02(a) and Morgan Stanley has
consented to inclusion of its opinion in the Schedule 14D-9 (as defined in
Section 1.02(b)).
2
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(b) The Company shall file with the SEC on the date of commencement of the
Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (as amended
and supplemented from time to time, the "Schedule 14D-9") containing such
recommendations of the Board of Directors of the Company with respect to the
Offer and the Merger and shall disseminate the Schedule 14D-9 to stockholders
of the Company as required by Rule 14d-9 promulgated under the Exchange Act.
The Schedule 14D-9 shall comply in all material respects with the provisions
of applicable federal securities laws. The Company shall deliver copies of the
proposed form of the Schedule 14D-9 to Parent within a reasonable time prior
to the filing thereof with the SEC for review and comment by Parent and its
counsel (who shall provide any comments thereon as soon as practicable). The
Company agrees to provide in writing to Parent and its counsel, promptly after
receipt thereof, any comments that the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule l4D-9. The Company shall
promptly correct any information in the Schedule l4D-9 that shall become false
or misleading in any material respect, and shall take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the stockholders of the Company as and to the extent required
by applicable laws.
(c) In connection with the Offer, the Company shall promptly furnish Parent
with (or cause Parent to be furnished with) mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the shares of Company Common Stock as of a
recent date, and of those persons becoming record holders after such date, and
shall furnish Parent with such information and assistance as Parent or its
agents may reasonably request in communicating the Offer to the stockholders
of the Company. Subject to the requirements of applicable law, and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Parent Sub shall, and
shall cause each of their affiliates to, hold in confidence the information
contained in any of such labels, listings and files, use such information only
in connection with the Offer and the Merger, and, if this Agreement is
terminated, deliver to the Company all copies of such information or extracts
therefrom then in their possession or under their control.
Section 1.03 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 1.04), 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 1.04 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 1.05 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 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.
3
<PAGE>
Section 1.06 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 1.07 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
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
an amount in cash, without interest, equal to the price per share of
Company Common Stock paid pursuant to the Offer (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.
(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
4
<PAGE>
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 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.
5
<PAGE>
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 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
(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
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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.
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 the Initial Agreement (the "Company
Disclosure Schedule"), which shall identify exceptions by specific Section
references, the Company hereby (which, for purposes of this Article III, shall
be deemed to be pursuant to the Initial Agreement and as if this Amended and
Restated Agreement had never been executed) 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
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) 3,454,275 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
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(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 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
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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.
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. (S)(S) 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 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
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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 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 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. 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.
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(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 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.
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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 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
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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 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 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.
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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 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 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
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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 the Initial Agreement (the
"Parent Disclosure Schedule"), which shall identify exceptions by specific
Section references, Parent and Parent Sub hereby (which, for purposes of this
Article IV, shall be deemed to be pursuant to the Initial Agreement and as if
this Amended and Restated Agreement had never been executed) 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 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,
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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, 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.
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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-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, from and after the date of the
Initial Agreement and 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;
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
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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 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,
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(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 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 (other than the 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 (other than Parent or any of its subsidiaries) 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
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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;
(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.
If required by applicable law in order to consummate the Merger, the Company
shall, as promptly as practicable following the purchase of the shares of
Company Common Stock in the Offer, 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"). At the Stockholders' Meeting, all of the shares of
Company Common Stock then owned by Parent, Parent Sub or any other subsidiary
of Parent shall be voted to approve the Merger and this Agreement (subject to
applicable law and subject to the right of Parent, Parent Sub or any other
subsidiary of Parent to vote such shares of Company Common Stock as they elect
in the event of a Competing Transaction that is being recommended by the Board
of Directors of the Company in lieu of the Merger). 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
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determined by such directors in good faith after consultation with independent
legal counsel (which may include the Company's regularly engaged legal
counsel).
Section 6.02 Proxy Statement.
(a) If required under applicable law, 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 Proxy Statement has been cleared by the SEC, 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).
If a Proxy Statement is not required to be disseminated to stockholders of
the Company under the federal securities laws in connection with the Merger,
the Company shall prepare and mail to stockholders of the Company, as promptly
as practicable following the purchase of shares of Company Common Stock in the
Offer, such notices and other materials as may be required under the Delaware
Law in connection with the consummation of the Merger. The Company shall give
Parent and its counsel the opportunity to review such notices and other
materials and all amendments and supplements thereto prior to their being
mailed.
(b) The information supplied by the Company for inclusion in any of the
Proxy Statement to be sent to the stockholders of the Company in connection
with the Stockholders' Meeting, the Schedule 14D-1, the Schedule 14D-9 or the
Offer Documents shall not, in the case of the Schedule 14D-1, the Schedule
14D-9 or the Offer Documents (or any amendment thereof or supplement thereto),
at the time filed with the SEC and upon expiration of the Offer, or in the
case of the Proxy Statement, 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 Schedule 14D-1, the Schedule 14D-9, the Offer Documents or
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 any of the Proxy
Statement to be sent to the stockholders of the Company in connection with the
Stockholders' Meeting, the Schedule 14D-1, the Schedule 14D-9 or the Offer
Documents shall not, in the case of the Schedule 14D-1, the Schedule 14D-9, or
the Offer Documents (or any amendment thereof or supplement thereto), at the
time filed with the SEC and upon expiration of the Offer, or in the case of
the Proxy Statement, 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 Schedule 14D-1, the Schedule 14D-9, the Offer Documents or
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
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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.
Section 6.03 Board Representation.
Promptly upon the purchase of shares of Company Common Stock pursuant to the
Offer, Parent Sub shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company
as will give Parent Sub, subject to compliance with Section l4(f) of the
Exchange Act and the rules and regulations promulgated thereunder,
representation on the Board of Directors equal to the product of (a) the total
number of directors on the Board of Directors of the Company and (b) the
percentage that the number of shares of Company Common Stock purchased by
Parent Sub bears to the number of shares of Company Common Stock outstanding,
and the Company shall, upon request by Parent Sub, promptly increase the size
of the Board of Directors and/or exercise its reasonable best efforts to
secure the resignations of such number of directors as is necessary to enable
Parent Sub's designees to be elected to the Board of Directors of the Company
and shall cause Parent Sub's designees to be so elected. The Company shall
take, at its expense, all action required pursuant to Section 14(f) and Rule
14f-1 in order to fulfill its obligations under this Section 6.03 and shall
include in the Schedule 14D-9 or otherwise timely mail to its stockholders
such information with respect to the Company and its officers and directors as
is required by Section 14(f) and Rule 14f-l in order to fulfill its
obligations under this Section 6.03. Parent will supply to the Company in
writing and be solely responsible for any information with respect to itself
and its or Parent Sub's nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-l. In the event that Parent Sub's designees are
elected to the Board of Directors of the Company, until the Effective Time,
the Board of Directors shall have at least one director who is a director on
the date hereof (the "Company Director"). In such event, if the Company
Director is unable to serve for any reason whatsoever, the other directors
shall designate a person to fill such vacancy who shall not be a designee,
stockholder or affiliate of Parent or Parent Sub and such person shall be
deemed to be a Company Director for purposes of this Agreement.
Notwithstanding anything in this Agreement to the contrary, in the event that
Parent Sub's designees are elected to the Board of Directors of the Company,
after the acceptance for payment of shares of Company Common Stock pursuant to
the Offer and prior to the Effective Time, the affirmative vote of the Company
Director shall be required to (a) amend or terminate this Agreement by the
Company, (b) exercise or waive any of the Company's rights, benefits or
remedies hereunder, (c) extend the time for performance of Parent's and Parent
Sub's respective obligations hereunder, (d) take any other action by the Board
of Directors of the Company under or in connection with this Agreement, (e)
amend, repeal or otherwise modify 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, 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 or (f) cancel the Company's current policies
of directors' and officers' liability insurance.
Section 6.04 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
Offer and the Merger, (iii) make all necessary filings, and thereafter make
any other required submissions, with respect to this Agreement, the Offer 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,
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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 6.04 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 or to withdraw from doing business in any jurisdiction or (iv)
to enter into any consent or administrative decree or order.
Section 6.05 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 Offer or the Merger and shall not issue any such press release or make any
such public statement prior to such consultation.
Section 6.06 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
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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 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 6.06 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 6.07 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 6.08 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 6.09 Employment Agreements and Benefit Plans.
(a) 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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(b) In the event that Parent Sub's designees are elected to the Board of
Directors of the Company, after acceptance for payment of shares of Company
Common Stock pursuant to the Offer and prior to the Effective Time, Parent
shall use its reasonable best efforts to cause the Company to honor all
employment agreements, individual severance arrangements, the Retention Plan
and the Company's existing severence policy.
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 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) Minimum Condition. Parent Sub shall have purchased, pursuant to the
Offer a number of shares of Company Common Stock which satisfies the
Minimum Condition (as defined in Annex I hereto).
(b) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the
Company.
(c) 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 transactions contemplated by
this Agreement illegal or otherwise prohibiting consummation of the
transactions contemplated by this Agreement.
(d) 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 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 the
Initial 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 second last paragraph
of Section 3.13 of the Company Disclosure Schedule.
Section 7.03 Additional Conditions to Obligations of the Company.
The obligation of the Company to effect the Merger 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 the Initial Agreement and as of the Effective Time as
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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.
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 Offer shall have expired or
been terminated in accordance with its terms as the result of the failure
of any of the conditions set forth in Annex I hereto without Parent Sub
having purchased any shares of Company Common Stock pursuant to the Offer;
(f) by either Parent or the Company, if the Merger shall not have been
consummated before September 30, 1996;
(g) 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;
(h) by Parent, if (i) the Board of Directors of the Company withdraws,
modifies or changes its recommendation of this Agreement, the Offer 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 (other
than the 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 (other than Parent or its subsidiaries)
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
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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
(i) by the Company if (i) 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; (ii) the Offer shall not have been
timely commenced in accordance with Section 1.01; or (iii) the Offer shall
have expired or have been terminated without any shares of Company Common
Stock being purchased thereunder or if no shares of Company Common Stock
shall have been purchased thereunder by September 30, 1996 unless failure
to so purchase shares of Company Common Stock has been caused by or results
from a breach by the Company of this Agreement.
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 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.
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(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(i) (i) 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 Offer or 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, or
(II) 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
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) In the event that Parent Sub fails to purchase Company Common Stock in
the Offer on account of the failure of the conditions set forth in sub-section
(ii) of the introductory paragraph of Annex I, and paragraphs (a) or (b) of
Annex I hereto, 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 6.06 shall survive the Effective Time and those set forth
in Sections 5.04, 8.02, 8.05 and Article IX hereof shall survive termination.
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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:
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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(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 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.
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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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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.
/s/ Mary M. McDonald
By: _________________________________
Name: Mary M. McDonald
Title: Senior Vice President and
General Cousel
Merck-Medco Managed Care, Inc.
/s/ Bert I. Weinstein
By: _________________________________
Name: Bert I. Weinstein
Title: Senior Vice President and
Co-General Counsel
S Acquisition Corp.
/s/ Bert I. Weinstein
By: _________________________________
Name: Bert I. Weinstein
Title: Vice President
Systemed Inc.
/s/ Sam Westover
By: _________________________________
Name: Sam Westover
Title: President and Chief
Executive Officer
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ANNEX I
TO
AGREEMENT AND PLAN OF MERGER
Conditions to the Offer. Notwithstanding any other term of the Offer or this
Agreement, Parent Sub shall not be required to accept for payment or pay for,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) of the Exchange Act, any shares of Company Common Stock not
theretofore accepted for payment or paid for and may terminate the Offer
unless (i) there shall have been validly tendered and not withdrawn prior to
the expiration of the Offer that number of shares of Company Common Stock
which would represent at least a majority of the outstanding shares of Company
Common Stock on a fully diluted basis (the "Minimum Condition") and (ii) any
waiting period under the HSR Act applicable to the purchase of shares of
Company Common Stock pursuant to the Offer shall have expired or been
terminated. Furthermore, notwithstanding any other term of the Offer or this
Agreement, Parent Sub shall not be required to accept for payment or, subject
as aforesaid, to pay for any shares of Company Common Stock not theretofore
accepted for payment or paid for, and may terminate the Offer if, immediately
prior to the acceptance of such shares of Company Common Stock for payment or
the payment therefor, any of the following conditions exist or shall occur and
remain in effect:
(a) any action, suit, or proceeding by any Governmental Entity shall be
threatened or pending (i) challenging the consummation of any of the
transactions contemplated by this Agreement, (ii) seeking rescission of the
transactions contemplated by this Agreement 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 this clause (a) shall be in effect); or
(b) there shall have been enacted, entered, enforced or deemed applicable
to the Offer or the Merger, by any state, federal or foreign government or
governmental authority or by any court, domestic or foreign, any statute,
rule, regulation, judgment, decree, order or injunction, that prohibits or
makes illegal the making or consummation of the Offer or the Merger; or
(c) the Company and Parent Sub shall have reached an agreement or
understanding that the Offer or this Agreement be terminated or this
Agreement shall have been terminated in accordance with its terms; or
(d) 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, any of the representations and warranties
of the Company set forth in this Agreement, shall not have been true and
correct in all respects when made or shall thereafter have ceased to be
true and correct as if made as of such later time (other than
representations and warranties made as of a specific date which 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); or
(e) the Company shall not have performed or complied with any agreement
or covenants required by this Agreement to be performed or complied with by
it on or prior to the scheduled expiration date of the Offer, except where
the failure to so comply would not have a Company Material Adverse Effect.
The Company shall have not performed or complied with its obligations under
the second last paragraph of Section 3.13 of the Company Disclosure
Schedule; or
(f) any consent, approval or authorization legally required to be
obtained to consummate the Offer shall not have been obtained from or made
with all required Governmental Entities; or
(g) the Company's Board of Directors shall have withdrawn, modified or
amended its recommendation of the Offer in any manner adverse to Parent and
Parent Sub, or shall have recommended acceptance of any Competing
Transaction or shall have resolved to do any of the foregoing; or
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(h) a tender offer or exchange offer (other than the 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;
which, in the reasonable judgment of Parent and Parent Sub, in any case, and
regardless of the circumstances (including any action or inaction by Parent or
Parent Sub or any of their affiliates other than any action or inaction
constituting a material breach by Parent or Parent Sub of their obligations
under this Agreement) giving rise to any such condition, makes it inadvisable
to proceed with the Offer or with such acceptance for payment, purchase of, or
payment for the shares of Company Common Stock.
The foregoing conditions are for the sole benefit of Parent Sub and may be
asserted by Parent Sub regardless of the circumstances giving rise to any such
condition and may be waived by Parent Sub, in whole or in part, at any time
and from time to time, in the sole discretion of Parent Sub. The failure by
Parent Sub at any time to exercise any of the foregoing rights will not be
deemed a waiver of any right, the waiver of such right with respect to any
particular facts or circumstances shall not be deemed a waiver with respect to
any other facts or circumstances, and each right will be deemed an ongoing
right which may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered shares of Company Common Stock not theretofore accepted for payment
shall forthwith be returned by the Paying Agent to the tendering stockholders.
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