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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
PCI SERVICES, INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
693206 10 4
(CUSIP Number)
F. Douglas Raymond, III
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107
(215) 988-2700
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 23, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box | |.
Check the following box if a fee is being paid with the statement | |, (A fee is
not required only if the reporting person (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
SEC 1746 (12-91)
<PAGE>
SCHEDULE 13D
- -------------------------- ----------------------------------
CUSIP No. 693 206 104 Page 2 of 6 Pages
- -------------------------- ----------------------------------
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MEDIQ Incorporated
IRS Identification No. 51-0219413*
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) | |
(b) | |
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT T
ITEMS 2(d) OR 2(e) | |
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY
OWNED BY EACH -0-
REPORTING PERSON
WITH
--------------------------------------------
8 SHARED VOTING POWER
2,875,000
--------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
--------------------------------------------
10 SHARED DISPOSITIVE POWER
2,875,000
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,875,000
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
46.29%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
<PAGE>
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
- ----------------------------- --------------------------------------
CUSIP No. 693 206 104 Page 3 of 6 Pages
- ----------------------------- --------------------------------------
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MEDIQ Investment Services, Inc.
IRS Identification No. 51-0261761
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) | |
(b) | |
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) | |
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER
BENEFICIALLY
OWNED BY EACH -0-
REPORTING PERSON
WITH
--------------------------------------------
8. SHARED VOTING POWER
2,875,000
--------------------------------------------
9. SOLE DISPOSITIVE POWER
-0-
--------------------------------------------
10. SHARED DISPOSITIVE POWER
2,875,000
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,875,000
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
46.29%
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
-4-
<PAGE>
The statement on Schedule 13D (the "Original Schedule 13D") dated
September 9, 1992, as amended by Amendment No. 1 ("Amendment No. 1"), dated
March 29, 1996, and filed with the Securities and Exchange Commission by MEDIQ
Incorporated ("MEDIQ") and MEDIQ Investment Services, Inc. ("MIS", and together
with MEDIQ, the "Reporting Persons") with respect to beneficial ownership of
Common stock, par value $.001 per share (the "Common Stock"), of PCI Services,
Inc. (the "Issuer") is hereby amended as provided herein.
Item 4. Purpose of Transaction. Item 4 is amended to delete the last paragraph
of Item 4 and insert the following language at the end of Item 4:
On July 23, 1996 MEDIQ entered into an Agreement and Plan of Merger
with Cardinal Health, Inc., an Ohio corporation ("Buyer"), Panther Merger Corp.,
a Delaware corporation and a wholly owned subsidiary of Buyer ("Subcorp") and
the Issuer (the "Merger Agreement"). Simultaneously, the Reporting Persons also
entered into a Support/Voting Agreement (the "Voting Agreement") and a Stock
Option Agreement (the "Stock Option Agreement") with Buyer and a Reimbursement
Agreement (the "Reimbursement Agreement") with the Issuer, each dated as of July
23, 1996.
Pursuant to the Merger Agreement, and subject to the conditions set
forth therein (including regulatory approvals and approval by stockholders of
the Issuer), at the effective time of the Merger, Subcorp will be merged with
and into the Issuer (the "Merger"). Each share of common stock of the Issuer,
including without limitation all such shares held by the Reporting Persons (such
shares held by the Reporting Person being referred to herein as the "Shares")
will be converted into the right to receive 0.336 shares of stock of Buyer,
subject to possible adjustment under the circumstances described in the Merger
Agreement, plus cash in lieu of receipt of fractional shares of the common stock
of Buyer. The Merger Agreement may be terminated by either the Issuer or Buyer
under specified circumstances, including among others, by the Issuer or the
Buyer if the average trading price of Buyer's common stock over a specified
period prior to the special meeting of the Issuer's stockholders called to
approve the Merger falls below certain levels. The foregoing summary of the
Merger is qualified in its entirety by reference to the copy of the Merger
Agreement included as Exhibit 1 to this Schedule 13D and incorporated herein in
its entirety by reference.
Pursuant to the Voting Agreement, the Reporting Persons have agreed (i)
to vote the Shares at any meeting of stockholders of the Issuer called to
consider and vote to approve the Merger and the Merger Agreement and/or the
transactions contemplated thereby in favor thereof, (ii) not to vote such Shares
in favor of any recapitalization, merger, consolidation or other business
combination involving the Issuer, or acquisition of any capital stock or any
material portion of the assets (except for acquisition of assets in the ordinary
course of business consistent with past
-5-
<PAGE>
practice) of the Issuer, or any combination of the foregoing (a "Competing
Transaction") and (iii) not to, and not to permit any company, trust or other
entity controlled by the Reporting Persons to, and not to permit any of their
affiliates to, contract to sell, sell or otherwise transfer or dispose of any of
the Shares or any interest therein or securities convertible thereinto or any
voting rights with respect thereto other than pursuant to the Merger Agreement
or with Buyer's consent. The Voting Agreement may be terminated at the option of
any party at any time upon the earlier of the termination of the Merger
Agreement or the date upon which the Merger becomes effective. The foregoing
summary of the Voting Agreement is qualified in its entirety by reference to the
copy of the Voting Agreement included as Exhibit 2 to this Schedule 13D and
incorporated herein in its entirety by reference.
In accordance with the terms of the Stock Option Agreement, the
Reporting Persons have granted Buyer an option (the "Option"), exercisable under
certain circumstances and subject to certain adjustments, to purchase the Shares
at a price per share (the "Purchase Price"), payable in cash, equal to the lower
of (x) $23.00 or (y) the exchange ratio under the Merger Agreement, multiplied
by the closing price of the common stock of Buyer as reported on the New York
Stock Exchange composite tape on the last trading day immediately preceding the
date of delivery to Issuer of written notice of Buyer's exercise of the Option,
provided that, notwithstanding the foregoing, in no event will the Purchase
Price be less than $19.53. The Option may be exercised in part only for less
than 390,500 Shares in the aggregate, unless Buyer exercises the Option for at
least 2,253,876 Shares. The Option shall terminate upon the earliest to occur of
the effective time of the Merger or termination of the Merger Agreement under
certain other circumstances. As of the date hereof, the Option is not
exercisable. The foregoing summary of the Stock Option Agreement is qualified in
its entirety by reference to the copy of the Stock Option Agreement included as
Exhibit 3 to this Schedule 13D and incorporated herein in its entirety by
reference.
MEDIQ also entered into a Reimbursement Agreement with the Issuer
pursuant to which MEDIQ has agreed to reimburse the Issuer for any termination
fees (up to $5 million) or reimbursement of expenses (up to $1 million) that the
Issuer is required to pay to Buyer pursuant to Section 7.2 of the Merger
Agreement solely by reason of the breach of MEDIQ's obligations pursuant to the
Merger Agreement, Stock Option Agreement or Voting Agreement, subject to the
maximum amounts set forth above. The foregoing summary of the Reimbursement
Agreement is qualified in its entirety by reference to the copy of the
Reimbursement Agreement included as Exhibit 4 to this Schedule 13D and
incorporated herein in its entirety by reference.
Pursuant to the Merger Agreement, upon consummation of the Merger, the
officers of the Issuer shall be the officers of the
-6-
<PAGE>
Surviving Corporation and the directors of Subcorp shall be the directors of the
Surviving Corporation.
Pursuant to the Merger Agreement, upon consummation of the Merger, the
Certificate of Incorporation of the Surviving Corporation shall be amended so as
to contain the provisions, and only the provisions, contained in the Certificate
of Incorporation of Subcorp, except for Article I thereof, which shall continue
to read, "The name of the corporation is 'PCI Services, Inc.'", and the By-laws
of Subcorp shall be the By-laws of the Surviving Corporation; in each case until
amended in accordance with applicable law.
Item 5 Interest in Securities of the Issuer. Items 5(a)-(d) are
amended by adding the following:
As described in Item 4 hereof, Buyer has the right, under the
circumstances and subject to the limitations set forth in the Stock Option
Agreement, to acquire up to all the Shares. The Option is not currently
exercisable and the Reporting Persons do not presently share with Buyer voting
or dispositive power with respect to any of the Shares. The foregoing
description of certain terms set forth in the Stock Option Agreement is
qualified in its entirety by reference to the copy of the Stock Option Agreement
included as Exhibit 3 to this Schedule 13D and incorporated herein in its
entirety by reference.
Item 6 Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer
Item 6 is amended in its entirety and restated to read as follows:
The Reporting Persons have entered into the Merger Agreement, Voting
Agreement, Stock Option Agreement and Reimbursement Agreement with the Issuer.
All such agreements, other than the Merger Agreement, will terminate upon the
effective time of the Merger.
The Merger Agreement is included as Exhibit 1 to this Schedule 13D and
is incorporated herein by reference. See Item 4.
The Voting Agreement is included as Exhibit 2 to this Schedule 13D and
is incorporated herein by reference. See Item 4.
The Stock Option Agreement is included as Exhibit 3 to this Schedule
13D and is incorporated herein by reference. See Item 4.
The Reimbursement Agreement is included as Exhibit 4 to this Schedule
13D and is incorporated herein by reference. See Item 4.
-7-
<PAGE>
Item 7 Material to be Filed as Exhibits
--------------------------------
Item 7 is amended to file the following additional documents as
exhibits:
1. Agreement and Plan of Merger dated as of July 23, 1996 by
and among Cardinal Health, Inc., Panther Merger Corp., PCI
Services, Inc. and MEDIQ Incorporated is incorporated
herein by reference to Exhibit 2.1 to the Schedule 13D
filed by Cardinal Health, Inc. with respect to the
securities of PCI Services, Inc. on July 29, 1996.
2. Support/Voting Agreement dated as of July 23, 1996, by and
among Cardinal Health, Inc., MEDIQ Incorporated and MEDIQ
Investment Services, Inc. is incorporated herein by
reference to Exhibit 99.1 to the Schedule 13D filed by
Cardinal Health, Inc. with respect to the securities of
PCI Services, Inc. on July 29, 1996.
3. Stock Option Agreement dated as of July 23, 1996 by and
among Cardinal Health, Inc., MEDIQ Incorporated and MEDIQ
Investment Services, Inc. is incorporated herein by
reference to Exhibit 2.2 to the Schedule 13D filed by
Cardinal Health, Inc. with respect to the securities of
PCI Services, Inc. on July 29, 1996.
4. Reimbursement Agreement dated as of July 23, 1996 between
MEDIQ Incorporated and PCI Services, Inc.
5. Press Release dated July 24, 1996.
-8-
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: July 30, 1996
MEDIQ INCORPORATED
/s/ Michael F. Sandler
---------------------------
Michael F. Sandler
Chief Financial Officer
MEDIQ INVESTMENT SERVICES, INC.
/s/ Michael F. Sandler
------------------------------
Michael F. Sandler
Chief Financial Officer
-9-
<PAGE>
REIMBURSEMENT AGREEMENT
This Reimbursement Agreement (the "Agreement") is made and entered into
this 23rd day of July, 1996, by and between PCI Services, Inc, a Delaware
corporation ("PCI"), and MEDIQ INCORPORATED, a Delaware corporation ("MEDIQ").
R E C I T A L S:
WHEREAS, PCI and MEDIQ have negotiated and plan to enter into an
Agreement and Plan of Merger (the "Merger Agreement") by and among Cardinal
Health, Inc. ("Cardinal"), Panther Merger Corp. ("PMC"), PCI and MEDIQ, pursuant
to which, among other things, PMC shall be merged with and into PCI;
WHEREAS, Section 7.2 of the Merger Agreement provides for the payment
of certain amounts by PCI to Red in the event of the termination of the Merger
Agreement under certain circumstances, including MEDIQ's failure to perform its
obligations under the Merger Agreement; and
WHEREAS, as a condition to proceeding with the transactions set forth
in the Merger Agreement, PCI has required, and MEDIQ has agreed to provide, the
reimbursement of PCI as set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises set forth herein, the parties, intending to be legally bound,
hereby agree as follows:
1. Reimbursement. If PCI is required pursuant to Section 7.2 of the
Merger Agreement to pay to Cardinal a termination fee (up to $5 million) or
reimbursement (up to $1 million) of Cardinal's expenses following a termination
of the Agreement by Cardinal pursuant to Section 7.1 solely by reason of the
breach of MEDIQ's obligations pursuant to the Merger Agreement, the MEDIQ Option
or the MEDIQ Support Agreement, then MEDIQ shall, within two business days after
receipt of notice of such payment by PCI, reimburse PCI therefor, subject to the
maximum amounts set forth above. Any request by Cardinal for payment of any such
termination fee or expenses is referred to herein as a "Claim."
2. Indemnification Procedures. PCI shall promptly notify MEDIQ of any
Claim, and include in such notice the nature of any such Claim or potential
Claim of Cardinal, within one business day after any termination of the Merger
Agreement, and include in such notice the factual basis, and, if known, the
estimated amount of the claim. MEDIQ shall have the right, at its expense, to
undertake the defense of or, with the consent of PCI (which consent shall not
unreasonably be withheld), to settle
<PAGE>
or compromise any such Claim, unless PCI waives all rights to reimbursement or
indemnity against MEDIQ with respect to such Claim. The election by MEDIQ to
undertake the defense of a Claim shall not preclude PCI also from participating
in such defense, so long as it bears its own legal fees and expenses for so
doing.
3. Notices. All notices pursuant to this Agreement shall be given as
follows:
TO PCI Services, Inc:
PCI Services, Inc
3001 Red Lion Road
Philadelphia, PA 19114
Attention: Daniel F. Gerner, President
TO MEDIQ INCORPORATED:
MEDIQ Incorporated
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Thomas J. Carroll
Unless otherwise provided herein, all notices, demands, elections, requests or
other communications given or made under this Agreement must be in writing and
shall be deemed properly given or made only if delivered to the respective
addresses indicated above (or to such other address as may be specified by
notice) in one of the following manners: (i) by hand; (ii) by facsimile; (iii)
by overnight delivery service; or (iv) by certified mail, return receipt
requested. Any notice shall have been deemed to have been given on the date of
delivery.
4. Effect of this Agreement. Nothing contained in this Agreement shall
be construed as a waiver of rights under the Merger Agreement except as
expressly provided herein.
5. Governing Law. This Agreement shall be construed and interpreted
according to the laws of the State of Delaware.
6. No Waiver. No failure of any party at any time or times to require
performance of any provision hereof, and no delay in exercising any right,
power, privilege or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof by any party preclude any further
exercise thereof or the exercise of any other right, power, privilege or remedy
of such party.
7. Counterparts. The Agreement may be executed in several counterparts,
each of which shall be deemed an original but all of which shall constitute one
instrument.
-2-
<PAGE>
8. Expenses. Each party shall pay the reasonable attorneys' fees and
expenses incurred by the other party hereto in connection with its enforcement
of its rights hereunder, to the extent it is the prevailing party in the
litigation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
PCI Services, Inc.
By: /s/ Daniel F. Gerner
MEDIQ INCORPORATED
By: /s/ Michael Sandler
Senior Vice President
-3-
<PAGE>
MEDIQ
_
|_| NEWS RELEASE
Date: IMMEDIATE (July 24, 1996)
Contact: Michael F. Sandler
Chief Financial Officer
MEDIQ Incorporated
(609) 665-9399
MEDIQ ANNOUNCES PCI SERVICES, INC. MERGING
WITH CARDINAL HEALTH, INC.
PENNSAUKEN, N.J. -- MEDIQ Incorporated (AMEX:MED) reported today that
PCI Services, Inc., a company in which MEDIQ owns a substantial interest,
announced it has agreed to be acquired by Cardinal Health, Inc. MEDIQ owns
2,875,000 shares of the common stock of PCI, or approximately 46% of PCI's total
outstanding shares.
Under the terms of the merger agreement, shareholders of PCI will
receive 0.336 shares of Cardinal Health common stock for each common share
of PCI owned at the time that the transaction closes. Cardinal Health will issue
approximately 2.1 million shares in the merger representing a transaction value
of approximately $201 million, based upon yesterday's closing stock price and
including PCI's outstanding debt of approximately $56 million. The combination
is expected to be accounted for as a pooling of interests.
In connection with the transaction, MEDIQ has granted Cardinal Health
an option to purchase all of the shares of PCI owned by MEDIQ, exercisable upon
the occurrence of certain events and has agreed to vote in favor of the
transaction. The merger is expected to be completed in the fall, subject to
approval by shareholders of PCI, and the receipt of requisite regulatory
approvals.
The merger agreement may be terminated by either PCI or Cardinal
Health under specified circumstances, including, among others, if the
average trading price of Cardinal Health's common stock over a specified period
prior to the PCI stockholders' meeting is less than $58.12. PCI will not be able
to terminate the agreement if Cardinal Health increases the exchange ratio in
the manner provided by the agreement. Moreover, either PCI or Cardinal Health
may terminate the merger agreement if Cardinal Health's average trading price
over the relevant period is less than $54.70.
-MORE-
<PAGE>
-2-
Thomas E. Carroll, President and Chief Executive Officer of MEDIQ,
said that "we are extremely pleased with this transaction because it is another
significant step in implementing MEDIQ's strategic plan to reduce debt with
proceeds to be realized from the sale of non-core assets."
If the merger were to be consummated at yesterday's closing stock
price for Cardinal Health stock, MEDIQ would receive shares of Cardinal Health
having a market value of approximately $66.125 million and would report an
after-tax gain of approximately $24 million or approximately $1.00 per share
of MEDIQ common stock.
MEDIQ Incorporated, whose shares (MED and MED.Pr) and debentures
(MED.C and MED.NP) are traded on the American Stock Exchange, through its
wholly-owned subsidiary, MEDIQ/PRN Life Support Services, Inc., is the largest
movable critical care and life support medical equipment rental business in the
United States. MEDIQ also owns 47% of NutraMax Products, Inc. (NASDAQ:NMPC), a
leading private health and personal care products company.
