<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
September 24, 1997
CHEMED CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-8351 31-0791746
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification
incorporation) Number)
2600 Chemed Center, 255 East 5th Street, Cincinnati, OH 45202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(513) 762-6900
Not applicable
(Former name or former address, if changed since last report)
Page 1 of 9
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 24, 1997, OCR Holding Company ("OCR"), a wholly owned
subsidiary of Chemed Corporation (the "Company") completed the sale of all of
the issued and outstanding shares of capital stock of its wholly owned
businesses comprising the Omnia Group ("Omnia") to Banta Corporation ("Banta").
The Omnia Group manufactures medical and dental supplies and distributes them to
dealers throughout the United States. Products include paper, cotton, gauze
items and other supplies used by the primary, acute and long-term care markets.
Banta is a leading competitor in the single-use healthcare products market.
There is no material relationship between Banta and the Company, OCR, any of the
Company's affiliates, any Company director or officer or any associate of any
such directors or officers.
Pursuant to the agreement with Banta, the Company received aggregate
consideration of $52.1 million (before estimated expenses and income taxes)
consisting of (1) an immediate cash payment of $50 million which was paid at
closing and (2) deferred payments of $2.1 million (payable in annual
installments of $350,000 per year commencing on September 30, 2000). These
deferred payments will be recorded at their net present value.
On August 11, 1997, National Sanitary Supply Company ("National") ,
Unisource Worldwide, Inc. ("Unisource") and TFBD, Inc. ("Merger Subsidiary") a
wholly owned subsidiary of Unisource, entered into an Agreement and Plan of
Merger (the "Merger Agreement") whereby the Merger Subsidiary would be merged
into National, the Merger Subsidiary would cease its separate existence and
National would emerge as the surviving corporation and a wholly owned subsidiary
of Unisource. Concurrent with the execution of the Merger Agreement, the
Company, owning 5,144,551 of the issued and outstanding shares of National which
comprises an equity ownership interest in excess of 80%, delivered its written
consent approving the merger transaction. Such consent constitutes the only
action necessary by shareholders of National to effect the merger under Delaware
law. National is the largest specialized distributor of sanitary maintenance
supplies and paper supplies in the United States. There exists no material
relationship between Unisource or the Merger Company and the Company, National,
any of the Company's affiliates, any Company director or officer or any
associate of any such directors or officers.
On September 30, 1997, the sale of National was completed. In exchange
for its surrender of National shares, the Company received cash consideration of
$120.2 million (before estimated expenses and income taxes). In addition, the
Merger Agreement required that intercompany borrowings owed by National to the
Company be repaid (approximately $18 million).
Page 2 of 9
<PAGE> 3
The Company anticipates that a portion of the cash proceeds from these two
transactions will be used to retire borrowings under uncommitted lines of credit
and the amended revolving credit agreement with Bank of America National Trust
and Savings Association. By September 30, 1997 the Company had utilized
$72,000,000 of such proceeds to retire borrowings. The balance of the proceeds
will be invested in marketable securities in the short term and will be
available for the funding of future acquisitions and general corporate purposes.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(b) PRO FORMA CONDENSED FINANCIAL INFORMATION (UNAUDITED) The following
assumptions have been made in preparing the unaudited Pro Forma
Condensed Consolidated Statements of Income of Chemed Corporation and
Subsidiary Companies ("Chemed") for the six months ended June 30, 1997
and 1996 and for the year ended December 31, 1996 and the unaudited Pro
Forma Condensed Consolidated Balance Sheet of the Company as of June 30,
1997:
(i) For purposes of preparing the unaudited Pro Forma Condensed
Consolidated Statements of Income, Chemed's dispositions of
National and Omnia were assumed to have occurred at the
beginning of each fiscal period presented.
(ii) For purposes of preparing the unaudited Pro Forma Condensed
Balance Sheet, Chemed's aforementioned dispositions of
National and Omnia were assumed to be consummated on the
balance sheet date.
(iii) As discussed in Item 2, an intended use of the cash proceeds
from these transactions is to retire portions of the Company's
debt. At June 30, 1997, the Company had borrowings totalling
$77,000,000 under these agreements.
Accordingly, the Unaudited Pro Forma Condensed Consolidated
Balance Sheet at June 30, 1997 reflects the financial position
of Chemed after giving effect to the retirement of $5 million
of borrowings under an
Page 3 of 9
<PAGE> 4
uncommitted line of credit with Sanwa Bank, Ltd. and $72
million of long-term debt under the amended revolving credit
agreement with Bank of America National Trust and Savings
Association. These borrowings had a weighted average interest
rate of 6.01% at June 30, 1997.
(iv) The pro forma earnings have been adjusted to reflect the
interest savings that would have resulted had the borrowings
under the Company's uncommitted lines of credit and the
amended revolving credit agreement been retired at the
beginning of each fiscal period presented.
(v) The unaudited pro forma condensed consolidated financial
statements presented herein are shown for illustrative
purposes only and are not necessarily indicative of the future
financial position or future results of operations of Chemed,
or of the financial position or results of operations of
Chemed that would have actually occurred had the transactions
been in effect as of the date or for the periods presented.
(vi) The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the historical
financial statements and related notes of Chemed.
The unaudited pro forma condensed financial statements of Chemed follow on the
next page:
Page 4 of 9
<PAGE> 5
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(in thousands)
<TABLE>
<CAPTION>
Pro Forma Adjustments - Add/(Deduct)
------------------------------------
Pro
Historical National(a) Omnia (a) Other Forma
----------- ----------- --------- ----- -----
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 12,361 $ 20,395 $ (331) $ 83,092(b) $ 115,517
Accounts receivable, less allowances 85,984 (36,080) (12,018) -- 37,886
Inventories 50,778 (27,049) (15,139) -- 8,590
Statutory deposits 16,980 -- -- -- 16,980
Other current assets 37,878 (4,016) (1,232) -- 32,630
--------- --------- --------- --------- ---------
Total current assets 203,981 (46,750) (28,720) 83,092 211,603
--------- --------- --------- --------- ---------
Other investments 43,097 -- -- -- 43,097
Properties and equipment, net 90,529 (23,055) (20,264) -- 47,210
Identifiable intangible assets, net 18,452 -- (4,741) -- 13,711
Goodwill, net 189,213 (25,679) (22,543) -- 140,991
Other assets 17,741 (1,022) (252) 1,457(c) 17,924
--------- --------- --------- --------- ---------
Total assets $ 563,013 $ (96,506) $ (76,520) $ 84,549 $ 474,536
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 26,312 $ (16,055) $ (1,956) $ -- $ 8,301
Bank notes and loans payable 5,110 -- -- (5,000)(d) 110
Current portion of long-term debt 15,689 (19) -- -- 15,670
Income taxes 5,345 (855) (1,120) 29,272(e) 32,642
Deferred contract revenue 25,606 -- -- -- 25,606
Other current liabilities 46,450 (10,312) (3,161) -- 32,977
--------- --------- --------- --------- ---------
Total current liabilities 124,512 (27,241) (6,237) 24,272 115,306
--------- --------- --------- --------- ---------
Deferred income taxes 4,575 (893) (3,138) -- 544
Long-term debt 164,026 (24) -- (72,000)(d) 92,002
Other liabilities and deferred income 39,874 (1,129) (1) -- 38,744
Minority interest 12,086 (12,086) -- -- --
--------- --------- --------- --------- ---------
Total liabilities 345,073 (41,373) (9,376) (47,728) 246,596
--------- --------- --------- --------- ---------
Total stockholders' equity 217,940 (55,133) (67,144) 132,277 227,940
--------- --------- --------- --------- ---------
Total liabilities and
stockholders' equity $ 563,013 $ (96,506) $ (76,520) $ 84,549 $ 474,536
========= ========= ========= ========= =========
</TABLE>
(a) To eliminate the assets and liabilities related to National Sanitary Supply
Company and the Omnia Group. National's cash balance reflects the repayment
of the National intercompany balances due to Chemed.
(b) To record the proceeds from the sale of National, the proceeds from the sale
of Omnia, and the subsequent retirement of borrowings. Proceeds are net of
estimated expenses and costs assocated with theses dispositions.
(c) To record deferred payments to be received by the Company.
(d) To record the retirement of borrowings under the amended revolving credit
agreement and under uncommitted lines of credit.
(e) To record income tax liabilities related to the transactions.
Page 5 of 9
<PAGE> 6
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30,
1997 (in thousands except per share data)
<TABLE>
<CAPTION>
Pro Forma Adjustments Add/ (Deduct)
-----------------------------------
Pro
Historical National(a) Omnia(b) Other Forma
---------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C>
CONTINUING OPERATIONS
Sales $ 196,099 $(152,702) $ (34,891) $ -- $ 8,506
Service revenues 155,170 -- -- -- 155,170
--------- --------- --------- --------- ---------
Total sales and service revenues 351,269 (152,702) (34,891) -- 163,676
--------- --------- --------- --------- ---------
Cost of goods sold 132,946 (102,219) (24,757) -- 5,970
Cost of services provided 96,337 -- -- -- 96,337
Selling and marketing expenses 49,989 (32,665) (5,320) 126(c) 12,130
General and administrative expenses 50,892 (12,315) (2,403) 115(c) 36,289
Depreciation 6,630 (1,674) (840) -- 4,116
--------- --------- --------- --------- ---------
Total costs and expenses 336,794 (148,873) (33,320) 241 154,842
--------- --------- --------- --------- ---------
Income from operations 14,475 (3,829) (1,571) (241) 8,834
Interest expense (5,802) 6 3 2,600(c,d) (3,193)
Other income, net 14,536(e) 667 (329) -- 14,874(e)
--------- --------- --------- --------- ---------
Income before income taxes and
minority interest 23,209(e) (3,156) (1,897) 2,359 20,515(e)
Income taxes (8,697) 1,314 548 (941) (7,776)
Minority interest in earnings of
subsidiaries (331) 331 -- -- --
--------- --------- --------- --------- ---------
Income from continuing operations $ 14,181(e) $ (1,511) $ (1,349) $ 1,418 $ 12,739(e)
========= ========= ========= ========= =========
EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.42(e) $ 1.27(e)
========= =========
Average number of shares outstanding 10,018 10,018
========= =========
</TABLE>
(a) To eliminate the earnings of National Sanitary Supply for the six months
ended June 30, 1997.
(b) To eliminate the earnings of the Omnia Group for the six months ended June
30, 1997.
(c) To reclassify compensation costs and interest expense to reflect the
withdrawal of National and Omnia employees from continuing participation in
the Company's ESOPs.
(d) To reflect interest savings that would have resulted from the retirement of
borrowings under the Company's uncommitted lines of credit and the amended
revolving credit agreement.
(e) Amounts include pretax gains aggregating $12,235,000 ($7,652,000 aftertax or
$.76 per share) from the sales of investments during the period.
Page 6 of 9
<PAGE> 7
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30,
1996 (in thousands except per share data)
<TABLE>
<CAPTION>
Pro Forma Adjustments Add/ (Deduct)
-----------------------------------
Pro
Historical National(a) Omnia(b) Other Forma
---------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C>
CONTINUING OPERATIONS
Sales $ 199,642 $(154,487) $ (36,781) $ -- $ 8,374
Service revenues 138,290 -- -- -- 138,290
--------- --------- --------- --------- ---------
Total sales and service revenues 337,932 (154,487) (36,781) -- 146,664
--------- --------- --------- --------- ---------
Cost of goods sold 135,790 (104,417) (26,178) -- 5,195
Cost of services provided 84,289 -- -- -- 84,289
Selling and marketing expenses 48,897 (32,118) (5,439) 153(c) 11,493
General and administrative expenses 47,913 (11,824) (2,019) 198(c) 34,268
Depreciation 6,002 (1,666) (763) -- 3,573
--------- --------- --------- --------- ---------
Total costs and expenses 322,891 (150,025) (34,399) 351 138,818
--------- --------- --------- --------- ---------
Income from operations 15,041 (4,462) (2,382) (351) 7,846
Interest expense (3,831) 5 12 1,123(c,d) (2,691)
Other income, net 21,479(e) 689 (70) -- 22,098(e)
--------- --------- --------- --------- ---------
Income before income taxes and
minority interest 32,689(e) (3,768) (2,440) 772 27,253(e)
Income taxes (12,211) 1,615 750 (308) (10,154)
Minority interest in earnings of
subsidiaries (2,593) 350 -- -- (2,243)
--------- --------- --------- --------- ---------
Income from continuing operations $ 17,885(e) $ (1,803) $ (1,690) $ 464 $ 14,856(e)
========= ========= ========= ========= =========
EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.82(e) $ 1.51(e)
========= =========
Average number of shares outstanding 9,852 9,852
========= =========
</TABLE>
(a) To eliminate the earnings of National Sanitary Supply for the six months
ended June 30, 1996.
(b) To eliminate the earnings of the Omnia Group for the six months ended June
30, 1996.
(c) To reclassify compensation costs and interest expense to reflect the
withdrawal of National and Omnia employees from continuing participation in
the Company's ESOPs.
(d) To reflect interest savings that would have resulted from the retirement of
borrowings under the Company's uncommitted lines of credit and the amended
revolving credit agreement.
(e) Amounts include pretax gains aggregating $17,431,000 ($10,919,000 aftertax
or $1.11 per share) from the sales of investments during the period.
Page 7 of 9
<PAGE> 8
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(in thousands except per share data)
<TABLE>
<CAPTION>
Pro Forma Adjustments Add/ (Deduct)
-----------------------------------
Pro
Historical National(a) Omnia(b) Other Forma
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
CONTINUING OPERATIONS
Sales $ 399,776 $(310,125) $ (72,479) $ -- $ 17,172
Service revenues 284,041 -- -- -- 284,041
--------- --------- --------- --------- ---------
Total sales and service revenues 683,817 (310,125) (72,479) -- 301,213
--------- --------- --------- --------- ---------
Cost of goods sold 271,885 (207,851) (52,659) -- 11,375
Cost of services provided 171,397 -- -- -- 171,397
Selling and marketing expenses 99,038 (64,948) (11,010) 303(c) 23,383
General and administrative expenses 98,155 (23,985) (4,330) 383(c) 70,223
Depreciation 11,960 (3,353) (1,254) -- 7,353
--------- --------- --------- --------- ---------
Total costs and expenses 652,435 (300,137) (69,253) 686 283,731
--------- --------- --------- --------- ---------
Income from operations 31,382 (9,988) (3,226) (686) 17,482
Interest expense (8,950) (4) -- 3,391(c,d) (5,563)
Other income, net 34,953(e) 1,350 (234) -- 36,069(e)
--------- --------- --------- --------- ---------
Income before income taxes and
minority interest 57,385(e) (8,642) (3,460) 2,705 47,988(e)
Income taxes (21,866) 3,633 1,031 (1,079) (18,281)
Minority interest in earnings of
subsidiaries (3,791) 827 -- -- (2,964)
--------- --------- --------- --------- ---------
Income from continuing operations $ 31,728(e) $ (4,182) $ (2,429) $ 1,626 $ 26,743(e)
========= ========= ========= ========= =========
EARNINGS PER COMMON SHARE
Income from continuing operations $ 3.23(e) $ 2.72(e)
========= =========
Average number of shares outstanding 9,836 9,836
========= =========
</TABLE>
(a) To eliminate the earnings of National Sanitary Supply for the year ended
December 31, 1996.
(b) To eliminate the earnings of the Omnia Group for the year ended December 31,
1996.
(c) To reclassify compensation costs and interest expense to reflect the
withdrawal of National and Omnia employees from continuing participation in
the Company's ESOPs.
(d) To reflect interest savings that would have resulted from the retirement of
borrowings under the Company's uncommitted lines of credit and the amended
revolving credit agreement.
(e) Amounts include pretax gains of $28,166,000 ($17,731,000 aftertax or $1.80
per share) from the sales of investments during the period.
Page 8 of 9
<PAGE> 9
(c) EXHIBITS
SK 601
Ref. No. Description
- -------- ----------------------------------------------------------
2.1 Agreement and Plan of Merger dated as of August 11, 1997 among National
Sanitary Supply Company, Unisource Worldwide, Inc. and TFBD, Inc.
("Merger Agreement"). Pursuant to Paragraph 229.601(b)(2) of Regulation
S-K of the Securities Act of 1933, the Registrant has omitted the
exhibits and schedules to the Agreement. A description of the schedules
is included in the Amended Disclosure Schedule furnished as Exhibit
2.2. The Registrant hereby agrees to furnish supplementally to the
Securities and Exchange Commission upon request a copy of any omitted
schedule, or exhibit.
2.2 Amended Disclosure Schedules to Merger Agreement
2.3 Stock Purchase Agreement By and Among Banta Corporation, Chemed
Corporation and OCR Holding Company dated September 24, 1997. Pursuant
to Paragraph 229.601(b)(2) of Regulation S-K of the Securities Act of
1933, the Registrant has omitted the exhibits and schedules to the
Agreement. A description of the schedules is included within the
agreement. The Registrant hereby agrees to furnish supplementally to
the Securities and Exchange Commission upon request a copy of any
omitted schedule, or exhibit.
99.1 Press release, dated September 25, 1997
99.2 Press release, dated September 30, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHEMED CORPORATION
BY: Arthur V. Tucker, Jr.
----------------------
Its: Vice President & Controller
---------------------------
Dated: October 9, 1997
------------------
Page 9 of 9
<PAGE> 1
Exhibit 2.1
ANNEX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF
AUGUST 11, 1997
AMONG
NATIONAL SANITARY SUPPLY COMPANY,
UNISOURCE WORLDWIDE, INC.
AND
TFBD, INC.
<PAGE> 2
TABLE OF CONTENTS(1)
------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
THE MERGER
SECTION 1.01. The Merger............................................................. A-1
SECTION 1.02. Conversion of Shares................................................... A-2
SECTION 1.03. Surrender and Payment.................................................. A-2
SECTION 1.04. Dissenting Shares...................................................... A-3
SECTION 1.05. Stock Options.......................................................... A-3
SECTION 1.06. Lost Certificates...................................................... A-3
SECTION 1.07. Adjustments............................................................ A-3
ARTICLE 2
THE SURVIVING CORPORATION
SECTION 2.01. Certificate of Incorporation........................................... A-4
SECTION 2.02. Bylaws................................................................. A-4
SECTION 2.03. Directors and Officers................................................. A-4
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Corporate Existence and Power.......................................... A-4
SECTION 3.02. Corporate Authorization................................................ A-4
SECTION 3.03. Governmental Authorization............................................. A-4
SECTION 3.04. Non-contravention...................................................... A-4
SECTION 3.05. Capitalization......................................................... A-5
SECTION 3.06. Subsidiaries........................................................... A-5
SECTION 3.07. SEC Filings............................................................ A-5
SECTION 3.08. Financial Statements................................................... A-6
SECTION 3.09. Disclosure Documents................................................... A-6
SECTION 3.10. Absence of Certain Changes............................................. A-6
SECTION 3.11. No Undisclosed Material Liabilities.................................... A-7
SECTION 3.12. Litigation............................................................. A-7
SECTION 3.13. Taxes.................................................................. A-7
SECTION 3.14. ERISA.................................................................. A-8
SECTION 3.15. Compliance with Laws................................................... A-10
SECTION 3.16. Finders' Fees.......................................................... A-10
SECTION 3.17. Other Information...................................................... A-10
SECTION 3.18. Environmental Matters.................................................. A-10
SECTION 3.19. Vote Required.......................................................... A-11
SECTION 3.20. Anti-Takeover Plan; State Takeover Statutes............................ A-11
SECTION 3.21. Intercompany Accounts.................................................. A-11
SECTION 3.22. Material Contracts..................................................... A-11
SECTION 3.23. Properties............................................................. A-12
SECTION 3.24. Products............................................................... A-13
SECTION 3.25. Patents and Other Proprietary Rights................................... A-13
SECTION 3.26. Insurance Coverage..................................................... A-14
SECTION 3.27. Licenses and Permits................................................... A-14
SECTION 3.28. Inventories............................................................ A-14
SECTION 3.29. Receivables............................................................ A-14
- ---------------
(1) The Table of Contents is not a part of this Agreement.
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 3.30. Employees.............................................................. A-15
SECTION 3.31. Labor Matters.......................................................... A-15
SECTION 3.32. Required and Other Consents............................................ A-15
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 4.01. Corporate Existence and Power.......................................... A-15
SECTION 4.02. Corporate Authorization................................................ A-15
SECTION 4.03. Governmental Authorization............................................. A-15
SECTION 4.04. Non-contravention...................................................... A-16
SECTION 4.05. Disclosure Documents................................................... A-16
SECTION 4.06. Finders' Fees.......................................................... A-16
ARTICLE 5
COVENANTS OF THE COMPANY
SECTION 5.01. Conduct of the Company................................................. A-16
SECTION 5.02. Company Information Statement.......................................... A-17
SECTION 5.03. Access to Information.................................................. A-17
SECTION 5.04. Other Offers........................................................... A-17
SECTION 5.05. Notices of Certain Events.............................................. A-18
SECTION 5.06. State Takeover Laws.................................................... A-18
SECTION 5.07. Resignations........................................................... A-18
SECTION 5.08. Additional SEC Filings................................................. A-18
ARTICLE 6
COVENANTS OF BUYER
SECTION 6.01. Confidentiality........................................................ A-18
SECTION 6.02. Obligations of Merger Subsidiary....................................... A-19
ARTICLE 7
COVENANTS OF BUYER AND THE COMPANY
SECTION 7.01. Best Efforts........................................................... A-19
SECTION 7.02. Certain Filings........................................................ A-19
SECTION 7.03. Public Announcements................................................... A-19
SECTION 7.04. Further Assurances..................................................... A-19
SECTION 7.05. Confidentiality Agreement.............................................. A-19
SECTION 7.06. Completion of Due Diligence and Amended Disclosure Letter.............. A-19
ARTICLE 8
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party............................ A-20
SECTION 8.02. Conditions to the Obligations of Buyer and Merger Subsidiary........... A-20
SECTION 8.03. Conditions to the Obligations of the Company........................... A-21
ARTICLE 9
TERMINATION
SECTION 9.01. Termination............................................................ A-21
SECTION 9.02. Effect of Termination.................................................. A-22
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices............................................................... A-22
SECTION 10.02. Survival of Representations and Warranties and Agreements............. A-22
SECTION 10.03. Amendments; No Waivers................................................ A-23
SECTION 10.04. Expenses.............................................................. A-23
SECTION 10.05. Successors and Assigns................................................ A-23
SECTION 10.06. Governing Law......................................................... A-23
SECTION 10.07. Jurisdiction.......................................................... A-23
SECTION 10.08. Waiver of Jury Trial.................................................. A-23
SECTION 10.09. Counterparts; Effectiveness; Third Party Beneficiaries................ A-24
SECTION 10.10. Severability.......................................................... A-24
SECTION 10.11. Specific Performance.................................................. A-24
SECTION 10.12. Entire Agreement...................................................... A-24
ARTICLE 11
DEFINITIONS
SECTION 11.01. Definitions........................................................... A-24
EXHIBITS
Exhibit A -- Indemnity Agreement
Exhibit B -- Tax Matters Agreement
</TABLE>
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of August 11, 1997 among NATIONAL
SANITARY SUPPLY COMPANY, a Delaware corporation (the "Company"), UNISOURCE
WORLDWIDE, INC., a Delaware corporation ("BUYER"), and TFBD, INC., a Delaware
corporation and a wholly owned subsidiary of Buyer ("MERGER SUBSIDIARY").
WHEREAS, the Board of Directors of each of Buyer, the Company and Merger
Subsidiary have determined that it is advisable and in the best interests of
their respective stockholders to engage in the transactions contemplated hereby;
and
WHEREAS, the Board of Directors of the Company has approved the merger (the
"MERGER") of the Merger Subsidiary with and into the Company in accordance with
the terms of this Agreement and the General Corporation Law of the State of
Delaware (the "DELAWARE LAW") and other applicable law; and
WHEREAS, this Agreement and the Merger shall be approved by the
stockholders of the Company for purposes of Delaware Law at such time as the
Company is in receipt of written consents approving this Agreement and the
Merger executed by the holders of that number of shares of common stock, par
value $1.00 per share, of the Company (each, a "SHARE") representing the right
to cast a majority of the votes entitled to be cast at a meeting to consider the
Agreement and the Merger; and
WHEREAS, Chemed Corporation, a Delaware corporation ("CHEMED"), owns in
excess of 80% of the issued and outstanding Shares and concurrently with the
execution of this Agreement is delivering its written consent approving this
Agreement and the Merger as permitted by the certificate of incorporation and
bylaws of the Company and Delaware Law; and
WHEREAS, such consent constitutes the only action necessary by stockholders
of the Company required in order to authorize this Agreement and the Merger
under the Company's certificate of incorporation and bylaws and Delaware Law;
and
WHEREAS, Chemed, as an inducement to Buyer and Merger Subsidiary to enter
into the transactions contemplated hereby, is contemporaneously herewith
entering into the Indemnity Agreement and the Tax Matters Agreement (each as
defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.01. The Merger. (a) At the Effective Time (as defined below),
Merger Subsidiary shall be merged with and into the Company in accordance with
Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease,
and the Company shall be the surviving corporation (the "SURVIVING
CORPORATION").
(b) As soon as practicable after the later of (i) satisfaction or waiver of
all conditions to the Merger and (ii) the 20th calendar day after the Company
Information Statement (as defined below) is first sent or given to the
stockholders of the Company, the Company and Merger Subsidiary will file a
certificate of merger with the Secretary of State of the State of Delaware and
make all other filings or recordings required by Delaware Law in connection with
the Merger. The Merger shall become effective at such time as the certificate of
merger is duly filed with the Secretary of State of the State of Delaware or at
such later time as is specified in the certificate of merger (the "EFFECTIVE
TIME").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities and duties of the Company and Merger
Subsidiary, all as provided under Delaware Law.
A-1
<PAGE> 6
SECTION 1.02. Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned by Buyer
or any subsidiary of Buyer immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto;
(b) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become
one share of common stock of the Surviving Corporation with the same
rights, powers and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation; and
(c) each Share outstanding immediately prior to the Effective Time
shall, except as otherwise provided in Section 1.02(a) or as provided in
Section 1.04 with respect to Shares as to which appraisal rights have been
exercised, be converted into the right to receive $21.00 in cash, without
interest (the "MERGER CONSIDERATION").
SECTION 1.03. Surrender and Payment. (a) Prior to the Effective Time, Buyer
shall appoint an agent (the "EXCHANGE AGENT") for the purpose of exchanging
certificates representing Shares for the Merger Consideration. Buyer will make
available to the Exchange Agent, in such amounts as may be needed from time to
time, the Merger Consideration to be paid in respect of the Shares. Promptly
after the Effective Time, Buyer will send, or will cause the Exchange Agent to
send, to each holder of Shares at the Effective Time a letter of transmittal for
use in such exchange (which shall specify that the delivery shall be effected,
and risk of loss and title shall pass, only upon proper delivery of the
certificates representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted into a right to receive
the Merger Consideration, upon surrender to the Exchange Agent of a certificate
or certificates representing such Shares, together with a properly completed
letter of transmittal covering such Shares, will be entitled to receive the
Merger Consideration payable in respect of such Shares. From and after the
Effective Time, all shares which have been so converted shall no longer be
outstanding and shall automatically be canceled and retired and each such
certificate shall, after the Effective Time, represent for all purposes, only
the right to receive such Merger Consideration. From and after the Effective
Time, the holders of Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares except as otherwise
provided in this Agreement or by applicable law. All cash paid upon the
surrender of certificates in accordance with the terms of this Section 1.03
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the Shares previously represented by such certificates.
(c) If any portion of the Merger Consideration is to be paid to a Person
(as defined below) other than the registered holder of the Shares represented by
the certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a Person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. For purposes of
this Agreement, "PERSON" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(d) After the Effective Time, the stock transfer books of the Company shall
be closed and there shall be no further registration of transfers of Shares. If,
after the Effective Time, certificates representing Shares are presented to the
Surviving Corporation, they shall be canceled and exchanged for the
consideration provided for, and in accordance with the procedures set forth, in
this Article 1.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 1.03(a) that remains unclaimed by the holders of
Shares twelve months after the Effective Time shall be returned to Buyer, upon
demand, and any such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section prior to that time shall
thereafter look only to Buyer for payment of the Merger Consideration in respect
of his Shares. Notwithstanding the foregoing, Buyer shall not
A-2
<PAGE> 7
be liable to any holder of Shares for any amount paid to a public official
pursuant to applicable abandoned property laws. Any amounts remaining unclaimed
by holders of Shares two years after the Effective Time (or such earlier date
immediately prior to such time as such amounts would otherwise escheat to or
become property of any governmental entity) shall, to the extent permitted by
applicable law, become the property of Buyer free and clear of any claims or
interest of any Person previously entitled thereto.
(f) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 1.03(a) to pay for Shares for which appraisal rights
have been perfected shall be returned to Buyer, upon demand.
SECTION 1.04. Dissenting Shares. Notwithstanding Section 1.02, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Delaware Law shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses his right to appraisal. If
after the Effective Time such holder fails to perfect or withdraws or loses his
right to appraisal, such Shares shall be treated as if they had been converted
as of the Effective Time into a right to receive the Merger Consideration. The
Company shall give Buyer prompt written notice of any demands received by the
Company for appraisal of Shares, and Buyer shall have the right to participate
in all negotiations and proceedings with respect to such demands. The Company
shall not, except with the prior written consent of Buyer, make any payment with
respect to, or settle or offer to settle, any such demands.
SECTION 1.05. Stock Options. (a) At or immediately prior to the Effective
Time, each outstanding employee stock option to purchase Shares granted under
any employee stock option or compensation plan or arrangement of the Company
shall be canceled, and each holder of any such option, whether or not then
vested or exercisable, shall be paid by the Company promptly after the Effective
Time for each such option an amount determined by multiplying (i) the excess, if
any, of the Merger Consideration over the applicable exercise price of such
option by (ii) the number of Shares such holder could have purchased (assuming
full vesting of all options) had such holder exercised such option in full
immediately prior to the Effective Time, less any taxes required to be withheld
by the Company with respect thereto.
(b) Prior to the Effective Time, the Company shall (i) obtain any consents
from holders of options to purchase Shares granted under the Company's stock
option or compensation plans or arrangements and (ii) make any amendments to the
terms of such stock option or compensation plans or arrangements that, in the
case of either clauses 1.05(b)(i) or 1.05(b)(ii), are necessary to give effect
to the transactions contemplated by Section 1.05(a). Notwithstanding any other
provision of this Section, payment may be withheld in respect of any employee
stock option until necessary consents are obtained.
SECTION 1.06. Lost Certificates. If any certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the holder
claiming such certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such holder of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
certificate the Merger Consideration to be paid in respect of the Shares
represented by such certificate as contemplated by this Article.
SECTION 1.07. Adjustments. If at any time during the period between the
date of this Agreement and the Effective Time, any change in the outstanding
Shares shall occur, including by reason of any reclassification,
recapitalization, stock dividend, stock split or combination, exchange or
readjustment of Shares, or any stock dividend thereon with the record date
during such period, the price per share to be paid to holders of Shares in the
Merger shall be appropriately adjusted.
A-3
<PAGE> 8
ARTICLE 2
THE SURVIVING CORPORATION
SECTION 2.01. Certificate of Incorporation. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, except that the name of the Surviving
Corporation shall be changed to "National Sanitary Supply Company".
SECTION 2.02. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 2.03. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (a) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation, and (b) the officers of the
Company at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the letter of the Company dated the date hereof and
delivered to Buyer in connection with this Agreement (the "Disclosure Letter")
and making reference to the particular section of this Agreement to which
exception is being taken, the Company represents and warrants to Buyer that:
SECTION 3.01. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), business,
assets or results of operations of the Company and the Subsidiaries (as defined
below) taken as a whole (a "MATERIAL ADVERSE EFFECT"). The Company has
heretofore delivered to Buyer true and complete copies of the Company's
certificate of incorporation and bylaws as currently in effect.
SECTION 3.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and have been duly authorized by all necessary corporate action
(including all necessary stockholder action). This Agreement constitutes a valid
and binding agreement of the Company.
SECTION 3.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of a
certificate of merger in accordance with Delaware Law; (b) compliance with any
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR ACT"); and (c) compliance with any applicable requirements of the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder (the "EXCHANGE ACT").
SECTION 3.04. Non-contravention. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (a) contravene or conflict
with the certificate of incorporation or bylaws of the Company, (b) assuming
compliance with the matters referred to in Section 3.03, contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to the Company
or any Subsidiary, (c) constitute a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Company or any Subsidiary or to a loss of any benefit to which the Company or
any Subsidiary is entitled under any provision of any agreement, contract or
other instrument
A-4
<PAGE> 9
binding upon the Company or any Subsidiary or any license, franchise, permit or
other similar authorization held by the Company or any Subsidiary, or (d) result
in the creation or imposition of any Lien on any asset of the Company or any
Subsidiary. For purposes of this Agreement, "LIEN" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset.
SECTION 3.05. Capitalization. The authorized capital stock of the Company
consists of 9,000,000 Shares, and 1,000,000 shares of preferred stock, par value
$1.00 per share. As of July 31, 1997, there were outstanding 6,269,824 Shares,
no shares of preferred stock and employee stock options to purchase an aggregate
of 513,139 Shares. All outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and nonassessable.
Except as set forth in this Section and except for changes since July 31, 1997
resulting from the exercise of employee stock options outstanding on such date,
there are outstanding (a) no shares of capital stock or other voting securities
of the Company, (b) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
and (c) no options or other rights to acquire from the Company, and no
obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company (the items in clauses 3.05(a), 3.05(b) and 3.05(c)
being referred to collectively as the "COMPANY SECURITIES"). There are no
outstanding obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any Company Securities.
SECTION 3.06. Subsidiaries. (a) Each Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where failure
to be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. For purposes of this Agreement, "SUBSIDIARY" means any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are directly or indirectly owned by
the Company. All Subsidiaries and their respective jurisdictions of
incorporation are identified in the Company's annual report on Form 10-K for the
fiscal year ended December 31, 1996 (the "COMPANY 10-K").
(b) All of the outstanding capital stock of, or other ownership interests
in, each Subsidiary, is owned by the Company, directly or indirectly, free and
clear of any Lien and free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). There are no outstanding (i) securities of
the Company or any Subsidiary convertible into or exchangeable for shares of
capital stock or other voting securities or ownership interests in any
Subsidiary, and (ii) options or other rights to acquire from the Company or any
Subsidiary, and no other obligation of the Company or any Subsidiary to issue,
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Subsidiary (the items in clauses
3.06(b)(i) and 3.06(b)(ii) being referred to collectively as the "SUBSIDIARY
SECURITIES"). There are no outstanding obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any outstanding Subsidiary
Securities.
SECTION 3.07. SEC Filings. (a) The Company has delivered to Buyer (i) the
annual reports on Form 10-K for its fiscal years ended December 31, 1996, 1995
and 1994, (ii) the quarterly report of the Company on Form 10-Q for the fiscal
quarter ended March 31, 1997, (iii) its proxy or information statements relating
to meetings of, or actions taken without a meeting by, the stockholders of the
Company since December 31, 1996, and (iv) all of its other reports, statements,
schedules and registration statements filed with the Securities and Exchange
Commission (the "SEC") since December 31, 1994.
(b) As of its filing date, each such report or statement filed pursuant to
the Exchange Act did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(c) Each such registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act of 1933 as of the date such
statement or amendment became effective did not contain any
A-5
<PAGE> 10
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading.
SECTION 3.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in its annual reports on Form 10-K and the quarterly report on
Form 10-Q referred to in Section 3.07 fairly present, in conformity with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof and
their consolidated results of operations and changes in financial position for
the periods then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements). For purposes of this Agreement,
"BALANCE SHEET" means the consolidated balance sheet of the Company as of
December 31, 1996 set forth in the Company 10-K and "BALANCE SHEET DATE" means
December 31, 1996.
SECTION 3.09. Disclosure Documents. (a) Each document required to be filed
by the Company with the SEC in connection with the transactions contemplated by
this Agreement (the "COMPANY DISCLOSURE DOCUMENTS"), including, without
limitation, the proxy or information statement of the Company (the "COMPANY
INFORMATION STATEMENT") to be filed with the SEC in connection with the Merger,
and any amendments or supplements thereto will, when filed, comply as to form in
all material respects with the applicable requirements of the Exchange Act.
(b) At the time the Company Information Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, and at the
Effective Time, the Company Information Statement, as supplemented or amended,
if applicable, will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. At the time of the filing of any Company Disclosure Document other
than the Company Information Statement and at the time of any distribution
thereof, such Company Disclosure Document will not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. The representations and warranties contained in this
Section 3.09(b) will not apply to statements or omissions included in the
Company Disclosure Documents based upon information furnished to the Company in
writing by Buyer specifically for use therein.
SECTION 3.10. Absence of Certain Changes. Since the Balance Sheet Date, the
Company and Subsidiaries have conducted their business in the ordinary course
consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of circumstances
or facts which has had or reasonably could be expected to have a Material
Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or
any issuance, grant, sale, repurchase, redemption or other acquisition by
the Company or any Subsidiary of any outstanding shares of capital stock or
other securities of, or other ownership interests (including options,
rights or warrants) in, the Company or any Subsidiary;
(c) any amendment of any material term of any outstanding security of
the Company or any Subsidiary or any subdivision, reclassification,
recapitalization, split, combination or exchange of any shares of capital
stock of the Company (other than in connection with outstanding options);
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money;
(e) any creation or assumption by the Company or any Subsidiary of any
Lien on any material asset other than in the ordinary course of business
consistent with past practices;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries made in the
ordinary course of business consistent with past practices;
A-6
<PAGE> 11
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or
any Subsidiary which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other
right, in either case, material to the Company and the Subsidiaries taken
as a whole, other than transactions and commitments in the ordinary course
of business consistent with past practice and those contemplated by this
Agreement;
(i) any change in any method of accounting or accounting practice by
the Company or any Subsidiary, except for any such change required by
reason of a concurrent change in generally accepted accounting principles;
(j) any tax election, other than those consistent with past practice,
not required by law or any settlement or compromise of any tax liability in
either case that is material to the Company and the Subsidiaries;
(k) any (i) grant of any severance or termination pay to any director,
officer or employee of the Company or any Subsidiary, (ii) entering into of
any employment, severance or termination, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with
any director, officer or employee of the Company or any Subsidiary, (iii)
increase in benefits payable under any existing severance or termination
pay policies or employment agreements or (iv) increase in compensation,
bonus or other benefits payable to directors, officers or employees of the
Company or any Subsidiary, other than in the ordinary course of business
consistent with past practice; or
(l) any labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any Subsidiary, which employees
were not subject to a collective bargaining agreement at the Balance Sheet
Date, or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to such employees.
SECTION 3.11. No Undisclosed Material Liabilities. There are no liabilities
or obligations of the Company or any Subsidiary of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability or obligation, other than:
(a) liabilities or obligations disclosed or provided for in the
Balance Sheet;
(b) liabilities or obligations incurred in the ordinary course of
business consistent with past practice since the Balance Sheet Date, which
in the aggregate are not material to the Company and the Subsidiaries,
taken as a whole; and
(c) liabilities or obligations under this Agreement.
SECTION 3.12. Litigation. Section 3.12 of the Disclosure Letter sets forth,
as of the date of this Agreement, a list of all pending lawsuits or claims of
which the Company is aware, threatened against or affecting the Company or any
Subsidiary or any of their respective properties. Except as set forth in the
Disclosure Letter or Company 10-K, there is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or to the knowledge of the
Company threatened against or affecting, the Company or any Subsidiary or any of
their respective properties before any court or arbitrator or any governmental
body, agency or official (i) as of the date hereof and (ii) which, if determined
or resolved adversely to the Company or any Subsidiary in accordance with the
plaintiff's demands, would reasonably be expected to have a Material Adverse
Effect or which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the Merger or any of the other transactions contemplated
hereby.
SECTION 3.13. Taxes. Except as set forth in the Balance Sheet (including
the notes thereto) and except as would not, individually or in the aggregate,
have a Material Adverse Effect, (i) all tax returns, statements,
A-7
<PAGE> 12
reports and forms (collectively, the "COMPANY RETURNS") required to be filed
with any taxing authority by, or with respect to, the Company and its
Subsidiaries have been filed in accordance with all applicable laws, (ii) the
Company and its Subsidiaries have timely paid all taxes shown as due and payable
on such Company Returns that have been so filed, and, as of the time of filing,
the Company Returns correctly reflected the facts regarding the income,
business, assets, operations, activities and the status of the Company and its
Subsidiaries, (iii) the Company and its Subsidiaries have made adequate
provision on their books for all taxes payable by the Company and its
Subsidiaries for which no Company Return has yet been filed, (iv) the charges,
accruals and reserves for taxes with respect to the Company and its Subsidiaries
reflected on the Balance Sheet (excluding any provision for deferred income
taxes) are adequate under United States generally accepted accounting principles
("GAAP") to cover the tax liabilities accruing through the date thereof, (v)
there is no action, suit, proceeding, audit, or claim with respect to tax
matters now proposed or pending against or with respect to the Company or any of
its Subsidiaries, (vi) there are no outstanding waivers or other agreements
extending any statutory periods of limitation for the assessment of taxes of the
Company and its Subsidiaries, (vii) neither the Company nor any of its
Subsidiaries has been a United Sates real property holding corporation within
the meaning of Section 897(c)(2) of the Internal Revenue Code of 1986, as
amended (the "CODE") during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code and (viii) neither the Company nor any of its
Subsidiaries has been a member of an affiliated, consolidated, combined or
unitary group other than one of which Chemed is the common parent. With respect
to the 1997 calendar year, the Shares are "regularly traded on an established
securities market" within the meaning of Section 897(c)(2) of the Code and the
final and temporary regulations thereunder.
SECTION 3.14. ERISA. (a) Definitions. For purposes hereof the following
terms have the following meanings:
"BENEFIT ARRANGEMENT" means any employment, severance or similar contract
or arrangement (whether or not written) providing for compensation, bonus,
profit-sharing, stock option, or other stock related rights or other forms of
incentive or deferred compensation, vacation benefits, insurance coverage
(including any self-insured arrangements), health or medical benefits,
disability benefits, worker's compensation, supplemental unemployment benefits,
workers' compensation, supplemental unemployment benefits, severance benefits
and postemployment or retirement benefits (including compensation, pension,
health, medical or life insurance or other benefits) that (i) is not an Employee
Plan (as defined below), (ii) is entered into, maintained, administered or
contributed to, as the case may be, by the Company or any of its Affiliates (as
defined below) and (iii) covers any employee or former employee of the Company
or any Subsidiary.
"EMPLOYEE PLAN" means any "employee benefit plan", as defined in Section
3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by the Company or any of its
Affiliates and (iii) covers any employee or former employee of the Company or
any Subsidiary.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" of any entity means any other entity which, together with
such entity, would be treated as a single employer under Section 414 of the
Code.
"MULTIEMPLOYER PLAN" means each Employee Plan that is a multiemployer plan,
as defined in Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation.
"TITLE IV PLAN" means an Employee Plan subject to Title IV of ERISA other
than any Multiemployer Plan.
(b) The Company has provided, or will provide prior to the Effective Time,
Buyer with a list and copies of the Employee Plans (and, if applicable, related
trust agreements) and all amendments thereto and written interpretations thereof
together with the most recent annual report (Form 5500 including all required
Schedules thereto) and the most recent actuarial valuation report prepared in
connection with any Employee Plan. Such list identifies each Employee Plan which
is (i) a Multiemployer plan, (ii) a Title IV Plan or (iii) maintained in
connection with any trust described in Section 501(c)(9) of the Code. The
Company has
A-8
<PAGE> 13
provided, or will provide prior to the Effective Time, Buyer with complete age,
salary, service and related data as of the most recent practicable date for all
employees and former employees covered under any Title IV Plan.
(c) The fair market value of the assets of each Title IV Plan (excluding
for these purposes any accrued but unpaid contributions) exceeds the present
value of all benefits accrued under such Title IV Plan determined on a
termination basis using the assumptions established by the PBGC. There is no
unfunded liability of the Company or any Subsidiary in respect of any Employee
Plans or Benefit Arrangements described under Sections 4(b)(5) of ERISA or
401(a)(1) of the Code, as computed using reasonable actuarial assumptions and
determined as if all benefits under such plans are vested and payable.
(d) No transaction prohibited by Section 406 of ERISA or Section 4975 of
the Code has occurred with respect to any employee benefit plan or arrangement
which is covered by Title I of ERISA, which transaction has or will cause the
Company or any of its Subsidiaries to incur any liability under ERISA, the Code
or otherwise, excluding transactions effected pursuant to and in compliance with
a statutory or administrative exemption. No "accumulated funding deficiency", as
defined in Section 412 of the Code, has been incurred with respect to any
Employee Plan subject to such Section 412, whether or not waived. No "reportable
event", within the meaning of Section 4043 of ERISA, other than a "reportable
event" that will not have a Material Adverse Effect, and no event described in
Section 4062 or 4063 of ERISA, has occurred in connection with any Employee
Plan. Neither the Company nor any ERISA Affiliate of the Company has (i) engaged
in, or is a successor or parent corporation to an entity that has engaged in, a
transaction described in Sections 4069 or 4212(c) of ERISA or (ii) incurred, or
reasonably expects to incur prior to the Effective Time, (A) any liability under
Title IV of ERISA arising in connection with the termination of, or a complete
or partial withdrawal from, any plan covered or previously covered by Title IV
of ERISA or (B) any liability under Section 4971 of the Code that in either case
could become a liability of the Company or any Subsidiary or Buyer or any of its
ERISA Affiliates after the Effective Time. No condition exists that (i) could
constitute grounds for termination by the PBGC of any employee benefit plan that
is subject to Title IV of ERISA that is maintained by the Company, any
Subsidiary or any of their ERISA Affiliates or (ii) presents a material risk of
complete or partial withdrawal from any multiemployer plan, as defined in
Section 3(37) of ERISA, which could result in the Company, any Subsidiary or
Buyer or any ERISA Affiliate of any of them incurring a withdrawal liability
within the meaning of Section 4201 of ERISA. The assets of the Company and all
of its Subsidiaries are not now, nor will they after the passage of time be,
subject to any lien imposed under Code Section 412(n) by reason of a failure of
the Company or any Subsidiary to make timely installments or other payments
required under Code Section 412. If a "complete withdrawal" by the Company and
all of its ERISA Affiliates were to occur as of the Effective Time with respect
to all Multiemployer Plans, none of the Company, any Subsidiary or any of their
ERISA Affiliates would incur any material withdrawal liability under Title IV of
ERISA.
(e) Each Employee Plan that is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the period
since its adoption; each trust created under any such Plan is exempt from tax
under Section 501(a) of the Code and has been so exempt since its creation. The
Company has provided, or will provide prior to the Effective Time, Buyer with
the most recent determination letter of the Internal Revenue Service relating to
each such Employee Plan. Each Employee Plan has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations, including but not limited to
ERISA and the Code.
(f) The Company has provided, or will provide prior to the Effective Time,
Buyer with a list and copies or descriptions of each Benefit Arrangement (and,
if applicable, related trust agreements) and all amendments thereto and written
interpretations thereof. Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all applicable statutes, orders, rules and regulations and has been
maintained in good standing with applicable regulatory authorities.
(g) Neither the Company nor any Subsidiary has any current or projected
liability in respect of post-employment or post-retirement health or medical or
life insurance benefits for retired, former or current employees of the Company
or any Subsidiary, except as required to avoid excise tax under Section 4980B of
A-9
<PAGE> 14
the Code. No condition exists that would prevent the Company or any Subsidiary
from amending or terminating any Employee Plan or Benefit Arrangement providing
health or medical benefits in respect of any active employee of the Company or
any Subsidiary other than limitations imposed under the terms of a collective
bargaining agreement.
(h) All contributions and payments which have either become due and payable
or should be accrued under each Employee Plan and Benefit Arrangement,
determined in accordance with prior funding and accrual practices, will be
discharged and paid or accrued, respectively, on or prior to the Effective Time
in accordance with such practices. There has been no amendment to, written
interpretation of or announcement (whether or not written) by the Company or any
Subsidiary relating to, or change in employee participation or coverage under,
any Employee Plan or Benefit Arrangement that would increase materially the
expense of maintaining such Employee Plan or Benefit Arrangement above the level
of the expense incurred in respect thereof for the most recent fiscal year ended
prior to the date hereof.
(i) There is no contract, plan or arrangement (written or otherwise)
covering any employee or former employee of the Company or any Subsidiary that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G of the Code.
(j) There has been no failure of a group health plan (as defined in Section
5000(b)(1) of the Code) to meet the requirements of Code Section 4980B(f) with
respect to a qualified beneficiary (as defined in Section 4980B(g)). Neither the
Company nor any of its Subsidiaries has contributed to a nonconforming group
health plan (as defined in Section 5000(c)) and no ERISA Affiliate of the
Company or any of its Subsidiaries has incurred a tax under Section 5000(a)
which is or could become a liability of the Company or any of its Subsidiaries.
(k) No employee or former employee of the Company or any Subsidiary will
become entitled to any bonus, retirement, severance, job security or similar
benefit or enhanced such benefit (including acceleration of vesting or exercise
of an incentive award) solely as a result of the transactions contemplated
hereby, except as contemplated by this Agreement.
SECTION 3.15. Compliance with Laws. The Company and each of its
Subsidiaries is and has been in compliance with, and to the knowledge of the
Company is not under investigation with respect to and has not been threatened
to be charged with or given notice of any violation of, any applicable law,
rule, regulation, judgment, injunction, order or decree, except for matters that
have not had and could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
SECTION 3.16. Finders' Fees. There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf, of the Company or any Subsidiary who might be entitled to any fee or
commission from Buyer or any of its affiliates upon consummation of the
transactions contemplated by this Agreement.
SECTION 3.17. Other Information. None of the documents or information
delivered to Buyer in connection with the transactions contemplated by 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 therein not
misleading. The financial projections relating to the Company and the
Subsidiaries delivered to Buyer constitute the Company's best estimate of the
information purported to be shown therein and the Company is not aware of any
fact or information that would lead it to believe that such projections are
incorrect or misleading in any material respect.
SECTION 3.18. Environmental Matters. (a) Definitions. For purposes hereof
the following terms have the following meanings:
"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or governmental
restriction or requirement or any agreement with any governmental authority or
other third party, relating to human health and safety, the environment or to
pollutants, contaminants, wastes or
A-10
<PAGE> 15
chemicals or any toxic, radioactive, ignitable, corrosive, reactive or otherwise
hazardous substances, wastes or materials.
"ENVIRONMENTAL PERMITS" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities relating to or required by Environmental Laws and affecting, or
relating in any way to, the business of the Company or any Subsidiary as
currently conducted.
(b) Except as set forth in the Company 10-K:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review (or any basis therefor) is pending or, to the
knowledge of the Company or any Subsidiary, is threatened by any
governmental entity or other Person with respect to any matters relating to
the Company or any Subsidiary and relating to or arising out of any
Environmental Law which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect;
(ii) The Company is in compliance with all Environmental Laws and has
been and is in compliance with all Environmental Permits, except where any
noncompliance or failure to receive Environmental Permits could not
reasonably be expected to result in a Material Adverse Effect; and
(iii) there are no liabilities of or relating to the Company or any
Subsidiary of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise arising under or relating to any
Environmental Law that have had or may reasonably be expected to have a
Material Adverse Effect, and there are no facts, conditions, situations or
set of circumstances which could reasonably be expected to result in or be
the basis for any such liability.
(c) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any Subsidiary or
any property or facility now or previously owned or leased by the Company or any
Subsidiary which has not been delivered to Buyer at least five days prior to the
Effective Time.
(d) Neither the Company nor any Subsidiary owns, leases or operates or has
owned, leased or operated any real property, or conducts or has conducted any
operations, in New Jersey or Connecticut.
(e) For purposes of this Section, the terms "COMPANY" and "SUBSIDIARY"
shall include any entity which is, in whole or in part, a predecessor of the
Company or any Subsidiary.
SECTION 3.19. Vote Required. The only vote of the holders of any class or
series of capital stock of the Company necessary to approve the Merger is the
affirmative vote of the holders of a majority of the outstanding Shares.
SECTION 3.20. Anti-Takeover Plan; State Takeover Statutes. Neither the
Company nor any Subsidiary has in effect any plan, scheme, device or
arrangement, commonly or colloquially known as a "poison pill" or
"anti-takeover" plan or any similar plan, scheme, device or arrangement. The
Board of Directors of the Company has approved the Merger and this Agreement.
Except for Section 203 of Delaware Law, no state takeover statute or similar
statute or regulation applies or purports to apply to the Merger, this Agreement
or any of the transactions contemplated by this Agreement.
SECTION 3.21. Intercompany Accounts. Section 3.21 of the Disclosure Letter
contains a complete list of all intercompany balances as of the June 30, 1997
between Chemed and its Affiliates, on the one hand, and the Company and the
Subsidiaries, on the other hand. Since June 30, 1997 there has not been any
accrual of liability by the Company or any Subsidiary to Chemed or any of its
Affiliates or other transaction between the Company or any Subsidiary and Chemed
and any of its Affiliates, except (i) with respect to the period commencing June
30, 1997 and ending on the date of this Agreement, in the ordinary course of
business of the Company and the Subsidiaries consistent with past practice, and
(ii) thereafter, as provided in Section 3.21 of the Disclosure Letter.
SECTION 3.22. Material Contracts. (a) Neither the Company nor any
Subsidiary is a party to or bound by:
A-11
<PAGE> 16
(i) any lease (whether of real or personal property) providing for
annual rentals of $25,000 or more;
(ii) any agreement with a term of at least one year for the purchase
of materials, supplies, goods, services, equipment or other assets
providing for either (A) annual payments by the Company and the
Subsidiaries of $50,000 or more or (B) aggregate payments by the Company
and the Subsidiaries of $50,000 or more;
(iii) any sales, distribution or other similar agreement with a term
of at least six months, providing for the sale by the Company or any
Subsidiary of materials, supplies, goods, services, equipment or other
assets that provides for (A) annual payments to the Company and the
Subsidiaries of $100,000 or more and (B) does not by its terms permit the
Company or any Subsidiary to pass any increase in the costs of such
materials, supplies, goods, services, equipment or other assets on to the
counterparty thereto;
(iv) any partnership, joint venture or other similar agreement or
arrangement;
(v) any agreement relating to the acquisition or disposition of any
business (whether by merger, sale of stock, sale of assets or otherwise);
(vi) any agreement relating to asset sale programs, indebtedness for
borrowed money or the deferred purchase price of property (in either case,
whether incurred, assumed, guaranteed or secured by any asset);
(vii) any option, license, franchise or similar agreement;
(viii) any agency, dealer, sales representative, marketing or other
similar agreement;
(ix) any agreement that limits the freedom of the Company or any
Subsidiary or any officer or key employee to compete in any line of
business or with any Person or in any area or which would so limit the
freedom of the Company or any Subsidiary after the Effective Time;
(x) any agreement with (A) Chemed or any of its Affiliates (other than
the Subsidiaries), (B) any Person directly or indirectly owning,
controlling or holding with power to vote, 5% or more of the outstanding
voting securities of Chemed or any of its Affiliates (including without
limitation the Company and the Subsidiaries), (C) any Person 5% or more of
whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote by Chemed or any of its Affiliates
(including without limitation the Company and the Subsidiaries) or (D) any
director or officer of Chemed or any of its Affiliates (including without
limitation the Company and the Subsidiaries) or any "associates" or members
of the "immediate family" (as such terms are respectively defined in Rule
12b-2 and Rule 16a-1 of the Exchange Act) of any such director or officer;
(xi) any other agreement, commitment, arrangement or plan not made in
the ordinary course of business that is material to the Company and the
Subsidiaries, taken as a whole.
As used herein, the term "AFFILIATE" means, with respect to any Person, any
other Person directly or indirectly controlling, controlled by or under common
control with such Person.
(b) Each agreement, contract, plan, lease, arrangement or commitment
disclosed in any Section of the Disclosure Letter or required to be disclosed
pursuant to this Section is a valid and binding agreement of the Company or a
Subsidiary, as the case may be, and is in full force and effect, and none of the
Company, any Subsidiary or, to the knowledge of the Company, any other party
thereto is in default or breach in any material respect under the terms of any
such agreement, contract, plan, lease, arrangement or commitment, and, to the
knowledge of the Company, no event or circumstance has occurred that, with
notice or lapse of time or both, would constitute any event of default
thereunder. True and complete copies of each such agreement, contract, plan,
lease, arrangement or commitment have been delivered to Buyer.
SECTION 3.23. Properties. (a) The Company and the Subsidiaries have good
and marketable, indefeasible, fee simple title to, or in the case of leased
property and assets have valid leasehold interests in, all property and assets
(whether real, personal, tangible or intangible) reflected on the Balance Sheet
or acquired after the Balance Sheet Date, except for properties and assets sold
since the Balance Sheet Date in the
A-12
<PAGE> 17
ordinary course of business consistent with past practices. None of such
property or assets is subject to any Lien, except:
(i) Liens disclosed on the Balance Sheet;
(ii) Liens for taxes not yet due or being contested in good faith (and
for which adequate accruals or reserves have been established on the
Balance Sheet); or
(iii) Liens which do not materially detract from the value or
materially interfere with any present or intended use of such property or
assets.
(b) There are no developments affecting any such property or assets pending
or, to the knowledge of the Company threatened, which might materially detract
from the value, materially interfere with any present or intended use or
materially adversely affect the marketability of any such property or assets.
(c) The plants, buildings, structures and equipment owned by the Company or
any Subsidiary have no material defects, are in good operating condition and
repair and have been reasonably maintained consistent with standards generally
followed in the industry (giving due account to the age and length of use of
same, ordinary wear and tear excepted), are adequate and suitable for their
present and intended uses and, in the case of plants, buildings and other
structures (including, without limitation, the roofs thereof), are structurally
sound.
(d) The plants, buildings and structures owned by the Company or any
Subsidiary currently have access to (i) public roads or valid easements over
private streets or private property for such ingress to and egress from all such
plants, buildings and structures and (ii) water supply, storm and sanitary sewer
facilities, telephone, gas and electrical connections, fire protection, drainage
and other public utilities, in each case as is necessary for the conduct of the
businesses of the Company or any Subsidiary as heretofore conducted. None of the
structures on any such owned or leased real property encroaches upon real
property of another Person, and no structure of any other Person substantially
encroaches upon any of such owned or leased real property.
(e) Such real property, and its continued use, occupancy and operation as
currently used, occupied and operated, does not constitute a nonconforming use
under all applicable building, zoning, subdivision and other land use and
similar laws, regulations and ordinances.
(f) The property and assets owned or leased by the Company or any
Subsidiary constitute all of the property and assets used or held for use in
connection with the businesses of the Company or any Subsidiary and are adequate
to conduct such businesses as currently conducted.
SECTION 3.24. Products. Each of the products produced or sold by the
Company or any Subsidiary is, and at all times up to and including the sale
thereof has been, (i) in compliance in all material respects with all applicable
federal, state, local and foreign laws and regulations and (ii) fit for the
ordinary purposes for which it is intended to be used and conforms in all
material respects to any promises or affirmations of fact made on the container
or label for such product or in connection with its sale. There is no design
defect with respect to any of such products and each of such products contains
adequate warnings, presented in a reasonably prominent manner, in accordance
with applicable laws, rules and regulations and current industry practice with
respect to its contents and use.
SECTION 3.25. Patents and Other Proprietary Rights. The Company and the
Subsidiaries have rights to use, whether through ownership, licensing or
otherwise, all patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information. proprietary rights and processes of which
the Company is aware that are necessary for its business as now conducted
(collective the "INTELLECTUAL PROPERTY RIGHTS"), all of which have been
disclosed in Section 3.25 of the Disclosure Letter. The Company and the
Subsidiaries have not assigned, hypothecated or otherwise encumbered any of the
Intellectual Property Rights and none of the licenses included in the
Intellectual Property Rights purport to grant sole or exclusive licenses to
another Person, including without limitation sole or exclusive licenses limited
to specific fields of use. The patents owned by the Company and the Subsidiaries
are valid and enforceable and any patent issuing from patent applications of the
Company and the Subsidiaries will be valid and enforceable. The Company has no
knowledge of any infringement by any other party of any of the Intellectual
Property Rights, and the Company
A-13
<PAGE> 18
and the Subsidiaries have not entered into any agreement to indemnify any other
party against any charge of infringement of any of its Intellectual Property
Rights. To the best of the Company's knowledge, the Company and the Subsidiaries
have not and do not violate or infringe any intellectual property right of any
other Person, and the Company and the Subsidiaries have not received any
communication alleging that it violates or infringes the intellectual property
right of any other Person. The Company and the Subsidiaries have not been sued
for infringing any intellectual property right of another Person. None of the
processes, techniques and formulae, research and development results and other
know-how relating to the business of the Company and the Subsidiaries, the value
of which to the Company is contingent upon maintenance of the confidentiality
thereof, has been disclosed by the Company or any Affiliate thereof to any
Person other than those Persons who are bound to hold such information in
confidence pursuant to confidentiality agreements or by operation of law.
SECTION 3.26. Insurance Coverage. The Company has furnished or will
furnish to Buyer a list of, and true and complete copies of, all insurance
policies and fidelity bonds relating to the assets, business, operations,
employees, officers or directors of the Company and the Subsidiaries. There is
no claim by the Company or any Subsidiary pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds or in respect of which such underwriters
have reserved their rights. All premiums payable under all such policies and
bonds have been timely paid and the Company and the Subsidiaries have otherwise
complied fully with the terms and conditions of all such policies and bonds.
Such policies of insurance and bonds (or other policies and bonds providing
substantially similar insurance coverage) have been in effect since January 1,
1992 and remain in full force and effect. Such policies and bonds are of the
type and in amounts customarily carried by Persons conducting businesses similar
to those of the Company or any Subsidiary. The Company does not know of any
threatened termination of, premium increase with respect to, or material
alteration of coverage under, any of such policies or bonds. Except as disclosed
in Section 3.26 of the Disclosure Letter, the Company and the Subsidiaries shall
after the Effective Time continue to have coverage under such policies and bonds
with respect to events occurring prior to the Effective Time.
SECTION 3.27. Licenses and Permits. Section 3.27 of the Disclosure Letter
correctly describes each material license, franchise, permit, certificate,
approval or other similar authorization affecting, or relating in any way to,
the assets or business of the Company and its Subsidiaries together with the
name of the government agency or entity issuing such permit. All permits or
other similar authorizations (whether material or not) are valid and in full
force and effect and neither the Company nor any Subsidiary is in default under,
and no condition exists that with notice or lapse of time or both would
constitute a default under, the Permits. No permits or other similar
authorizations (whether material or not) will be terminated or impaired or
become terminable, in whole or in part, as a result of the transactions
contemplated hereby.
SECTION 3.28. Inventories. The inventories set forth in the Balance Sheet
were properly stated therein at the lesser of cost or fair market value
determined in accordance with generally accepted accounting principles
consistently maintained and applied by the Company and its Subsidiaries, less
any reserves for obsolescence recorded on the Balance Sheet. Since the Balance
Sheet Date, the inventories of the Company and its Subsidiaries have been
maintained in the ordinary course of business. All such inventories are owned
free and clear of all Liens. All of the inventories recorded on the Balance
Sheet consists of, and all inventories of the Company and its Subsidiaries as of
the Effective Time will consist of, items of a quality usable or saleable in the
normal course of business consistent with past practices and are and will be in
quantities sufficient for the normal operation of the business of the Company
and its Subsidiaries in accordance with past practice.
SECTION 3.29. Receivables. All accounts, notes receivable and other
receivables (other than receivables collected since the Balance Sheet Date)
reflected on the Balance Sheet are, and all accounts and notes receivable
arising from or otherwise relating to the business of the Company and its
Subsidiaries as of the Effective Time will be, valid, genuine and fully
collectible in the aggregate amount thereof, subject to normal and customary
trade discounts, less any reserves for doubtful accounts recorded on the Balance
Sheet. All accounts, notes receivable and other receivables arising out of or
relating to such business of the Company and its Subsidiaries as of the Balance
Sheet Date have been included in the Balance Sheet, and all accounts, notes
A-14
<PAGE> 19
receivable and other receivables arising out of or relating to the Business as
of the Effective Time will be included on the books of the Company in accordance
with generally accepted accounting principles applied on a consistent basis.
SECTION 3.30. Employees. Section 3.30 of the Disclosure Letter sets forth
a true and complete list of (a) the names, titles, annual salaries and other
compensation of all officers of the Company and its Subsidiaries and all other
employees of the Company and its Subsidiaries whose annual base salary exceeds
$100,000 and (b) the wage rates and commission structures for non-salaried
employees of the Company and its Subsidiaries (by location and job
classification). None of such employees listed in clause (a) hereof and no other
key employee of the Company and its Subsidiaries has indicated to the Company or
its Subsidiaries that he intends to resign or retire as a result of the
transactions contemplated by this Agreement or otherwise within one year after
the Effective Time.
SECTION 3.31. Labor Matters. The Company and the Subsidiaries are in
compliance with all currently applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and are not engaged in any unfair labor practice, failure to comply with which
or engagement in which, as the case may be, would reasonably be expected to have
a Material Adverse Effect. There is no unfair labor practice complaint pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary before the National Labor Relations Board.
SECTION 3.32. Required and Other Consents. (a) Section 3.32(a) of the
Disclosure Letter sets forth each agreement, contract or other instrument
binding upon the Company or its Affiliates requiring a consent as a result of
the execution, delivery and performance of this Agreement, except such consents
as would not, individually or in the aggregate, have, or reasonably be expected
to have, a Material Adverse Effect if not received by the Effective Time (each
such consent, a "REQUIRED CONSENT" and together the "REQUIRED CONSENTS").
(b) Section 3.32(b) of the Disclosure Letter sets forth every other consent
(each such consent, an "OTHER CONSENT" and together the "OTHER CONSENTS") under
such agreements, contracts or other instruments or such Permits that is
necessary or desirable with respect to the execution, delivery and performance
of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
SECTION 4.01. Corporate Existence and Power. Each of Buyer and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted. Since
the date of its incorporation, Merger Subsidiary has not engaged in any
activities other than in connection with or as contemplated by this Agreement or
in connection with arranging any financing required to consummate the
transactions contemplated hereby.
SECTION 4.02. Corporate Authorization. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Buyer and Merger Subsidiary and have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of each of Buyer and Merger
Subsidiary.
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated by
this Agreement require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of a
certificate of merger in accordance with Delaware Law, (b) compliance with any
applicable requirements of the HSR Act and (c) compliance with any applicable
requirements of the Exchange Act.
A-15
<PAGE> 20
SECTION 4.04. Non-contravention. The execution, delivery and performance
by Buyer and Merger Subsidiary of this Agreement and the consummation by Buyer
and Merger Subsidiary of the transactions contemplated hereby do not and will
not (a) contravene or conflict with the certificate of incorporation or bylaws
of Buyer or Merger Subsidiary, (b) assuming compliance with the matters referred
to in Section 4.03, contravene or conflict with any provision of law,
regulation, judgment, order or decree binding upon Buyer or Merger Subsidiary,
or (c) constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Buyer or Merger
Subsidiary or to a loss of any benefit to which Buyer or Merger Subsidiary is
entitled under any agreement, contract or other instrument binding upon Buyer or
Merger Subsidiary, except, in the case of clause (b) and (c), for such matters
as would not materially adversely affect the ability of Buyer and Merger
Subsidiary to consummate the transactions contemplated by this Agreement.
SECTION 4.05. Disclosure Documents. The information with respect to Buyer
and its subsidiaries that Buyer furnishes to the Company in writing specifically
for use in any Company Disclosure Document will not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading (i) in the case of the Company Information Statement
at the time the Company Information Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company and (ii) in the case of
any Company Disclosure Document other than the Company Information Statement, at
the time of the filing thereof and at the time of any distribution thereof.
SECTION 4.06. Finders' Fees. Except for Lehman Brothers Inc., whose fees
will be paid by Buyer, there is no investment banker, broker, finder or other
intermediary who might be entitled to any fee or commission from the Company or
any of its affiliates upon consummation of the transactions contemplated by this
Agreement.
ARTICLE 5
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 5.01. Conduct of the Company. From the date hereof until the
Effective Time, the Company and the Subsidiaries shall conduct their business in
the ordinary course consistent with past practice and shall use their best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time:
(a) the Company will not adopt or propose, or permit any Subsidiary to
adopt or propose, any change in its certificate of incorporation, bylaws or
other constituent documents;
(b) the Company will not, and will not permit any Subsidiary to, merge
or consolidate with any other Person or acquire a material amount of assets
of any other Person;
(c) the Company will not, and will not permit any Subsidiary to, sell,
lease, license or otherwise dispose of any material assets or property
except (i) pursuant to existing contracts or commitments and (ii) in the
ordinary course consistent with past practice;
(d) the Company will not, and will not permit any Subsidiary to, agree
or commit to do any of the foregoing; or
(e) the Company will not, and will not permit any Subsidiary to (i)
take or agree or commit to take any action that would make any
representation and warranty of the Company hereunder inaccurate in any
respect at, or as of any time prior to, the Effective Time or (ii) omit or
agree or commit to omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect at any such
time.
A-16
<PAGE> 21
SECTION 5.02. Company Information Statement. As promptly as practicable,
the Company (a) will prepare and file with the SEC, will use its best efforts to
have cleared by the SEC and will thereafter mail to its stockholders as promptly
as practicable the Company Information Statement and all other related
materials, if any, (b) include in any Company Information Statement the
determination of the Board of Directors to the effect that the Board of
Directors, having determined that this Agreement and the transactions
contemplated hereby are in the best interests of the Company and its
stockholders, has approved this Agreement and such transactions and (c) will
otherwise comply with all legal requirements applicable to such action. Buyer,
Merger Subsidiary and the Company shall cooperate with each other in the
preparation of the Company Information Statement, and the Company shall notify
Buyer of the receipt of any comments of the SEC with respect to the Company
Information Statement and of any request by the SEC for any amendment or
supplement thereto or for additional information and shall provide to Buyer
promptly copies of all correspondence between the Company or any representative
of the Company and the SEC. The Company shall give Buyer and its counsel the
opportunity to review the Company Information Statement prior to its being filed
with the SEC and shall give Buyer and its counsel the opportunity to review all
amendments and supplements to the Company Information Statement and all
responses to requests for additional information and replies to comments prior
to their being filed with, or sent to, the SEC.
If at any time prior to the Effective Time any event or circumstance
relating to any party hereto, or their respective officers or directors, any
party hereto, or their respective officers or directors, should be discovered by
such party which should be set forth in an amendment or a supplement to the
Company Information Statement, such party shall promptly inform the Company and
Buyer thereof and take appropriate action in respect thereof.
SECTION 5.03. Access to Information. From the date hereof until the
Effective Time, the Company will give Buyer, its counsel, financial advisors,
auditors and other authorized representatives full access to the offices,
properties, books and records of the Company and the Subsidiaries, will furnish
to Buyer, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Buyer in its investigation of
the business of the Company and the Subsidiaries; provided that no investigation
pursuant to this Section shall affect any representation or warranty given by
the Company to Buyer hereunder.
SECTION 5.04. Other Offers. From the date hereof until the termination
hereof, the Company and the Subsidiaries and the officers, directors, employees
or other agents of the Company and the Subsidiaries will not, directly or
indirectly, (i) take any action to solicit, initiate, facilitate or encourage
any Acquisition Proposal (as defined below), (ii) engage in negotiations with,
or disclose any nonpublic information relating to the Company or any Subsidiary
or afford access to the properties, books or records of the Company or any
Subsidiary to, any Person that may be considering making, or has made, an
Acquisition Proposal or (iii) enter into any agreement or understanding
requiring the Company to abandon, terminate or fail to consummate the Merger or
the other transactions contemplated hereby. The Company will promptly (and in no
event later than 24 hours after receipt of the relevant Acquisition Proposal)
notify (which notice shall be provided orally and in writing and shall identify
the Person making the relevant Acquisition Proposal and set forth the material
terms thereof) Buyer after receipt of any Acquisition Proposal or any indication
that any Person is considering making an Acquisition Proposal or any request for
nonpublic information relating to the Company or any Subsidiary or for access to
the properties, books or records of the Company or any Subsidiary by any Person
that may be considering making, or has made, an Acquisition Proposal and will
keep Buyer fully informed of the status and details of any such Acquisition
Proposal, indication or request. The Company shall, and shall cause the
Subsidiaries and the Company's directors, officers, employees, financial
advisors and other agents and representatives to, cease immediately and cause to
be terminated all activities, discussions or negotiations, if any, with any
Persons conducted heretofore with respect to any Acquisition Proposal. For
purposes of this Agreement, "Acquisition Proposal" means any offer or proposal
for, or any indication of interest in, a merger or other business combination
involving the Company or any Subsidiary or the acquisition of any equity
interest in, or a substantial portion of the assets of, the Company or any
Subsidiary, other than the transactions contemplated by this Agreement.
A-17
<PAGE> 22
SECTION 5.05. Notices of Certain Events. The Company shall promptly notify
Buyer of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to
or involving or otherwise affecting the Company or any Subsidiary which, if
pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 3.12 or which relate to the consummation
of the transactions contemplated by this Agreement.
SECTION 5.06. State Takeover Laws. The Company shall, upon the request of
Buyer or Merger Subsidiary, take all reasonable steps to assist in any challenge
by Buyer or Merger Subsidiary in respect of the validity or applicability to the
transactions contemplated by this Agreement, including the Merger, of any state
takeover law.
SECTION 5.07. Resignations. At or prior to the Effective Time, the Company
will deliver to Buyer the resignations of all officers of the Company who will
be officers, directors or employees of Chemed or any of its Affiliates after the
Effective Time from their positions with the Company.
SECTION 5.08. Additional SEC Filings. The Company will promptly prepare
and file with the SEC when due its quarterly reports on Form 10-Q for the fiscal
quarters ended June 30, 1997 and, if applicable, September 30, 1997, and, as of
their filing dates such reports will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein in the light of the circumstances under which they are
made, not misleading.
ARTICLE 6
COVENANTS OF BUYER
Buyer agrees that:
SECTION 6.01. Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, Buyer will hold, and will use its best efforts to
cause its officers, directors, employees, accountants, counsel, consultants,
advisors and agents to hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of law or the rules
of The New York Stock Exchange, all confidential documents and information
concerning the Company and the Subsidiaries furnished to Buyer in connection
with the transactions contemplated by this Agreement, including, without
limitation, any stockholder lists furnished by the Company, except to the extent
that such information can be shown to have been (a) previously known on a
nonconfidential basis by Buyer, (b) in the public domain through no fault of
Buyer, (c) later lawfully acquired by Buyer from sources other than the Company
or (d) developed independently by Buyer; provided that Buyer may disclose such
information to its officers, directors, employees, accountants, counsel,
consultants, advisors and agents in connection with the transactions
contemplated by this Agreement and to its lenders in connection with obtaining
the financing for the transactions contemplated by this Agreement so long as
such Persons are informed by Buyer of the confidential nature of such
information and are directed by Buyer to treat such information confidentially.
Buyer's obligation to hold any such information in confidence shall be satisfied
if it exercises the same care with respect to such information as it would take
to preserve the confidentiality of its own similar information. If this
Agreement is terminated (a) Buyer will, and will use its best efforts to cause
its officers, directors, employees, accountants, counsel, consultants, advisors
and agents to, destroy or deliver to the Company, upon request, all documents
and other materials, and all copies thereof, obtained by Buyer or on its behalf
from the Company in connection with this Agreement that are subject to such
confidence and (b) for a period of one year after the date hereof, Buyer will
not solicit the employment of any management or sales employee of the Company.
A-18
<PAGE> 23
SECTION 6.02. Obligations of Merger Subsidiary. Buyer will take all action
necessary to cause Merger Subsidiary to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set forth in
this Agreement.
ARTICLE 7
COVENANTS OF BUYER AND THE COMPANY
The parties hereto agree that:
SECTION 7.01. Best Efforts. Subject to the terms and conditions of this
Agreement, each party will use its commercially reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
SECTION 7.02. Certain Filings. The Company and Buyer shall cooperate with
one another (a) in connection with the preparation of the Company Disclosure
Documents and (b) in determining whether any action by or in respect of, or
filing with, any governmental body, agency or official, or authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (c) in
seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Company Disclosure Documents and seeking timely to obtain any such actions,
consents, approvals or waivers.
SECTION 7.03. Public Announcements. Buyer and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement and the transactions contemplated hereby and,
except as may be required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press release or make any
such public statement prior to such consultation.
SECTION 7.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
SECTION 7.05. Confidentiality Agreement. Buyer and the Company hereby
terminate the Confidentiality Agreement dated June 17, 1997 by and between Buyer
and the Company, and hereby agree that such Confidentiality Agreement shall from
the date hereof be of no further force or effect.
SECTION 7.06. Completion of Due Diligence and Amended Disclosure
Letter. (a) The Company and Buyer agree that Buyer will have four weeks from
the date of execution of this Agreement to conduct due diligence of the Company
and its Subsidiaries (the "DUE DILIGENCE PERIOD") except for due diligence with
respect to environmental matters, which due diligence may be conducted up until
the Effective Time. If at the end of the Due Diligence Period, the results of
such due diligence are not satisfactory to Buyer, Buyer may terminate the
Agreement in accordance with Section 9.01.
(b) The Company shall, no later than three weeks from the date of execution
of this Agreement, deliver an updated Disclosure Letter to Buyer (the "AMENDED
DISCLOSURE LETTER"). Buyer may review such Amended Disclosure Letter until the
end of the Due Diligence Period. If the Amended Disclosure Letter is
unsatisfactory to Buyer, Buyer may terminate the Agreement in accordance with
Section 9.01. If Buyer accepts the Amended Disclosure Letter, any reference in
this Agreement to the "Disclosure Letter" shall thereafter be deemed to be a
reference to the Amended Disclosure Letter.
A-19
<PAGE> 24
ARTICLE 8
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party. The obligations
of the Company, Buyer and Merger Subsidiary to consummate the Merger are subject
to the satisfaction of the following conditions:
(a) this Agreement shall have been adopted by the stockholders of the
Company in accordance with Delaware Law;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
and
(d) all actions by or in respect of or filings with any governmental
body, agency, official, or authority required to permit the consummation of
the Merger shall have been obtained.
SECTION 8.02. Conditions to the Obligations of Buyer and Merger
Subsidiary. The obligations of Buyer and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions:
(a) (i) the Company shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to
the Effective Time, (ii) the representations and warranties of the Company
contained in this Agreement and in any certificate or other writing
delivered by the Company pursuant hereto, disregarding all qualifications
contained therein relating to materiality or Material Adverse Effect, shall
be true in all material respects at and as of the Effective Time as if made
at and as of such time and (iii) Buyer shall have received a certificate
signed by the Vice Chairman of the Company to the foregoing effect;
(b) there shall not be instituted or pending any action or proceeding
by any government or governmental authority or agency, domestic or foreign,
or by any other Person, domestic or foreign, before any court or
governmental authority or agency, domestic or foreign, (i) challenging or
seeking to make illegal, to delay materially or otherwise directly or
indirectly to restrain or prohibit the consummation of the Merger, seeking
to obtain material damages or otherwise directly or indirectly relating to
the transactions contemplated by the Merger, (ii) seeking to restrain or
prohibit Buyer's ownership or operation (or that of its Affiliates) of all
or any material portion of the business or assets of the Company and its
Subsidiaries, taken as a whole, or of Buyer and its Affiliates, taken as a
whole, or to compel Buyer or any of its Affiliates to dispose of or hold
separate all or any material portion of the business or assets of the
Company and its Subsidiaries, taken as a whole, or of Buyer and its
Affiliates, taken as a whole or (iii) that otherwise is likely to
materially adversely affect the Company and its Subsidiaries, taken as a
whole, or Buyer and its Affiliates, taken as a whole;
(c) there shall not be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Merger, by any court,
government or governmental authority or agency, domestic or foreign, other
than the application of the waiting period provisions of the HSR Act to the
Merger, that is likely, directly or indirectly, to result in any of the
consequences referred to in clauses (i) through (iii) of paragraph (b)
above;
(d) Chemed shall have executed and delivered to Buyer the Indemnity
Agreement (the "INDEMNITY AGREEMENT") and the Tax Matters Agreement (the
"TAX MATTERS AGREEMENT") copies of which are attached hereto as Exhibits A
and B, respectively, and the Indemnity Agreement and Tax Matters Agreement
shall be in full force and effect;
(e) The Company shall have received all Required Consents in form and
substance reasonably satisfactory to Buyer;
A-20
<PAGE> 25
(f) Chemed shall have executed and delivered to Buyer a
non-competition agreement ("NON-COMPETE AGREEMENT"), in form and substance
satisfactory to Buyer, and such Non-Compete Agreement shall be in full
force and effect;
(g) Buyer shall have entered into employment agreements (the "KEY
EMPLOYEE AGREEMENTS") with each of the senior management employees of the
Company, in each case in form and substance satisfactory to Buyer;
(h) Buyer shall have received the resignation of the officers and
directors of the Company as contemplated by Section 5.07;
(i) Buyer shall have completed environmental due diligence to its
satisfaction;
(j) Buyer shall have received all documents it may reasonably request
relating to the existence of the Company and the Subsidiaries and the
authority of the Company for this Agreement, all in form and substance
satisfactory to Buyer; and
(k) The Buyer and Chemed shall have entered into a Transitional
Services Agreement, pursuant to which Chemed will provide certain employee
benefits to employees of the Company for a period of time to be agreed upon
between Buyer and Chemed, in form and substance satisfactory to Buyer.
SECTION 8.03. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) Buyer and Merger Subsidiary shall have performed in all
material respects all of their respective obligations hereunder required to
be performed by them at or prior to the Effective Time, (ii) the
representations and warranties of Buyer and Merger Subsidiary contained in
this Agreement and any certificate or other writing delivered by Buyer or
Merger Subsidiary pursuant hereto, disregarding all qualifications
contained therein relating to materiality or material adverse effect, shall
be true in all material respects at and as of the Effective Time as if made
at and as of such time and (iii) the Company shall have received a
certificate signed by a Senior Vice President of Buyer and an equivalent
officer of Merger Subsidiary to the foregoing effect;
(b) The Company shall have received all documents it may reasonably
request relating to the existence of Buyer or Merger Subsidiary and the
authority of Buyer or Merger Subsidiary for this Agreement, all in form and
substance satisfactory to the Company.
ARTICLE 9
TERMINATION
SECTION 9.01. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the stockholders of the Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if the Merger has not been
consummated by December 31, 1997; provided that the right to terminate this
Agreement pursuant to this Section 9.01(b) shall not be available to any
party whose breach of any provision of this Agreement results in the
failure of the Merger to be consummated by such time; or
(c) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining Buyer
or the Company from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and nonappealable; or
(d) by Buyer if either the results of its due diligence of the Company
and the Subsidiaries or the Amended Disclosure Letter are not to its
satisfaction, in accordance with Section 7.06.
A-21
<PAGE> 26
The party desiring to terminate this Agreement pursuant to clauses 9.01(b),
9.01(c) or 9.01(d), shall give written notice of such termination to the other
party in accordance with Section 10.01.
SECTION 9.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 9.01, this Agreement shall become void and of no effect with
no liability on the part of any party hereto, except that the agreements
contained in Sections 6.01, 10.01, 10.02, 10.04, 10.05, 10.06, 10.07, 10.08,
10.10 and 10.11 shall survive the termination hereof; provided that nothing in
this Section 9.02 shall be deemed to release any party from any liability for
any wilful breach by such party of the terms and provisions of this Agreement.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given,
if to Buyer or Merger Subsidiary, to:
Unisource Worldwide, Inc.
740 Springdale Drive
Exton, PA 19341
Attention: General Counsel
Telecopy: (610) 722-3555
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: William L. Rosoff
Telecopy: (212) 450-4800
if to the Company, to:
National Sanitary Supply Company
255 East Fifth Street
Suite 2900
Cincinnati, OH 45202-4790
Attention: Kevin McNamara
Telecopy: (513) 762-6919
with a copy to:
Clifford A. Roe, Jr.
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202-4790
Telecopy: (513) 977-8501
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
SECTION 10.02. Survival of Representations and Warranties and
Agreements. The representations and warranties of Buyer and Merger Subsidiary
contained herein and in any certificate or other writing delivered pursuant
hereto shall not survive the Effective Time. The representations and warranties
of the Company contained herein and in any certificate or other writing
delivered pursuant hereto shall survive and shall be
A-22
<PAGE> 27
subject to the provisions of the Indemnity Agreement until the second
anniversary of the Effective Time; provided that (i) the representations and
warranties contained in Sections 3.13 and 3.14 shall survive and shall be
subject to the provisions of the Indemnity Agreement until the expiration of the
statute of limitations applicable to the matters covered thereby (giving affect
to any waiver, mitigation or extension thereof), if later and (ii) the
representations and warranties contained in Section 3.18 shall survive and shall
be subject to the provisions of the Indemnity Agreement (A) insofar as such
representations and warranties relate to any property or facility currently
owned or leased by the Company or any Subsidiary, until the fourth anniversary
of the Effective Time and (B) insofar as such representations and warranties
relate to any property or facility previously owned or leased by the Company or
any Subsidiary or to the off-site transportation, disposal or arrangement for
disposal or migration of any hazardous substances, wastes or materials on or
prior to the Effective Time, until the fifteenth anniversary of the Effective
Time. The other covenants and agreements of the parties contained herein shall
not survive the Effective Time, except for the covenants and agreements set
forth in Sections 6.01, 10.04, 10.05, 10.06, 10.07, 10.08, 10.10 and 10.11,
which shall survive for the period set forth therein (or if no such period is
specified, indefinitely).
SECTION 10.03. Amendments; No Waivers. (a) Any provision of this Agreement
may be amended or waived prior to the Effective Time if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company, Buyer and Merger Subsidiary or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that no such
amendment or waiver shall, without the further approval of the stockholders of
the Company, alter or change (i) the amount or kind of consideration to be
received in exchange for any Shares, (ii) any term of the certificate of
incorporation of the Surviving Corporation or (iii) any of the terms or
conditions of this Agreement, if such alteration or change would adversely
affect the holders of any shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 10.04. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 10.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto.
SECTION 10.06. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware without regard
to the conflict of law provisions of such State.
SECTION 10.07. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any federal court located in the State of Delaware or any Delaware state court,
and each of the parties hereby consents to the jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient form. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 10.01 shall be deemed
effective service of process on such party.
SECTION 10.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
A-23
<PAGE> 28
SECTION 10.09. Counterparts; Effectiveness; Third Party Beneficiaries.
This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the other
parties hereto. No provision of this Agreement is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
SECTION 10.10. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. Upon such a determination, the parties 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 in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
SECTION 10.11. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement is
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof in addition to any other
remedy to which they are entitled at law or in equity.
SECTION 10.12. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.
ARTICLE 11
DEFINITIONS
SECTION 11.01. Definitions. Each of the following terms is defined in the
Section set forth opposite such term:
<TABLE>
<CAPTION>
TERM SECTION
---------------------------------------------------------- -------------
<S> <C>
Affiliate 3.22
Balance Sheet 3.08
Balance Sheet Date 3.08
Benefit Arrangement 3.14(a)
Buyer Preface
Company Preface
Company Disclosure Documents 3.09(a)
Company Information Statement 3.09(a)
Code 3.13
Company Returns 3.13
Company Subsidiaries 3.05(c)
Company 10-K 3.06(a)
Delaware Law Preface
Disclosure Letter 3.21
Effective Time 1.01(b)
Employee Plan 3.14(a)(iii)
Environmental Laws 3.18(a)
Environmental Permits 3.18(a)
ERISA 3.14(a)
ERISA Affiliate 3.14(a)(iii)
Exchange Act 3.03(c)
Exchange Agent 1.03(a)
</TABLE>
A-24
<PAGE> 29
<TABLE>
<CAPTION>
TERM SECTION
---------------------------------------------------------- -------------
<S> <C>
GAAP 3.13
HSR Act 3.03(b)
Indemnity Agreement 8.02
Intellectual Property Rights 3.25
Key Employee Agreements 8.02(g)
Lien 3.04(d)
Material Adverse Effect 3.01
Merger Preface
Merger Consideration 1.02(c)
Merger Subsidiary Preface
Multiemployer Plan 3.14(a)(iii)
Non-Compete Agreement 8.02(f)
Other Consents 3.32(a)
PBGC 3.14(a)
Permits 3.27
Required Consents 3.32(a)
SEC 3.07(a)
Share Preface
Subsidiary 3.06(a)
Subsidiary Securities 3.06(b)(ii)
Surviving Corporation 1.01(a)
Tax Matters Agreement 8.02
Title IV Plan 3.14(a)(iii)
</TABLE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
NATIONAL SANITARY SUPPLY COMPANY
By: Kevin J. McNamara
--------------------------------------
Name: Kevin J. McNamara
Title: Vice Chairman
UNISOURCE WORLDWIDE, INC.
By: Kathleen N. Burns
--------------------------------------
Name: Kathleen N. Burns
Title: Vice President
and Treasurer
TFBD, INC.
By: Robert M. McLaughlin
--------------------------------------
Name: Robert M. McLaughlin
Title: President
A-25
<PAGE> 1
Exhibit 2.2
Amended Disclosure Letter of National Sanitary Supply Company
delivered to Unisource Worldwide, Inc. in connection with
the Agreement and Plan of Merger of August 11, 1997
3.01 None
3.02 None
3.03 None
3.04 a None
b None
c None other than disclosed in response to Schedule 3.32(a) -
required consents.
d None
3.05 None
3.06 a None
b None
3.07 a None
b None
c None
3.08 None
3.09 a None
b None
3.10 a None
b Quarterly dividends declared and paid in 1997, option and
restricted stock award grants in 1997.
c None
d See inter-company balances listed on Schedule 3.10(d)
e None
f See inter-company balances listed on Schedule 3.10(f)
g None
h None other than disclosed in response to Schedule 3.22 -
material contracts.
<PAGE> 2
i None
j None
k (i) None other than in the ordinary course of business
consistent with past practice.
(ii) See employment agreements, as amended, of W.D.
Jackson, K.F. Vuylsteke, G.H. Sander and P.C. Voet.
See employment agreements of Brian Serdiuk and
James E. Behrendt.
(iii) None
(iv) None
l None
3.11 a See OCR Holding Company Truck Leases and listing produced
in response to Schedule 3.22(x)(A).
b None
c None
3.12 (i) See updated Disclosure of Litigation List, adding
McHenry lawsuit and Designating Balance Sheet Accrual.
(ii) None
3.13 (i) None
(ii) None
(iii) None
(iv) None
(v) None
(vi) See waiver of statute of limitations through 12/31/97 for
Illinois sales and use tax audit.
(vii) None
(viii) None
3.14 a ------------
b See list, Schedule 3.14(b) and Title VI Plan participants list
produced
c See disclosure regarding unfunded liability of Retirement Plan
for Non-Union Employees of Century Papers, Inc.
d A None
B None
2
<PAGE> 3
(i) None
(ii) None
e None
f See list of Benefit Arrangements, Schedule 3.14(f)
g None
h None
i None
j None
k See vesting of options and restricted stock awards pursuant
to Stock Incentive Plans
3.15 None
3.16 None
3.17 None
3.18 a ------------
b (i) None
(ii) None
(iii) None
c None
d None
e ------------
3.19 None
3.20 None
3.21 See Schedule 3.21
3.22 (i) See listing of real estate leases and of OCR Holding Company
truck leases, Schedule 3.22(i)
(ii) See Systems Directions Data Processing Agreement of 9/20/85
with Century Papers, Inc.
(iii) See ITT Automotive, Inc. Supply Agreement, SRI Speciality
Retailers, Inc. Purchase Order of August 7, 1997, H.E. Butt
Grocery Company corporate account designation of
3
<PAGE> 4
August 4, 1997, City of San Antonio bid dated October 7, 1996.
(iv) See Data Center Agreement of July 6, 1987 between Bobrick
Washroom Equipment, Inc. and NSS, as amended by letter of
August 23, 1993.
(v) No such executory contracts are extant, see Metro - Omicron
letter of Intent
(vi) See Schedule 3.22(vi) - description of NSS debt
(vii) None
(viii) See Form of Sales Representative and Manager Employment
Agreements, Network Services Company Agreement of
March 10, 1987 with CPI
(ix) None
(x) (A) See Chemed Sublease governing 255 E. 5th Street,
Cincinnati, Ohio 45202; OCR Holding Co. truck leases;
Tax Procedures and Services Agreement; pension
record keeping fees memo of 3/20/97.
(B) None
(C) None
(D) See Indemnity Agreements with Chemed Officers and
Directors produced
(xi) None
(b) None
3.23 (a) None
(b) None
(c) None
(d) None
(e) None
(f) None
3.24 None
3.25 None
3.26 Effective April 1, 1997, total umbrella limits were increased to $125
million from $100 million, by replacing excess umbrella
4
<PAGE> 5
limits of $75 million (X.L. Insurance Company, policy #XLUMB-00132)
with excess limits of $100 million (TIG, Zurich, Federal and Fireman's
Fund; policy #'s 3095804, XLX9271251, EUO365102500, 79698865 and
XXKOOO7429877, respectively).
3.27 See Schedule 3.27 - Sanichem permits, Industrial Wastewater Discharge
permit.
3.28 None
3.29 None
3.30 (a) See Schedule 3.30(a), which excludes Chemed employees who
are Officers of NSS, other than P.C. Voet, G.H. Sander, J.E.
Friedman, D.J. Pagel, T.J. Reilly and D.V. Keller.
(b) See Schedule 3.30(b).
3.31 None
3.32 (a) Required consents - see Schedule 3.32(a)
(b) Other consents - see Schedule 3.32(b)
NATIONAL SANITARY SUPPLY COMPANY
By: Naomi C. Dallob
-----------------------------------
Its: Secretary
----------------------------------
5
<PAGE> 1
Exhibit 2.3
STOCK PURCHASE AGREEMENT
BY AND AMONG
BANTA CORPORATION,
CHEMED CORPORATION
AND
OCR HOLDING COMPANY
DATED SEPTEMBER 24, 1997
<PAGE> 2
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF SHARES............................................1
2. PURCHASE PRICE - PAYMENT...............................................2
2.1. Purchase Price.................................................2
2.2. Payment of Purchase Price......................................4
2.3. Determination of Net Asset Value...............................4
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS...........................................................7
3.1. Corporate......................................................8
3.2. Shareholders...................................................9
3.3. No Violation...................................................9
3.4. Financial Statements..........................................10
3.5. Tax Matters...................................................10
3.6. Accounts Receivable...........................................12
3.7. Inventory.....................................................12
3.8. Absence of Certain Changes....................................12
3.9. Absence of Undisclosed Liabilities............................14
3.10. No Litigation.................................................14
3.11. Compliance With Laws and Orders...............................15
3.12. Title to Properties...........................................16
3.13. Insurance.....................................................18
3.14. Contracts and Commitments.....................................19
3.15. Labor Matters.................................................21
3.16. Employee Benefit Plans........................................21
3.17. Employment Compensation.......................................25
3.18. Trade Rights..................................................25
3.19. Major Customers and Suppliers.................................26
3.20. Product Warranty and Product Liability........................27
3.21. Bank Accounts.................................................27
3.22. Affiliates' Relationships.....................................27
3.23. Assets Necessary to Business..................................28
3.24. No Brokers or Finders.........................................28
3.25. Disclosure....................................................28
4. REPRESENTATIONS AND WARRANTIES OF BUYER...............................28
4.1. Corporate.....................................................28
4.2. Authority.....................................................29
4.3. No Brokers or Finders.........................................29
4.4. Disclosure....................................................29
4.5. Investment Intent.............................................29
ii
<PAGE> 3
5. COVENANTS...............................................................29
5.1. Title Insurance.................................................29
5.2. Surveys.........................................................29
5.3. Environmental and OSHA Audits...................................30
5.4. Lease for Detroit Facility; Guaranty for Troy Facility..........30
5.5. Employment Agreements; Transitional Services....................30
5.6. Noncompetition; Confidentiality.................................31
5.7. General Releases and Indemnification............................32
5.8. HSR Act Filings.................................................33
5.9. Indemnity Relating to Detroit Facility and Pomona Facility......33
5.10. Tax Matters.....................................................34
5.11. Assumption of and Indemnity Relating to Workers'
Compensation Claims...........................................37
5.12. Employee Benefits and Severance.................................37
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.............................38
6.1. Representations and Warranties True of the Closing Date.........38
6.2. Compliance With Agreement.......................................38
6.3. Absence of Litigation...........................................38
6.4. Consents and Approvals..........................................38
6.5. Title Insurance.................................................38
6.6. Estoppel Certificates...........................................38
6.7. Hart-Scott-Rodino Waiting Period................................39
6.8. Section 1445 Affidavit..........................................39
6.9. Environmental and OSHA Audits...................................39
6.10. Noncompetition and Consulting Agreements........................39
7. CONDITIONS PRECEDENT TO THE SHAREHOLDERS' OBLIGATIONS...................39
7.1. Representations and Warranties True on the Closing Date.........39
7.2. Compliance With Agreement.......................................39
7.3. Absence of Litigation...........................................39
7.4. Hart-Scott-Rodino Waiting Period................................39
8. INDEMNIFICATION.........................................................40
8.1. By Shareholders.................................................40
8.2. By Buyer........................................................40
8.3. Indemnification of Third-Party Claims...........................40
8.4. Payment.........................................................41
8.5. Limitations on Indemnification..................................41
8.6. No Waiver.......................................................43
9. CLOSING.................................................................43
9.1. Documents to be Delivered by the Shareholders...................43
9.2. Documents to be Delivered by Buyer..............................44
iii
<PAGE> 4
10. MISCELLANEOUS...........................................................45
10.1. Disclosure Schedule.............................................45
10.2. Further Assurance...............................................45
10.3. Disclosures and Announcements...................................45
10.4. Assignment; Parties in Interest.................................45
10.5. Law Governing Agreement.........................................46
10.6. Amendment and Modification......................................46
10.7. Notice..........................................................46
10.8. Expenses........................................................47
10.9. Entire Agreement................................................48
10.10. Counterparts....................................................48
10.11. Headings........................................................49
iv
<PAGE> 5
DISCLOSURE SCHEDULE
Schedule 3.1.(c)- Foreign Corporation Qualification
Schedule 3.1.(e)-Directors and Officers
Schedule 3.1.(f)-Shareholder List
Schedule 3.3- Violation, Conflict, Default
Schedule 3.4- Financial Statements
Schedule 3.5.(b)- Tax Returns (Exceptions to Representations)
Schedule 3.5.(c)- Tax Audits
Schedule 3.5.(d)- Consolidated Tax Returns
Schedule 3.5.(e)- Tax, Other
Schedule 3.5.(f)-Tax Basis
Schedule 3.6- Accounts Receivable (Aged Schedule)
Schedule 3.7- Inventory
Schedule 3.8- Certain Changes
Schedule 3.9- Off-Balance Sheet Liabilities
Schedule 3.10- Litigation Matters
Schedule 3.11.(a)- Non-Compliance with Laws
Schedule 3.11.(b)- Licenses and Permits
Schedule 3.11.(c)- Environmental Matters (Exceptions to Representations)
Schedule 3.12.(b)- Owned Real Property
Schedule 3.13- Insurance
Schedule 3.14.(b)- Personal Property Leases
Schedule 3.14.(d)- Sales Commitments
Schedule 3.14.(e)- Contracts With Affiliates
Schedule 3.14.(g)- Collective Bargaining Agreements
Schedule 3.14.(h)- Loan Agreements, etc.
Schedule 3.14.(i)- Guarantees
Schedule 3.14.(k)- Burdensome or Restrictive Agreements
Schedule 3.14.(l)- Material Contracts
Schedule 3.15- Labor Matters
Schedule 3.16.(a)- Employee Plans/Agreements
Schedule 3.16.(e)- Controlled Group
Schedule 3.16.(g)- Post-Retirement Benefits
Schedule 3.17- Employment Compensation
Schedule 3.18- Trade Rights
Schedule 3.19.(a)- Major Customers
Schedule 3.19.(b)- Major Suppliers
Schedule 3.19.(c)- Dealers and Distributors
Schedule 3.20-Product Warranty, Warranty Expense and Liability Claims
Schedule 3.21-Bank Accounts
Schedule 3.22.(a)-Contracts with Affiliates
Schedule 3.22.(c)-Obligations of and to Affiliates
v
<PAGE> 6
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated September 24,
1997, by and among Banta Corporation, a Wisconsin corporation ("Buyer"), Chemed
Corporation, a Delaware corporation ("Chemed"), and OCR Holding Company, a
Nevada corporation ("OCR").
RECITALS
WHEREAS, OCR is a wholly-owned subsidiary of Chemed; and
WHEREAS, OCR owns beneficially and of record all of the issued and
outstanding shares of capital stock of Omnia I, Inc., a Delaware corporation
("Omnia I"), The Omnia Corporation, a Delaware corporation ("Omnia
Corporation"), Tidi Products, Inc., a Delaware corporation ("Tidi Products"),
Unidisco, Inc., a Delaware corporation ("Unidisco), and Unidisco Acquisition,
Inc., a Delaware corporation ("Unidisco Acquisition"); and
WHEREAS, Omnia I, Omnia Corporation, Tidi Products, Unidisco and
Unidisco Acquisition are collectively referred to herein as the "Acquired
Companies" and are sometimes individually referred to herein as an "Acquired
Company"; and
WHEREAS, Buyer desires to purchase all of the issued and outstanding
shares of capital stock of the Acquired Companies, and Chemed and OCR desire to
sell such shares to Buyer upon the terms and conditions herein set forth; and
WHEREAS, the shares of capital stock of the Acquired Companies to be
acquired by Buyer hereunder (constituting all of the issued and outstanding
shares of capital stock of the Acquired Companies) are hereinafter referred to
as the "Shares" and Chemed and OCR are collectively hereinafter referred to as
the "Shareholders".
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows.
1. PURCHASE AND SALE OF SHARES
Subject to the terms and conditions of this Agreement, on the Closing
Date (as hereinafter defined) the Shareholders shall sell to Buyer and Buyer
shall purchase from the Shareholders all the Shares.
<PAGE> 7
2. PURCHASE PRICE - PAYMENT
2.1. PURCHASE PRICE.
2.1.(a) PURCHASE PRICE. Subject to post-closing adjustments
and payments provided for hereunder, the purchase price (the "Purchase
Price") payable for the Shares shall be Fifty Million Dollars
($50,000,000), plus $666,237, reflecting the amount of the reserves as
of August 31, 1997 established for workers' compensation claims on the
books of the Acquired Companies net of applicable taxes.
2.1.(b) CONTINGENT PURCHASE PRICE. Provided Buyer continues to
receive federal and state income Tax (as hereinafter defined)
deductions for the goodwill and other intangibles identified in
Section 3.5.(g) for each of the following years, Buyer shall pay an
additional amount (the "Contingent Purchase Price") to Shareholders as
follows:
<TABLE>
<CAPTION>
Contingent
Calendar Year Purchase Price Payment Date
------------- -------------- ------------
<S> <C> <C>
2000 $350,000 September 30, 2000
2001 350,000 September 30, 2001
2002 350,000 September 30, 2002
2003 350,000 September 30, 2003
2004 350,000 September 30, 2004
2005 350,000 September 30, 2005
</TABLE>
The Contingent Purchase Price payment for each year shall be made on
September 30 of such year provided Buyer is eligible to take deductions
for the goodwill and other intangibles on its federal and state Tax (as
hereinafter defined) returns for the then current year and
notwithstanding whether Buyer is actually able to take such deductions
on its Tax returns for the then current year due solely to losses
reported on such returns. The Contingent Purchase Price payments
required under this Section 2.1.(b) shall cease (or, to the extent
deductions for the goodwill and other intangibles are not eliminated in
whole, the Contingent Purchase Price payments shall be reduced by an
amount equivalent to the deductions lost in each period), and the
Shareholders shall immediately reimburse Buyer for Contingent Purchase
Price payments previously received by Shareholders (but only to the
extent that deductions for prior periods are denied or lost), if (i)
changes in federal or state Tax law eliminate or limit the
deductibility of the amortization for goodwill or other intangibles or
(ii) prior deductions relating to such goodwill and other intangibles
are eliminated in whole or in part upon an audit of Buyer's and/or the
Acquired Companies' Tax returns. Notwithstanding the foregoing, in the
event that the Acquired Companies, including any successors thereto,
are no longer members of Buyer's affiliated group of corporations that
file a consolidated return and if Buyer was eligible immediately prior
to the time the Acquired Companies were no longer members of its
affiliated group to take deductions for the goodwill and other
intangibles on its federal and state Tax returns for Buyer's then
current year, Buyer shall remain obligated to make the Contingent
Purchase
2
<PAGE> 8
Price payments required under this Section 2.1.(b); PROVIDED, HOWEVER,
the obligation to continue to make such Contingent Purchase Price
payments shall cease (or, to the extent that deductions for the
goodwill and other intangibles are not eliminated in whole, the
Contingent Purchase Price payments shall be reduced by an amount
equivalent to the deductions lost) and Shareholders shall immediately
reimburse Buyer for payments previously received by Shareholders (but
only to the extent that deductions for prior periods are denied or
lost) if prior deductions relating to such goodwill or other
intangibles are eliminated in whole or in part upon subsequent audit.
The Shareholders' obligation to reimburse Buyer for Contingent
Purchase Price payments previously received by Shareholders is not
subject to the limitations set forth in Article 8 hereof.
2.1. (c) INVENTORY ADJUSTMENT AND REIMBURSEMENT; CASH
TRANSACTION RECONCILIATION. Shareholders acknowledge that the Acquired
Companies hold certain inventories identified below that may be in
excess of quantities useable and saleable in the ordinary course of
business or obsoleted by actions of the customers of the Acquired
Companies. Such inventory items are generally identified as the
Criterion Isolation Gown Line, Foster Domestic and Import Non-Woven
Products and Surge Dispenser Products and the equipment and
receivables related thereto (the "Excess Inventory"). The Excess
Inventory assets as of August 31, 1997 and the reserve related thereto
was as follows:
(1) Criterion Isolation Gown Line $795,816
(2) Foster Domestic and Import
Non-Woven Products 68,796
(3) Surge Dispenser Inventory 12,804
(4) Surge Dispenser Receivable 159,982
Equipment Receivable
(5) Reserve (400,000)
--------
(6) Total Net of Reserve $637,398
========
In connection with the Final Closing Balance Sheet (as hereinafter
defined), the value of the Excess Inventory at cost net of reserve will
be calculated. The Shareholders covenant and agree to pay to Buyer an
amount equal to fifty percent (50%) of such value net of reserve. The
Shareholders shall make the payment to Buyer required under this
Section 2.1.(c) within five (5) business days of determination of the
Final Closing Balance Sheet pursuant to Section 2.3.(b). Thereafter,
Buyer covenants that it will use commercially reasonable efforts to
sell the Excess Inventory on hand as of the Closing Date (as
hereinafter defined) during the period from the Closing Date to April
30, 1998. Buyer shall pay the Shareholders an amount equal to fifty
percent (50%) of the difference between (i) the consideration received
by Buyer upon disposition of such Excess Inventory prior to April 30,
1998 and (ii) the reserve related to such Excess Inventory disposed of
during the period. Buyer will provide Shareholders with a
reconciliation of the consideration received by Buyer upon sale of the
Excess Inventory and the reserve related
3
<PAGE> 9
thereto within thirty (30) days following April 30, 1998 and the
Shareholders shall have thirty (30) days to review and verify such
reconciliation. The Buyer shall make the payment to the Shareholders
required, if any, under this Section 2.1.(c) within five (5) business
days of the end of the Shareholders' review period.
In addition to the foregoing, and in connection with the
preparation of the Final Closing Balance Sheet, a determination shall
be made of the net cash receipts or net cash disbursements of the
Acquired Companies which were received or funded by the Shareholders,
as the case may be, between the Effective Time and the close of
business on the Closing Date. In the event of net cash receipts, the
Shareholders shall be obligated to pay such net amount to Buyer and in
the event of net cash disbursements, Buyer shall be obligated to pay
such net amount to the Shareholders. Any payment required by this cash
transaction reconciliation shall be made within five (5) business days
of determination of the Final Closing Balance Sheet pursuant to
Section 2.3.(b).
2.2. PAYMENT OF PURCHASE PRICE.
2.2.(a) PURCHASE PRICE. The Purchase Price specified in
Section 2.1 shall be paid by Buyer to OCR on the Closing Date. The
Contingent Purchase Price specified in Section 2.1.(b) shall be paid
to the extent set forth in Section 2.1.(b). The payments specified in
Section 2.1.(c) shall be made as set forth in Section 2.1.(c).
2.2.(b) ADJUSTMENT OF FINAL CASH PURCHASE PRICE. On or before
the fifth business day following the final determination of the Final
Closing Balance Sheet, the Shareholders shall pay to Buyer the amount,
if any, by which the Net Asset Value of the Acquired Companies as of
the Effective Time (as hereinafter defined), as reflected on the Final
Closing Balance Sheet, is less than the sum of (i) Sixty-Seven Million
Dollars ($67,000,000) and (ii) $666,237, reflecting the amount of the
reserves as of August 31, 1997 established for workers' compensation
claims on the books of the Acquired Companies net of applicable taxes.
2.2.(c) METHOD OF PAYMENT. All payments under this Section 2.2
shall be made in the form of a certified or bank cashier's check
payable to the order of the recipient or, at the recipient's option,
by wire transfer of immediately available funds to an account
designated by the recipient not less than 48 hours prior to the time
for payment specified herein.
2.3. DETERMINATION OF NET ASSET VALUE.
2.3.(a) DEFINITION OF NET ASSET VALUE. The term "Net Asset
Value" shall mean the dollar amount by which the net book value of the
assets of the Acquired Companies exceeds the net book value of all the
liabilities of the Acquired Companies, as reflected on the Final
Closing Balance Sheet.
4
<PAGE> 10
2.3.(b) FINAL CLOSING BALANCE SHEET. The final balance sheet
of the Acquired Companies prepared as of the close of business on
September 20, 1997 (hereinafter the "Effective Time") shall be
prepared as follows:
(i) Within 60 days after the Closing Date, Buyer shall
deliver to the Shareholders a balance sheet of the Acquired
Companies as of the Effective Time, prepared in accordance
with generally accepted accounting principles from the books
and records of the Acquired Companies, on a basis consistent
with the generally accepted accounting principles theretofore
followed by the Acquired Companies in the preparation of the
Recent Balance Sheet (as hereinafter defined) and in
accordance with this Section 2.3, and fairly presenting the
financial position on a basis consistent with generally
accepted accounting principles as theretofore followed by the
Acquired Companies as of the Effective Time. The balance sheet
shall be accompanied by detailed schedules of the assets and
liabilities of the Acquired Companies at the Effective Time
and by a report (1) setting forth the amount of Net Asset
Value (as defined above) reflected in the balance sheet, (2)
stating that the balance sheet has been prepared in accordance
with generally accepted accounting principles, on a basis
consistent with the accounting principles and presentation
theretofore followed by the Acquired Companies, except as
otherwise provided in this Section 2.3, and (3) setting forth
the amount of any adjustment to the Purchase Price to be paid
to Buyer by the Shareholders pursuant to Section 2.2.(b)
hereof.
(ii) Within 30 days following the delivery of the
balance sheet referred to in (i) above, the Shareholders or a
firm of independent accountants engaged by the Shareholders
("Shareholders' Accountants") may object to any of the
information contained in said balance sheet or accompanying
schedules which could affect the necessity or amount of any
payment by the Shareholders pursuant to Section 2.2.(b)
hereof. Any such objection shall be made in writing and shall
state the Shareholders' determination of the amount of the Net
Asset Value.
(iii) In the event of a dispute or disagreement
relating to the balance sheet or schedules which Buyer and the
Shareholders are unable to resolve, either party may elect to
have all such disputes or disagreements resolved by an
accounting firm (other than the Shareholders' Accountants or
the independent accountants for Buyer) of nationally
recognized standing (the "Third Accounting Firm") to be
mutually selected by the Shareholders and Buyer. The Third
Accounting Firm shall make a resolution of the balance sheet
of the Acquired Companies as of the Effective Time and the
calculation of Net Asset Value, which shall be final and
binding for purposes of this Article 2. The Third Accounting
Firm shall be instructed to use every reasonable effort to
perform its services within 15 days of submission of the
balance sheet to it and, in any case, as soon as practicable
after such submission. The fees and
5
<PAGE> 11
expenses for the services of the Third Accounting Firm shall
be paid one-half by Buyer and one-half by the Shareholders.
As used in this Agreement, the term "Final Closing
Balance Sheet" shall mean the balance sheet of the Acquired
Companies as of the Effective Time as finally determined for
purposes of this Article 2, whether by acquiescence of the
Shareholders in the figures supplied by Buyer in accordance
with Section 2.3.(b)(i), by negotiation and agreement of the
parties or by the Third Accounting Firm in accordance with
Section 2.3.(b)(iii).
(iv) Buyer agrees to permit the Shareholders, the
Shareholders' Accountants, and their respective
representatives, during normal business hours, to have
reasonable access to, and to examine and make copies of, all
books and records of the Acquired Companies, including but not
limited to the books, records, schedules and work papers of
Buyer, which documents and access are necessary to review the
balance sheet delivered by Buyer in accordance with Section
2.3.(b)(i). In addition, the parties hereto and their
representatives shall have the opportunity to observe the
taking of the inventory in connection with the preparation of
such balance sheet.
(v) Notwithstanding any provision contained herein
requiring that the Final Closing Balance Sheet be prepared in
accordance with generally accepted accounting principles
consistent with the past practices of the Acquired Companies,
the Final Closing Balance Sheet shall be prepared as follows:
(A) Prepaid expenses valued for purposes of
the Final Closing Balance Sheet must be of a nature
and valued in a manner consistent with past practices
of the Acquired Companies.
(B) Inventory shall be valued in accordance
with generally accepted accounting principles on the
basis of the lower of cost or market (net of
appropriate reserves) and consistent with past
practices of the Acquired Companies, provided,
however, that inventory identified in Section 2.1.(c)
shall be valued at cost net of applicable reserves.
Only inventory of a commercially useable quality and
good and usable in the ordinary course of business
shall be valued.
(C) All accrued liabilities shall be
sufficient for the payment in full of the liabilities
to which they relate and accrued expenses shall
reflect all accruals of a character that would be
reflected in a manner consistent with a year-end
balance sheet, including, without limitation, wages,
bonuses, vacation, holiday
6
<PAGE> 12
and sick pay (and employee payroll taxes applicable
thereto) attributable to all periods or partial
periods prior to the Effective Time.
(D) Accounts receivable and notes receivable
shall be stated net of an appropriate reserve for
doubtful accounts and anticipated collection expenses.
(E) There shall be established a reasonable
and sufficient reserve for all anticipated costs and
expenses (whether or not covered under product
warranties of the Acquired Companies) for the repair,
replacement or recall of products manufactured on or
prior to the Closing Date which are defective in
design, materials or workmanship.
(F) No insurance claim relating to damage to
or full or partial loss of any property occurring
after the date of the Recent Balance Sheet shall be
valued in excess of the book value (net of accumulated
depreciation) of such property as reflected in the
Recent Balance Sheet.
(G) No reserve or liability for workers'
compensation claims shall be reflected on the Final
Closing Balance Sheet.
(H) The capitalized assets relating to the
proposed Somerset, Kentucky facility set forth on the
Recent Balance Sheet shall be reflected as capitalized
assets on the Final Closing Balance Sheet.
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS
In order to induce Buyer to enter into this Agreement, and
acknowledging that Buyer has relied upon the representations and warranties
contained herein, the Shareholders, jointly and severally, make the following
representations and warranties to Buyer, each of which is true and correct on
the date hereof, shall be unaffected by any investigation heretofore or
hereafter made by Buyer, or any knowledge of Buyer other than as specifically
disclosed in the Disclosure Schedule delivered to Buyer at the time of the
execution of this Agreement, and shall survive the Closing of the transactions
provided for herein.
7
<PAGE> 13
3.1. CORPORATE.
3.1.(a) ORGANIZATION. Each of the Acquired Companies is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
3.1.(b) CORPORATE POWER. Each of the Acquired Companies has
all requisite corporate power and authority to own, operate and lease
its properties and to carry on its business as and where such is now
being conducted.
3.1.(c) QUALIFICATION. Each of the Acquired Companies is duly
licensed or qualified to do business as a foreign corporation, and is
in good standing, in each jurisdiction wherein the character of the
properties owned or leased by it, or the nature of its business, makes
such licensing or qualification necessary. The states in which the
Acquired Companies are licensed or qualified to do business are listed
in Schedule 3.1.(c).
3.1.(d) SUBSIDIARIES. The Acquired Companies do not own any
interest in any corporation, partnership or other entity.
3.1.(e) CORPORATE DOCUMENTS, ETC. The copies of the charter
and by-laws of each of the Acquired Companies, including any
amendments thereto, which have been delivered by the Shareholders to
Buyer are true, correct and complete copies of such instruments as
presently in effect. The corporate minute book and stock records of
each of the Acquired Companies which have been furnished to Buyer for
inspection are true, correct and complete and accurately reflect all
material corporate action taken by each of the Acquired Companies. The
directors and officers of each of the Acquired Companies are listed in
Schedule 3.1.(e).
3.1.(f) CAPITALIZATION OF THE ACQUIRED COMPANIES. The
authorized capital stock of each of the Acquired Companies is set
forth in Schedule 3.1(f). No shares of such capital stock are issued
or outstanding except for the shares which are owned of record and
beneficially by the Shareholders (directly in the case of OCR and
indirectly by Chemed) in the respective numbers set forth in Schedule
3.1.(f). All such shares of capital stock of each of the Acquired
Companies are validly issued, fully paid and nonassessable. There are
no (a) securities convertible into or exchangeable for any capital
stock or other securities of the Acquired Companies, (b) options,
warrants or other rights to purchase or subscribe to capital stock or
other securities of any of the Acquired Companies or securities which
are convertible into or exchangeable for capital stock or other
securities of any of the Acquired Companies, or (c) contracts,
commitments, agreements, understandings or arrangements of any kind
relating to the issuance, sale or transfer of any capital stock or
other equity securities of any of the Acquired Companies, any such
convertible or exchangeable securities or any such options, warrants
or other rights.
8
<PAGE> 14
3.2. SHAREHOLDERS.
3.2.(a) ORGANIZATION AND OWNERSHIP. Each of the Shareholders
is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. OCR is a
wholly-owned subsidiary of Chemed.
3.2.(b) POWER. Each Shareholder has full corporate power,
legal right and authority to enter into, execute and deliver this
Agreement and the other agreements, instruments and documents
contemplated hereby (such other documents sometimes referred to herein
as "Ancillary Instruments"), and to carry out the transactions
contemplated hereby.
3.2.(c) AUTHORIZATION. The execution and delivery of this
Agreement and the Ancillary Instruments, and full performance
thereunder, have been duly authorized by the respective boards of
directors and, if required, the shareholders of each Shareholder, and
no other or further corporate act on the part of any such Shareholder
is necessary therefor.
3.2.(d) VALIDITY. This Agreement has been duly and validly
executed and delivered by each Shareholder and is, and when executed
and delivered each Ancillary Instrument will be, the legal, valid and
binding obligation of such Shareholder, enforceable in accordance with
its terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally,
and by general equitable principles.
3.2.(e) TITLE. Each Shareholder (directly in the case of OCR
and indirectly in the case of Chemed) has, and at Closing Buyer will
receive, good and marketable title to the Shares to be sold by such
Shareholders hereunder, free and clear of all Liens (as defined in
Section 3.12) including, without limitation, voting trusts or
agreements and proxies.
3.3. NO VIOLATION. Except as set forth on Schedule 3.3, neither the
execution and delivery of this Agreement or the Ancillary Instruments nor the
consummation by the Shareholders of the transactions contemplated hereby and
thereby (a) will violate any statute, law, ordinance, rule or regulation
(collectively, "Laws") or any order, writ, injunction, judgment, plan or
decree (collectively, "Orders") of any court, arbitrator, department,
commission, board, bureau, agency, authority, instrumentality or other body,
whether federal, state, municipal, foreign or other (collectively, "Government
Entities"), (b) except for applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), will require any
authorization, consent, approval, exemption or other action by or notice to
any Government Entity (including, without limitation, under any
"plant-closing" or similar law), or (c) subject to obtaining the consents
referred to in Schedule 3.3, will violate or conflict with, or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or will result in the termination of, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the assets of any of the Acquired Companies (or the Shares)
9
<PAGE> 15
under, any term or provision of the charter or by-laws of the Acquired
Companies or the Shareholders or of any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which any of
the Acquired Companies or any Shareholder is a party or by which any of the
Acquired Companies or any Shareholder or any of its or their assets or
properties may be bound or affected.
3.4. FINANCIAL STATEMENTS. Included as Schedule 3.4 are true and
complete copies of the financial statements of each of the Acquired Companies
consisting of (i) balance sheets of each such Acquired Company as of December
31, 1994, 1995 and 1996, and the related statements of income for the years
then ended, and (ii) a combined balance sheet of the Acquired Companies as of
June 30, 1997 (the "Recent Balance Sheet"), and the related combined statement
of income for the six months then ended and for the corresponding period of
the prior year. All of such financial statements are true, complete and
accurate, have been prepared in accordance with generally accepted accounting
principles (except for the absence of footnote disclosure) applied on a
consistent basis, have been prepared in accordance with the books and records
of the Acquired Companies, and fairly present, in accordance with generally
accepted accounting principles, the assets, the liabilities and financial
position, and the results of operations of the Acquired Companies as of the
dates and for the years and periods indicated. The net intercompany receivable
of the Acquired Companies from Chemed (aggregating $10,512,000 at April 30,
1997) was distributed to Chemed prior to the Effective Time. In addition,
prior to the Effective Time, any advances to the officers of the Acquired
Companies have either been collected or written off. The Final Closing Balance
Sheet shall be in accordance with the specifications set forth in Article 2;
the Final Closing Balance Sheet shall be true, complete and accurate.
3.5. TAX MATTERS.
3.5.(a) PROVISION FOR TAXES. The provision or reserve made for
taxes on the face of the Recent Balance Sheet (excluding any such
provision or reserve set forth in the notes thereto) is sufficient for
the payment of all federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes
under Section 59A of the Internal Revenue Code of 1986, as amended
(the "Code")), customs, duties, capital stock, franchise, profits,
withholding, social security (or similar tax), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated,
or other tax or assessment of any kind whatsoever, including any
interest, penalty, or addition thereto, whether or not disputed ("Tax"
or "Taxes") at the date of the Recent Balance Sheet and for all years
and periods prior thereto. Since the date of the Recent Balance Sheet,
the Acquired Companies have not incurred any Taxes other than Taxes
incurred in the ordinary course of business consistent in type and
amount with past practices of the Acquired Companies.
3.5.(b) TAX RETURNS FILED. Except as set forth on Schedule
3.5.(b), all Tax returns required to be filed (including without
limitation all returns for periods ending on or before December 31,
1996) by or on behalf of each of the Acquired Companies have been
timely filed and when filed were true and correct in all respects, and
all Taxes have
10
<PAGE> 16
been paid or adequately accrued. True and complete copies of all Tax
returns or reports (and any examination reports and/or statements of
deficiency related thereto) filed by each of the Acquired Companies
for each of the five most recent fiscal years have been delivered to
Buyer. Each of the Acquired Companies has duly withheld and paid all
Taxes which it is required to withhold and pay relating to amounts
paid to the employees, independent contractors, creditors,
stockholders, or other third parties of such Acquired Company.
3.5.(c) TAX AUDITS. The Tax returns of the Acquired Companies
have been audited by the Internal Revenue Service or the appropriate
Tax authorities for the periods and to the extent set forth in
Schedule 3.5.(c), and the Acquired Companies have not received from
the Internal Revenue Service or from such Tax authorities any notice
of underpayment of Taxes or other deficiency which has not been paid
nor any objection to any return or report filed by the Acquired
Companies. There are no outstanding agreements or waivers extending
the statutory period of limitations applicable to any Tax return or
report.
3.5.(d) CONSOLIDATED GROUP. Schedule 3.5.(d) lists for each of
the Acquired Companies every year such Acquired Company was a member
of an affiliated group of corporations that filed a consolidated Tax
return on which the statute of limitations does not bar a federal or
state Tax assessment, and each corporation that has been part of such
group. No affiliated group of corporations of which any of the
Acquired Companies has been a member has discontinued filing
consolidated returns during the past five years. None of the Acquired
Companies have any liability for the Taxes of any person other than
the Acquired Companies (i) under Reg. ss. 1.1502-6 as promulgated
pursuant to the Code (or any similar provision of state, local, or
foreign law), (ii) as a transferee or successor, (iii) by contract, or
(iv) otherwise.
3.5.(e) OTHER. Except as set forth in Schedule 3.5.(e), each
of the Acquired Companies has not (i) filed any consent or agreement
under Section 341(f) of Code, (ii) applied for any tax ruling, (iii)
entered into a closing agreement with any taxing authority, (iv) filed
an election under Section 338(g) or Section 338(h)(10) of the Code
(nor has a deemed election under Section 338(e) of the Code occurred),
(v) made any payments, or been a party to an agreement (including this
Agreement) that under any circumstances could obligate it to make
payments that will not be deductible because of Section 280G or 162(m)
of the Code, or (vi) been a party to any Tax allocation or Tax sharing
agreement. Each of the Acquired Companies is not a "United States real
property holding company" within the meaning of Section 897 of the
Code.
3.5.(f) TAX BASIS. Schedule 3.5(f) sets forth the following
information with respect to each of the Acquired Companies as of the
most recent practicable date: (A) the original and adjusted tax basis
of its assets; (B) the amount of any net operating loss, net capital
loss, unused investment or other credit, unused foreign tax, or excess
charitable contribution allocable to the Acquired Companies; and (C)
the amount of any
11
<PAGE> 17
deferred gain or loss allocable to the Acquired Companies arising out
of any deferred intercompany transaction.
3.5.(g) DEDUCTIBILITY OF CERTAIN ASSETS. The goodwill and
other intangible assets reflected on the Recent Balance Sheet have
been and currently are tax deductible over a 15-year period (which
commenced as of the date such goodwill or intangible assets were
acquired) by the Acquired Companies for federal income tax purposes
pursuant to Section 197 of the Code (and for state, local, and foreign
income or franchise tax purposes under any corresponding state, local
or foreign tax law) and neither the Shareholders nor the Acquired
Companies have taken action or omitted to take action that could cause
or result in such deductibility being modified or denied or have
knowledge of any attempt or proposed action by the Internal Revenue
Service or other Tax authority to deny or modify such deductibility.
At June 30, 1997, such goodwill and other intangibles aggregated
$22,543,000 and $4,741,000, respectively.
3.6. ACCOUNTS RECEIVABLE. All accounts receivable of the Acquired
Companies reflected on the Recent Balance Sheet, and as incurred in the normal
course of business since the date thereof, represent arm's length sales
actually made in the ordinary course of business; are collectible (net of the
reserve shown on the Recent Balance Sheet for doubtful accounts) within 210
days of the date of such receivables without the necessity of commencing legal
proceedings; are subject to no counterclaim or setoff; and are not in dispute.
Schedule 3.6 contains an aged schedule of accounts receivable as of June 28,
1997. All accounts receivable of the Acquired Companies reflected on the Final
Closing Balance Sheet will represent arm's length sales actually made in the
ordinary course of business and will be collected (net of the reserve shown on
the Final Closing Balance Sheet for doubtful accounts) within 210 days of the
date of such receivables without the necessity of commencing legal proceedings
and will be subject to no counterclaim or set-off. If the Shareholders are
required to reimburse or indemnify Buyer for any uncollectible accounts
receivable, the Shareholders shall obtain the right to pursue collection of
such accounts receivable for their own benefit to the extent of such
indemnification.
3.7. INVENTORY. Except as set forth in Schedule 3.7 and except for the
inventory specifically identified in Section 2.1.(c), all inventory of the
Acquired Companies reflected on the Recent Balance Sheet had a commercial
value at least equal to the value shown on such balance sheet and is valued in
accordance with generally accepted accounting principles at the lower of cost
(on a FIFO basis) or market. All inventory purchased since the date of such
balance sheet consists of a quality and quantity useable and saleable in the
ordinary course of business. Except as set forth in Schedule 3.7, all
inventory of the Acquired Companies is located on premises owned or leased by
the Acquired Companies as reflected in this Agreement.
3.8. ABSENCE OF CERTAIN CHANGES. Except as and to the extent set forth
in Schedule 3.8, since December 31, 1996 there has not been:
3.8.(a) NO ADVERSE CHANGE. Any adverse change in the financial
condition, assets, liabilities, business, prospects or operations of
the Acquired Companies;
12
<PAGE> 18
3.8.(b) NO DAMAGE. Any loss, damage or destruction, whether
covered by insurance or not, affecting the business or properties of
the Acquired Companies;
3.8.(c) NO INCREASE IN COMPENSATION. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of any Acquired Company (including, without
limitation, any increase or change pursuant to any bonus, pension,
profit sharing, retirement or other plan or commitment), or any bonus
or other employee benefit granted, made or accrued, except, in the
case of employees only, for increases in base compensation made in the
ordinary course of business and not representing increases in excess
of 7% per annum in each case, and except for up to thirty (30)
employees with annual base salaries of less than $50,000 who may have
received increases in excess of 7%;
3.8.(d) NO LABOR DISPUTES. Any labor dispute or disturbance,
other than routine individual grievances which are not material to the
business, financial condition or results of operations of any Acquired
Company;
3.8.(e) NO COMMITMENTS. Any commitment or transaction by any
Acquired Company (including, without limitation, any borrowing or
capital expenditure) other than in the ordinary course of business
consistent with past practice;
3.8.(f) NO DIVIDENDS. Any declaration, setting aside, or
payment of any dividend or any other distribution in respect of the
capital stock of any Acquired Company; any redemption, purchase or
other acquisition by any Acquired Company of any of its respective
capital stock, or any security relating thereto; or any other payment
to any shareholder of any Acquired Company as such a shareholder;
3.8.(g) NO DISPOSITION OF PROPERTY. Any sale, lease or other
transfer or disposition of any properties or assets of any Acquired
Company exceeding $150,000 in the aggregate, except for the sale of
inventory items in the ordinary course of business and except for the
disposition of the Detroit Facility and the Pomona Facility (as such
terms are hereinafter defined);
3.8.(h) NO INDEBTEDNESS. Any indebtedness for borrowed money
incurred, assumed or guaranteed by any Acquired Company;
3.8.(i) NO LIENS. Any mortgage, pledge, lien or encumbrance
made on any of the properties or assets of any Acquired Company;
3.8.(j) NO AMENDMENT OF CONTRACTS. Any entering into,
amendment or termination by any Acquired Company of any contract, or
any waiver of material rights thereunder, other than in the ordinary
course of business;
3.8.(k) LOANS AND ADVANCES. Any loan or advance (other than
advances to employees in the ordinary course of business for travel
and entertainment in accordance
13
<PAGE> 19
with past practice) to any person including, but not limited to, any
Affiliate (for purposes of this Agreement, the term "Affiliate" shall
mean and include the Shareholders and the directors and officers of
either Shareholder or any Acquired Company; the spouse of any such
natural person; any natural person who would be the heir or descendant
of any such person if he or she were not living; and any entity in
which any of the foregoing has a direct or indirect interest, except
through ownership of less than 5% of the outstanding shares of any
entity whose securities are listed on an internationally recognized
securities exchange);
3.8.(l) CREDIT. Any grant of credit to any customer or
distributor on terms or in amounts more favorable than those which
have been extended to such customer or distributor in the past, any
other change in the terms of any credit heretofore extended, or any
other change of the policies or practices of any Acquired Company with
respect to the granting of credit; or
3.8.(m) NO UNUSUAL EVENTS. Any other event or condition not in
the ordinary course of business of the Acquired Companies.
3.9. ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
specifically disclosed in the Recent Balance Sheet, or in Schedule 3.9, the
Acquired Companies do not have any liabilities, commitments or obligations
(secured or unsecured, and whether accrued, absolute, contingent, direct,
indirect or otherwise), other than commercial liabilities and obligations
incurred since the date of the Recent Balance Sheet in the ordinary course of
business and consistent with past practice and none of which has or will have
a material adverse effect on the business, financial condition or results of
operations of the Acquired Companies taken as a whole. Except as and to the
extent described in the Recent Balance Sheet or in Schedule 3.9, neither the
Acquired Companies nor any Shareholder has knowledge of any basis for the
assertion against the Acquired Companies of any liability and there are no
circumstances, conditions, happenings, events or arrangements, contractual or
otherwise, which may give rise to liabilities, except commercial liabilities
and obligations incurred in the ordinary course of the business of the
Acquired Companies and consistent with past practice.
3.10. NO LITIGATION. Except as set forth in Schedule 3.10, there is no
action, suit, arbitration, proceeding, investigation or inquiry, whether
civil, criminal or administrative ("Litigation"), pending or threatened
against the Acquired Companies, their directors or officers (in such
capacity), their business or any of their assets, nor do the Acquired
Companies or any Shareholder know, or have grounds to know, of any basis for
any Litigation. Except for routine collection matters brought by one or more
of the Acquired Companies which have been resolved and closed and except for
such collection matters which are currently pending but in each case involve
claims for less than $20,000, Schedule 3.10 also identifies all Litigation to
which the Acquired Companies or any of their directors or officers (in such
capacity) have been parties since January 1, 1993. Except as set forth in
Schedule 3.10, neither the Acquired Companies nor their respective businesses
or assets are subject to any Order of any Government Entity.
14
<PAGE> 20
3.11. COMPLIANCE WITH LAWS AND ORDERS.
3.11.(a) COMPLIANCE. Except as set forth in Schedule 3.11.(a),
each Acquired Company (including each and all of its operations,
practices, properties and assets) is in compliance with all applicable
Laws and Orders, including, without limitation, those applicable to
discrimination in employment, occupational safety and health, trade
practices, competition and pricing, product warranties, zoning,
building and sanitation, employment, retirement and labor relations,
product advertising and the Environmental Laws (as hereinafter
defined). Except as set forth in Schedule 3.11.(a), the Acquired
Companies have not received notice of any violation or alleged
violation of, and are subject to no liability or other obligation for
past or continuing violation of, any Laws or Orders. All reports and
returns required to be filed by each Acquired Company with any
Government Entity have been filed, and were accurate and complete when
filed. Without limiting the generality of the foregoing:
(i) The operation of the business of the Acquired
Companies as it is now conducted does not, nor does any
condition existing at any of its facilities, in any manner
constitute a nuisance or other tortious interference with the
rights of any person or persons in such a manner as to give
rise to or constitute the grounds for a suit, action, claim or
demand by any such person or persons seeking compensation or
damages or seeking to restrain, enjoin or otherwise prohibit
any aspect of the conduct of such business or the manner in
which it is now conducted.
(ii) Each Acquired Company has made all required
payments to its unemployment compensation reserve accounts
with the appropriate governmental departments of the states
where it is required to maintain such accounts, and each of
such accounts has a positive balance.
(iii) Each Acquired Company has delivered to Buyer
copies of all reports of such Acquired Company for the past
five (5) years required under the federal Occupational Safety
and Health Act of 1970, as amended, and under all other
applicable health and safety laws and regulations. The
deficiencies, if any, noted on such reports have been
corrected.
(iv) Each Acquired Company is in compliance or has
fully complied with any and all reporting, notification,
recall and remedial action requirements of Laws applicable to
such company or the current or past sale of their Products (as
defined in Section 3.20).
3.11.(b) LICENSES, PERMITS AND APPROVALS. Each Acquired
Company has (and for discontinued Products had) all licenses, permits,
approvals, authorizations and consents of all Government Entities and
all certification organizations required for the conduct of its
business (as presently conducted and as proposed to be conducted) and
operation of its facilities. All such licenses, permits, approvals,
authorizations and
15
<PAGE> 21
consents are described in Schedule 3.11.(b), are in full force and
effect and will not be affected or made subject to loss, limitation or
any obligation to reapply as a result of the transactions contemplated
hereby. Except as set forth in Schedule 3.11.(b), each Acquired
Company (including its operations, properties and assets) is and has
been in compliance with all such permits and licenses, approvals,
authorizations and consents.
3.11.(c) ENVIRONMENTAL MATTERS. The applicable Laws relating
to pollution or protection of the environment, including Laws relating
to emissions, discharges, generation, storage, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic,
hazardous or petroleum or petroleum-based substances or wastes
("Waste") into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Waste
including, without limitation, the Clean Water Act, the Clean Air Act,
the Resource Conservation and Recovery Act, the Toxic Substances
Control Act and the Comprehensive Environmental Response Compensation
Liability Act ("CERCLA"), as amended, and their state and local
counterparts are herein collectively referred to as the "Environmental
Laws". Without limiting the generality of the foregoing provisions of
this Section 3.11, each of the Acquired Companies is in full
compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulations,
code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder. Except as
set forth in Schedule 3.11.(c), there is no Litigation nor any demand,
claim, hearing or notice of violation pending or threatened against
any Acquired Company relating in any way to the Environmental Laws or
any Order issued, entered, promulgated or approved thereunder. Except
as set forth in Schedule 3.11.(c), there are no past or present or, to
the best knowledge of the Acquired Companies and the Shareholders,
future events, conditions, circumstances, activities, practices,
incidents, actions, omissions or plans which may interfere with or
prevent compliance or continued compliance with the Environmental Laws
or with any Order issued, entered, promulgated or approved thereunder,
or which may give rise to any liability, including, without
limitation, liability under CERCLA or similar state or local Laws, or
otherwise form the basis in whole or in part of any Litigation,
hearing, notice of violation, study or investigation, based on or
related in any way to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling, or the emission,
discharge, migration, release or threatened release of or into the
environment, or exposure to, any Waste.
3.12. TITLE TO PROPERTIES.
3.12.(a) MARKETABLE TITLE. Except for the real estate relating
to the facility located at 19000 Fitzpatrick, Detroit, Michigan (the
"Detroit Facility") and the facility located at 1280 East 9th Street,
Pomona, California (the "Pomona Facility"), and except for inventory
disposed of in the ordinary course of business since the date of the
Recent Balance Sheet, each of the Acquired Companies has good and
marketable title to all of its
16
<PAGE> 22
assets, business and properties, including, without limitation, all
such properties (tangible and intangible) reflected in the Recent
Balance Sheet, free and clear of all mortgages, liens, (statutory or
otherwise) security interests, claims, pledges, licenses, equities,
options, conditional sales contracts, assessments, levies, easements,
covenants, reservations, restrictions, rights-of-way, exceptions,
limitations, charges or encumbrances of any nature whatsoever
(collectively, "Liens") except those reflected on the Recent Balance
Sheet and, in the case of real property, Liens for taxes not yet due
or which are being contested in good faith by appropriate proceedings
(and which have been sufficiently accrued or reserved against in the
Recent Balance Sheet), municipal and zoning ordinances and easements
for public utilities, none of which interfere with the use of the
property as currently utilized. None of the assets, business or
properties of the Acquired Companies are subject to any restrictions
with respect to the transferability thereof; and the title thereto
will not be affected in any way by the transactions contemplated
hereby. All buildings, plants and other structures owned or otherwise
utilized by each of the Acquired Companies are in good condition and
repair and have no structural defects or defects affecting the
plumbing, electrical, sewerage, or heating, ventilating or air
conditioning systems. Since the date of the Recent Balance Sheet and
prior to the Effective Time, OCR has acquired for no consideration
each of the Detroit Facility and the Pomona Facility and has assumed
all liabilities relating thereto, and (except for the lease for the
Detroit Facility referenced in Section 5.4 hereof) the Acquired
Companies have and in the future will have no liabilities or other
obligations (including, without limitation, liabilities under the
Environmental Laws) with respect to such facilities. All transfer
fees, all Taxes or other liabilities incurred by any Acquired Company
in connection with the transfer of the Detroit Facility and the Pomona
Facility have been paid by OCR. The Pomona Facility has not been used
to conduct the business of the Acquired Companies since June 1991.
3.12.(b) REAL PROPERTY. Schedule 3.12.(b) sets forth all real
property owned, used or occupied by each of the Acquired Companies
(the "Real Property"), including with respect to all owned Real
Property a description of all land, and all encumbrances, easements or
rights of way of record (or, if not of record, of which each such
company has notice or knowledge) granted on or appurtenant to or
otherwise affecting such Real Property, the zoning classification
thereof, and all plants, buildings or other structures located
thereon. There are no encumbrances, easements or rights of way, zoning
classifications or other restrictions or limitations that would
materially and adversely affect the use of any leased Real Property by
the Acquired Company which is the tenant with respect to such leased
Real Property. Schedule 3.12.(b) also sets forth, with respect to each
parcel of Real Property which is leased, the material terms of such
lease. There are now in full force and effect required duly issued
certificates of occupancy permitting the Real Property and
improvements located thereon to be legally used and occupied as the
same are now constituted. All of the owned Real Property has permanent
rights of access to dedicated public highways. No fact or condition
exists which would prohibit or adversely affect the ordinary rights of
access to and from the owned Real Property from and to the existing
highways and roads and there is no pending or threatened restriction
or denial, governmental or otherwise, upon such ingress and egress.
There is not (i) any claim of adverse possession or prescriptive
rights involving any of the
17
<PAGE> 23
owned Real Property, (ii) any structure located on any owned Real
Property which encroaches on or over the boundaries of neighboring or
adjacent properties, (iii) any structure of any other party which
encroaches on or over the boundaries of any of such owned Real
Property, or (iv) any material adverse other matter affecting the
owned Real Property that would be disclosed by an accurate ALTA survey
of such owned Real Property. Except as set forth in Schedule 3.12.(b),
none of the Real Property is located in a flood plain, flood hazard
area, wetland or lakeshore erosion area within the meaning of any Law,
regulation or ordinance. No public improvements have been commenced
and to the best knowledge of the Acquired Companies and the
Shareholders none are planned which in either case may result in
special assessments against or otherwise materially adversely affect
any Real Property. No portion of any of the Real Property has been
used as a landfill or for storage or landfill of hazardous or toxic
materials. Neither any Acquired Company nor any Shareholder has notice
or knowledge of any (i) planned or proposed increase in assessed
valuations of any Real Property, (ii) Order requiring repair,
alteration, or correction of any existing condition affecting any Real
Property or the systems or improvements thereat, (iii) condition or
defect which could give rise to an order of the sort referred to in
"(ii)" above, (iv) underground storage tanks, or any structural,
mechanical, or other defects of material significance affecting any
Real Property or the systems or improvements thereat (including, but
not limited to, inadequacy for normal use of mechanical systems or
disposal or water systems at or serving the Real Property), or (v)
work that has been done or labor or materials that has or have been
furnished to any Real Property during the period of six (6) months
immediately preceding the date of this Agreement for which Liens could
be filed against any of the Real Property.
3.12.(c) NO CONDEMNATION OR EXPROPRIATION. Neither the whole
nor any portion of the property or any other assets of any Acquired
Company is subject to any Order to be sold or is being condemned,
expropriated or otherwise taken by any Government Entity with or
without payment of compensation therefor, nor to the best knowledge of
the Acquired Companies or the Shareholders has any such condemnation,
expropriation or taking been proposed.
3.13. INSURANCE. Set forth in Schedule 3.13 is a complete and accurate
list and description of all policies of fire, liability, product liability,
workers compensation, health and other forms of insurance presently in effect
with respect to the business and properties of each of the Acquired Companies,
true and correct copies of which have heretofore been delivered to Buyer.
Schedule 3.13 includes, without limitation, the carrier, the description of
coverage, the limits of coverage, retention or deductible amounts, amount of
annual premiums, date of expiration and the date through which premiums have
been paid with respect to each such policy, and any pending claims in excess
of $50,000. All such policies are valid, outstanding and enforceable policies
and provide insurance coverage for the properties, assets and operations of
each of the Acquired Companies, of the kinds, in the amounts and against the
risks customarily maintained by organizations similarly situated; and no such
policy (nor any previous policy) provides for or is subject to any currently
enforceable retroactive rate or premium adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially out of
events arising prior to the date hereof. Schedule 3.13 indicates each policy
as to which (a) the coverage
18
<PAGE> 24
limit has been reached or (b) the total incurred losses to date equal 75% or
more of the coverage limit. No notice of cancellation or termination has been
received with respect to any such policy, and neither any Acquired Company nor
any Shareholder has knowledge of any act or omission which could result in
cancellation of any such policy prior to its scheduled expiration date. No
Acquired Company has been refused any insurance with respect to any aspect of
the operations of its business nor has its coverage been limited by any
insurance carrier to which it has applied for insurance or with which it has
carried insurance during the last three years. Each of the Acquired Companies
has duly and timely made all claims it has been entitled to make under each
policy of insurance. Since January 1, 1993, all general liability policies
maintained by or for the benefit of any Acquired Company have been
"occurrence" policies and not "claims made" policies. There is no claim by any
Acquired Company pending under any such policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies, and
neither the Acquired Companies nor any Shareholder knows of any basis for
denial of any claim under any such policy. No Acquired Company has received
any written notice from or on behalf of any insurance carrier issuing any such
policy that insurance rates therefor will hereafter be substantially increased
(except to the extent that insurance rates may be increased for all similarly
situated risks) or that there will hereafter be a cancellation or an increase
in a deductible (or an increase in premiums in order to maintain an existing
deductible) or nonrenewal of any such policy. Such policies are sufficient in
all material respects for compliance by each of the Acquired Companies with
all requirements of law and with the requirements of all material contracts to
which any of them is a party. Schedule 3.13 describes any self-insurance
arrangements affecting any of the Acquired Companies. Except for reserves
established for and relating to workers' compensation claims, the reserves
established by the Acquired Companies are adequate to dispose of any liability
under such self-insurance arrangements.
3.14. CONTRACTS AND COMMITMENTS.
3.14.(a) REAL PROPERTY LEASES. Except as set forth in Schedule
3.12.(b), the Acquired Companies have no leases of real property. The
leases set forth in Schedule 3.12.(b) are valid and in full force and
effect and the amounts required to be paid thereunder by the Acquired
Companies have been paid.
3.14.(b) PERSONAL PROPERTY LEASES. Except as set forth in
Schedule 3.14.(b), the Acquired Companies have no leases of personal
property involving consideration or other expenditure in excess of
$50,000.
3.14.(c) PURCHASE COMMITMENTS. The Acquired Companies have no
purchase commitments for inventory items or supplies that, together
with amounts on hand, constitute in excess of four months normal
usage, or which are at an excessive price.
3.14.(d) SALES COMMITMENTS. Except as set forth in Schedule
3.14.(d), the Acquired Companies have no sales contracts or
commitments to customers or distributors which aggregate in excess of
$100,000 to any one customer or distributor (or group of affiliated
customers or distributors). The Acquired Companies have no sales
contracts or commitments except those made in the ordinary course of
business, at arm's
19
<PAGE> 25
length, and no such contracts or commitments are for a sales price
which would result in a loss to any Acquired Company.
3.14.(e) CONTRACTS WITH AFFILIATES AND CERTAIN OTHERS. Except
as set forth in Schedule 3.14.(e), the Acquired Companies have no
agreement, understanding, contract or commitment (written or oral)
with any Affiliate or any employee, agent, consultant, distributor,
dealer or franchisee that is not cancelable by the Acquired Company
which is a party thereto on notice of not longer than 30 days without
liability, penalty or premium of any nature or kind whatsoever.
3.14.(f) POWERS OF ATTORNEY. No Acquired Company has given a
power of attorney, which is currently in effect, to any person, firm
or corporation for any purpose whatsoever.
3.14.(g) COLLECTIVE BARGAINING AGREEMENTS. Except as set forth
in Schedule 3.14.(g), no Acquired Company is a party to any collective
bargaining agreements with any unions, guilds, shop committees or
other collective bargaining groups. Copies of all such agreements have
heretofore been delivered to Buyer.
3.14.(h) LOAN AGREEMENTS. Except as set forth in Schedule
3.14.(h), no Acquired Company is obligated under any loan agreement,
promissory note, letter of credit, or other evidence of indebtedness
as a signatory, guarantor or otherwise.
3.14.(i) GUARANTEES. Except as disclosed on Schedule 3.14.(i),
no Acquired Company has guaranteed the payment or performance of any
person, firm or corporation, agreed to indemnify any person or act as
a surety, or otherwise agreed to be contingently or secondarily liable
for the obligations of any person.
3.14.(j) CONTRACTS SUBJECT TO RENEGOTIATION. No Acquired
Company is a party to any contract with any governmental body which is
subject to renegotiation.
3.14.(k) BURDENSOME OR RESTRICTIVE AGREEMENTS. No Acquired
Company is a party to or is it bound by any agreement, deed, lease or
other instrument which is so burdensome as to materially affect or
impair the operation of such Acquired Company, except as provided in
Schedule 3.14.(k). Without limiting the generality of the foregoing,
except as set forth on Schedule 3.14.(k), no Acquired Company is a
party to or is it bound by any agreement requiring it to assign any
interest in any trade secret or proprietary information, or
prohibiting or restricting it from competing in any business or
geographical area or soliciting customers or otherwise restricting it
from carrying on its business anywhere in the world.
3.14.(l) OTHER MATERIAL CONTRACTS. No Acquired Company is
party to any contract or commitment of any nature involving
consideration or other expenditure in excess of $50,000, or involving
performance (other than with respect to leases) over a period of more
than 12 months, or which is otherwise individually material to the
20
<PAGE> 26
operations of the Acquired Companies taken as a whole, except as
explicitly described in Schedule 3.14.(l) or in any other Schedule.
3.14.(m) NO DEFAULT. No Acquired Company is in default under
any lease, contract or commitment, nor has any event or omission
occurred which through the passage of time or the giving of notice, or
both, would constitute a default thereunder or cause the acceleration
of any of its obligations or result in the creation of any Lien on any
of the assets owned, used or occupied by such Acquired Company. No
third party is in default under any lease, contract or commitment to
which any Acquired Company is a party, nor has any event or omission
occurred which, through the passage of time or the giving of notice,
or both, would constitute a default thereunder or give rise to an
automatic termination, or the right of discretionary termination,
thereof.
3.15. LABOR MATTERS. Except as set forth in Schedule 3.15, within the
last five years no Acquired Company has experienced any labor disputes, union
organization attempts or any work stoppage due to labor disagreements in
connection with its business. Except to the extent set forth in Schedule 3.15,
(a) each of the Acquired Companies is in compliance with all applicable Laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor
practice; (b) there is no unfair labor practice charge or complaint against
any Acquired Company pending or threatened; (c) there is no labor strike,
dispute, request for representation, slowdown or stoppage actually pending or
threatened against or affecting any Acquired Company nor any secondary boycott
with respect to products of any Acquired Company; (d) no question concerning
representation has been raised or is threatened respecting the employees of
any Acquired Company; (e) no grievance which might have a material adverse
effect on any Acquired Company, nor any arbitration proceeding arising out of
or under collective bargaining agreements, is pending and no such claim
therefor exists; and (f) there are no administrative charges or court
complaints against any Acquired Company concerning alleged employment
discrimination or other employment related matters pending or threatened
before any Government Entity.
3.16. EMPLOYEE BENEFIT PLANS.
3.16.(a) DISCLOSURE. Schedule 3.16.(a) sets forth all pension,
thrift, savings, profit sharing, retirement, incentive bonus or other
bonus, medical, dental, life, accident insurance, benefit, employee
welfare, disability, group insurance, stock purchase, stock option,
stock appreciation, stock bonus, executive or deferred compensation,
hospitalization and other similar fringe or employee benefit plans,
programs and arrangements, and any employment or consulting contracts,
"golden parachutes," collective bargaining agreements, severance
agreements or plans, vacation and sick leave plans, programs,
arrangements and policies, including, without limitation, all
"employee benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), all
employee manuals, and all written or binding oral statements of
policies, practices or understandings relating to employment, which
are provided to, for the benefit of, or relate to, any persons
employed by the Acquired Companies. The items described in the
foregoing sentence are hereinafter sometimes
21
<PAGE> 27
referred to collectively as "Employee Plans/Agreements," and each
individually as an "Employee Plan/Agreement." True and correct copies
of all the Employee Plans/Agreements, including all amendments
thereto, have heretofore been provided to Buyer. Each of the Employee
Plans/Agreements is identified on Schedule 3.16.(a), to the extent
applicable, as one or more of the following: an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA), a "defined
benefit plan" (as defined in Section 414 of the Code), an "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA), and/or as
a plan intended to be qualified under Section 401 of the Code. Except
as set forth in Schedule 3.16.(a), no Employee Plan/Agreement is a
"multiemployer plan" (as defined in Section 4001 of ERISA), and none
of the Acquired Companies has ever contributed nor been obligated to
contribute to any such multiemployer plan.
3.16.(b) TERMINATIONS, PROCEEDINGS, PENALTIES, ETC. With
respect to each employee benefit plan (including, without limitation,
the Employee Plans/Agreements) that is subject to the provisions of
Title IV of ERISA and with respect to which the Acquired Companies or
any of their assets may, directly or indirectly, be subject to any
liability, contingent or otherwise, or the imposition of any Lien
(whether by reason of the complete or partial termination of any such
plan, the funded status of any such plan, any "complete withdrawal"
(as defined in Section 4203 of ERISA) or "partial withdrawal" (as
defined in Section 4205 of ERISA) by any person from any such plan, or
otherwise):
(i) no such plan has been terminated so as to subject,
directly or indirectly, any assets of any Acquired Company to
any liability, contingent or otherwise, or the imposition of
any lien under Title IV of ERISA;
(ii) no proceeding has been initiated or threatened by
any person (including the Pension Benefit Guaranty Corporation
("PBGC")) to terminate any such plan;
(iii) no condition or event currently exists or
currently is expected to occur that could subject, directly or
indirectly, any assets of any Acquired Company to any
liability, contingent or otherwise, or the imposition of any
lien under Title IV of ERISA, whether to the PBGC or to any
other person or otherwise on account of the termination of any
such plan;
(iv) if any such plan were to be terminated as of the
Closing Date, no assets of any Acquired Company would be
subject, directly or indirectly, to any liability, contingent
or otherwise, or the imposition of any lien under Title IV of
ERISA;
(v) no "reportable event" (as defined in Section 4043
of ERISA) has occurred with respect to any such plan;
(vi) no such plan which is subject to Section 302 of
ERISA or Section 412 of the Code has incurred any "accumulated
funding deficiency"
22
<PAGE> 28
(as defined in Section 302 of ERISA and Section 412 of the
Code, respectively), whether or not waived; and
(vii) no such plan is a multiemployer plan or a plan
described in Section 4064 of ERISA.
3.16.(c) PROHIBITED TRANSACTIONS, ETC. There have been no
"prohibited transactions" within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code for which a statutory or
administrative exemption does not exist with respect to any Employee
Plan/Agreement, and no event or omission has occurred in connection
with which any Acquired Company or any of their assets or any Employee
Plan/Agreement, directly or indirectly, could be subject to any
liability under ERISA, the Code or any other Law or Order applicable
to any Employee Plan/Agreement, or under any agreement, instrument,
Law or Order pursuant to or under which any Acquired Company has
agreed to indemnify or is required to indemnify any person against
liability incurred under any such Law or Order.
3.16.(d) FULL FUNDING. The funds available under each Employee
Plan/Agreement which is intended to be a funded plan exceed the
amounts required to be paid, or which would be required to be paid if
such Employee Plan/Agreement were terminated, on account of rights
vested or accrued as of the Closing Date (using the actuarial methods
and assumptions then used by actuaries of the Acquired Companies in
connection with the funding of such Employee Plan/Agreement).
3.16.(e) CONTROLLED GROUP; AFFILIATED SERVICE GROUP; LEASED
EMPLOYEES. Except as set forth in Schedule 3.16.(e), each of the
Acquired Companies is not and never has been a member of a controlled
group of corporations as defined in Section 414(b) of the Code or in
common control with any unincorporated trade or business as determined
under Section 414(c) of the Code. Except as set forth in Schedule
3.16.(e), each of the Acquired Companies is not and never has been a
member of an "affiliated service group" within the meaning of Section
414(m) of the Code. Except as set forth in Schedule 3.16.(e), there
are not and never have been any leased employees within the meaning of
Section 414(n) of the Code who perform services for the Acquired
Companies, and no individuals are expected to become leased employees
with the passage of time. With respect to any entity identified on
Schedule 3.16.(e), the representations and warranties in the last
sentence of Section 3.16.(a) hereof and all of Section 3.16.(b) hereof
would be accurate if all of such entities were included as "Acquired
Companies" for purposes of Sections 3.16.(a) and 3.16.(b) hereof.
3.16.(f) PAYMENTS AND COMPLIANCE. With respect to each
Employee Plan/Agreement, (i) all payments due from any Acquired
Company to date have been made and all amounts properly accrued to
date as liabilities of any Acquired Company which have not been paid
have been properly recorded on the books of such Acquired Company and
are reflected in the Recent Balance Sheet; (ii) each of the Acquired
Companies has complied with, and each such Employee Plan/Agreement
conforms in form and operation
23
<PAGE> 29
to, all applicable Laws and regulations, including but not limited to
ERISA and the Code, in all respects and all reports and information
relating to such Employee Plan/Agreement required to be filed with any
Governmental Entity have been timely filed; (iii) all reports and
information relating to each such Employee Plan/ Agreement required to
be disclosed or provided to participants or their beneficiaries have
been timely disclosed or provided; (iv) each such Employee
Plan/Agreement which is intended to qualify under Section 401 of the
Code has received a favorable determination letter from the Internal
Revenue Service with respect to such qualification, its related trust
has been determined to be exempt from taxation under Section 501(a) of
the Code, and nothing has occurred since the date of such letter that
has or is likely to adversely affect such qualification or exemption;
(iv) there are no actions, suits or claims pending (other than routine
claims for benefits) or threatened with respect to such Employee Plan/
Agreement or against the assets of such Employee Plan/Agreement; and
(v) no Employee Plan/Agreement is a plan which is established and
maintained outside the United States primarily for the benefit of
individuals substantially all of whom are nonresident aliens.
3.16.(g) POST-RETIREMENT BENEFITS. Except as set forth on
Schedule 3.16.(g), no Employee Plan/Agreement provides benefits,
including, without limitation, death or medical benefits (whether or
not insured) with respect to current or former employees of the
Acquired Companies beyond their retirement or other termination of
service other than (i) coverage mandated by applicable law, (ii) death
or retirement benefits under any Employee Plan/Agreement that is an
employee pension benefit plan, (iii) deferred compensation benefits
accrued as liabilities on the books of the Acquired Companies
(including the Recent Balance Sheet), (iv) disability benefits under
any Employee Plan/Agreement that is an employee welfare benefit plan
and which have been fully provided for by insurance or otherwise, (v)
benefits in the nature of severance pay or (vi) as set forth in
Schedule 3.16.(g).
3.16.(h) NO TRIGGERING OF OBLIGATIONS. The consummation of the
transactions contemplated by this Agreement will not (i) entitle any
current or former employee of any Acquired Company to severance pay,
unemployment compensation or any other payment, (ii) accelerate the
time of payment or vesting, or increase the amount of compensation due
to any such employee or former employee or (iii) result in any
prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code for which an exemption is not available. Buyer
covenants that any liability for severance payments to employees of
the Acquired Companies (other than for Messrs. Devlin, Naglick and
Williams) arising after the Closing Date and resulting from actions
taken by Buyer after the Closing Date (other than any rights to
severance benefits that arise as a result of the transactions
contemplated by this Agreement) shall be the sole responsibility of
Buyer.
24
<PAGE> 30
3.16.(i) DELIVERY OF DOCUMENTS. There has been delivered to
Buyer, with respect to each Employee Plan/Agreement:
(i) a copy of the annual report, if required under
ERISA, with respect to each such Employee Plan/Agreement for
the last two years;
(ii) a copy of the summary plan description, together
with each summary of material modifications, required under
ERISA with respect to such Employee Plan/Agreement, all
material employee communications relating to such Employee
Plan/Agreement, and, unless the Employee Plan/ Agreement is
embodied entirely in an insurance policy to which any Acquired
Company is a party, a true and complete copy of such Employee
Plan/Agreement;
(iii) if the Employee Plan/Agreement is funded through
a trust or any third party funding vehicle (other than an
insurance policy), a copy of the trust or other funding
agreement and the latest financial statements thereof; and
(iv) the most recent determination letter received
from the Internal Revenue Service with respect to each
Employee Plan/Agreement that is intended to be a "qualified
plan" under Section 401 of the Code.
With respect to each Employee Plan/Agreement for which an annual
report has been filed and delivered to Buyer pursuant to clause (i) of
this Section 3.16.(i), no material adverse change has occurred with
respect to the matters covered by the latest such annual report since
the date thereof.
3.16.(j) FUTURE COMMITMENTS. No Acquired Company has an
announced plan or legally binding commitment to create any additional
Employee Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement.
3.17. EMPLOYMENT COMPENSATION. Schedule 3.17 contains a true and
correct list of all employees to whom any Acquired Company is paying
compensation, including bonuses and incentives, at an annual rate in excess of
$50,000 for services rendered or otherwise; and in the case of salaried
employees such list identifies the current annual rate of compensation for
each employee and in the case of hourly or commission employees identifies
certain reasonable ranges of rates and the number of employees falling within
each such range.
3.18. TRADE RIGHTS. Schedule 3.18 lists all Trade Rights (as defined
below) in which each of the Acquired Companies now has any interest,
specifying whether such Trade Rights are owned, controlled, used or held
(under license or otherwise) by such company, and also indicating which of
such Trade Rights are registered. All Trade Rights shown as registered in
Schedule 3.18 have been properly registered, all pending registrations and
applications have been properly made and filed and all annuity, maintenance,
renewal and other fees relating to registrations or applications are current.
In order to conduct the business of each of the Acquired Companies, as
25
<PAGE> 31
such is currently being conducted or proposed to be conducted, such company
does not require any Trade Rights that it does not already have. The Acquired
Companies are not infringing and have not infringed any Trade Rights of
another in the operation of their businesses, nor is any other person
infringing the Trade Rights of the Acquired Companies. No Acquired Company has
granted any license or made any assignment of any Trade Right listed on
Schedule 3.18, nor does any Acquired Company pay any royalties or other
consideration for the right to use any Trade Rights of others. There is no
Litigation pending or threatened to challenge any Acquired Company's right,
title and interest with respect to its continued use and right to preclude
others from using any of its Trade Rights. All Trade Rights of the Acquired
Companies are valid, enforceable and in good standing, and there are no
equitable defenses to enforcement based on any act or omission of any Acquired
Company. The consummation of the transactions contemplated hereby will not
alter or impair any Trade Rights owned or used by any Acquired Company. As
used herein, the term "Trade Rights" shall mean and include: (i) all trademark
rights, business identifiers, trade dress, service marks, trade names and
brand names, all registrations thereof and applications therefor and all
goodwill associated with the foregoing; (ii) all copyrights, copyright
registrations and copyright applications, and all other rights associated with
the foregoing and the underlying works of authorship; (iii) all patents and
patent applications, and all international proprietary rights associated
therewith; (iv) all contracts or agreements granting any right, title, license
or privilege under the intellectual property rights of any third party; (v)
all inventions, mask works and mask work registrations, know-how, discoveries,
improvements, designs, trade secrets, shop and royalty rights, employee
covenants and agreements respecting intellectual property and non-competition
and all other types of intellectual property; and (vi) all claims for
infringement or breach of any of the foregoing.
3.19. MAJOR CUSTOMERS AND SUPPLIERS.
3.19.(a) MAJOR CUSTOMERS. Schedule 3.19.(a) contains a list of
the ten largest customers, including distributors, of the Acquired
Companies for each of the two (2) most recent fiscal years (determined
on the basis of the total amount of net sales) showing the total
amount of net sales to each such customer during each such year.
Neither the Acquired Companies nor any Shareholder has any knowledge
or information of any facts indicating, nor any other reason to
believe, that any of the customers listed on Schedule 3.19.(a) will
not continue to be customers of the business of the Acquired Companies
after the Closing at substantially the same level of purchases as
heretofore.
3.19.(b) MAJOR SUPPLIERS. Schedule 3.19.(b) contains a list of
the ten largest suppliers to the Acquired Companies for each of the
two (2) most recent fiscal years (determined on the basis of the total
amount of purchases) showing the total amount of purchases from each
such supplier during each such year. Neither the Acquired Companies
nor any Shareholder has any knowledge or information of any facts
indicating, nor any other reason to believe, that any of the suppliers
listed on Schedule 3.19.(b) will not continue to be suppliers to the
business of the Acquired Companies after the Closing and will not
continue to supply the business with substantially the same quantity
and quality of goods at competitive prices.
26
<PAGE> 32
3.19.(c) DEALERS AND DISTRIBUTORS. Section 3.19.(c) contains a
list by product line of all sales representatives, dealers,
distributors and franchisees of the Acquired Companies, together with
representative copies of all sales representative, dealer, distributor
and franchise contracts and policy statements, and a description of
all substantial modifications or exceptions.
3.20. PRODUCT WARRANTY AND PRODUCT LIABILITY. Schedule 3.20 contains a
true, correct and complete copy of the standard warranty or warranties of the
Acquired Companies for sales of Products (as defined below) and, except as
stated therein, there are no warranties, commitments or obligations with
respect to the return, repair or replacement of Products. Schedule 3.20 sets
forth the estimated aggregate annual cost to the Acquired Companies of
performing warranty obligations for customers for each of the two preceding
fiscal years and the current fiscal year to the date of the Recent Balance
Sheet. Schedule 3.20 contains a description of all product liability claims
and similar Litigation relating to products manufactured or sold, or services
rendered, which are presently pending or which to the best knowledge of any
Acquired Company or Shareholder are threatened, or which have been asserted or
commenced against any Acquired Company within the last five years, in which a
party thereto either requests injunctive relief or alleges damages in excess
of $5,000 (whether or not covered by insurance). There are no defects in
design, construction or manufacture of the Products which would adversely
affect performance, create an unusual risk of injury to persons or property or
require notification to end-users, recall or remedial action under applicable
Laws. None of the Products has been the subject of (i) any Medication and
Device Experience Report ("MDR"); or (ii) any remedial action replacement,
field fix, retrofit, modification or recall campaign by any Acquired Company
and, to the best knowledge of any Acquired Company or Shareholder, no facts or
conditions exist which could reasonably be expected to result in such a MDR or
recall campaign. The Products have been designed and manufactured so as to
meet and comply with all governmental standards, specifications and Laws
currently in effect. Such products have received all approvals from
Governmental Entities or certificates necessary to allow their sale and use,
including applicable stock certificates. As used in this Section 3.20, the
term "Products" means any and all products currently or at any time previously
manufactured, distributed or sold by any Acquired Company, or by any
predecessor of any Acquired Company under any brand name or mark under which
products are or have been manufactured, distributed or sold by any Acquired
Company.
3.21. BANK ACCOUNTS. Schedule 3.21 sets forth the names and locations
of all banks, trust companies, savings and loan associations and other
financial institutions at which any Acquired Company maintains a safe deposit
box, lock box or checking, savings, custodial or other account of any nature,
the type and number of each such account and the signatories therefore, a
description of any compensating balance arrangements, and the names of all
persons authorized to draw thereon, make withdrawals therefrom or have access
thereto.
3.22. AFFILIATES' RELATIONSHIPS.
3.22.(a) CONTRACTS WITH AFFILIATES. All leases, contracts,
agreements or other arrangements between any Acquired Company and any
Affiliate (including any Shareholder) are described on Schedule
3.22.(a).
27
<PAGE> 33
3.22.(b) NO ADVERSE INTERESTS. No Affiliate has any direct or
indirect interest in (i) any entity which does business with any
Acquired Company or is competitive with the business of the Acquired
Companies, or (ii) any property, asset or right which is used by the
Acquired Companies in the conduct of their business.
3.22.(c) OBLIGATIONS. All obligations of any Affiliate to any
Acquired Company, and all obligations of any Acquired Company to any
Affiliate, are listed on Schedule 3.22.(c).
3.23. ASSETS NECESSARY TO BUSINESS. The Acquired Companies presently
have and at the Closing (provided that the lease relating to the Detroit
Facility as contemplated by Section 5.4 has been entered into) will have good,
valid and marketable title to all property and assets, tangible and
intangible, and all leases, licenses and other agreements, necessary to permit
Buyer to carry on the business of the Acquired Companies as presently
conducted and as conducted as reflected in the financial statements described
in Section 3.4 hereof.
3.24. NO BROKERS OR FINDERS. Neither the Acquired Companies nor the
Shareholders nor any of their directors, officers, employees, shareholders or
agents have retained, employed or used any broker or finder in connection with
the transactions provided for herein or in connection with the negotiation
thereof.
3.25. DISCLOSURE. No representation or warranty by the Shareholders in
this Agreement, nor any statement, certificate, schedule, document or exhibit
hereto furnished or to be furnished by or on behalf of the Acquired Companies
and/or the Shareholders pursuant to this Agreement or in connection with
transactions contemplated hereby, contains or shall contain any untrue
statement of material fact or omits or shall omit a material fact necessary to
make the statements contained therein not misleading. All statements and
information contained in any certificate, instrument, Disclosure Schedule or
document delivered by or on behalf of the Acquired Companies and/or the
Shareholders shall be deemed representations and warranties by the
Shareholders.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to the
Shareholders, each of which is true and correct on the date hereof, shall be
unaffected by any investigation heretofore or hereafter made by the
Shareholders or any notice to the Shareholders, and shall survive the Closing
of the transactions provided for herein.
4.1. CORPORATE.
4.1.(a) ORGANIZATION. Buyer is a corporation duly organized
and validly existing under the laws of the State of Wisconsin.
28
<PAGE> 34
4.1.(b) CORPORATE POWER. Buyer has all requisite corporate
power to enter into this Agreement and the other documents and
instruments to be executed and delivered by Buyer and to carry out the
transactions contemplated hereby and thereby.
4.2. AUTHORITY. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by Buyer pursuant
hereto and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by the Board of Directors of Buyer. No other
corporate act or proceeding on the part of Buyer or its shareholders is
necessary to authorize this Agreement or the other documents and instruments
to be executed and delivered by Buyer pursuant hereto or the consummation of
the transactions contemplated hereby and thereby. This Agreement constitutes,
and when executed and delivered, the other documents and instruments to be
executed and delivered by Buyer pursuant hereto will constitute, valid and
binding agreements of Buyer, enforceable in accordance with their respective
terms, except as such may be limited by bankruptcy, insolvency, reorganization
or other Laws affecting creditors' rights generally, and by general equitable
principles.
4.3. NO BROKERS OR FINDERS. Neither Buyer nor any of its directors,
officers, employees or agents have retained, employed or used any broker or
finder in connection with the transaction provided for herein or in connection
with the negotiation thereof.
4.4. DISCLOSURE. No representation or warranty by Buyer in this
Agreement, nor any statement, certificate, schedule, document or exhibit
hereto furnished or to be furnished by or on behalf of Buyer pursuant to this
Agreement or in connection with transactions contemplated hereby, contains or
shall contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statements contained therein not
misleading.
4.5. INVESTMENT INTENT. The Shares are being acquired by Buyer for
investment only and not with the view to resale or other distribution.
5. COVENANTS
5.1. TITLE INSURANCE. The Shareholders, at their expense, shall
provide to Buyer prior to Closing title insurance commitments, issued by a
title insurance company or companies reasonably satisfactory to Buyer,
agreeing to issue to the Acquired Companies standard form owner's policies of
title insurance with respect to all owned Real Property, together with a copy
of each document to which reference is made in such commitments. Such policies
shall be standard ALTA Form 1990 owner's policies in the full fair market
value thereof, insuring good and marketable title thereto (expressly including
all easements and other appurtenances). All policies shall insure title in
full accordance with the representations and warranties set forth herein and
shall be subject only to such conditions and exceptions as shall be reasonably
acceptable to Buyer, and shall contain such endorsements as Buyer shall
reasonably request (including, but not limited to, an endorsement over rights
of creditors, if requested by Buyer).
5.2. SURVEYS. The Shareholders, at their expense, shall provide to
Buyer as soon as is reasonably practicable after Closing surveys of all owned
Real Property, prepared in accordance
29
<PAGE> 35
with ALTA/ASCM standards, each dated no more than ninety (90) days prior to
the date of delivery to Buyer and each detailing the legal description, the
perimeter boundaries, all improvements located thereon, all easements and
encroachments affecting each such parcel of Real Property and such other
matters as may be reasonably requested by Buyer or the title insurance
companies, each containing a surveyor certificate reasonably acceptable to
Buyer and the title insurance companies, and each prepared by a registered
land surveyor satisfactory to Buyer.
5.3. ENVIRONMENTAL AND OSHA AUDITS. Buyer (at its option) will prior
to Closing have retained a firm engaged in the regular business of
environmental engineering and such firm will have conducted such environmental
audits of the operations of the Acquired Companies and the real estate
occupied or previously owned or occupied by the Acquired Companies as Buyer in
its discretion shall consider necessary or appropriate. In addition, Buyer (at
its option) will prior to Closing have retained a firm engaged in the business
of performing compliance audits relating to Laws governing occupational health
and safety matters and such firm shall have conducted such reviews of the
operations of the Acquired Companies as Buyer in its discretion shall consider
necessary or appropriate.
5.4. LEASE FOR DETROIT FACILITY; GUARANTY FOR TROY FACILITY. At the
Closing, OCR and Omnia Corporation shall execute and deliver a lease for the
Detroit Facility in the form of Exhibit A hereto. At the Closing, Buyer will
enter into a guaranty of the Acquired Companies' obligations with respect to
the lease for the space located at 50 Big Beaver, Suite 350, Troy, Michigan
(the "Troy Guaranty").
5.5. EMPLOYMENT AGREEMENTS; TRANSITIONAL SERVICES. Chemed acknowledges
that it currently has employment agreements, as amended, with each of James H.
Devlin, John Naglick, Jr. and David P. Williams and that, at Closing, Chemed
will continue to employ and assume all liability for (and indemnify, defend
and hold the Acquired Companies and Buyer harmless with respect to) such
employment contracts. Chemed further acknowledges that Buyer may, but is not
obligated to, offer one or both of Messrs. Devlin and Naglick full-time
employment with one or more of the Acquired Companies and Chemed waives any
claims, actions or the like it may have against Buyer or the Acquired
Companies resulting from any such offer or offers of employment or the
transactions contemplated by this Section 5.5. Chemed further consents to and
acknowledges that, as contemplated by Section 9.1.(c), Buyer will enter into
Noncompetition and Consulting Agreements with Messrs. Devlin and Naglick in
connection with the Closing. In addition, Chemed acknowledges that it has an
employment agreement, dated May 16, 1994, with Christopher J. Heaney, which
agreement has been amended by amendment no. 1 thereto, dated May 15, 1995, by
amendment no. 2 thereto, dated May 20, 1996, and by amendment no. 3 thereto,
dated May 19, 1997 (such employment agreement as so amended is hereinafter
referred to as the "Heaney Employment Agreement"). Chemed agrees to continue
to employ Mr. Heaney pursuant to the terms of the Heaney Employment Agreement
and represents and warrants that it has not taken and will not take any action
(including, without limitation, consummation of the transactions contemplated
by this Agreement), and has not omitted and will not omit to take any action
that would constitute a termination of Mr. Heaney "Without Cause" as such term
is defined in the Heaney Employment Agreement. Chemed further agrees that, for
the one year period following the Closing Date, it will use its reasonable
best efforts to cause Mr.
30
<PAGE> 36
Heaney to provide such consulting services to the Acquired Companies
(consistent in scope to the services provided by Mr. Heaney prior to the
Closing Date) as the Buyer or the Acquired Companies may from time to time
request. Buyer agrees to reimburse Chemed for seventy percent (70%) of the
costs incurred by Chemed with respect to the employment of Mr. Heaney under
the Heaney Employment Agreement during the one year period following the
Closing Date in accordance with the terms of the Heaney Employment Agreement
as in effect on the date hereof, with any additional costs thereunder being
Chemed's responsibility. In addition, Buyer will pay Mr. Heaney a bonus amount
equal to thirty percent (30%) of his current annual salary under the Heaney
Employment Agreement, payable in monthly installments commencing September 30,
1997. Notwithstanding the foregoing, Chemed following the Closing will use its
reasonable best efforts to encourage Mr. Heaney to accept full-time employment
with Buyer or one or more of its subsidiaries (including for this purpose the
Acquired Companies) on terms to be negotiated by the parties and Chemed waives
any claims, actions or the like it may have against Buyer or its subsidiaries
(including the Acquired Companies) resulting from any such offer of employment
or the transactions contemplated by this Section 5.5. Buyer agrees to provide
their existing office space to Messrs. Williams and Heaney at no cost to such
individuals or the Shareholders for the one year period following the Closing
Date; provided however, that if Buyer relocates that facility, it will provide
equivalent space elsewhere.
5.6. NONCOMPETITION; CONFIDENTIALITY. Subject to the Closing, and as
an inducement to Buyer to execute this Agreement and complete the transactions
contemplated hereby, and in order to preserve the goodwill associated with the
business of the Acquired Companies being acquired pursuant to this Agreement,
each Shareholder hereby covenants and agrees as follows:
5.6.(a) COVENANT NOT TO COMPETE. For a period of ten years
from the Closing Date, no Shareholder will directly or indirectly:
(i) engage in, continue in or carry on any business
which competes with the business of the Acquired Companies or
is substantially similar thereto, including owning or
controlling any financial interest in any corporation,
partnership, firm or other form of business organization which
is so engaged;
(ii) consult with, advise or assist in any way,
whether or not for consideration, any corporation,
partnership, firm or other business organization which is now
or becomes a competitor of the Acquired Companies or Buyer in
any aspect with respect to the business of the Acquired
Companies, including, but not limited to, advertising or
otherwise endorsing the products of any such competitor;
soliciting customers or otherwise serving as an intermediary
for any such competitor; loaning money or rendering any other
form of financial assistance to or engaging in any form of
business transaction on other than an arm's length basis with
any such competitor;
(iii) offer employment to an employee (other than
James H. Devlin, John Naglick, Jr., David P. Williams and
Christopher J. Heaney as
31
<PAGE> 37
contemplated by Section 5.5 hereof) of any Acquired Company,
without the prior written consent of Buyer; or
(iv) engage in any practice the purpose of which is to
evade the provisions of this covenant not to compete or to
commit any act which adversely affects the business of the
Acquired Companies;
provided, however, that the foregoing shall not prohibit the ownership
of securities of corporations which are listed on a national
securities exchange or traded in the national over-the-counter market
in an amount which shall not exceed 5% of the outstanding shares of
any such corporation. The parties agree that the geographic scope of
this covenant not to compete shall extend to the United States and its
territories and Canada. The parties agree that Buyer may sell, assign
or otherwise transfer this covenant not to compete, in whole or in
part, to any person, corporation, firm or entity that purchases all or
part of the business of the Acquired Companies. In the event a court
of competent jurisdiction determines that the provisions of this
covenant not to compete are excessively broad as to duration,
geographical scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and
effect, and any such over broad provisions shall be deemed, without
further action on the part of any person, to be modified, amended
and/or limited, but only to the extent necessary to render the same
valid and enforceable in such jurisdiction.
5.6.(b) COVENANT OF CONFIDENTIALITY. No Shareholder shall, and
the Shareholders will cause their respective Affiliates, employees,
advisors and agents not to, at any time subsequent to the Closing,
except as explicitly requested by Buyer, (i) use for any purpose, (ii)
disclose to any person, or (iii) keep or make copies of documents,
tapes, discs or programs containing, any confidential information
concerning the Acquired Companies. For purposes hereof, "confidential
information" shall mean and include, without limitation, all Trade
Rights in which the Acquired Companies have an interest, all customer
lists and customer information, and all other information concerning
any processes, apparatus, equipment, packaging, products, marketing
and distribution methods of the Acquired Companies, not previously
disclosed to the public directly by the Acquired Companies.
5.6.(c) EQUITABLE RELIEF FOR VIOLATIONS. Each Shareholder
agrees that the provisions and restrictions contained in this Section
5.6 are necessary to protect the legitimate continuing interests of
Buyer in acquiring the Shares, and that any violation or breach of
these provisions will result in irreparable injury to Buyer for which
a remedy at law would be inadequate and that, in addition to any
relief at law which may be available to Buyer for such violation or
breach and regardless of any other provision contained in this
Agreement, Buyer shall be entitled to injunctive and other equitable
relief as a court may grant after considering the intent of this
Section 5.6.
32
<PAGE> 38
5.7. GENERAL RELEASES AND INDEMNIFICATION. At the Closing, each
Shareholder shall deliver general releases to Buyer, in form and substance
satisfactory to Buyer and its counsel, releasing each Acquired Company and the
directors, officers, agents and employees of each such Acquired Company from
all claims to the Closing Date, except as otherwise contemplated by this
Agreement and any agreement, document or instrument delivered hereunder or in
connection herewith. In addition to any other indemnification otherwise
provided for in this Agreement, and notwithstanding any disclosure with
respect thereto in the Disclosure Schedule or otherwise, or any knowledge or
information of or obtained by Buyer or the Acquired Companies, the
Shareholders, jointly and severally, shall indemnify and hold Buyer, its
directors, officers, employees and controlled and controlling persons and the
Acquired Companies harmless from and against any and all loss, cost, expense
or other damage (including, without limitation, reasonable attorneys' fees and
expenses and any fines or penalties) resulting from, arising out of or
incurred with respect to, or alleged to result from, arise out of or have been
incurred with respect to any claim, demand, right, liability, obligation,
action, cause of action or suit, known or unknown, which any of James H.
Devlin, John G. Naglick, Jr., David P. Williams or Christopher J. Heaney or
any person claiming through or under any of them ever had or now has or
hereafter can, shall or may have against the Acquired Companies and their
respective directors, officers, agents and employees, or any of them, for,
upon, or by reason of any matter, cause or thing from the beginning of the
world to the date hereof, including but not limited to matters related to the
employment of any of Messrs. Devlin, Naglick, Williams or Heaney by the
Acquired Companies or any oral or written agreement of any nature whatsoever
between any of them and the Acquired Companies, except there is expressly
excluded from this
indemnification obligation of the Shareholders any right or claim that any of
Messrs. Devlin, Naglick, Williams or Heaney may have arising under this
Agreement and any agreement, document or instrument delivered hereunder or in
connection herewith.
5.8. HSR ACT FILINGS. To the extent such filings have not been
completed prior to the execution of this Agreement, each party shall, in
cooperation with the other parties, file or cause to be filed any reports or
notifications that may be required to be filed by it under the HSR Act, with
the Federal Trade Commission and the Antitrust Division of the Department of
Justice, and shall furnish to the others all such information in its
possession as may be necessary for the completion of the reports or
notifications to be filed by the other. Prior to making any communication,
written or oral, with the Federal Trade Commission, the Antitrust Division of
the federal Department of Justice or any other Governmental Entity or members
of their respective staffs with respect to this Agreement or the transactions
contemplated hereby, the Shareholders shall, and shall cause the Acquired
Companies to, consult with Buyer.
5.9. INDEMNITY RELATING TO DETROIT FACILITY AND POMONA FACILITY. In
addition to any other indemnification otherwise provided for in this
Agreement, and notwithstanding any disclosure with respect thereto in the
Disclosure Schedule or otherwise, or any knowledge or information of or
obtained by Buyer or the Acquired Companies, the Shareholders, jointly and
severally, shall indemnify and hold Buyer, its directors, officers, employees
and controlled and controlling persons and the Acquired Companies harmless
from and against any and all loss, cost, expense or other damage (including,
without limitation, reasonable attorneys' fees and expenses and any fines or
penalties) resulting from, arising out of or incurred with respect to, or
alleged
33
<PAGE> 39
to result from, arise out of or have been incurred with respect to: (i) any
liability or obligation relating to the Detroit Facility (other than
obligations of Omnia Corporation under the lease contemplated by Section 5.4
hereof) and the Pomona Facility, whether accrued, absolute, contingent, known
or unknown, or otherwise; (ii) any violation or alleged violation of any Law
or Order with respect to the Detroit Facility or the Pomona Facility,
including, but not limited to, the Environmental Laws; (iii) any suit,
proceeding, investigation or remedial procedure relating to any of the
foregoing.
5.10. TAX MATTERS. The following provisions shall govern the
allocation of responsibility as between Buyer and the Shareholders for certain
Tax matters following the Closing Date:
5.10.(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. The
Shareholders shall prepare or cause to be prepared and timely file or
cause to be timely filed all Tax returns and shall pay all Taxes due
thereon for the Acquired Companies for all periods beginning before
but ending on or prior to the Closing Date which are filed after the
Closing Date. The Shareholders shall submit draft copies of such Tax
returns and related schedules to Buyer at least fifteen (15) days
prior to the required filing date for each such return. The
Shareholders will allow Buyer an opportunity to review and comment
upon such Tax returns (including any amended returns) to the extent
that they relate to the Acquired Companies. The Shareholders will take
no position on such returns that relate to the Acquired Companies that
would adversely affect the Acquired Companies after the Closing Date.
Buyer shall reimburse the Shareholders for Taxes of the Acquired
Companies with respect to such periods within three (3) days after
payment by the Shareholders of such Taxes up to the amount of the
reserve for such Tax liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax
income) shown on the face of the Final Closing Balance Sheet.
5.10.(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE
CLOSING DATE. Except for 1997 calendar year state income or franchise
Tax returns set forth in Section 5.10.(c), the Shareholders shall
prepare or cause to be prepared and timely file or cause to be timely
filed any Tax returns and shall pay all Taxes due thereon of the
Acquired Companies for Tax periods which begin before the Closing Date
and end after the Closing Date. The Shareholders shall submit draft
copies of such Tax returns and related schedules to Buyer at least
fifteen (15) days prior to the required filing date for each such
return. The Shareholders will allow Buyer an opportunity to review and
comment upon such Tax returns (including any amended returns) to the
extent that they relate to the Acquired Companies. The Shareholders
will take no position on such returns that relate to the Acquired
Companies that would adversely affect the Acquired Companies after the
Closing Date. The Buyer shall pay to the Shareholders within three (3)
days after the date on which Taxes are paid with respect to such
periods an amount equal to the portion of such Taxes which relates to
the portion of such Taxable period ending on the Closing Date to the
extent such Taxes are reflected in the reserve for Tax liability
(rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) shown on the face of
the Final Closing Balance Sheet. Buyer shall pay
34
<PAGE> 40
to the Shareholders an amount equal to all Taxes paid by the
Shareholders with respect to periods after the Closing Date.
5.10.(c) STATE TAX RETURNS FOR PERIODS BEGINNING BEFORE AND
ENDING AFTER THE CLOSING DATE. Buyer shall prepare or cause to be
prepared and timely file or caused to be timely filed all 1997
calendar year state income and franchise Tax returns for the Acquired
Companies for all periods ending on or after the Closing Date (other
than income (or franchise) Tax returns with respect to periods for
which a consolidated, unitary or combined income (or franchise) Tax
return of the Shareholders will include the operations of the Acquired
Companies). Buyer shall submit draft copies of such Tax returns and
related schedules to the Shareholders at least fifteen (15) days prior
to the required filing date for each such 1997 calendar year return.
The Shareholders shall reimburse Buyer for Taxes of the Acquired
Companies with respect to such periods within three (3) days after
payment by Buyer or the Acquired Companies of such Taxes in an amount
equal to the portion of such Taxes which relates to the portion of the
Taxable period ending on the Closing Date to the extent such Taxes are
not reflected in the reserve for such Tax liability (rather than the
reserve for deferred Taxes established to reflect timing differences
between book and Tax income) shown on the face of the Final Closing
Balance Sheet.
5.10.(d) ALLOCATION OF TAXES. For purposes of this Section
5.10, in the case of any Taxes that are imposed on a periodic basis
and are payable for a Tax period that includes (but does not end on)
the Closing Date, the portion of such Tax which relates to the portion
of such Tax period ending on the Closing Date shall (x) in the case of
any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Tax
period multiplied by a fraction the numerator of which is the number
of days in the Tax period ending on and including the Closing Date and
the denominator of which is the number of days in the entire Tax
period, and (y) in the case of any Tax based upon or related to income
or receipts be deemed equal to the amount which would be payable if
the relevant Tax period ended on the Closing Date. Any credits
relating to a Tax period that begins before and ends after the Closing
Date shall be taken into account as though the relevant Tax period
ended on the Closing Date.
5.10.(e) CONSOLIDATED RETURNS FOR PERIODS THROUGH THE CLOSING
DATE. Chemed will include the income of the Acquired Companies
(including any deferred income triggered into income by Reg.
ss.1.1502-13 and Reg. ss.1.1502-14 and any excESS loss accounts taken
into income under Reg. ss.1.1502-19) on Chemed's consolidated federal
(and state) income (or franchises) Tax returns for all periods through
and including the Closing Date and pay any Taxes attributable to such
income. The Acquired Companies will furnish Tax information to Chemed
for inclusion in Chemed's federal (and state) consolidated (or
combined) income Tax return for the period which includes the Closing
Date in accordance with the Acquired Companies' past custom and
practice. Chemed will allow Buyer an opportunity to review and comment
upon such Tax returns (including any amended returns) to the extent
that they relate to the Acquired Companies. Chemed will take no
position on such returns that relate to the Acquired Companies that
would adversely affect the Acquired Companies after the Closing Date.
The income of the
35
<PAGE> 41
Acquired Companies will be apportioned to the period up to and
including the Closing Date and the period after the Closing Date by
closing the books of the Acquired Companies as of the end of the
Closing Date. Buyer shall reimburse Shareholders for Taxes of the
Acquired Companies with respect to such periods within three (3) days
after payment by Shareholders to the extent such Taxes are reflected
in the liability accrual for Tax liabilities shown on the Final
Closing Balance Sheet.
5.10.(f) COOPERATION ON TAX MATTERS.
(i) Buyer and the Shareholders shall cooperate fully,
as and to the extent reasonably requested by the other party,
in connection with the filing of Tax returns pursuant to this
Section 5.10 and any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to
any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material
provided hereunder. Buyer and the Shareholders agree (A) to
retain all books and records with respect to Tax matters
pertinent to the Acquired Companies relating to any taxable
period beginning before the Closing Date until the expiration
of the statute of limitations (and, to the extent notified by
Buyer or the Shareholders, any extensions thereof) of the
respective Taxable periods, and to abide by all record
retention agreements entered into with any Taxing authority,
and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books
and records and, if the other party so requests, Buyer (on
behalf of the Acquired Companies) or the Shareholders, as the
case may be, shall allow the other party to take possession of
such books and records.
(ii) Chemed will allow the Acquired Companies and their
counsel to participate in any audits of Chemed's consolidated income
(and franchise) Tax returns to the extent that such returns relate to
the Acquired Companies. Chemed will not settle any such audit in a
manner which would adversely affect the Acquired Companies after the
Closing Date without the prior written consent of Buyer.
(iii) Buyer and the Shareholders further agree, upon
request, to use their best efforts to obtain any certificate or other
document from any Government Entity or any other person as may be
necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(iv) Buyer and the Shareholders further agree, upon
request, to provide the other party with all information that either
party may be required to report pursuant to Section 6043 of the Code
and all regulations of the Treasury Department promulgated thereunder
(if any).
36
<PAGE> 42
5.10.(g) TAX SHARING AGREEMENT. All Tax sharing agreements or
similar agreements with respect to or involving the Acquired Companies
shall be terminated as of the Closing Date and, after the Closing
Date, the Acquired Companies shall not be bound thereby or have any
liability thereunder, and such agreements shall have no further effect
for any Tax year (whether the current year, a future year, or a past
year).
5.10.(h) TAXES OF OTHER PERSONS. The Shareholders, jointly and
severally, agree to indemnify the Buyer from and against the entirety
of any Adverse Consequences the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any
liability of any of the Acquired Companies for Taxes of any person
other than any of the Acquired Companies (i) under Reg. ss.1.1502-6
(or any similar provision of state, local or foreign law), (ii) as a
transferee or successor, (iii) by contract, or (iv) otherwise.
"Adverse Consequences" for purposes of this Section 5.10.(h) means all
actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, liabilities, obligations, Taxes, liens, losses, expenses
and fees, including court costs and reasonable attorneys' fees and
expenses.
5.10.(i) CARRYBACKS. Chemed will immediately pay to the Buyer
any Tax refund (or reduction in Tax liability) resulting from a
carryback of a postacquisition Tax attribute of any of the Acquired
Companies into Chemed's consolidated (or combined) Tax return, when
such refund or reduction is realized by the Chemed group. Chemed will
cooperate with Buyer and the Acquired Companies in obtaining such
refunds (or reduction in Tax liability), including through the filing
of amended Tax returns or refund claims. Buyer agrees to indemnify
Chemed for any Taxes resulting from the disallowance of such
postacquisition Tax attribute on audit or otherwise.
5.11. ASSUMPTION OF AND INDEMNITY RELATING TO WORKERS' COMPENSATION
CLAIMS. The Shareholders hereby assume responsibility for all claims,
liabilities or other obligations of the Acquired Companies as of the Closing
Date with respect to workers' compensation claims (the "Assumed Liabilities")
and further agree, notwithstanding any disclosure with respect thereto in the
Disclosure Schedule or otherwise, or any knowledge or information of or
obtained by Buyer or the Acquired Companies, to, jointly and severally,
indemnify and hold Buyer, its directors, officers, employees and controlled
and controlling persons and the Acquired Companies harmless from and against
any and all loss, cost, expense or other damage (including, without
limitation, reasonable attorneys' fees and expenses and any fines or
penalties) resulting from, arising out of or incurred with respect to, or
alleged to result from, arise out of or have been incurred with respect to the
Assumed Liabilities. Shareholders represent and warrant that, as of August 31,
1997, the amount of the reserves established for workers' compensation claims
as reflected on the books and records of the Acquired Companies was
$1,024,980.
5.12. EMPLOYEE BENEFITS AND SEVERANCE. Chemed agrees to continue the
participation of the current and future employees of the Acquired Companies in
its medical plan and "125" plan through December 31, 1997. The Acquired
Companies shall promptly (i) transmit employee contributions to the plans and
(ii) reimburse Chemed for their share of the third-party
37
<PAGE> 43
administrative costs for both plans for the period after the Closing Date
through December 31, 1997 and for the costs of medical benefits paid from the
medical plan for expenses incurred during the period after the Closing Date
through December 31, 1997. In addition, Buyer covenants that following the
Closing Date the severance policy for nonunion employees of the Acquired
Companies shall provide for one week of pay for each year of service up to a
maximum of twenty weeks of severance pay. In addition, during the six-month
period following the Closing Date, Buyer will provide an additional week of
severance pay for each year of service up to the maximum of twenty weeks of
severance pay. The Shareholders covenant and agree to reimburse Buyer for the
costs associated with this additional severance pay. After six months
following the Closing Date, Buyer and the Acquired Companies shall be free to
establish whatever severance policy such parties may deem appropriate for the
employees of the Acquired Companies.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of each of the
following conditions:
6.1. REPRESENTATIONS AND WARRANTIES TRUE OF THE CLOSING DATE. Each of
the representations and warranties made by the Shareholders in this Agreement,
and the statements contained in the Disclosure Schedule or in any instrument,
list, certificate or writing delivered by the Shareholders or the Acquired
Companies pursuant to this Agreement, shall be true and correct when made and
shall be true and correct at and as of the Closing Date as though such
representations and warranties were made or given on and as of the Closing
Date.
6.2. COMPLIANCE WITH AGREEMENT. The Shareholders shall have in all
material respects performed and complied with all of their agreements and
obligations under this Agreement which are to be performed or complied with by
them prior to or on the Closing Date, including the delivery of the closing
documents specified in Section 9.1.
6.3. ABSENCE OF LITIGATION. No Litigation shall have been commenced or
threatened, and no investigation by any Government Entity shall have been
commenced, against Buyer, the Acquired Companies, the Shareholders or any of
the Affiliates of any of them, with respect to the transactions contemplated
hereby.
6.4. CONSENTS AND APPROVALS. All approvals, consents and waivers that
are required to effect the transactions contemplated hereby shall have been
received, and executed counterparts thereof shall have been delivered to
Buyer.
6.5. TITLE INSURANCE. Buyer shall have obtained good and valid title
insurance policies or, in final form, irrevocable title insurance binders
conforming to the specifications set forth in Section 5.1 hereof.
6.6. ESTOPPEL CERTIFICATES. The Shareholders shall have caused the
Acquired Companies to deliver to Buyer an estoppel certificate or status
letter from the landlord under each lease of Real Property which estoppel
certificate or status letter will certify (i) the lease is valid
38
<PAGE> 44
and in full force and effect; (ii) the amounts payable by the Acquired
Companies under the lease and the date to which the same have been paid; (iii)
whether there are, to the knowledge of said landlord, any defaults thereunder,
and, if so, specifying the nature thereof; and (iv) a statement that the
transactions contemplated by this Agreement will not constitute a default
under the lease; PROVIDED, HOWEVER, to the extent Buyer consents to the
delivery of one or more of such estoppel certificates after the Closing Date,
the Shareholders shall use their reasonable best efforts to obtain such
certificate or certificates at the earliest practicable date.
6.7. HART-SCOTT-RODINO WAITING PERIOD. All applicable waiting periods
related to the HSR Act shall have expired.
6.8. SECTION 1445 AFFIDAVIT. Each of the Acquired Companies shall have
delivered to Buyer an affidavit, in form satisfactory to Buyer, to the effect
that such company is not a "foreign person," "foreign corporation," "foreign
partnership," "foreign trust," or "foreign estate" under Section 1445 of the
Code, and containing all such other information as is required to comply with
the requirements of such Section.
6.9. ENVIRONMENTAL AND OSHA AUDITS. The results of the audits
conducted pursuant to Section 5.3 shall be acceptable to Buyer in its sole
discretion.
6.10. NONCOMPETITION AND CONSULTING AGREEMENTS. At the Closing, the
Shareholders shall deliver to Buyer Noncompetition Agreements in substantially
the form attached hereto as Exhibits B and C, duly executed by John H. Devlin
and John Naglick, Jr., respectively.
7. CONDITIONS PRECEDENT TO THE SHAREHOLDERS' OBLIGATIONS
Each and every obligation of the Shareholders to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing
of the following conditions:
7.1. REPRESENTATIONS AND WARRANTIES TRUE ON THE CLOSING DATE. Each of
the representations and warranties made by Buyer in this Agreement shall be
true and correct when made and shall be true and correct at and as of the
Closing Date as though such representations and warranties were made or given
on and as of the Closing Date.
7.2. COMPLIANCE WITH AGREEMENT. Buyer shall have in all material
respects performed and complied with all of Buyer's agreements and obligations
under this Agreement which are to be performed or complied with by Buyer prior
to or on the Closing Date, including the delivery of the closing documents
specified in Section 9.2.
7.3. ABSENCE OF LITIGATION. No Litigation shall have been commenced or
threatened, and no investigation by any Government Entity shall have been
commenced, against Buyer, the Acquired Companies, the Shareholders or any of
the Affiliates of any of them, with respect to the transactions contemplated
hereby.
39
<PAGE> 45
7.4. HART-SCOTT-RODINO WAITING PERIOD. All applicable waiting periods
related to the HSR Act shall have expired.
8. INDEMNIFICATION
8.1. BY SHAREHOLDERS. Subject to the terms and conditions of this
Article 8, each Shareholder, jointly and severally, hereby agrees to
indemnify, defend and hold harmless Buyer, its directors, officers, employees
and controlled and controlling persons (hereinafter "Buyer's Affiliates") and
the Acquired Companies from and against all Claims asserted against, resulting
to, imposed upon, or incurred by Buyer, Buyer's Affiliates or the Acquired
Companies, directly or indirectly, by reason of, arising out of or resulting
from (a) the inaccuracy or breach of any representation or warranty of the
Shareholders contained in or made pursuant to this Agreement, or (b) the
breach of any covenant of the Shareholders contained in this Agreement. As
used in this Article 8, the term "Claim" shall include (i) all debts,
liabilities and obligations; (ii) all losses, damages, judgments, awards,
settlements, costs and expenses (including, without limitation, interest
(including prejudgment interest in any litigated matter), penalties, court
costs and attorneys fees and expenses); and (iii) all demands, claims, suits,
actions, costs of investigation, causes of action, proceedings and
assessments, whether or not ultimately determined to be valid.
8.2. BY BUYER. Subject to the terms and conditions of this Article 8,
Buyer hereby agrees to indemnify, defend and hold harmless each Shareholder
from and against all Claims asserted against, resulting to, imposed upon or
incurred by any such person, directly or indirectly, by reason of or resulting
from (a) the inaccuracy or breach of any representation or warranty of Buyer
contained in or made pursuant to this Agreement, or (b) the breach of any
covenant of Buyer contained in this Agreement.
8.3. INDEMNIFICATION OF THIRD-PARTY CLAIMS. The obligations and
liabilities of any party to indemnify any other under this Article 8 with
respect to Claims relating to third parties shall be subject to the following
terms and conditions:
8.3.(a) NOTICE AND DEFENSE. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party from whom indemnification is sought (the "Indemnifying
Party") written notice of any such Claim, and the Indemnifying Party
will undertake the defense thereof by representatives chosen by it. In
all matters concerning the Shareholders by virtue of joint and several
liability, Chemed shall give and receive notice and otherwise act in
all respects on its own behalf and on behalf of OCR. Failure to give
such notice shall not affect the Indemnifying Party's duty or
obligations under this Article 8, except to the extent the
Indemnifying Party is materially prejudiced thereby. So long as the
Indemnifying Party is defending any such Claim actively and in good
faith, the Indemnified Party shall not settle such Claim. The
Indemnified Party shall make available to the Indemnifying Party or
its representatives all records and other materials required by them
and in the possession or under the control of the Indemnified Party,
for the use of the Indemnifying Party and its representatives in
defending any such Claim, and shall in other respects give reasonable
cooperation in such defense.
40
<PAGE> 46
8.3.(b) FAILURE TO DEFEND. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to defend such
Claim actively and in good faith, the Indemnified Party will (upon
further notice) have the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with
respect to such Claim, on behalf of and for the account and risk of
the Indemnifying Party, and the Indemnifying Party shall thereafter
have no right to challenge the Indemnified Party's defense,
compromise, settlement or consent to judgment therein.
8.3.(c) INDEMNIFIED PARTY'S RIGHTS. Anything in this Section
8.3 to the contrary notwithstanding, (i) if there is a reasonable
likelihood that a Claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall have the right to defend,
compromise or settle such Claim, and (ii) the Indemnifying Party shall
not, without the written consent of the Indemnified Party, settle or
compromise any Claim or consent to the entry of any judgment which
does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a release from
all liability in respect of such Claim.
8.4. PAYMENT. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 8. Upon judgment,
determination, settlement or compromise of any third party Claim, the
Indemnifying Party shall pay promptly on behalf of the Indemnified Party,
and/or to the Indemnified Party in reimbursement of any amount theretofore
required to be paid by it, the amount so determined by judgment,
determination, settlement or compromise and all other Claims of the
Indemnified Party with respect thereto, unless in the case of a judgment an
appeal is made from the judgment. If the Indemnifying Party desires to appeal
from an adverse judgment, then the Indemnifying Party shall post and pay the
cost of the security or bond to stay execution of the judgment pending appeal.
Upon the payment in full by the Indemnifying Party of such amounts, the
Indemnifying Party shall succeed to the rights of such Indemnified Party, to
the extent not waived in settlement, against the third party who made such
third party Claim.
8.5. LIMITATIONS ON INDEMNIFICATION. Except for any willful or knowing
breach or misrepresentation, as to which Claims may be brought without
limitation as to time or amount:
8.5.(a) TIME LIMITATION. No claim or action shall be brought
under this Article 8 for breach of a representation or warranty after
December 31, 1999. Regardless of the foregoing, however, or any other
provision of this Agreement:
(i) There shall be no time limitation on Claims or
actions brought for breach of any representation or warranty
made by the Shareholders in or pursuant to Sections 3.1.(f),
3.2.(e) and 3.12.(a) and the Shareholders hereby waive all
applicable statutory limitation periods with respect thereto.
(ii) Any Claim or action brought for breach of any
representation or warranty made by the Shareholders in or
pursuant to Section
41
<PAGE> 47
3.5 may be brought at any time until the underlying Tax
obligation is barred by the applicable period of limitation
under federal and state laws relating thereto (as such period
may be extended by waiver).
(iii) Any Claim or action brought for breach of any
representation or warranty made by the Shareholders in or
pursuant to Sections 3.2.(a), (b), (c) or (d), or 3.11 may be
brought at any time on or prior to five (5) years after the
Closing and any Claim or action brought for breach of any
representation or warranty made by the Shareholders in or
pursuant to Section 3.9 may be brought at any time on or prior
to three (3) years after the Closing; PROVIDED, HOWEVER, that
there shall be no time limit with respect to such Claims
relating to offsite disposal or release of Waste, or for
Claims involving the migration of Waste or contaminants
associated with or related to Waste (including but not limited
to breakdown products that have migrated from the disposal or
release location) whether such disposal or release occurred on
property owned or utilized by the Acquired Companies or on
other property.
(iv) Any Claim made by a party hereunder by providing
notice thereof to the Indemnifying Party under this Article 8
or by filing a suit or action in a court of competent
jurisdiction or a court reasonably believed to be of competent
jurisdiction for breach of a representation or warranty prior
to the termination of the survival period for such Claim shall
be preserved despite the subsequent termination of such
survival period.
(v) If any act, omission, disclosure or failure to
disclosure shall form the basis for a Claim for breach of more
than one representation or warranty, and such Claims have
different periods of survival hereunder, the termination of
the survival period of one Claim shall not affect a party's
right to make a Claim based on the breach of representation or
warranty still surviving.
Nothing contained in this Section 8.5.(a) shall be construed
to limit in any way the rights of the parties under Article 2 or
Sections 5.5, 5.6, 5.7, 5.9, 5.10, 5.11, 5.12 and 10.8 of this
Agreement.
8.5.(b) AMOUNT LIMITATION. Except with respect to claims for
breaches of representations or warranties contained in Sections
3.1.(f), 3.2.(e) and 3.12.(a) and adjustments or reimbursements
contained in Article 2 to which the following limitation shall not
apply, an Indemnified Party shall not be entitled to indemnification
under this Article 8 for breach of a representation or warranty unless
the aggregate of the Indemnifying Party's indemnification obligations
to the Indemnified Party pursuant to this Article 8 (but for this
Section 8.5.(b)) exceeds $250,000; but in such event, the Indemnified
Party shall be entitled to indemnification for all claims for breaches
of representations and/or warranties in excess of $100,000; PROVIDED,
HOWEVER, that in the event the aggregate of the Indemnifying Party's
indemnification obligations to the
42
<PAGE> 48
Indemnified Party pursuant to this Article 8 (but for this Section
8.5.(b)) exceeds $500,000, the Indemnified Party shall be entitled to
indemnification in full for all breaches of representations and/or
warranties.
Nothing contained in this Section 8.5.(b) shall be construed
to limit in any way the rights of the parties under Article 2 or
Sections 5.5, 5.6, 5.7, 5.9, 5.10, 5.11, 5.12 and 10.8 of this
Agreement.
8.6. NO WAIVER. The closing of the transactions contemplated by this
Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of condition
constituting the basis of the Claim at or before the Closing.
9. CLOSING
The closing of this transaction ("the Closing") shall take place at
the offices of Chemed Corporation, 2600 Chemed Center, 255 East Fifth Street,
Cincinnati, Ohio, at 11:00 A.M. on September 24, 1997, or at such other time
and place as the parties hereto shall agree upon. Such date is referred to in
this Agreement as the "Closing Date".
9.1. DOCUMENTS TO BE DELIVERED BY THE SHAREHOLDERS. At the Closing,
the Shareholders shall deliver to Buyer the following documents, in each case
duly executed or otherwise in proper form:
9.1.(a) STOCK CERTIFICATE(S). Stock Certificates representing
the Shares, duly endorsed for transfer or with duly executed stock
powers attached.
9.1.(b) COMPLIANCE CERTIFICATE. A certificate signed by the
chief executive or chief financial officer of each Shareholder that
each of the representations and warranties made by the Shareholders in
this Agreement is true and correct on and as of the Closing Date and
that the Shareholders have performed and complied in all material
respects with all of their obligations under this Agreement which are
to be performed or complied with on or prior to the Closing Date.
9.1.(c) NONCOMPETITION AND CONSULTING AGREEMENTS. The
Noncompetition Agreements duly executed by John H. Devlin and John
Naglick, Jr., respectively, as contemplated by Section 6.10 hereof.
9.1.(d) LEASE FOR DETROIT FACILITY. The Lease for the Detroit
Facility duly executed by OCR in the form of Exhibit A hereto.
9.1.(e) CERTIFIED RESOLUTIONS. Certified copies of the
resolutions of the Board of Directors of the Shareholders authorizing
and approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
43
<PAGE> 49
9.1.(f) CHARTER; BY-LAWS. A copy of the By-Laws of each
Acquired Company certified by the secretary of such company, and a
copy of the charter of such company certified by the Secretary of
State (or other applicable Governmental Entity) of the state of
incorporation of the company.
9.1.(g) INCUMBENCY CERTIFICATE. Incumbency certificates
relating to each person executing any document executed and delivered
to Buyer pursuant to the terms hereof.
9.1.(h) GENERAL RELEASES. The General Releases referred to in
Section 5.7, duly executed by the Shareholders.
9.1.(i) RESIGNATIONS. The resignations of all of the directors
of the Acquired Companies and the resignations of Kevin J. McNamara
and Mark W. Stephens as officers of the Acquired Companies, effective
as of the Closing Date and in form satisfactory to Buyer's counsel.
9.1.(j) AFFIDAVIT. An affidavit from each of the Acquired
Companies in form and substance satisfactory to Buyer complying with
Section 1445(b)(3) of the Code.
9.1.(k) OTHER DOCUMENTS. All other documents, instruments or
writings required to be delivered to Buyer at or prior to the Closing
pursuant to this Agreement and such other certificates of authority
and documents as Buyer may reasonably request.
9.2. DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer shall
deliver to the Shareholders the following documents, in each case duly
executed or otherwise in proper form:
9.2.(a) CASH PURCHASE PRICE. To the Shareholders, certified or
bank cashier's checks (or wire transfer) as required by Section 2.2
hereof.
9.2.(b) COMPLIANCE CERTIFICATE. A certificate signed by the
chief executive or chief financial officer of Buyer that the
representations and warranties made by Buyer in this Agreement are
true and correct on and as of the Closing Date, and that Buyer has
performed and complied in all material respects with all of Buyer's
obligations under this Agreement which are to be performed or complied
with on or prior to the Closing Date.
9.2.(c) CERTIFIED RESOLUTIONS. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
9.2.(d) NONCOMPETITION AND CONSULTING AGREEMENTS. The
Noncompetition and Consulting Agreements duly executed by Buyer in the
form of Exhibits B and C hereto.
44
<PAGE> 50
9.2.(e) LEASE FOR DETROIT FACILITY. The Lease for the Detroit
Facility duly executed by Omnia Corporation in the form of Exhibit A
hereto.
9.2.(f) INCUMBENCY CERTIFICATE. Incumbency certificates
relating to each person executing any document executed and delivered
to the Shareholders by Buyer pursuant to the terms hereof.
9.2.(g) TROY GUARANTY. The Troy Guaranty duly executed by
Buyer.
9.2.(h) OTHER DOCUMENTS. All other documents, instruments or
writings required to be delivered to the Shareholders at or prior to
the Closing pursuant to this Agreement and such other certificates of
authority and documents as the Shareholders may reasonably request.
10. MISCELLANEOUS
10.1. DISCLOSURE SCHEDULE. The Schedules have been compiled in a bound
volume (the "Disclosure Schedule"), executed by the Shareholders and dated and
delivered to Buyer on the date of this Agreement. Information set forth in the
Disclosure Schedule specifically refers to the article and section of this
Agreement to which such information is responsive and such information shall
not be deemed to have been disclosed with respect to any other article or
section of this Agreement or for any other purpose. The Disclosure Schedule
includes a table of contents and/or index to all of the information and
documents contained therein. The Disclosure Schedule shall not vary, change or
alter the language of the representations and warranties contained in this
Agreement and, to the extent the language in the Disclosure Schedule does not
conform in every respect to the language of such representations and
warranties, such language in the Disclosure Schedule shall be disregarded and
be of no force or effect.
10.2. FURTHER ASSURANCE. From time to time, at Buyer's request and
without further consideration, the Shareholders will execute and deliver to
Buyer such documents and take such other action as Buyer may reasonably
request in order to consummate more effectively the transactions contemplated
hereby.
10.3. DISCLOSURES AND ANNOUNCEMENTS. Announcements concerning the
transactions provided for in this Agreement by Buyer or the Shareholders shall
be subject to the approval of the other parties in all essential respects,
except that approval of the other parties shall not be required as to any
statements and other information which any party is required to make or
disclose pursuant to any rule or regulation of the Securities and Exchange
Commission or any applicable securities exchange or market, or pursuant to
other applicable Law.
10.4. ASSIGNMENT; PARTIES IN INTEREST.
10.4.(a) ASSIGNMENT. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other parties. Notwithstanding the foregoing, Buyer may,
45
<PAGE> 51
without consent of any other party, cause one or more subsidiaries of
Buyer to carry out all or part of the transactions contemplated
hereby; provided, however, that Buyer shall, nevertheless, remain
liable for all of its obligations, and those of any such subsidiary,
to the Shareholders hereunder.
10.4.(b) PARTIES IN INTEREST. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person any
right or remedy under or by reason of this Agreement.
10.5. LAW GOVERNING AGREEMENT. This Agreement may not be modified or
terminated orally, and shall be construed and interpreted according to the
internal laws of the State of Wisconsin, excluding any choice of law rules
that may direct the application of the laws of another jurisdiction.
10.6. AMENDMENT AND MODIFICATION. Buyer and the Shareholders may
amend, modify and supplement this Agreement in such manner as may be agreed
upon in writing between Buyer and the Shareholders.
10.7. NOTICE. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered;
(b) sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the parties at their respective
addresses indicated herein by registered or certified U.S. mail, return
receipt requested and postage prepaid, or by private overnight mail courier
service. The respective addresses to be used for all such notices, demands or
requests are as follows:
(a) If to Buyer, to:
Banta Corporation
River Place
225 Main Street
Menasha, Wisconsin 54952
Attention: Gerald A. Henseler, Executive Vice
President and Chief Financial Officer
Facsimile: (414) 751-7790
(with a copy to)
Jay O. Rothman
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Facsimile: (414) 297-4900
or to such other person or address as Buyer shall furnish to the Shareholders
in writing.
46
<PAGE> 52
(b) If to the Shareholders, to:
Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202-4726
Attention: Timothy S. O'Toole
Executive Vice President and Treasurer
Facsimile: (513) 762-6919
(with a copy to)
Clifford A. Roe, Jr.
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
Facsimile: (513) 977-8501
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); if sent
by overnight courier pursuant to this paragraph, such communication shall be
deemed delivered upon receipt; and if sent by U.S. mail pursuant to this
paragraph, such communication shall be deemed delivered as of the date of
delivery indicated on the receipt issued by the relevant postal service, or,
if the addressee fails or refuses to accept delivery, as of the date of such
failure or refusal. Any party to this Agreement may change its address for the
purposes of this Agreement by giving notice thereof in accordance with this
Section.
10.8. EXPENSES. Regardless of whether or not the transactions
contemplated hereby are consummated:
10.8.(a) BROKERAGE. The Shareholders and Buyer each represent
and warrant to each other that there is no broker involved or in any
way connected with the transfer provided for herein on their behalf
respectively (and the Shareholders represent and warrant that there is
no broker involved on behalf of the Acquired Companies) and each
agrees to hold the other harmless from and against all other claims
for brokerage commissions or finder's fees in connection with the
execution of this Agreement or the transactions provided for herein.
10.8.(b) EXPENSES TO BE PAID BY THE SHAREHOLDERS. The
Shareholders shall pay, and shall indemnify, defend and hold Buyer and
the Acquired Companies harmless from and against, each of the
following:
47
<PAGE> 53
(i) TRANSFER TAXES. Any sales, use, excise, transfer
or other similar tax imposed with respect to the transactions
provided for in this Agreement, and any interest or penalties
related thereto.
(ii) TITLE INSURANCE PREMIUMS. All premiums for the
issuance of the title insurance policies issued pursuant to
Section 6.5 hereof, and the cost of surveys performed pursuant
to Section 5.2.
(iii) PROFESSIONAL FEES. All fees and expenses of
their own and the Acquired Companies' legal, accounting,
investment banking and other professional counsel in
connection with the transactions contemplated hereby.
10.8.(c) OTHER. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
10.8.(d) COSTS OF LITIGATION OR ARBITRATION. The parties agree
that the prevailing party in any action brought with respect to or to
enforce any right or remedy under this Agreement shall be entitled to
recover from the other party or parties all reasonable costs and
expenses of any nature whatsoever incurred by the prevailing party in
connection with such action, including without limitation attorneys'
fees and prejudgment interest.
10.9. ENTIRE AGREEMENT. This instrument embodies the entire agreement
between the parties hereto with respect to the transactions contemplated
herein, and there have been and are no agreements, representations or
warranties between the parties other than those set forth or provided for
herein.
10.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
48
<PAGE> 54
10.11. HEADINGS. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date and year first above written.
BANTA CORPORATION
("Buyer")
By: Donald D. Belcher
---------------------------------
Donald D. Belcher
Chairman, President and Chief
Executive Officer
Attest: Gerald A. Henseler
----------------------------
Gerald A. Henseler
Executive Vice President and
Chief Financial Officer
CHEMED CORPORATION
("Chemed")
By: Kevin J. McNamara
----------------------------------
Kevin J. McNamara
President
Attest: Naomi C. Dallob
-----------------------------
Naomi C. Dallob
Secretary
OCR HOLDING COMPANY
("OCR")
By: Mark W. Stephens
---------------------------------
Mark W. Stephens
Assistant Treasurer
Attest: Naomi C. Dallob
---------------------------
Naomi C. Dallob
Secretary
49
<PAGE> 1
Exhibit 99.1
CONTACT: Timothy S. O'Toole FOR IMMEDIATE RELEASE
(513) 762-6702
CHEMED SELLS THE OMNIA GROUP
CINCINNATI, September 25, 1997 Chemed Corporation (NYSE:CHE)
today announced that its wholly owned businesses comprising The Omnia Group have
been sold to Banta Corp. (NASDAQ:BNTA) for $50.0 million in cash and $2.3
million in deferred payments.
Commenting on the sale, Chemed Chairman and Chief Executive
Officer Edward L. Hutton said, "For Chemed's shareholders, the sale of Omnia
means we can focus more fully on the operations of our Roto-Rooter Group, in
which we invested $100 million last year to acquire the 42 percent minority
interest, as well as on Patient Care Inc., our home healthcare subsidiary.
Acquisition opportunities for these operations are plentiful, and we expect to
accelerate our pace in this area.
"The proceeds from the sale of Omnia, as well as those
anticipated from our previously announced sale of National Sanitary Supply Co.,
which is pending, will provide a capital infusion to fund acquisitions, as well
as to pay down debt."
The Omnia Group manufactures disposable medical and dental
products for the primary, acute, and long-term care markets. Banta is a leading
competitor in the single-use healthcare products market.
Mr. Hutton continued, "Banta was seeking to grow its
healthcare products business, and the business of The Omnia Group was an
excellent fit. This transaction should prove beneficial to both companies, and
the resulting combined company should be a stronger competitor in the healthcare
products marketplace."
Chemed Corporation, headquartered in Cincinnati, is a
diversified public corporation with strategic positions in plumbing and drain
cleaning; home healthcare services; residential appliance and air-conditioning
repair; and sanitary- maintenance-product distribution.
###
<PAGE> 1
Exhibit 99.2
CONTACT: Timothy S. O'Toole FOR IMMEDIATE RELEASE
(513) 762-6702
CHEMED COMPLETES SALE
OF NATIONAL SANITARY SUPPLY CO.
CINCINNATI, September 30, 1997 Chemed Corporation (NYSE:CHE)
today announced the completion of the previously announced merger between its
82-percent-owned subsidiary, National Sanitary Supply Co., and a wholly owned
subsidiary of Unisource Worldwide Inc. (NYSE:UWW). Chemed's net cash proceeds
from this transaction are expected to total approximately $100 million.
Chemed will use the proceeds from the sale of National
Sanitary, as well as those from the sale of The Omnia Group, announced Sept. 25,
to pay down debt incurred in its purchase of the 42 percent minority interest in
Roto-Rooter last year, as well as to fund acquisitions for the Roto-Rooter Group
and Patient Care Inc., Chemed's home healthcare subsidiary.
The sale of National Sanitary and Omnia will result in a net
capital gain for Chemed of approximately $10 million in the 1997 third quarter.
Additionally, the divestiture of National Sanitary marks Chemed's exit from the
sanitary-maintenance-distribution business, as well as from the manufacture of
cleaning and maintenance chemicals.
Chemed Corporation, headquartered in Cincinnati, is a
diversified public corporation with strategic positions in plumbing and drain
cleaning; home healthcare services; and residential appliance and
air-conditioning repair.
###
