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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-K
(Mark One) Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (Fee
[ X ] Required)
For the fiscal year ended December 31, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 (No Fee
Required)
For the transition period from to .
------------- -----------
Commission file number 1-8269
OMNICARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 31-1001351
(State of Incorporation) (I.R.S. Employer Identification No.)
OMNICARE, INC.
50 EAST RIVERCENTER BOULEVARD
COVINGTON, KENTUCKY 41011
(Address of principal executive offices)
Registrant's telephone number, including area code: 606-655-1180
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
Common Stock ($1 Par Value) New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
l934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
---
Aggregate market value of the Registrant's voting stock held by
non-affiliates, based upon the closing price of said stock on the New York Stock
Exchange Composite Transaction Listing on February 28, 1997 ($26.50 per share):
$2,088,809,818.
As of February 28, 1997, 78,823,012 shares of the Common Stock, $1.00 par
value, of the Registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Omnicare, Inc.'s, (Omnicare, the Company or the
Registrant) definitive Proxy Statement for its 1997 Annual Meeting of
Stockholders, to be held May 19, 1997, are incorporated by reference into Part
III of this report. Definitive copies of its 1997 Proxy Statement will be filed
with the Securities and Exchange Commission within 120 days of the end of the
Company's fiscal year.
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OMNICARE, INC.
1996 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
PAGE
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . 3
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . 13
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS . . . . . . . . . . . . 16
EXECUTIVE OFFICERS OF THE COMPANY . . . . 17
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS . . . . 18
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. . . . . . . . . . 21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA . . . . . . . . . . . . . . . . . . 25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE . . . . . . . . . . 46
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF
THE REGISTRANT . . . . . . . . . . . . . 46
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . 46
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT . . . . . . . . . 46
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS . . . . . . . . . . . . . . 46
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND
REPORTS ON FORM 8-K . . . . . . . . . . 46
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PART I
ITEM 1 - BUSINESS
BACKGROUND
Omnicare, Inc. (the "Company" or "Omnicare") was incorporated in Delaware
on May 19, 1981 to conduct certain health care businesses contributed to it by
W. R. Grace & Co. and Chemed Corporation, and in July 1981 public trading of the
Company's Common Stock commenced. As part of a multi-year restructuring program
undertaken in 1985, the Company, through a series of divestitures and
acquisitions, redeployed all of its capital in the long-term pharmacy business.
As a result, Omnicare is today a leading independent provider of pharmacy
services to long-term care institutions such as nursing homes, retirement
centers and other institutional health care facilities. The Company operates
principally in one business segment-institutional pharmacy services for the
long-term care market. At December 31, 1996, Omnicare provided these services to
approximately 300,000 residents in 3,700 nursing facilities located principally
in the states of Alabama, Connecticut, Georgia, Illinois, Indiana, Kansas,
Kentucky, Maine, Massachusetts, Michigan, Missouri, New Jersey, New York, North
Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Washington, West Virginia and
Wisconsin. The Company does not make any export sales.
In 1996, the Company completed the acquisition of 17 institutional pharmacy
providers. See "Note 2 - Acquisitions" of the Notes to Consolidated Financial
Statements at Item 8 of this Report for additional information.
PHARMACY SERVICES
Omnicare purchases, repackages and dispenses prescription and non-
prescription medication in accordance with physician orders and delivers such
prescriptions at least daily to the nursing facility for administration to
individual patients by the facility's nursing staff. Omnicare typically services
nursing homes within a 150-mile radius of its pharmacy locations. Omnicare
maintains a 24-hour, on-call pharmacist service, 365 days per year, for
emergency dispensing and delivery or for consultation with the facility's staff
or attending physician.
Upon receipt of a prescription, the relevant patient information is entered
into Omnicare's computerized dispensing and billing systems. At that time, the
dispensing system checks the prescription for any potentially adverse drug
interactions or patient sensitivity. When required and/or specifically requested
by the physician or patient, branded drugs are dispensed; generic drugs are
substituted in accordance with applicable state and federal laws and as
requested by the physician or patient. The Company also provides therapeutic
interchange, with physician approval, in accordance with the Company's
pharmaceutical care guidelines. See "THE OMNICARE GUIDELINES(R)" below.
Omnicare provides a "unit dose" distribution system. Most of its
prescriptions are filled utilizing specialized unit-of-use packaging and
delivery systems. Maintenance medications are typically provided in 30-day
supplies utilizing either a box unit dose system or unit dose punch card system.
The unit dose system, preferred over the bulk delivery systems
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employed by retail pharmacies, improves control over drugs in the nursing
facility and improves patient compliance with drug therapy by increasing the
accuracy and timeliness of drug administration.
Integral to Omnicare's drug distribution system is its computerized medical
records and documentation system. Omnicare provides to the facility computerized
medication administration records and physician's order sheets and treatment
records for each patient. Data extracted from these computerized records are
also formulated into monthly management reports on patient care and quality
assurance. The computerized documentation system, in combination with the unit
dose drug delivery system, results in greater efficiency in nursing time,
improved control, reduced drug waste in the facility and lower error rates in
both dispensing and administration. These benefits improve drug efficacy and
result in fewer drug-related hospitalizations.
CONSULTANT PHARMACIST SERVICES
Federal and state regulations mandate that nursing facilities, in addition
to providing a source of pharmaceuticals, retain consultant pharmacist services
to monitor and report on prescription drug therapy in order to maintain and
improve the quality of patient care. The Omnibus Budget Reconciliation Act
("OBRA") implemented in 1990 seeks to further upgrade and standardize care by
setting forth more stringent standards relating to planning, monitoring and
reporting on the progress of prescription drug therapy as well as facility-wide
drug usage.
Omnicare provides consultant pharmacist services which help clients comply
with such federal and state regulations applicable to nursing homes. The
services offered by Omnicare's consultant pharmacists include: (i)
comprehensive, monthly drug regimen reviews for each patient in the facility to
assess the appropriateness and efficacy of drug therapies, including a review of
the patient's medical records, monitoring drug reactions to other drugs or food,
monitoring lab results and recommending alternate therapies or discontinuing
unnecessary drugs; (ii) participation on the Pharmacy and Therapeutics, Quality
Assurance and other committees of client nursing facilities as well as periodic
involvement in staff meetings; (iii) monthly inspection of medication carts and
storage rooms; (iv) monitoring and monthly reporting on facility-wide drug usage
and drug administration systems and practices; (v) development and maintenance
of pharmaceutical policy and procedures manuals; and (vi) assistance to the
nursing facility in complying with state and federal regulations as they pertain
to patient care.
Additionally, Omnicare offers a specialized line of consulting services
which help nursing facilities to enhance care and reduce and contain costs as
well as to comply with state and federal regulations. Under this service line,
Omnicare provides: (i) data required for OBRA and other regulatory purposes,
including reports on psychotropic drug usage (chemical restraints), antibiotic
usage (infection control) and other drug usage; (ii) Plan of Care programs which
assess each patient's state of health upon admission and monitor progress and
outcomes using data on drug usage as well as dietary, physical therapy and
social service inputs; (iii) counseling related to appropriate drug usage and
implementation of drug protocols; (iv) on-site educational seminars for the
nursing facility staff on topics such as drug information relating to clinical
indications,
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adverse drug reactions, drug protocols and special geriatric considerations in
drug therapy, and information and training on intravenous drug therapy and
updates on OBRA and other regulatory compliance issues; (v) mock regulatory
reviews for nursing staffs; and (vi) nurse consultant services and consulting
for dietary, social services and medical records.
THE OMNICARE GUIDELINES(R)
In June 1994, to enhance the pharmaceutical care management services that it
offers, Omnicare introduced to its client nursing facilities and their attending
physicians the Omnicare GERIATRIC PHARMACEUTICAL CARE GUIDELINES(R) (THE
OMNICARE GUIDELINES(R)) which it believes is the first clinically-based
formulary for the elderly residing in long-term care institutions. THE OMNICARE
GUIDELINES(R) presents an analysis ranking specific drugs in therapeutic classes
as Preferred, Acceptable or Unacceptable based solely on their disease-specific
clinical effectiveness in treating the elderly in nursing facilities. The
formulary takes into account such factors as pharmacology, safety and toxicity,
efficacy, drug administration, quality of life and other considerations specific
to the frail elderly population residing in nursing facilities. The clinical
evaluations and rankings were developed exclusively for the Company by the
Philadelphia College of Pharmacy and Science, an academic institution recognized
for its expertise in geriatric long-term care. In addition, THE OMNICARE
GUIDELINES(R) provides relative cost information comparing the prices of the
drugs to patients, their insurers or other payors of the pharmacy bill.
As THE OMNICARE GUIDELINES(R) focuses on health benefits, rather than solely
on cost, in assigning rankings, the Company believes that use of THE OMNICARE
GUIDELINES(R) will assist physicians in making the best clinical choices of drug
therapy for the patient at the lowest cost to the payor of the pharmacy bill.
The Company also believes that the development of and subsequent compliance with
THE OMNICARE GUIDELINES(R) will lower costs for the patients it serves and
strengthen the Company's purchasing power with pharmaceutical manufacturers.
ANCILLARY SERVICES
Omnicare provides the following ancillary products and services to nursing
facilities:
Infusion Therapy Products and Services. With cost containment pressures in
health care, nursing facilities are increasingly providing subacute care as a
means of treating moderately acute but stabilized patients more cost-
effectively than hospitals, provided that the nursing staff and pharmacy are
capable of supporting higher degrees of acuity. Omnicare provides infusion
therapy support services for such residents in its client nursing facilities
and, to a lesser extent, hospice and home care patients. Infusion therapy
consists of the product (a nutrient, antibiotic, chemotherapy or other drugs in
solution) and the intravenous administration of the product.
Omnicare prepares the product to be administered using proper equipment in a
sterile environment and then delivers the product to the nursing home for
administration by the nursing staff. Proper administration of intravenous ("IV")
drug therapy requires a highly trained nursing staff. Omnicare's consultant
pharmacists and nurse consultants operate an
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education and certification program on IV therapy to assure proper staff
training and compliance with regulatory requirements in client facilities
offering an IV program.
By providing an infusion therapy program, Omnicare enables its client
nursing facilities to admit and retain patients who otherwise would need to be
cared for in an acute-care facility. The Company believes that by providing
these high-acuity pharmacy services it has a competitive advantage over other
pharmacy providers. The most common infusion therapies Omnicare provides are
total parenteral nutrition, antibiotic therapy, chemotherapy, pain management
and hydration.
Wholesale Medical Supplies/Medicare Part B Billing. Omnicare distributes
disposable medical supplies, including urological, ostomy, nutritional support
and wound care products and other disposables needed in the nursing home
environment. In addition, Omnicare provides direct Medicare billing services for
certain of these product lines for patients eligible under the Medicare Part B
program. As part of this service, Omnicare determines patient eligibility,
obtains certifications, orders products and maintains inventory on behalf of the
nursing facility. Omnicare also contracts to act as billing agent for certain
nursing homes that supply these products directly to the patient.
Other Services. Omnicare also provides respiratory therapy products and
durable medical equipment and offers clinical care plan and financial software
information systems to its client nursing facilities. Omnicare continues to
review the expansion of these as well as other products and services that may
further enhance the ability of its client nursing facilities to care for their
residents in a cost-effective manner.
PRODUCT AND MARKET DEVELOPMENT
Omnicare's pharmacy business engages in a continuing program for the
development of new services and the marketing thereof. While new service and new
market development are important factors for the growth of this business,
Omnicare does not expect that any new service or marketing effort, including
those in the developmental stage, will require the investment of a material
portion of Omnicare's assets.
MATERIALS/SUPPLY
Omnicare purchases pharmaceuticals through a wholesale distributor with whom
it has a prime vendor contract and, on an increasing basis, under contracts
negotiated directly with pharmaceutical manufacturers. The Company also is a
member of industry buying groups which contract with manufacturers for
discounted prices based on volume which are passed through to the Company by its
wholesale distributor. The Company has numerous sources of supply available to
it and has not experienced any difficulty in obtaining pharmaceuticals or other
products and supplies used in the conduct of its business.
PATENTS, TRADEMARKS AND LICENSES
Omnicare's business operations are not dependent upon any material patents,
trademarks or licenses.
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INVENTORIES
Omnicare's pharmacies maintain adequate on-site inventories of
pharmaceuticals and supplies to ensure prompt delivery service to its customers.
Inventories on hand are not considered to be high by industry standards. The
Company's primary wholesale distributor also maintains local warehousing in most
major geographic markets in which the Company operates.
COMPETITION
By its nature, the long-term care pharmacy business is highly regionalized
and, within a given geographic region of operations, highly competitive. In the
geographic regions it serves, Omnicare competes with numerous local retail
pharmacies, local and regional institutional pharmacies and pharmacies owned by
long-term care facilities. Omnicare competes in this market on the basis of
quality, cost-effectiveness and the increasingly comprehensive and specialized
nature of its services along with the clinical expertise, pharmaceutical
technology and professional support it offers.
In its program of acquiring institutional pharmacy providers, the Company
competes with several other companies with similar acquisition strategies, some
of which may have greater resources than the Company.
No individual customer or market group is critical to the total sales of the
Company's long-term care pharmacy business.
GOVERNMENT REGULATION
Institutional pharmacies, as well as the long-term care facilities they
serve, are subject to extensive federal, state and local regulation. These
regulations cover required qualifications, day-to-day operations, reimbursement
and the documentation of activities. Omnicare continuously monitors the effects
of regulatory activity on its operations.
Licensure, Certification and Regulation. States generally require that
companies operating a pharmacy within the state be licensed by the state board
of pharmacy. The Company currently has pharmacy licenses for each location in
the states in which it operates pharmacies. In addition, the Company currently
delivers prescription products from its licensed pharmacies to 4 states in which
the Company does not operate a pharmacy. These states regulate out-of-state
pharmacies, however, as a condition to the delivery of prescription products to
patients in such states. Omnicare's pharmacies hold the requisite licenses
applicable in these states. In addition, Omnicare's pharmacies are registered
with the appropriate state and federal authorities pursuant to statutes
governing the regulation of controlled substances.
Client nursing facilities are also separately required to be licensed in the
states in which they operate and, if serving Medicare or Medicaid patients, must
be certified to be in compliance with applicable program participation
requirements. Client nursing facilities are also subject to the nursing home
reforms of the Omnibus Budget Reconciliation Act of 1987, which imposed strict
compliance standards relating to quality of care for nursing home operations,
including vastly increased documentation and
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reporting requirements. In addition, pharmacists, nurses and other health care
professionals who provide services on the Company's behalf are in most cases
required to obtain and maintain professional licenses and are subject to state
regulation regarding professional standards of conduct.
Federal and State Laws Affecting the Repacking, Labelling, and Interstate
Shipping of Drugs. Federal and state laws impose certain repackaging, labelling,
and package insert requirements on pharmacies that repackage drugs for
distribution beyond the regular practice of dispensing or selling drugs directly
to patients at retail. A drug repackager must register with the Food and Drug
Administration. The Company holds all required registrations and licenses, and
its repackaging operations are believed to be in compliance with applicable
state and federal requirements.
Medicare and Medicaid. The nursing home pharmacy business has long operated
under regulatory and cost containment pressures from state and federal
legislation primarily affecting Medicaid and, to a lesser extent, Medicare.
As is the case for nursing home services generally, Omnicare receives
reimbursement from the Medicaid and Medicare programs, directly from individual
residents (private pay), and from other payors such as third-party insurers. The
Company believes that its reimbursement mix is in line with nursing home
expenditures nationally. For the year ended December 31, 1996, Omnicare's payor
mix was approximately as follows: 54% private pay and nursing homes, 42%
Medicaid, 3% Medicare and 1% insurance and other private sources.
For those patients who are not covered by government-sponsored programs or
private insurance, Omnicare generally directly bills the patient or the
patient's responsible party on a monthly basis. Depending upon local market
practices, Omnicare may alternatively bill private patients through the nursing
facility. Pricing for private pay patients is based on prevailing regional
market rates or "usual and customary" charges.
The Medicaid program is a cooperative federal-state program designed to
enable states to provide medical assistance to aged, blind, or disabled
individuals, or members of families with dependent children whose income and
resources are insufficient to meet the costs of necessary medical services.
State participation in the Medicaid program is voluntary. To become eligible to
receive federal funds, a state must submit a Medicaid "state plan" to the
Secretary of the Department of Health and Human Services ("HHS") for approval.
The federal Medicaid statute specifies a variety of requirements which the state
plan must meet, including requirements relating to eligibility, coverage of
services, payment and administration.
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Federal law and regulations contain a variety of requirements relating to
the furnishing of prescription drugs under Medicaid. First, states are given
authority, subject to certain standards, to limit or specify conditions to the
coverage of particular drugs. Second, federal Medicaid law establishes standards
affecting pharmacy practice. These standards include general requirements
relating to patient counseling and drug utilization review and more specific
standards for nursing facilities relating to drug regimen reviews for Medicaid
patients in such facilities. Recent regulations clarify that, under federal law,
a pharmacy is not required to meet the general requirements for drugs dispensed
to nursing facility residents if the nursing facility complies with the drug
regimen review standards. However, the regulations indicate that states may
nevertheless require pharmacies to comply with the general requirements,
regardless of whether the nursing facility satisfies the drug regimen review
requirement, and the states in which the Company operates currently do require
its pharmacies to comply with these general standards.
Third, federal regulations impose certain requirements relating to
reimbursement for prescription drugs furnished to Medicaid patients. Among other
things, regulations establish "upper limits" on payment levels. In addition to
requirements imposed by federal law, states have substantial discretion to
determine administrative, coverage, eligibility and payment policies under their
state Medicaid programs which may affect the Company's operations. For example,
some states have enacted "freedom of choice" requirements which may prohibit a
nursing facility from requiring its residents to purchase pharmacy or other
ancillary medical services or supplies from particular providers that deal with
the nursing home. Such limitations may increase the competition which the
Company faces in providing services to nursing facility patients.
The Medicare program is a federally funded and administered health insurance
program for individuals age 65 and over or who are disabled. The Medicare
program consists of two parts: Part A, which covers, among other things,
inpatient hospital, skilled nursing facility, home health care and certain other
types of health care services; and Medicare Part B, which covers physicians'
services, outpatient services, and certain items and services provided by
medical suppliers. Medicare Part B also covers a limited number of specifically
designated prescription drugs. The Medicare program establishes certain
requirements for participation of providers and suppliers in the Medicare
program. Pharmacies are not subject to such certification requirements. Skilled
nursing facilities and suppliers of medical equipment and supplies, however, are
subject to specified standards. Failure to comply with these requirements and
standards may adversely affect an entity's ability to participate in the
Medicare program and receive reimbursement for services provided to Medicare
beneficiaries.
The Medicare and Medicaid programs are subject to statutory and regulatory
changes, retroactive and prospective rate adjustments, administrative rulings,
and freezes and funding reductions, all of which may adversely affect the
Company's business. There can be no assurance that payments for pharmaceutical
supplies and services under governmental reimbursement programs will continue to
be based on the current methodology or remain comparable to present levels. In
this regard, the Company may be subject to rate reductions as a result of
federal budgetary legislation related to the Medicare and Medicaid programs. In
addition, various state Medicaid programs periodically experience budgetary
shortfalls which may
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result in Medicaid payment delays to the Company. To date, the Company has not
experienced any material adverse effect due to any such budgetary shortfall.
In addition, the failure, even if inadvertent, of Omnicare and/or its client
institutions to comply with applicable reimbursement regulations could adversely
affect Omnicare's business. Additionally, changes in such reimbursement programs
or in regulations related thereto, such as reductions in the allowable
reimbursement levels, modifications in the timing or processing of payments and
other changes intended to limit or decrease the growth of Medicaid and Medicare
expenditures, could adversely affect the Company's business.
Referral Restrictions. The Company is subject to federal and state laws
which govern financial and other arrangements between health care providers.
These laws include the federal anti-kickback statute, which prohibits, among
other things, knowingly and willfully soliciting, receiving, offering or paying
any remuneration directly or indirectly in return for or to induce the referral
of an individual to a person for the furnishing of any item or service for which
payment may be made in whole or in part under federal healthcare programs. Many
states have enacted similar statutes which are not necessarily limited to items
and services for which payment is made by federal healthcare programs.
Violations of these laws may result in fines, imprisonment, and exclusion from
the federal programs or other state-funded programs. Federal and state court
decisions interpreting these statutes are limited, but have generally construed
the statutes to apply if "one purpose" of remuneration is to induce referrals or
other conduct within the statute.
Federal regulations establish "safe harbors," which give immunity from
criminal or civil penalties to parties meeting all of the safe harbor
requirements. While the failure to satisfy all criteria for a safe harbor does
not mean that an arrangement violates the statute, it may subject the
arrangement to review by the HHS Office of Inspector General ("OIG"), which is
charged with administering the federal anti-kickback statute. Federal
legislation directed the OIG to establish procedures for obtaining advisory
opinions on the application of the federal anti-kickback statute, and
regulations were recently issued setting forth this new advisory opinion
process. However, there is little experience with the new process. Further, the
Clinton administration has proposed repealing the advisory opinion process as
part of its fiscal year (FY) 1998 budget proposal. Thus, there is limited
authority on qualification for a safe harbor upon which the Company can rely.
The OIG issues "Fraud Alerts" identifying certain questionable arrangements
and practices which it believes may implicate the federal anti-kickback statute.
The OIG has issued a Fraud Alert providing its views on certain joint venture
and contractual arrangements between health care providers. The OIG also issued
a Fraud Alert concerning prescription drug marketing practices that could
potentially violate the federal statute. Pharmaceutical marketing activities may
implicate the federal anti-kickback statute because drugs are often reimbursed
under the Medicaid program. According to the Fraud Alert, examples of practices
that may implicate the statute include certain arrangements under which
remuneration is made to pharmacists to recommend the use of a particular
pharmaceutical product.
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In addition, a number of states have undertaken enforcement actions against
pharmaceutical manufacturers involving pharmaceutical marketing programs,
including programs containing incentives to pharmacists to dispense one
particular product rather than another. These enforcement actions arose under
state consumer protection laws which generally prohibit false advertising,
deceptive trade practices, and the like. The Company believes its contract
arrangements with other health care providers, its pharmaceutical suppliers and
its pharmacy practices are in compliance with these laws.
There can be no assurance that such laws will not, however, be interpreted
in the future in a manner inconsistent with the Company's interpretation and
application.
Health Care Reform and Federal Budget Legislation. In recent years, a number
of legislative proposals have been introduced in Congress to reform the health
care system. Currently, Congress and the Clinton administration are considering
such reforms in the context of federal budget legislation. This legislation
could result in significant reductions in payments to providers under the
Medicaid and Medicare programs. With respect to Medicare, proposals include
establishment of a prospective payment system for skilled nursing facilities
("SNFs"); limits on payments to Medicare SNFs for routine services; requiring
consolidated billing by a SNF for all Part A and B claims for SNF residents; and
other cost savings proposals affecting reimbursement for Medicare SNF services.
The Administration also has proposed to eliminate the "mark-up" charged by
physicians and suppliers on outpatient drugs, covered under Medicare Part B, by
limiting payments to acquisition costs, subject to a limit. If enacted, there
can be no assurance that such proposals could not have a material adverse effect
on the business of Omnicare. While budget negotiations are continuing, the
future of any reform proposals in Congress is unknown.
In addition, a number of states have enacted and are considering various
health care reforms, including reforms through Medicaid demonstration projects.
Federal law allows HHS to authorize waivers of federal Medicaid program
requirements, including requirements relating to coverage, free choice of
providers and payment for health care services, in connection with state
demonstration projects that promote Medicaid program objectives. HHS published
procedures and public notice requirements designed to open the waiver approval
process to public comment and to expedite processing. The Clinton
Administration's FY 1998 budget proposal would eliminate the need for states to
seek a federal waiver to implement a Medicaid managed care system.
Several state Medicaid programs have established mandatory statewide managed
care programs for Medicaid beneficiaries to control costs through negotiated or
capitated rates, as opposed to traditional cost-based reimbursement for Medicaid
services and propose to use savings achieved through these programs to expand
coverage to those not previously eligible for Medicaid. HHS has approved waivers
for statewide managed care demonstration projects in several states and are
pending for several other states. These demonstration projects generally exempt
institutionalized care, including nursing facility services, from the programs,
and the Company's operations have not been adversely affected in states with
managed care demonstration projects in effect. The Company is unable to predict
what impact, if any, future Medicaid managed care systems might
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have on the Company's operations. Because there are currently various reform
proposals under consideration at the federal and state levels, it is uncertain
at this time what health care reform initiatives, if any, will be implemented,
or whether there will be other changes in the administration of governmental
health care programs or interpretations of governmental policies or other
changes affecting the health care system. There can be no assurance that future
health care or budget legislation or other changes will not have an adverse
effect on the business of the Company.
ENVIRONMENTAL MATTERS
In operating its facilities, Omnicare makes every effort to comply with
pollution control laws. No major difficulties have been encountered in effecting
compliance. No material capital expenditures for environmental control
facilities are expected. While Omnicare cannot predict the effect which any
future legislation, regulations, or interpretations may have upon its
operations, it does not anticipate any changes that would have a material
adverse impact on its operations.
EMPLOYEES
At December 31, 1996, Omnicare employed a total of 4,699 persons (including
1,220 part-time employees), all of whom were located within the United States.
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ITEM 2 - PROPERTIES
Omnicare has offices and distribution centers in various locations in the
United States. A list of the major facilities operated by Omnicare as of
December 31, 1996 follows. The owned property is held in fee and is not subject
to any material encumbrance. Omnicare considers all of these facilities to be in
good operating condition and generally to be adequate for present and
anticipated needs.
LEASED
OWNED -----------------------------------
LOCATION TYPE AREA AREA EXPIRATION DATE
- -------- ---- ---- ---- ---------------
Folcroft, Offices and -- 6,101 sq. ft. March 1,
Pennsylvania distribution 2001
center
Lexington, Offices and -- 7,000 sq. ft. September 30,
Kentucky distribution 1997
center
St. Louis, Offices and -- 7,000 sq. ft. April 1,
Missouri distribution 2005
center
Racine, Offices and -- 7,500 sq. ft. December 17,
Wisconsin distribution 2001
center
Belleville, Offices and -- 8,300 sq. ft. March 31,
Illinois distribution 1997
center
Peabody, Offices and -- 8,510 sq. ft. February 1,
Massachusetts distribution 1998
center
Springfield, Offices and -- 8,745 sq. ft. February 28,
Missouri distribution 1998
center
Nitro, Offices and -- 9,000 sq. ft. March 10,
West Virginia distribution 2003
center
Hebron, Offices and -- 9,536 sq. ft. June 30,
Kentucky distribution 1997
center
Tonawanda, Offices and -- 9,600 sq. ft. July 30,
New York distribution 2000
center
Griffith, Offices and -- 10,600 sq. ft. March 31,
Indiana distribution 2002
center
13
<PAGE> 14
LEASED
OWNED ---------------------------------
LOCATION TYPE AREA AREA EXPIRATION DATE
- -------- ---- ---- ---- ---------------
Yakima, Offices and -- 11,000 sq. ft. February 28,
Washington distribution 2000
center
Newington, Offices and -- 11,600 sq. ft. June 10,
Connecticut distribution 1998
center
Dover, Offices and -- 12,000 sq. ft. December 31,
Ohio distribution 2008
center
Spokane, Offices and -- 13,750 sq. ft. January 31,
Washington distribution 2007
center
Dayton, Offices and -- 15,000 sq. ft. January 31,
Ohio distribution 1998
center
Portland, Offices and -- 15,880 sq. ft. March 31,
Oregon distribution 2001
center
Pompton Offices and -- 16,041 sq. ft. August 1,
Plains, distribution 2001
New Jersey center
Plainview, Offices and -- 17,550 sq. ft. June 30,
New York distribution 2005
center
Overland Park, Offices and -- 20,059 sq. ft. August 31,
Kansas distribution 1999
center
Wadsworth, Offices and -- 21,000 sq. ft. June 30,
Ohio distribution 2001
center
Perrysburg, Offices and 23,200 sq. ft. -- --
Ohio distribution
center
Decatur, Offices and 23,274 sq. ft. -- --
Illinois distribution
center
Indianapolis, Offices and -- 23,740 sq. ft. April 30,
Indiana distribution 2006
center
14
<PAGE> 15
LEASED
OWNED -----------------------------------
LOCATION TYPE AREA AREA EXPIRATION DATE
- -------- ---- ---- ---- ---------------
Cincinnati, Offices and -- 24,375 sq. ft. September 30,
Ohio distribution 1999
center
Oklahoma City, Offices and -- 28,000 sq. ft. September 30,
Oklahoma distribution 1998
center
Livonia, Offices and -- 28,524 sq. ft. May 1,
Michigan distribution 2002
center
Skokie, Offices and -- 29,200 sq. ft. November 30,
Illinois distribution 2000
center
Louisville, Offices and -- 37,400 sq. ft. September 30,
Kentucky distribution 2001
center
Florissant, Offices and 37,753 sq. ft. -- --
Missouri distribution
center
Kirkland, Offices and -- 43,107 sq. ft. April 5,
Washington distribution 2003
center
15
<PAGE> 16
ITEM 3 - LEGAL PROCEEDINGS
In May 1996, the Company became aware of a government investigation of
Home Pharmacy Services, Inc. ("Home"), a wholly-owned subsidiary of the Company
acquired in 1992, based in Belleville, Illinois and certain individuals at that
unit. Home accounted for less than four percent of Omnicare's total sales and
earnings in 1996. The Company is cooperating fully with the government's
inquiry. Home continues to provide pharmacy services without interruption to
nursing home residents in the region. The outcome of this investigation is not
currently predictable.
There are no other pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which Omnicare or any of its
subsidiaries is a party or of which any of their property is the subject, and no
such proceedings are known to be contemplated by governmental authorities.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
16
<PAGE> 17
ADDITIONAL ITEM - EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company as of March 25, 1997 are as follows:
Name Age Office First Elected
- ---------------- --- ---------------- -------------
Edward L. Hutton 77 Chairman May 20, 198l
Joel F. Gemunder 57 President May 20, 198l
Kenneth W. Chesterman 56 Executive Vice August 2, 1984
President
Patrick E. Keefe 51 Executive Vice April 11, 1993
President - Operations
Timothy E. Bien 46 Senior Vice President- May 20, 1996
Professional Services
and Purchasing
Mary Lou Fox 65 Senior Vice President- May 20, 1996
Marketing
David W. Froesel, Jr. 45 Senior Vice President March 4, 1996
and Chief Financial
Officer
Robert F. Heath 49 Senior Vice President February 5, 1997
and General Counsel
Cheryl D. Hodges 45 Senior Vice President August 4, 1982
and Secretary
All of the executive officers listed above have been actively engaged in
the business of the Company or its predecessors for the past five years, with
the exception of Messrs. Keefe, Froesel and Heath. Mr. Keefe served as Vice
President of Diagnostek, Inc. from April 1992 to April 1993. From September
1990 to April 1992, he was President of HPI Health Care Services, Inc.
("HPI"), a subsidiary of Diagnostek which it acquired from Omnicare in August
1989. He served as Executive Vice President of HPI from August 1984 until
September 1990. Mr. Froesel was Vice President of Finance and Administration
at Mallinckrodt Veterinary Inc. from May 1993 to February 1996. From July
1989 to April 1993, he was worldwide corporate controller of Mallinckrodt
Medical Inc. Mr. Heath, who was newly elected in February 1997, was
Associate General Counsel of GE Medical Systems, a division of the General
Electric Company, from 1993 to 1997. He joined GE Medical in 1988. From
1984 to 1988, Mr. Heath worked as Senior Counsel of GE American
Communications.
Executive officers are elected for one-year terms at the annual
organizational meeting of the Board of Directors which follows the annual
meeting of stockholders each year.
17
<PAGE> 18
PART II
ITEM 5 - MARKET FOR THE COMPANY'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK; HOLDERS OF RECORD
The Company's Common Stock is listed on the New York Stock Exchange. The
following table sets forth the ranges of high and low closing prices for the
Common Stock on the New York Stock Exchange during each of the calendar quarters
of 1996 and 1995. All prices shown have been adjusted to reflect two-for-one
stock splits in June 1996 and June 1995.
<TABLE>
<CAPTION>
1996 1995
--------------- --------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
First Quarter $27.13 $19.69 $13.38 $10.31
Second Quarter 30.00 25.00 14.06 10.88
Third Quarter 30.50 22.00 19.50 13.44
Fourth Quarter 32.13 26.13 22.38 17.06
</TABLE>
The number of holders of record of Omnicare Common Stock on February 28,
1997 was 1,981. This figure does not include stockholders with shares held under
beneficial ownership in nominee name or within clearinghouse positions of
brokerage houses and banks.
DIVIDENDS
Reflecting the Company's financial position and operating performance, on
February 7, 1996, the Board of Directors elected to increase the quarterly cash
dividend to $.015 per share, for an indicated annual rate of $.06 per share in
1996. On February 5, 1997, the quarterly cash dividend was raised to $.0175, for
an indicated annual rate of $.07 per share in 1997. It is presently intended
that cash dividends will continue to be paid on a quarterly basis; however,
future dividends are necessarily dependent upon the Company's earnings and
financial condition and other factors not currently determinable.
RECENT SALES OF UNREGISTERED SECURITIES
During the quarter ended December 31, 1996, the Company acquired Clasen
L.T.C. Pharmacy, Roeschen's Healthcare Corporation and Pharmacon Corporation. In
connection with these transactions, a total of 265,075 shares of common stock
and 80,000 warrants (the "Securities") were issued. No underwriters were
involved in these acquisition transactions.
The Securities were issued in reliance on the exemption from registration
contained at Section 4(2) of the Securities Act of 1933. The 80,000 warrants
referred to above may be exercised at a price of $29.75 through December 10,
2002. See Note 2 to the Consolidated Financial Statements for additional
information regarding the 1996 acquisition transactions.
ITEM 6 - SELECTED FINANCIAL DATA
The following table summarizes certain selected financial data, which should
be read in conjunction with the Company's Consolidated Financial Statements and
related Notes and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere herein.
18
<PAGE> 19
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the years ended and at December 31,
1996 1995 1994 1993 1992
------------------------------------------------------------------------------------------
INCOME STATEMENT DATA: (a)(b)
<S> <C> <C> <C> <C> <C>
Sales $536,604 $399,636 $307,655 $223,129 $157,406
======== ======== ======== ======== ========
Income from continuing
operations $ 43,450(c) $ 24,760(d) $ 13,531(e) $ 10,970(f) $ 5,873
Discontinued operations (a) - - - - 8,710(g)
Cumulative effect of
accounting change - - - 280(h) -
-------- -------- -------- -------- --------
Net income $ 43,450(c) $ 24,760(d) $ 13,531(e) $ 11,250(f) $ 14,583
======== ======== ======== ======== ========
Earnings per share data
Primary:
Income from continuing
operations $ .64(c) $ .47(d) $ .30(e) $ .26(f) $ .14
Discontinued operations (a) - - - - .21(g)
Cumulative effect of
accounting change - - - - -
-------- -------- -------- -------- --------
Net income $ .64(c) $ .47(d) $ .30(e) $ .26(f) $ .35
======== ======== ======== ======== ========
Fully diluted:
Continuing operations $ .61(c) $ .43(d) $ .30(e) $ .26(f) $ .14
Discontinued operations (a) - - - - .21(g)
Cumulative effect of
accounting change - - - - -
-------- -------- -------- -------- --------
Net income $ .61(c) $ .43(d) $ .30(e) $ .26(f) $ .35
======== ======== ======== ======== ========
Dividends per share $ .06 $ .05 $ .045 $ .04 $ .035
======== ======== ======== ======== ========
BALANCE SHEET DATA:
Working capital $329,002 $106,384 $125,550 $ 80,570 $ 25,792
Total assets 721,697 360,836 317,205 241,318 151,403
Long-term debt (i) 1,992 82,692 85,323 86,477 7,087
Stockholder's equity(j)(k) 634,378 214,761 180,104 102,750 94,333
</TABLE>
(a) As a result of the December 1992 sale of the Veratex Group of
businesses and the divestiture of Labtronics, Inc. which was completed
in 1993, results have been restated to include these entities' results
of operations as well as any gain or loss on dispositions as
"discontinued operations."
(b) The Company has had an active acquisition program in effect since 1989.
See Note 2 of the Notes to Consolidated Financial Statements for
information concerning these acquisitions.
(c) Includes acquisition expenses related to the 1996 pooling-of-interests
transaction of $690,000. Such expenses, on an aftertax basis, were
$534,000, or $.01 per primary share. Net income, excluding these
expenses, was $43,984,000, or $.65 per primary share ($.61 fully
diluted).
19
<PAGE> 20
(d) Includes acquisition expenses related to the 1995 Specialized
pooling-of-interests transaction of $1,292,000. Such expenses, on an
aftertax basis, were $989,000, or $.02 per primary share ($.01 fully
diluted). Net income, excluding these expenses, was $25,749,000, or
$.49 per primary share ($.44 fully diluted).
(e) Includes acquisition expenses related to the 1994 Evergreen
pooling-of-interests transaction of $2,380,000. Such expenses, on an
aftertax basis, were $1,860,000, or $.04 per primary share ($.03 fully
diluted). Net income, excluding these expenses, was $15,391,000, or
$.34 per primary share ($.33 fully diluted).
(f) Includes a one-time cumulative tax benefit of $450,000 or $.01 per
share, arising from a change in tax laws enacted in August of 1993
relating to amortization of intangibles.
(g) Includes aftertax gain of $5,198,000, or $.12 per share, related to
the sale of the Veratex Group and the divestiture of Labtronics.
(h) Aftertax gain representing the cumulative effect of a change in
accounting for income taxes.
(i) In 1993, the Company issued $80.5 million of Convertible Subordinated
Notes due 2003 ("Notes"). In 1996, all of the remaining Notes were
converted into common stock. (See Note 6 of the Notes to Consolidated
Financial Statements).
(j) In 1994, the Company sold 6,494,964 shares of common stock, in a public
offering, resulting in net proceeds of $59,211,000.
(k) In 1996, the Company sold 5,750,000 (pre-1996 stock split) shares of
its common stock in a public offering, resulting in net proceeds of
$279,159,000. (See Note 7 of the Notes to Consolidated Financial
Statements).
20
<PAGE> 21
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
- ---------------------
(All share and per share data included in Management's Discussion and Analysis
of Financial Condition and Results of Operations have been adjusted for the June
1996 and June 1995 two-for-one stock splits.)
The following table presents sales and results of operations for Omnicare,
Inc. (the Company), excluding pooling-of-interests expenses (in thousands,
except per share amounts):
<TABLE>
<CAPTION>
For the years ended December 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Sales $536,604 $399,636 $307,655
======== ======== ========
Net income, as reported $ 43,450 $ 24,760 $ 13,531
Acquisition expenses, pooling-
of-interests (net of taxes) 534 989 1,860
-------- -------- --------
Pro forma net income $ 43,984 $ 25,749 $ 15,391
======== ======== ========
Pro forma earnings per share:
Net income, as reported $ .64 $ .47 $ .30
Acquisition expenses, pooling-
of-interests (net of taxes) .01 .02 .04
-------- -------- --------
Primary $ .65 $ .49 $ .34
======== ======== ========
Fully diluted $ .61 $ .44 $ .33
======== ======== ========
</TABLE>
1996 vs. 1995
- -------------
Excluding the impact of charges taken for acquisitions accounted for as
pooling-of-interests transactions, pro forma net income for the year ended
December 31, 1996 increased 71% over net income earned in 1995. Primary earnings
per share, on this basis, for 1996 increased 33% over 1995, and fully diluted
earnings per share increased 39%.
Sales increased 34% in 1996 versus 1995. The sales increase was the result of
the completion of 17 institutional pharmacy acquisitions in 1996 (see Note 2 of
the Consolidated Financial Statements) and internal growth. Internal growth
resulted from an increase in acuity levels of residents in client facilities,
expansion of services such as infusion therapy and drug price inflation, as well
as the addition of new clients through the efforts of the Company's National
Sales and Marketing Group and pharmacy staff. Acquisitions and internal growth
brought the total number of nursing facility residents served at December 31,
1996 to 300,000, up 39% from the prior year end.
21
<PAGE> 22
Gross margin improvements from 28.0% in 1995 to 28.9% in 1996 resulted from
changes in sales mix, including increased infusion therapy revenue, and the
Company's increased leverage in purchasing and fixed overhead costs. Excluding
the aforementioned pro forma adjustments for pooling-of-interests expenses,
operating income as a percent of sales increased from 11.2% in 1995 to 12.2% in
1996, reflecting the gross margin improvement.
Investment income increased by 225% to $11,285,000 in 1996 as the Company
realized the benefit of investing the net proceeds of $279.2 million from the
March 1996 stock offering for the majority of the year. Interest expense
decreased 39% from $5,954,000 in 1995 to $3,652,000 in 1996, primarily due to
the conversion of the Convertible Subordinated Notes during 1996.
The effective tax rates of 39.9% in 1995 and 39.8% in 1996 are marginally
higher than statutory rates due primarily to the nondeductibility of certain
acquisition costs.
1995 vs. 1994
- -------------
Sales increased 30% in 1995 versus 1994. The sales increase was the result of
nine institutional pharmacy acquisitions in 1995 (see Note 2 of the Consolidated
Financial Statements) and internal growth. Internal growth resulted from the
higher acuity levels of residents in client facilities, expansion of services
such as infusion therapy, drug price inflation and the addition of new clients
owing to the efforts of the Company's National Sales and Marketing Group,
initiated late in 1994, and the pharmacy staff. Acquisitions and internal growth
brought the total number of nursing facility residents served at December 31,
1995 to 216,500, up 47% from the prior year end.
Gross margin improvements from 26.0% in 1994 to 28.0% in 1995 resulted from
changes in sales mix, including increased infusion therapy revenue, and the
Company's increased leverage in purchasing and fixed overhead costs. Excluding
the aforementioned pro forma adjustments for pooling-of-interests expenses,
operating income as a percent of sales increased from 9.8% in 1994 to 11.2% in
1995, primarily reflecting the gross margin improvement.
Investment income increased by 120% to $3,475,000 in 1995 as the Company
realized the benefit of invested cash during 1995 due to receipt of $59.2
million of net proceeds from the November 1994 stock offering. Interest expense
decreased 9% from $6,533,000 in 1994 to $5,954,000 in 1995, primarily due to
reductions in outstanding debt associated with Specialized Pharmacy Services,
Inc. (Specialized) and Evergreen Pharmaceutical, Inc. (Evergreen) prior to
acquisition by the Company; these acquisitions were accounted for as
poolings-of-interests, and accordingly, Specialized and Evergreen are included
in the Company's financial results for all years presented.
The Company's effective tax rates decreased from 40.3% in 1994 to 39.9% in
1995. The effective tax rates are marginally higher than statutory rates due
primarily to the nondeductibility of certain acquisition costs.
22
<PAGE> 23
Impact of Inflation
- -------------------
Inflation has not materially affected Omnicare's profitability inasmuch as
price increases have generally been obtained to cover inflationary drug cost
increases.
Liquidity and Capital Resources
- -------------------------------
Acquisitions completed during 1996 utilized cash of $87.9 million and deferred
cash payments of $9.0 million were made relating to pre-1996 acquisitions. Such
acquisitions were also financed, in part, with common stock of the Company.
Shares of common stock with a market value of approximately $20.2 million
(698,093 shares) were issued in connection with 1996 acquisitions and 45,164
shares with a market value of $960,000 were issued in 1996 in connection with
pre-1996 acquisitions. Additional amounts totaling $20 million may become
payable through the year 2011 pursuant to the terms of various acquisition
agreements.
On October 1, 1993, the Company issued $80,500,000 principal amount of 5.75%
Convertible Subordinated Notes ("Notes") due 2003. The Notes were convertible
into common stock at any time at the option of the holder at a price of $7.22
per share. The remaining Notes were converted in October 1996 into 10,201,700
shares of common stock. Prior to the October conversion, Notes were converted
into 613,444 shares of common stock during 1996.
In October 1996, the Company entered into an agreement with a consortium of
sixteen banks for a $400 million revolving credit facility, replacing the prior
$135 million facility. Interest rates and commitment fees for this new facility
are based on the Company's level of performance under certain debt covenants. No
amounts were outstanding at December 31, 1996 under the credit facility.
At December 31, 1996, the Company had invested $200,230,000 in U.S.
Treasury-backed repurchase agreements. These securities are usually held
overnight, but in no case are they held longer than 30 days, under agreements to
resell the securities to the counterparty. The Company has a collateralized
interest in the underlying securities which are segregated in the accounts of
the counterparty bank. Omnicare's current ratio increased to 6.3 to 1.0 at
December 31, 1996 from 2.9 to 1.0 at December 31, 1995, and working capital at
December 31, 1996 increased to $329,002,000 from year end 1995 working capital
of $106,384,000. This increase is primarily attributable to the cash proceeds
received relating to the Company's March 1996 stock offering of 5,750,000 shares
(pre-1996 stock split) of common stock, resulting in net proceeds of $279.2
million. Book value per common share increased to $8.24 per share as of December
31, 1996 from $4.08 per share at the prior year end, primarily attributable to
the current year stock offering and net income, partially offset by dividends
paid.
On February 5, 1997, Omnicare's Board of Directors elected to increase the
quarterly cash dividend by 17% to 1.75 cents per share for an indicated annual
rate of 7 cents per share for 1997.
23
<PAGE> 24
The Company believes that its sources of liquidity and capital are adequate
for its operating needs. There are no material commitments and contingencies
outstanding, other than additional acquisition-related payments to be made (see
Note 2 of the Consolidated Financial Statements). If needed, other external
sources of financing are readily available to the Company.
Outlook
- -------
As in the past several years, federal policy makers continue to propose
various plans to contain or reduce health care costs. While it is not possible
to predict the future of any such proposals, market forces nevertheless continue
to challenge health care providers to lower costs while maintaining or improving
quality. In this environment, the need to lower health care costs will drive
ongoing industry consolidation, which should continue to provide momentum for
the Company's acquisition program. Moreover, the development of the Company's
institutional pharmacy network in key geographic regions provides opportunities
for economies of scale to lower overall costs. In addition, Omnicare's
proprietary geriatric formulary not only lowers costs for payors and patients,
but also enhances the quality of care for the elderly.
Demographic trends also indicate that demand for long-term care will increase
well into the middle of the next century as the elderly population grows
significantly. Pharmaceutical therapy is generally considered the most
cost-effective form of treatment for chronic ailments afflicting the elderly
and, as such, is an essential part of long-term care. Omnicare believes it is
well positioned to meet the challenges of today's health environment through a
number of initiatives, including drug formulary management, cost-effective drug
purchasing and efficient delivery systems. Additionally, Omnicare's pharmacy
consulting services for nursing facilities identify, resolve and prevent drug
therapy-related problems, reducing costs to the health care system while also
promoting optimal patient outcomes. Omnicare also recently agreed to acquire a
contract research organization, which should provide additional opportunities to
leverage the Company's geriatric pharmaceutical expertise. Management believes
Omnicare is strategically positioned for continued sales and earnings growth in
1997.
Safe Harbor Statement under the Private Securities Litigation Reform Act
- ------------------------------------------------------------------------
of 1995 Regarding Forward-Looking Information
- ---------------------------------------------
In addition to historical information, this report contains forward-looking
statements and performance trends which are subject to certain risks and
uncertainties that could cause actual results to differ materially from these
statements and trends. Such factors include, but are not limited to: the
continued availability of suitable acquisition candidates; changing economic and
market conditions that could impact the suitability of such candidates;
Omnicare's ability to integrate acquisitions; the effect of changes in
government regulation and reimbursement policies and in the interpretation and
application of such policies; and the failure of the Company to obtain or
maintain required regulatory approvals or licenses. See the "Competition,"
"Government Regulation" and "Legal Proceedings" sections at Item 1 of this
report.
24
<PAGE> 25
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements and Financial Statement Schedule
Page
----
Financial Statements:
Report of Independent Accountants 26
Consolidated Statement of Income 27
Consolidated Balance Sheet 28
Consolidated Statement of Cash Flows 29
Consolidated Statement of Stockholders'
Equity 30
Notes to Consolidated Financial
Statements 31
Financial Statement Schedule:
II - Valuation and Qualifying Accounts S-1
All other financial statement schedules are omitted because they are not
applicable or because the required information is shown in the Consolidated
Financial Statements or notes thereto.
25
<PAGE> 26
Report of Independent Accountants
---------------------------------
To the Stockholders and
Board of Directors of Omnicare, Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Omnicare, Inc. and its subsidiaries at December 31, 1996 and 1995,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Cincinnati, Ohio
January 29, 1997
26
<PAGE> 27
CONSOLIDATED STATEMENT OF INCOME
OMNICARE, INC. AND SUBSIDIARY COMPANIES
<TABLE>
<CAPTION>
(In thousands, except per share data)
For the years ended December 31,
1996 1995 1994
------------------------------------------------
<S> <C> <C> <C>
Sales $536,604 $399,636 $307,655
Cost of sales 381,768 287,715 227,533
-------- -------- --------
Gross profit 154,836 111,921 80,122
Selling, general and administrative
expenses 89,636 66,970 50,111
Acquisition expenses, pooling-
of-interests 690 1,292 2,380
-------- -------- --------
Operating income 64,510 43,659 27,631
Investment income 11,285 3,475 1,580
Interest expense (3,652) (5,954) (6,533)
--------- -------- --------
Income before income taxes 72,143 41,180 22,678
Income taxes 28,693 16,420 9,147
-------- -------- --------
Net income $ 43,450 $ 24,760 $ 13,531
======== ======== ========
Earnings per share:
Primary $ .64 $ .47 $ .30
======== ======== ========
Fully diluted $ .61 $ .43 $ .30
======== ======== ========
Weighted average number of
common shares outstanding:
Primary 67,388 52,396 44,958
======== ======== ========
Fully diluted 75,429 65,284 56,858
======== ======== ========
<FN>
The Notes to Consolidated Financial Statements are an integral part of this
statement.
</TABLE>
27
<PAGE> 28
CONSOLIDATED BALANCE SHEET
OMNICARE, INC. AND SUBSIDIARY COMPANIES
<TABLE>
<CAPTION>
(In thousands, except share data)
December 31,
1996 1995
------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $216,515 $ 40,137
Accounts receivable, less allowances
of $5,631 (1995-$4,761) 118,913 80,247
Inventories 43,585 28,841
Deferred income tax benefits 6,036 6,600
Other current assets 5,686 5,247
-------- --------
Total current assets 390,735 161,072
Properties and equipment, at cost less accumulated
depreciation of $28,415 (1995-$19,036) 56,055 32,458
Goodwill, less accumulated amortization
of $15,550 (1995-$10,448) 259,507 157,843
Other assets 15,400 9,463
-------- --------
Total assets $721,697 $360,836
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 21,432 $ 22,020
Amounts payable pursuant to acquisition agreements 11,651 13,642
Current portion of long-term debt 1,199 1,051
Accrued employee compensation 10,645 5,338
Liabilities relating to discontinued operations 806 1,547
Other current liabilities 16,000 11,090
-------- -------
Total current liabilities 61,733 54,688
Long-term debt 1,992 82,692
Deferred income taxes 4,197 2,621
Amounts payable pursuant to acquisition agreements 9,088 1,418
Other noncurrent liabilities 10,309 4,656
-------- -------
Total liabilities 87,319 146,075
-------- -------
Stockholders' equity:
Preferred stock-authorized 1,000,000 shares
without par value; none issued
Common stock-authorized 110,000,000 shares
$1 par; 77,025,661 shares issued
(1995-26,344,588 pre-1996 stock split shares) 77,026 26,345
Paid-in capital 433,117 99,686
Retained earnings 135,398 93,598
---------- ----------
645,541 219,629
Treasury stock, at cost-0 shares
(1995-24,268 pre-1996 stock split shares) - (482)
Deferred compensation (9,503) (2,126)
Unallocated stock of ESOP (1,660) (2,260)
------- -------
Total stockholders' equity 634,378 214,761
------- -------
Contingencies (Note 12)
Total liabilities and stockholders' equity $721,697 $360,836
======== ========
<FN>
The Notes to Consolidated Financial Statements are an integral part of this
statement.
</TABLE>
28
<PAGE> 29
CONSOLIDATED STATEMENT OF CASH FLOWS
OMNICARE, INC. AND SUBSIDIARY COMPANIES
<TABLE>
<CAPTION>
(In thousands) For the years ended December 31,
1996 1995 1994
------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 43,450 $ 24,760 $ 13,531
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 15,407 11,117 8,264
Provision for doubtful accounts 3,614 3,086 2,298
Deferred tax provision 3,083 1,750 917
Changes in assets and liabilities, net of effects
from acquisition/disposal of businesses:
Accounts receivable (31,555) (19,286) (14,192)
Inventories (8,356) (4,930) (3,652)
Current and noncurrent assets (8,625) (1,402) (443)
Payables and accrued liabilities 882 4,335 2,785
Current and noncurrent liabilities 4,783 444 3,129
-------- ------- -------
Net cash flows from operating activities 22,683 19,874 12,637
-------- ------- -------
Cash flows from investing activities:
Acquisition of businesses (96,895) (35,373) (40,084)
Capital expenditures (26,716) (13,603) (9,659)
Marketable securities - 45,245 (45,245)
Proceeds from sales of properties and equipment 199 261 606
Cash flows from discontinued operations (741) (852) (1,370)
---------- --------- ---------
Net cash flows from investing activities (124,153) (4,322) (95,752)
---------- --------- ---------
Cash flows from financing activities:
Net borrowings on line-of-credit - (3,670) (215)
Proceeds from long-term borrowings - 5,343 141
Principal payments on long-term obligations (470) (9,130) (3,426)
Net proceeds from stock offering 279,159 - 59,211
Proceeds from exercise of stock options and warrants,
net of stock tendered in payment 3,059 70 1,291
Dividends paid (3,900) (2,581) (2,756)
---------- --------- ---------
Net cash flows from financing activities 277,848 (9,968) 54,246
---------- --------- --------
Net increase (decrease) in cash and cash equivalents 176,378 5,584 (28,869)
Cash and cash equivalents at beginning of period 40,137 34,553 63,422
--------- -------- --------
Cash and cash equivalents at end of period $ 216,515 $ 40,137 $ 34,553
========= ======== ========
<FN>
The Notes to Consolidated Financial Statements are an integral part of this
statement.
</TABLE>
29
<PAGE> 30
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Omnicare, Inc. And Subsidiary Companies
<TABLE>
<CAPTION>
(In thousands, except per share data)
Common Paid-in Retained Treasury
Stock Capital Earnings Stock
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 $13,098 $64,556 $59,382 $(31,126)
Pooling-of-interests (Note 2) 371 (341) 1,120 -
Net income - - 13,531 -
Dividends paid ($.045 per share) - - (1,759) -
Dividend to former owners of Evergreen - - (397) -
Dividends to former owners of Lo-Med - - (402) -
Stock issued in public offering 1,624 57,587 - -
Stock and warrants issued in
connection with acquisitions 75 3,616 - -
Exercise of warrants - 529 - 658
Exercise of stock options 117 2,432 - (2,592)
Stock awards, net of amortization 51 1,592 - -
Decrease in unallocated stock of ESOP - - - -
---------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1994 15,336 129,971 71,475 (33,060)
Net income - - 24,760 -
Dividends paid ($.05 per share) - - (2,581) -
Two-for-one stock split 10,429 (45,524) - 35,095
Conversion of subordinated debt 4 49 - -
Stock and warrants issued in
connection with acquisitions 254 10,632 - -
Exercise of warrants - 298 - (298)
Exercise of stock options 82 1,760 - (1,902)
Stock awards, net of amortization 52 2,636 - (317)
Decrease in unallocated stock of ESOP - - - -
Other 188 (136) (56) -
---------- ----------- ----------- ------------
BALANCE AT DECEMBER 31, 1995 26,345 99,686 93,598 (482)
Pooling-of-interests (Note 2) 193 (1,673) 2,250 -
Net income - - 43,450 -
Dividends paid ($.06 per share) - - (3,900) -
Stock issued in public offering 5,750 273,409 - -
Two-for-one stock split 32,689 (33,147) - 458
Conversion of subordinated debt 10,815 67,423 - -
Stock and warrants issued in
connection with acquisitions 540 16,156 - -
Exercise of warrants 405 2,313 - 44
Exercise of stock options 97 (290) - 562
Stock awards, net of amortization 192 9,352 - (582)
Decrease in unallocated stock of ESOP - - - -
Other - (112) - -
---------- ----------- ----------- ------------
BALANCE AT DECEMBER 31, 1996 $77,026 $433,117 $135,398 $ -
======= ======== ======== =========
Unallocated Total
Deferred Stock of Stockholders'
Compensation ESOP Equity
-------------- ------------- ----------------
BALANCE AT DECEMBER 31, 1993 $ - $ (3,160) $ 102,750
Pooling-of-interests (Note 2) - - 1,150
Net income - - 13,531
Dividends paid ($.045 per share) - - (1,759)
Dividend to former owners of Evergreen - - (397)
Dividends to former owners of Lo-Med - - (402)
Stock issued in public offering - - 59,211
Stock and warrants issued in
connection with acquisitions - - 3,691
Exercise of warrants - - 1,187
Exercise of stock options - - (43)
Stock awards, net of amortization (858) - 785
Decrease in unallocated stock of ESOP - 400 400
----------- -------- -----------
BALANCE AT DECEMBER 31, 1994 (858) (2,760) 180,104
Net income - - 24,760
Dividends paid ($.05 per share) - - (2,581)
Two-for-one stock split - - -
Conversion of subordinated debt - - 53
Stock and warrants issued in
connection with acquisitions - - 10,886
Exercise of warrants - - -
Exercise of stock options - - (60)
Stock awards, net of amortization (1,268) - 1,103
Decrease in unallocated stock of ESOP - 500 500
Other - - (4)
----------- -------- -----------
BALANCE AT DECEMBER 31, 1995 (2,126) (2,260) 214,761
Pooling-of-interests (Note 2) - - 770
Net income - - 43,450
Dividends paid ($.06 per share) - - (3,900)
Stock issued in public offering - - 279,159
Two-for-one stock split - - -
Conversion of subordinated debt - - 78,238
Stock and warrants issued in
connection with acquisitions - - 16,696
Exercise of warrants - - 2,762
Exercise of stock options - - 369
Stock awards, net of amortization (7,377) - 1,585
Decrease in unallocated stock of ESOP - 600 600
Other - - (112)
----------- -------- -----------
Balance at December 31, 1996 $ (9,503) $ (1,660) $ 634,378
=========== ======== ===========
<FN>
The Notes to Consolidated Financial Statements are an integral part of this
statement.
30
</TABLE>
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
Omnicare, Inc. ("Omnicare" or the "Company") primarily operates in one
business segment which includes the distribution of pharmaceuticals, related
pharmacy management services and medical supplies to long-term care institutions
and their residents in the United States. The consolidated financial statements
include the accounts of the Company and all majority-owned subsidiaries.
CASH EQUIVALENTS
Cash equivalents include all investments in highly liquid instruments with
original maturities of three months or less.
INVENTORIES
Inventories consist primarily of purchased pharmaceuticals and medical
supplies held for sale to customers and are stated at the lower of cost or
market. Cost is determined using the first-in, first-out ("FIFO") method.
PROPERTIES AND EQUIPMENT
Properties and equipment are stated at cost. Expenditures for maintenance,
repairs, renewals and betterments that do not materially prolong the useful
lives of the assets are charged to expense as incurred. Depreciation of
properties and equipment is computed using the straight-line method over the
estimated useful lives of the assets. Leasehold improvements are amortized over
the lesser of the lease terms, including renewal options, or their useful lives.
GOODWILL, INTANGIBLES AND OTHER ASSETS
Intangible assets, comprised primarily of goodwill, arising from business
combinations accounted for as purchase transactions are amortized using the
straight-line method over their estimated useful lives, not in excess of forty
years.
On an annual basis, the Company reviews the recoverability of goodwill. The
measurement of possible impairment is based primarily on the ability to recover
the balance of the goodwill from expected future operating cash flows on an
undiscounted basis. In management's opinion, no such impairment exists as of
December 31, 1996 or 1995.
Debt issuance costs as of December 31, 1995 are included in other assets and
are amortized using the straight-line method over the life of the related debt.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of all financial instruments of the Company approximates the
amounts presented on the consolidated balance sheet.
31
<PAGE> 32
REVENUE RECOGNITION
Revenue is recognized when products or services are provided to the
customer. A significant portion of the Company's revenues from sales of
pharmaceutical and medical products are reimbursable from Medicaid and Medicare
programs. The Company monitors its receivables from these reimbursement sources
under policies established by management and reports such revenues at the net
realizable amount expected to be received from these third-party payors.
INCOME TAXES
The Company accounts for income taxes using the asset and liability method
under which deferred income taxes are recognized for the tax consequences of
temporary differences by applying enacted statutory tax rates to differences
between the tax bases of assets and liabilities and their reported amounts in
the consolidated financial statements.
PER SHARE DATA
Primary earnings per share are computed based on the weighted average number
of shares of common stock outstanding during the period and common stock
equivalents, if material. Fully diluted earnings per share include common stock
equivalents and for the years ended December 31, 1996, 1995 and 1994, assumed
the conversion of the 5.75% Convertible Subordinated Notes due 2003 into common
stock. Additionally, for the years ended December 31, 1996, 1995 and 1994,
interest expense and amortization of debt issuance costs arising from these
convertible securities were added, net of related income taxes, to income for
the purpose of calculating fully diluted earnings per share. The Convertible
Subordinated Notes were converted on October 3, 1996; accordingly, they had no
impact on the fully diluted earnings per share calculation subsequent to that
date.
The Board of Directors declared a two-for-one split of the Company's $1 par
value common stock effective June 27, 1996. As a result of the split, 32,697,700
additional shares were issued including 8,677 from treasury stock. Paid-in
capital and treasury stock were reduced by $33,147,000 and $458,000,
respectively.
All references in the consolidated financial statements to the number of
common shares and per share amounts have been adjusted to reflect the stock
split, unless otherwise indicated.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
32
<PAGE> 33
ACCOUNTING CHANGE
Effective January 1, 1996, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." This statement establishes financial accounting and reporting
standards for stock-based employee compensation plans. As permitted by SFAS No.
123, the Company continued to follow the measurement principles prescribed by
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees," and has disclosed the pro forma impact of using the fair value
measurement principles of SFAS No. 123 in the notes to the consolidated
financial statements.
RECLASSIFICATIONS
Certain reclassifications of prior year amounts have been made to conform
with the current year presentation.
33
<PAGE> 34
NOTE 2 - ACQUISITIONS
Since 1989, the Company has been involved in a program to acquire
providers of pharmaceutical and related pharmacy management services and medical
supplies to long-term care facilities and their residents. The Company's
strategy includes acquisitions of freestanding institutional pharmacy businesses
as well as pharmacy contracts and other assets, generally insignificant in size,
which are combined with existing pharmacy operations to augment their internal
growth. From time to time, the Company may acquire other businesses such as
long-term care software companies, pharmacy consulting companies and medical
supply companies. To date, none of these non-pharmacy acquisitions have been
significant.
During the year ended December 31, 1996, the Company completed 18
acquisitions (excluding insignificant acquisitions), including 17 institutional
pharmacy businesses and a long-term care software company. Seventeen of the
acquisitions were accounted for as purchases and one as a pooling-of-interests.
During the year ended December 31, 1995, the Company completed 10
acquisitions (excluding insignificant acquisitions), including nine
institutional pharmacy businesses and a long-term care software company. Nine of
the acquisitions were accounted for as purchases and one as a
pooling-of-interests.
During the year ended December 31, 1994, the Company completed seven
acquisitions (excluding insignificant acquisitions) of institutional pharmacy
businesses. Five of the acquisitions were accounted for as purchases and two as
poolings-of-interests.
Purchases
- ---------
For all acquisitions accounted for as purchases, including insignificant
acquisitions, the purchase price paid for each has been allocated to the
fair value of the assets acquired and liabilities assumed. Purchase price
allocations are subject to final determination within one year after the
acquisition date.
The following table summarizes the aggregate purchase price for all
businesses acquired which have been accounted for as purchases (in thousands):
<TABLE>
<CAPTION>
Businesses acquired in
-------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash $ 72,953 $21,309 $17,954
Amounts payable in the future 19,026 4,797 3,107
Common stock 13,814 10,856 2,819
Warrants 696 30 872
Assumption of indebtedness 4,831 197 2,027
------ ------- -------
$111,320 $37,189 $26,779
======== ======= =======
</TABLE>
Cash in the above table represents payments made in the year of acquisition.
This amount differs from cash paid for the acquisition of the businesses in the
Consolidated Statement of Cash Flows due primarily to purchase price payments
made during the year pursuant to acquisition agreements entered into in prior
years.
34
<PAGE> 35
Warrants outstanding as of December 31, 1996 represent the right to purchase
905,000 shares of common stock and were issued in connection with certain
acquisitions. These warrants can be exercised at any time through 2002 at prices
ranging from $7.70 to $29.18 per share. Warrants to purchase 407,000 shares of
common stock, issued in prior years, were exercised in 1996.
Amounts contingently payable totaled $19,995,000 as of December 31, 1996
and, if paid, will be recorded as additional purchase price, serving to increase
goodwill in the period in which the contingencies are resolved. Amounts payable
in the future are subject to set-off for claims of indemnity.
The results of operations of the companies acquired in purchase transactions
have been included in the consolidated results of operations of the Company from
the dates of acquisition.
Unaudited pro forma combined results of operations of the Company for the
years ended December 31, 1996 and 1995, are presented below. Such pro forma
presentation has been prepared assuming that the acquisitions had been made as
of January 1, 1995 (in thousands, except per share data).
<TABLE>
<CAPTION>
For the years
ended December 31,
1996 1995
-----------------------------
<S> <C> <C>
Pro Forma
---------
Sales $ 589,825 $ 494,185
Net income 45,228 25,702
Earnings per share:
Primary $ .67 $ .48
Fully diluted $ .63 $ .44
</TABLE>
The pro forma information does not purport to be indicative of operating
results which would have occurred had the acquisitions been made at the
beginning of the respective periods or of results which may occur in the future.
Pooling-Of-Interests
- --------------------
The impact of the 1996 pooling-of-interests transaction and one of the 1994
pooling-of-interests transactions on the Company's historical consolidated
financial statements were not material; consequently, prior period and current
year financial statements have not been restated for these transactions.
35
<PAGE> 36
On June 30, 1995, the Company issued 806,370 shares of its common stock for
all of the outstanding common stock of Specialized Pharmacy Services, Inc.
("Specialized"). On September 30, 1994, the Company issued 4,445,288 shares of
its common stock for all the outstanding common stock of Evergreen
Pharmaceutical, Inc. and Evergreen Pharmaceutical East, Inc. (collectively,
"Evergreen"). These acquisitions were accounted for as poolings-of-interests
and, accordingly, the Company's consolidated financial statements have been
restated for all periods prior to the acquisitions to include the results of
operations, financial position and cash flows of Specialized and Evergreen. Net
sales and net income for Omnicare and Specialized prior to the Specialized
transaction and Omnicare and Evergreen prior to the Evergreen transaction are as
follows (in thousands):
<TABLE>
Omnicare Specialized Evergreen
-------- ----------- ---------
<S> <C> <C> <C>
Six months ended June 30, 1995:
Sales $171,211 $ 16,441 (a)
Net income 9,861 286 (a)
Year ended December 31, 1994:
Sales 275,663 31,992 (a)
Net income 13,406 125 (a)
Nine months ended September 30, 1994:
Sales 172,876 23,748 $25,324
Net income 7,091 66 1,877
<FN>
(a) The results of operations of Evergreen are included in the
consolidated results of Omnicare for these periods.
</TABLE>
In accordance with accounting rules for pooling-of-interests transactions,
charges to operating income for acquisition-related expenses were recorded upon
completion of the pooling acquisitions. These acquisition-related expenses
totaled $690,000 ($534,000 aftertax) for the 1996 transaction, $1,292,000
($989,000 aftertax) for the Specialized transaction and $2,380,000 ($1,860,000
aftertax) for the Evergreen transaction.
NOTE 3 - CASH AND CASH EQUIVALENTS
A summary of cash and cash equivalents follows (in thousands):
<TABLE>
<CAPTION>
December 31,
1996 1995
---------------
<S> <C> <C>
Cash and cash equivalents:
Cash $ 16,108 $ 7,418
Money market funds 177 197
U.S. Treasury-backed repurchase
agreements 200,230 32,522
-------- -------
$216,515 $40,137
======== =======
</TABLE>
Repurchase agreements represent investments in U.S. Treasury bills under
agreements to resell, usually overnight, but in no case longer than 30 days. The
Company has a collateralized interest in the underlying securities, which are
segregated in the accounts of the bank counterparty.
36
<PAGE> 37
NOTE 4 - PROPERTIES AND EQUIPMENT
<TABLE>
<CAPTION>
A summary of properties and equipment follows (in thousands):
December 31,
1996 1995
-----------------
<S> <C> <C>
Land $ 1,355 $ 247
Buildings 2,459 1,496
Machinery and equipment 44,930 27,487
Furniture, fixtures
and leasehold improvements 35,726 22,264
------- --------
84,470 51,494
Accumulated depreciation (28,415) (19,036)
------- --------
$56,055 $ 32,458
======= ========
</TABLE>
NOTE 5 - LEASING ARRANGEMENTS
The Company has operating leases which cover various real and personal
property. In most cases, the Company expects that these leases will be renewed
or replaced by other leases in the normal course of business. There are no
significant contingent rentals in the Company's operating leases.
The following is a schedule of future minimum rental payments required under
operating leases that have initial or remaining noncancellable terms in excess
of one year as of December 31, 1996 (in thousands):
1997 $ 3,943
1998 3,446
1999 2,990
2000 2,263
2001 1,729
Later years 3,722
-------
Total minimum payments required $ 18,093
========
Total rent expense under operating leases for the years ended December 31,
1996, 1995 and 1994 were $5,889,000, $4,567,000 and $3,470,000, respectively.
37
<PAGE> 38
NOTE 6 - LONG-TERM DEBT
A summary of long-term debt follows (in thousands):
<TABLE>
<CAPTION>
December 31,
1996 1995
---- ----
<S> <C> <C>
Convertible Subordinated Notes due 2003 $ - $80,445
Employee Stock Ownership Plan ("ESOP")
Loan Guarantee 1,660 2,260
Capitalized lease obligations 1,531 1,038
------- -------
3,191 83,743
Less current portion (1,199) (1,051)
------- -------
$ 1,992 $82,692
======= =======
</TABLE>
The following is a schedule by year of required long-term debt payments as
of December 31, 1996 (in thousands):
1997 $ 1,199
1998 1,443
1999 387
2000 162
2001 -
Later years -
-------
$ 3,191
=======
Total interest payments made for the years ended December 31, 1996, 1995 and
1994 were $4,968,000, $5,421,000 and $6,145,000, respectively.
Convertible Subordinated Notes
- ------------------------------
On October 1, 1993, the Company issued $80,500,000 principal amount of 5.75%
Convertible Subordinated Notes ("Notes") due 2003. The Notes were convertible
into common stock at any time at the option of the holder at a price of $7.22
per share. The remaining Notes were converted in October 1996 into 10,201,700
shares of common stock. Prior to the October conversion, Notes were converted
into 613,444 shares of common stock during 1996. In connection with the Notes
conversions, the Company recorded the $1.9 million in unamortized deferred debt
issuance costs against the paid-in capital balance for the common stock issued.
The Company amortized $220,000 of deferred debt issuance costs in 1996 (prior to
the final Notes conversion) and $310,000 in 1995.
ESOP Loan Guarantee
- -------------------
In 1988, the Company established an Employee Stock Ownership Plan ("ESOP")
which currently covers certain acquired entities' employees and corporate
headquarters employees. The ESOP used proceeds from a $4 million bank loan to
purchase 1,973,748 shares of the Company's common stock on the open market at
prices ranging from $1.94 to $2.13 per share. Inasmuch as the Company has
guaranteed the repayment of this obligation, it has recorded the ESOP's bank
debt as long-term debt and also as a reduction of stockholders' equity in the
accompanying consolidated balance sheet.
38
<PAGE> 39
The ESOP services its debt with Company contributions which were previously
made to the Company's Employee Savings and Investment Plan, and dividends
received on shares held by the ESOP. Principal and interest payments on the bank
debt are made in increasing quarterly installments over a ten-year period, the
final payment being due on December 31, 1998. The loan bears interest at the per
annum rate of 7% and is secured by the unallocated shares of common stock held
by the ESOP trust. These unallocated shares had a fair market value equal to
$18,515,000 and $18,230,000 as of December 31, 1996 and 1995, respectively.
The Company funds ESOP expense as accrued. The components of total ESOP
expense are as follows (in thousands):
<TABLE>
<CAPTION>
For the years ended December 31,
1996 1995 1994
--------------------------
<S> <C> <C> <C>
Interest expense $ 145 $ 182 $ 214
Principal payments 600 500 400
Dividends on ESOP stock ( 90) (76) (70)
---- ----- -----
$ 655 $ 606 $ 544
===== ===== =====
</TABLE>
Revolving Credit Facility
- -------------------------
In October 1996, the Company negotiated a five-year, $400 million line of
credit agreement with a consortium of sixteen banks, which replaced the existing
$135 million revolving credit facility. Borrowings under this agreement bear
interest based upon LIBOR plus a spread of 25 to 60 basis points, dependent upon
the Company's Fixed Charge Coverage Ratio, or other rates negotiated with the
banks. Additionally, a commitment fee on the unused portion of the facility
ranges from 9 to 20 basis points, and is also based on the Company's Fixed
Charge Coverage Ratio. The agreement also contains debt covenants which include
the Fixed Charge Coverage Ratio and minimum consolidated net worth. The Company
is in compliance with all of the covenants in the agreement. No amounts were
outstanding under this agreement as of December 31, 1996.
NOTE 7 - PUBLIC OFFERING OF COMMON STOCK
In March 1996, the Company completed a public offering of 5,750,000 shares
(pre-1996 stock split) of common stock resulting in gross proceeds of
$298,281,000 (before underwriting discounts and expenses).
NOTE 8 - STOCK INCENTIVE PLANS
The Company has stock incentive plans under which it may grant stock options
or stock awards to key employees at a price equal to the fair market value at
the date of grant. Under these plans, stock options become exercisable beginning
one year following the date of grant in four equal annual installments. As of
December 31, 1996, 290,084 shares were available for granting.
39
<PAGE> 40
Summary information for stock options relating to these plans is presented
below (in thousands, except per share data):
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year 2,242 $ 7.89 1,526 $ 4.04 1,996 $ 3.89
Options granted 508 26.36 1,058 12.19 - -
Options exercised (273) 7.03 (326) 3.65 (470) 3.41
Options forfeited (3) 26.22 (16) 12.13 - -
- ---------------------------------------------------------------------------------------------------------------------
Options outstanding,
end of year 2,474 $11.76 2,242 $7.89 1,526 $4.04
- ---------------------------------------------------------------------------------------------------------------------
Options exercisable,
end of year 1,083 748 726
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The following summarizes information about stock options
outstanding as of December 31, 1996 (in thousands, except per share data):
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ----------------------------------------------------------------------------------------------------------------
WEIGHTED
AVERAGE
REMAINING
NUMBER CONTRACTUAL WEIGHTED NUMBER WEIGHTED
RANGE OF EXERCISE OUTSTANDING AT LIFE(IN AVERAGE EXERCISABLE AVERAGE
PRICES 12/31/96 YEARS) EXERCISE PRICE AT 12/31/96 EXERCISE PRICE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 2.78 - $ 4.64 1,018 5.37 $ 4.09 914 $ 4.10
11.39 - 12.13 934 8.17 12.10 165 12.11
18.41 - 25.75 34 9.24 22.29 4 18.41
26.22 - 28.25 488 9.24 26.38 - -
- ---------------------------------------------------------------------------------------------------------------
$ 2.78 - $28.25 2,474 7.24 $11.76 1,083 $ 5.37
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE> 41
During 1995, the Company's Board of Directors and stockholders
approved the 1995 Premium-Priced Stock Option Plan, providing options to
purchase 2,520,000 shares of Company common stock available for grant at an
exercise price of 125% of the stock's fair market value at the date of grant. No
options have been granted under this plan.
Nonvested stock awards are granted to key employees at the discretion of the
Incentive Committee. Nonvested stock awards are restricted as to the transfer
of ownership and vest over 5 to 7 years. Unrestricted stock awards are granted
annually to members of the Board of Directors. The fair value of a stock award
is equal to the fair market value of a share of Company stock at the grant date.
Summary information relating to stock award grants is presented below:
<TABLE>
<CAPTION>
For the years ended December 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Nonvested shares 378,092 198,944 197,312
Unrestricted shares 6,400 6,400 7,200
Weighted-average grant $ 23.99 $ 11.68 $ 7.56
date fair value
</TABLE>
When granted, the cost of nonvested stock awards is deferred and amortized
over the vesting period. Unrestricted stock awards are expensed during the year
granted. During 1996, 1995 and 1994, the amount of compensation expense related
to stock awards charged against income was $937,000, $506,000 and $277,000,
respectively.
As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation," the
Company accounts for stock options and stock awards granted under these plans
according to APB Opinion 25, "Accounting for Stock Issued to Employees." As a
result, no compensation cost has been recognized for the stock options granted
under the incentive plans. The fair value of each option at grant date is
estimated using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 1996 and 1995: risk-free
interest rate of 6%, volatility of 32%, dividend yield of 0.2% and expected life
of 4.2 years. The weighted average fair value at grant date during 1996 and 1995
was $9.13 and $4.22, respectively. No options were granted during 1994.
Unaudited pro forma data as though the Company had accounted for stock-
based compensation cost in accordance with SFAS No. 123 are as follows (in
thousands, except per share data):
<TABLE>
<CAPTION>
For the years ended December 31,
1996 1995
---- ----
<S> <C> <C>
Pro Forma
---------
Net income $ 42,269 $ 24,225
Earnings per share:
Primary $ .63 $ .46
Fully diluted $ .60 $ .42
</TABLE>
The above pro forma information includes only stock options granted in 1996
and 1995. Because it does not include stock options granted prior to 1995, the
pro forma effects are not representative of effects on net income or earnings
per share for future years.
41
<PAGE> 42
NOTE 9- RELATED PARTY TRANSACTIONS
The Company contracted with a division of Chemed Corporation ("Chemed"), a
1% stockholder, to assist in the development of a new information system to
integrate and standardize all operational and financial reporting functions. The
Company also subleases its corporate offices from Chemed and is charged for the
occasional use of Chemed's corporate aviation department and other incidental
expenses based on Chemed's cost. The Company believes that the method by which
such charges are determined is reasonable and that the charges are essentially
equal to that which would have been incurred if the Company had operated as an
unaffiliated entity. Charges to the Company for these services for the years
ended December 31, 1996, 1995 and 1994 were $7,139,000, $4,535,000 and
$2,951,000, respectively. Net amounts owed by the Company to Chemed as of
December 31, 1996 and 1995 were $946,000 and $667,000, respectively.
NOTE 10 - EMPLOYEE BENEFIT PLANS
The Company has a non-contributory, defined benefit pension plan covering
certain corporate headquarters employees and the employees of several companies
sold by the Company in 1992, for which benefits ceased accruing upon the sale
(the "Qualified Plan"). Benefits accruing under this plan to corporate
headquarters employees were fully vested and frozen as of January 1, 1994. The
Company also has an excess benefits plan which provides retirement payments to
participants in amounts consistent with what they would have received under the
Qualified Plan if payments to them under the Qualified Plan were not limited by
the Internal Revenue Code and other restrictions.
Retirement benefits are based primarily on an employee's years of service
and compensation near retirement. Plan assets are invested primarily in U.S.
Treasury obligations. The Company's policy is to fund pension costs in
accordance with the funding provisions of the Employee Retirement Income
Security Act.
Actuarial assumptions used to calculate the Accumulated Benefit Obligation
and net expenses include a 7.25% interest rate as of December 31, 1996 and 1995
(8% at December 31, 1994), an expected long-term rate of return on assets of 8%
and a 6% rate of increase in compensation levels in years prior to 1994.
The Accumulated Benefit Obligation in excess of plan assets as of December
31, 1996 and 1995 was $7,422,000 and $3,188,000, respectively. The net expenses
relating to the Company's defined contribution and defined benefit plans
(including the ESOP described in Note 6) for the years ended December 31, 1996,
1995 and 1994 were $1,907,000, $1,663,000 and $1,481,000, respectively.
42
<PAGE> 43
NOTE 11 - INCOME TAXES
The provision for income taxes is comprised of the following (in thousands):
<TABLE>
<CAPTION>
For the years
ended December 31,
1996 1995 1994
--------------------------
<S> <C> <C> <C>
Current:
Federal $21,917 $13,197 $ 7,158
State and local 3,693 1,473 1,072
------- ------- -------
25,610 14,670 8,230
------- ------- -------
Deferred:
Federal 2,993 1,272 802
State 90 478 115
------- ------- ------
3,083 1,750 917
------- ------- ------
Income taxes $28,693 $16,420 $9,147
======= ======= ======
</TABLE>
Tax benefits related to the exercise of stock options and stock awards have
been credited to paid-in capital in amounts of $2,243,000, $1,357,000 and
$947,000 for 1996, 1995 and 1994, respectively.
The difference between the Company's reported income tax expense and the
federal income tax expense computed at the statutory rate of 35% is explained in
the following table (in thousands):
<TABLE>
<CAPTION>
For the years ended December 31,
1996 1995 1994
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal income tax at the
statutory rate $25,250 35.0% $14,413 35.0% $7,937 35.0%
State and local income taxes,
net of federal income tax benefit 2,459 3.4 1,268 3.1 772 3.4
Amortization of nondeductible
intangible asset 448 0.6 408 1.0 372 1.6
Other 536 0.8 331 0.8 66 0.3
------- ----- ------- ---- ------ -----
Income Taxes $28,693 39.8% $16,420 39.9% $9,147 40.3%
======= ===== ======= ===== ====== =====
</TABLE>
Income tax payments made in 1996, 1995 and 1994 amounted to $19,749,000,
$14,014,000 and $5,569,000, respectively.
A summary of deferred tax assets and liabilities follows (in thousands):
<TABLE>
<CAPTION>
December 31,
1996 1995
------ -----
<S> <C> <C>
Accounts receivable reserves $3,912 $4,469
Accrued liabilities 3,841 4,929
Other 106 104
------ ------
Gross deferred tax assets $7,859 $9,502
====== ======
Fixed assets and depreciation methods $ 945 $ 973
Amortization of intangibles 4,046 3,798
Other 1,029 752
------ ------
Gross deferred tax liabilities $6,020 $5,523
====== ======
</TABLE>
43
<PAGE> 44
The Company has evaluated its net deferred tax asset position and has
concluded that a valuation allowance is not required as these net assets are
more likely than not to be realized.
NOTE 12 - CONTINGENCIES
In May 1996, the Company became aware of a government investigation of Home
Pharmacy Services, Inc. ("Home"), a wholly-owned subsidiary of the Company
acquired in 1992, based in Belleville, Illinois and certain individuals at that
unit. Home accounted for less than four percent of Omnicare's total sales and
earnings in 1996. The Company is cooperating fully with the government's
inquiry. Home continues to provide pharmacy services without interruption to
nursing home residents in the region. The outcome of this investigation is not
currently predictable.
44
<PAGE> 45
NOTE 13 - SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
The following table presents the Company's quarterly financial information
for 1996 and 1995 (in thousands, except per share data):
<TABLE>
<CAPTION>
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
--------------------------------------------------------------------------
1996
<S> <C> <C> <C> <C> <C>
Sales $117,185 $121,833 $140,733 $156,853 $536,604
Cost of sales 83,553 86,738 100,111 111,366 381,768
-------- -------- -------- -------- --------
Gross profit 33,632 35,095 40,622 45,487 154,836
Selling, general and
administrative expenses 19,433 20,639 23,213 26,351 89,636
Acquisition expenses, pooling-
of-interests - - - 690(b) 690(b)
-------- -------- -------- -------- --------
Operating income 14,199 14,456 17,409 18,446(b) 64,510(b)
Investment income, net of
interest (expense) (760) 2,803 2,512 3,078 7,633
-------- -------- -------- -------- --------
Income before income taxes 13,439 17,259 19,921 21,524(b) 72,143(b)
Income taxes 5,310 6,863 8,108 8,412 28,693
-------- -------- -------- -------- --------
Net income $ 8,129 $ 10,396 $ 11,813 $13,112(b) $43,450(b)
======== ======== ======== ======== ========
Earnings per share(a):
Primary $ .15 $ .15 $ .17 $ .17(b) $ .64(b)
======== ======== ======== ======== ========
Fully diluted $ .13 $ .14 $ .16 $ .17(b) $ .61(b)
======== ======== ======== ======== ========
1995
Sales $ 90,527 $97,125 $102,145 $109,839 $399,636
Cost of sales 65,879 70,168 73,198 78,470 287,715
-------- ------- -------- -------- -------
Gross profit 24,648 26,957 28,947 31,369 111,921
Selling, general and
administrative expenses 15,413 16,549 16,789 18,219 66,970
Acquisition expenses, pooling-
of-interests - 1,292(c) - - 1,292(c)
-------- ---------- -------- ------- -------
Operating income 9,235 9,116(c) 12,158 13,150 43,659(c)
Interest (expense), net of
investment income (535) (591) (638) (715) (2,479)
-------- ------- -------- ------- -------
Income before income taxes 8,700 8,525(c) 11,520 12,435 41,180(c)
Income taxes 3,449 3,629 4,585 4,757 16,420
-------- ------- -------- -------- --------
Net income $ 5,251 $ 4,896(c) $ 6,935 $ 7,678 $24,760(c)
======== ======= ======== ======== =======
Earnings per share(a):
Primary $ .10 $ .09(c) $ .13 $ .14 $ .47(c)
======== ======= ======== ======== =======
Fully diluted $ .09 $ .09(c) $ .12 $ .13 $ .43(c)
======== ======= ======== ======== =======
<FN>
(a) Earnings per share is calculated independently for each quarter and
the sum of the quarters may not necessarily be equal to the full year
earnings per share amount.
(b) Includes acquisition-related expenses of $690,000 relating to the
1996 pooling-of-interests transaction. Such expenses, on an aftertax
basis, were $534,000. Net income, excluding these expenses, was
$13,646,000 for the fourth quarter, or $.17 per share (primary and
fully diluted) and $43,984,000 for the full year 1996, or $.65 per
primary share and $.61 fully diluted.
(c) Includes acquisition-related expenses of $1,292,000 relating to the
1995 pooling-of-interests transaction. Such expenses, on an aftertax
basis, were $989,000. Net income, excluding these expenses, was
$5,885,000 for the second quarter, or $0.11 per share (primary and
fully diluted) and $25,749,000 for the full year 1995, or $.49 per
primary share and $.44 fully diluted.
</TABLE>
45
<PAGE> 46
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Except for information regarding the Company's executive officers
included in Part I of this Form 10-K, the information required under this Item
is set forth in the Company's 1997 Proxy Statement which is incorporated herein
by reference.
ITEM 11 - EXECUTIVE COMPENSATION
Information required under this Item is set forth in the Company's 1997
Proxy Statement which is incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required under this Item is set forth in the Company's 1997
Proxy Statement which is incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required under this Item is set forth in the Company's 1997
Proxy Statement which is incorporated herein by reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The 1996 Consolidated Financial Statements of Omnicare are
included in Part II, Item 8.
(a)(2) Financial Statement Schedule
See Index to the Financial Statement Schedule at page 25 of this
Report.
(a)(3) Exhibits
See Index to Exhibits starting at page E-1 of this Report.
(b) Reports on Form 8-K
During the quarter ended December 31, 1996, the Company did not
file any Report on Form 8-K.
46
<PAGE> 47
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of l934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized, on this 31st day
of March 1997.
OMNICARE, INC.
/s/Joel F. Gemunder
---------------------------
Joel F. Gemunder, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/Edward L. Hutton Chairman and Director
- -------------------- (Principal Executive Officer)
Edward L. Hutton
/s/Joel F. Gemunder President and Director
- -------------------- (Principal Executive Officer)
Joel F. Gemunder
/s/David W. Froesel, Jr. Senior Vice President and
- ------------------------ Chief Financial Officer
David W. Froesel, Jr. (Principal Financial and
Accounting Officer)
Ronald K. Baur, Director*
Kenneth W. Chesterman, Director*
Charles H. Erhart, Jr., Director*
Mary Lou Fox, Director*
Thomas C. Hutton, Director* March 31, 1997
Patrick E. Keefe, Director*
Sandra E. Laney, Director*
Andrea R. Lindell, Director*
Sheldon Margen, M.D., Director*
Kevin J. McNamara, Director*
John M. Mount, Director*
Timothy S. O'Toole, Director*
D. Walter Robbins, Jr., Director*
* Cheryl D. Hodges, by signing her name hereto, signs this document on
behalf of herself as a director and on behalf of each person indicated above
pursuant to a power of attorney duly executed by such person and filed with the
Securities and Exchange Commission.
/s/Cheryl D. Hodges
-------------------
Cheryl D. Hodges
(Attorney-in-Fact)
47
<PAGE> 48
Schedule II
OMNICARE, INC. AND SUBSIDIARY COMPANIES
Valuation and Qualifying Accounts
(in thousands)
<TABLE>
<CAPTION>
Additions
Balance at charged Write-offs Balance
beginning of to cost net of at end
period and expenses Acquisitions recoveries of period
------ ------------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for
uncollectible
accounts receivable
Year ended
December 31,
1996 $4,761 $3,614 $105 $(2,849) $5,631
1995 3,681 3,086 239 (2,245) 4,761
1994 3,187 2,298 722 (2,526) 3,681
Allowance for
uncollectible
accounts receivable,
discontinued operations
Year ended
December 31,
1996 $ 282 $ - $ - $ (282) $ -
1995 282 - - - 282
1994 288 - - (6) 282
</TABLE>
S-1
<PAGE> 49
INDEX OF EXHIBITS
-----------------
Previous Document
or Location Herein
--------------------------------
Number Refers to Item 601
Regulation S-K and Type of Filing Previous Exhibit
Description of Exhibit and Filing Date Page Number
---------------------- --------------- -----------
(3.1) Restated Certificate of E-5 - E-8
Incorporation of Omnicare,
Inc.
(3.2) By-Laws of Omnicare, Inc., Form 10-K E-4 - E-13
as amended March 26, 1993
(4) Credit Agreement among E-9 - E-61 (Copies of the
Omnicare, Inc., Schedules and
First National Bank of Exhibits to the
Chicago, Agent, and certain Agreement will be
banks dated as of made available on
October 22, 1996 request)
(10.1) Executive Salary Protec- Form 10-K E-3 - E-8
tion Plan, as amended, March 25, 1996
May 22, 1981
(10.2) 1981 Stock Incentive Plan, Form 10-K E-3 - E-14
as amended March 25, 1988
(10.3) 1989 Stock Incentive Plan Proxy Statement A-1 - A-6
for 1989 Annual
Meeting of Stock-
holders dated
April 10, 1989
(10.4) 1992 Long-Term Stock Proxy Statement A-1 - A-9
Incentive Plan for 1992 Annual
Meeting of Stock-
holders dated
April 6, 1992
(10.5) 1995 Premium-Priced Proxy Statement A-1 - A-6
Stock Option Plan for 1995 Annual
Meeting of Stock-
holders dated
April 10, 1995
E-1
<PAGE> 50
INDEX OF EXHIBITS
-----------------
Previous Document
or Location Herein
--------------------------------
Number Refers to Item 601
Regulation S-K and Type of Filing Previous Exhibit
Description of Exhibit and Filing Date Page Number
---------------------- --------------- -----------
(10.6) Excess Benefits Plan Form 10-K E-22 - E-32
March 25, 1988
(10.7) Form of Indemnification Proxy Statement A-1 - A-4
Agreement with Directors for 1987 Annual
and Officers Meeting of Stock-
holders dated
April 14, 1987
(10.8) Employment Agreements Form 10-K E-83 - E-126
with J. F. Gemunder and March 29, 1989
C. D. Hodges dated
August 4, 1988
(10.9) Amendment to Employment Form 10-K E-32 - E-35
Agreements with J. F. March 25, 1994
Gemunder and C. D. Hodges
dated May 17, 1993
(10.10) Employment Agreement Form 10-K E-36 - E-52
with T. R. Marsh dated March 25, 1994
August 4, 1988 and Amendment
dated May 17, 1993
(10.11) Employment Agreement with Form 10-K E-4 - E-18
P. E. Keefe dated March March 25,1994
4, 1993
(10.12) Employment Agreement with Form 10-K E-19 - E-31
K. W. Chesterman dated March 25, 1994
May 17, 1993
(10.13) Amendment to Employment Form 10-K E-3 - E-7
Agreements with March 25, 1995
J. F. Gemunder,
K. W. Chesterman,
P. E. Keefe,
C. D. Hodges
and T. R. Marsh dated
May 16, 1994
E-2
<PAGE> 51
INDEX OF EXHIBITS
-----------------
Previous Document
or Location Herein
---------------------------------
Number Refers to Item 601
Regulation S-K and Type of Filing Previous Exhibit
Description of Exhibit and Filing Date Page Number
---------------------- --------------- -----------
(10.14) Amendment to Employment Form 10-K E-9 - E-12
Agreements with March 25, 1996
J. F. Gemunder,
K. W. Chesterman,
P. E. Keefe and
C. D. Hodges dated
May 15, 1995
(10.15) Split Dollar Agreement Form 10-K E-13 - E-24
with E. L. Hutton dated March 25, 1996
June 1, 1995 (Agreement
in the same Form exists
with J. F. Gemunder)
(10.16) Split Dollar Agreement Form 10-K E-25 - E-35
with K. W. Chesterman dated March 25, 1996
June 1, 1995 (Agreements in
the same Form exist with the
following Executive Officers:
C. D. Hodges, P. E. Keefe
and T. E. Bien)
(10.17) Annual Incentive Plan for Proxy Statement A-1 - A-3
Senior Executive Officers for 1996 Annual
Meeting of
Shareholders dated
May 20, 1996
(10.18) Employment Agreement with E-62 - E-67
T. E. Bien dated
January 1, 1994
(10.19) Employment Agreement with E-68 - E-73
D. W. Froesel dated
February 17, 1996
(10.20) Employment Agreement with E-74 - E-83
M. L. Fox dated
April 4, 1996
(10.21) Consulting Agreement with E-84 - E-91
MLF Co. dated April 4, 1996
(10.22) Amendment to Employment E-92 - E-95
Agreement with J. F. Gemunder
dated May 20, 1996
(Amendments in the same Form
exist with the following
Executive Officers:
K. W. Chesterman, P. E. Keefe,
And C. D. Hodges)
E-3
<PAGE> 52
INDEX OF EXHIBITS
-----------------
Previous Document
or Location Herein
--------------------------------
Number Refers to Item 601
Regulation S-K and Type of Filing Previous Exhibit
Description of Exhibit and Filing Date Page Number
---------------------- --------------- -----------
(11) Statement of Computation E-96
of Earnings per Common Share
(12) Statement of Computation of Ratio E-97
of Earnings to Fixed Charges
(21) Subsidiaries of Omnicare, Inc. E-98 - E-99
(23) Consent of Price Waterhouse LLP E-100
(24) Powers of Attorney E-101 - E-113
E-4
<PAGE> 1
RESTATED CERTIFICATE OF INCORPORATION
OF
OMNICARE, INC.
1. The name of the corporation is OMNICARE, INC.
2. The address of its registered office in the State of Delaware is No.
100 West Tenth Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted
is:
To engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the Corporation shall have
authority to issue is One Hundred Eleven Million (111,000,000), of
which One Hundred Ten Million (110,000,000) shares of the par value of
One Dollar ($1.00) each, amounting in the aggregate to One Hundred Ten
Million Dollars ($110,000,000), shall be common stock and of which One
Million (1,000,000) shares, without par value, shall be preferred
stock.
Authority is hereby expressly granted to and vested in the Board of
Directors at any time, or from time to time, to issue the preferred
stock in one or more series and, in connection with the creation
of each such series, to fix by the resolution or resolutions
providing for the issue of shares thereof the number of shares to
be included in such series; the dividend rate; the redemption
price or prices if any; the terms and conditions of the
redemption of or purchase of the shares of such series; the terms
and conditions on which such shares are convertible into common
stock or any other securities, if they are convertible; and any
and all other designations, preferences and relative,
participating, optional, voting or other special rights and
qualifications, limitations or restrictions thereof, of such
series, to the full extent now or hereafter granted by the laws
of the State of Delaware.
5. A. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
K. L. Husfelt 100 West Tenth Street
Wilmington, Delaware 19801
B. A. Schuman 100 West Tenth Street
Wilmington, Delaware 19801
M. A. Ferrucci 100 West Tenth Street
Wilmington, Delaware 19801
E-5
<PAGE> 2
B. The name and mailing address of each person, who is to serve as a
director until the first annual meeting of the stockholders or
until a successor is elected and qualified is as follows:
NAME MAILING ADDRESS
---- ---------------
E. L. Hutton 1200 DuBois Tower
Cincinnati, Ohio 45202
W. F. Johnson 1200 DuBois Tower
Cincinnati, Ohio 45202
J. L. Kenrich 1200 DuBois Tower
Cincinnati, Ohio 45202
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the Corporation.
8. Elections of directors need not be by written ballot unless the by-
laws of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the
corporation may be kept (subject to any provision contained in
the statutes) outside the State of Delaware at such place or
places as may be designated from time to time by the board of
directors or in the by-laws of the Corporation.
9. A. Except as otherwise expressly provided in Clause B of this
Paragraph 9:
(i) any merger or consolidation of the Corporation with or into any
other corporation;
(ii) any sale, lease, exchange or other disposition of all or any
substantial part of the assets of the Corporation to or with any other
corporation, person or other entity;
(iii) the issuance or transfer of any securities of the Corporation to
any other corporation, person or other entity in exchange for
assets or securities or a combination thereof (except assets or
securities or a combination thereof so acquired in a single
transaction or a series of related transactions having an
aggregate fair market value of less than $5,000,000); or
(iv) the issuance or transfer of any securities of the Corporation to
any other corporation, person or other entity for cash;
shall require the affirmative vote of the holders of at least a
majority of the outstanding shares of capital stock of the
Corporation which are not beneficially owned by such other
corporation, person or other entity if, as of the record date for
the determination of stockholders entitled to notice thereof and
to vote thereon, such other corporation, person or entity is the
beneficial owner, directly or indirectly, of 10% or more of the
outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of Directors, considered for
the purposes of this Paragraph 9 as one class. Such affirmative
vote shall be required notwithstanding the fact that no vote may
be required, or that some
E-6
<PAGE> 3
lesser percentage may be specified, by law or in any agreement with
any national securities exchange.
B. The provisions of this Paragraph 9 shall not apply to any transaction
described in clauses (i), (ii), (iii) or (iv) of Clause A of this Paragraph 9,
(i) with another corporation if a majority, by vote, of the outstanding shares
of all classes of capital stock of such other corporation entitled to vote
generally in the election of Directors, considered for this purpose as one
class, is owned of record or beneficially by the Corporation and/or its
subsidiaries; (ii) with another corporation, person or other entity if the
Board of Directors of the Corporation shall by resolution have approved a
memorandum of understanding with such other corporation, person or other
entity with respect to and substantially consistent with such transaction
prior to the time such other corporation, person or other entity became the
beneficial owner, directly or indirectly, of 10% or more of the outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of Directors; or (iii) approved by resolution unanimously adopted by
the whole Board of Directors of the Corporation at any time prior to the
consummation thereof.
C. For the purposes of this Paragraph 9, a corporation, person or other entity
shall be deemed to be the beneficial owner of any shares of capital stock of
the Corporation (i) which it has the right to acquire pursuant to any
agreement, or upon exercise of conversion rights, warrants or options, or
otherwise; or (ii) which are beneficially owned, directly or indirectly
(including shares deemed owned through application of clause (i) above), by
any other corporation, person or other entity with which it or its 'affiliate'
or 'associate' (as defined below) has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
capital stock of the Corporation or which is its 'affiliate' or 'associate' as
those terms were defined in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934 as in effect on May 14, 1981. For
the purposes of this Paragraph 9, the outstanding shares of any class of
capital stock of the Corporation shall include shares deemed owned through the
application of clauses (i) and (ii) of this Clause C but shall not include any
other shares which may be issuable pursuant to any agreement, or upon exercise
of conversion rights, warrants or options, or otherwise.
D. The Board of Directors of the Corporation shall have the power and duty to
determine for the purposes of this Paragraph 9, on the basis of information
then known to it, whether (i) any other corporation, person or other entity
beneficially owns, directly or indirectly, 10% or more of the outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of Directors, or is an 'affiliate' or 'associate' (as defined above)
of another, (ii) any proposed sale, lease, exchange or other disposition of
part of the assets of the Corporation involves a substantial part of the
assets of the Corporation, (iii) assets or securities, or a combination
thereof, to be acquired in exchange for securities of the Corporation, have an
aggregate fair market value of less than $5,000,000 and whether the same are
proposed to be acquired in a single transaction or a series of related
transactions, and (iv) the memorandum of understanding referred to above is
substantially consistent with the transaction to which it relates. Any such
determination by the Board shall be conclusive and binding for all purposes of
this Paragraph 9.
E-7
<PAGE> 4
10. A Director or the entire Board of Directors of the Corporation may be
removed without cause only by the holders of two-thirds of the shares
then entitled to vote at an election of Directors, notwithstanding
any provision of the General Corporation Law of the State of Delaware
which may provide for such action to be taken by the holders of a
lesser percentage of such shares. For purposes of this Section, the
term "cause" shall mean (i) negligence or misconduct in the
performance of his duties to the Corporation by a Director if he did
not act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the Corporation; or
(ii) the commission of an unlawful act by a Director which was
committed in the capacity of a Director, officer, employee or agent
of the Corporation provided he had reasonable cause to believe that
his conduct was unlawful.
11. To the full extent permitted by the General Corporation Law of the
State of Delaware, as amended or interpreted from time to time, a
Director of the Corporation shall not be liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as
a Director. Neither the amendment nor repeal of this Article Eleven,
nor the adoption of any other provision of this certificate of
incorporation that is inconsistent with this Article Eleven, shall
eliminate or reduce the effect of this Article Eleven with respect to
any matter occurring, or any cause of action, suit or claim that but
for this Article Eleven would accrue or arise prior to such
amendment, repeal or adoption.
12. The Corporation shall, to the full extent permitted by the General
Corporation Law of the State of Delaware, as amended or interpreted
from time to time, indemnify all Directors, officers and employees
whom it may indemnify pursuant thereto; and the Corporation may, to
the full extent permitted thereby, indemnify agents of the Corporation
or other persons.
13. The Board of Directors of the Corporation, when evaluating any offer
of another party to (i) make a tender or exchange offer for any
equity security of the Corporation, (ii) merge or consolidate the
Corporation with another corporation, or (iii) purchase or otherwise
acquire all or substantially all of the properties and assets of the
Corporation, shall, in connection with the exercise of its judgment
in determining what is in the best interests of the Corporation and
its stockholders, give due consideration to all relevant factors,
including without limitation the social and economic effects on the
employees, customers, suppliers and other constituents of the
Corporation and its subsidiaries and on the communities in which the
Corporation and its subsidiaries operate or are located.
14. The Corporation reserves the right to amend, alter, change or repeal
any provision contained in its Certificate of Incorporation, in the
manner now or hereafter provided by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
Notwithstanding the foregoing, Paragraphs 7, 9, 10, 11 and 12 of the
Corporation's Certificate of Incorporation may not be altered,
amended or repealed unless two-thirds of the outstanding stock of
each class entitled to vote thereon as a class, have been voted in
favor of such action.
E-8
<PAGE> 1
EXECUTION COPY
==============================================================================
U.S. $400,000,000
CREDIT AGREEMENT
Dated as of October 22, 1996
Among
OMNICARE, INC.
as the Borrower,
THE BANKS NAMED HEREIN
as the Lenders,
and
THE FIRST NATIONAL BANK OF CHICAGO
as the Agent
==============================================================================
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<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Section Page
------- ----
ARTICLE I DEFINITIONS
<S> <C>
1.1. CERTAIN DEFINED TERMS.....................................................................E-14
ARTICLE II THE CREDITS
2.1. THE SYNDICATED LOANS......................................................................E-24
2.2. REPAYMENT OF THE SYNDICATED LOANS.........................................................E-24
2.3. RATABLE LOANS; TYPES OF SYNDICATED ADVANCES...............................................E-24
2.4. MINIMUM AMOUNT OF EACH SYNDICATED ADVANCE.................................................E-24
2.5. OPTIONAL PREPAYMENTS OF SYNDICATED LOANS..................................................E-25
2.6. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR NEW SYNDICATED ADVANCES................E-25
2.7. CONVERSION AND CONTINUATION OF OUTSTANDING SYNDICATED ADVANCES............................E-25
2.8. PAYMENT OF INTEREST ON SYNDICATED ADVANCES; CHANGES IN INTEREST RATE......................E-26
2.9. SWING LINE LOANS..........................................................................E-26
2.10. THE BID RATE ADVANCES....................................................................E-27
2.11. COMMITMENT FEE; REDUCTIONS IN AGGREGATE COMMITMENT.......................................E-29
2.12. RATES APPLICABLE AFTER DEFAULT...........................................................E-30
2.13. METHOD OF PAYMENT........................................................................E-30
2.14. NOTES; TELEPHONIC NOTICES................................................................E-30
2.15. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND COMMITMENT REDUCTIONS..........E-30
2.16. LENDING INSTALLATIONS....................................................................E-30
2.17. NON-RECEIPT OF FUNDS BY THE AGENT........................................................E-30
2.18. WITHHOLDING TAX EXEMPTION................................................................E-31
2.19. EXTENSION OF FACILITY TERMINATION DATE...................................................E-31
2.20. TERMINATION..............................................................................E-32
2.21. LETTER OF CREDIT FACILITY................................................................E-32
ARTICLE III CHANGE IN CIRCUMSTANCES
3.1. YIELD PROTECTION..........................................................................E-34
3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS...................................................E-35
3.3. AVAILABILITY OF TYPES OF SYNDICATED ADVANCES..............................................E-35
3.4. FUNDING INDEMNIFICATION...................................................................E-35
3.5. MITIGATION; LENDER STATEMENTS; SURVIVAL OF INDEMNITY......................................E-35
ARTICLE IV CONDITIONS PRECEDENT
4.1. EFFECTIVENESS; INITIAL ADVANCE............................................................E-36
4.2. EACH ADVANCE AND LETTER OF CREDIT.........................................................E-37
ARTICLE V REPRESENTATIONS AND WARRANTIES
5. REPRESENTATIONS AND WARRANTIES..............................................................E-37
5.1. CORPORATE EXISTENCE AND STANDING..........................................................E-37
5.2. AUTHORIZATION AND VALIDITY................................................................E-37
5.3. NO CONFLICT; GOVERNMENT CONSENT...........................................................E-37
5.4. FINANCIAL STATEMENTS......................................................................E-38
5.5. MATERIAL ADVERSE CHANGE...................................................................E-38
5.6. TAXES.....................................................................................E-38
5.7. LITIGATION AND CONTINGENT LIABILITIES.....................................................E-38
5.8. SUBSIDIARIES..............................................................................E-38
5.9. ERISA.....................................................................................E-38
5.10. ACCURACY OF INFORMATION..................................................................E-39
5.11. REGULATION U.............................................................................E-39
5.12. MATERIAL AGREEMENTS......................................................................E-39
5.13. COMPLIANCE WITH LAWS.....................................................................E-39
5.14. OWNERSHIP OF PROPERTIES..................................................................E-39
5.15. INVESTMENT COMPANY ACT...................................................................E-39
5.16. PUBLIC UTILITY HOLDING COMPANY ACT.......................................................E-39
</TABLE>
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ARTICLE VI COVENANTS
<TABLE>
<S> <C>
6. COVENANTS....................................................................................E-39
6.1. FINANCIAL REPORTING........................................................................E-39
6.2. USE OF PROCEEDS............................................................................E-41
6.3. NOTICE OF DEFAULT..........................................................................E-41
6.4. CONDUCT OF BUSINESS........................................................................E-41
6.5. TAXES......................................................................................E-41
6.6. INSURANCE..................................................................................E-41
6.7. COMPLIANCE WITH LAWS.......................................................................E-41
6.8. MAINTENANCE OF PROPERTIES..................................................................E-41
6.9. INSPECTION.................................................................................E-42
6.10. MERGER....................................................................................E-42
6.11. SALE OF ASSETS............................................................................E-42
6.12. PREPAYMENTS...............................................................................E-42
6.13. AFFILIATES................................................................................E-42
6.14. INVESTMENTS...............................................................................E-42
6.15. CONTINGENT OBLIGATIONS....................................................................E-43
6.16. LIENS.....................................................................................E-43
6.17. MINIMUM CONSOLIDATED NET WORTH............................................................E-44
6.18. FIXED CHARGES COVERAGE....................................................................E-45
6.19. ACQUISITIONS..............................................................................E-45
6.20. SUPPLEMENTAL GUARANTORS...................................................................E-45
ARTICLE VII DEFAULTS
7. DEFAULTS.....................................................................................E-45
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. ACCELERATION...............................................................................E-47
8.2. AMENDMENTS.................................................................................E-47
8.3. PRESERVATION OF RIGHTS.....................................................................E-48
ARTICLE IX GENERAL PROVISIONS
9.1. SURVIVAL OF REPRESENTATIONS................................................................E-48
9.2. GOVERNMENTAL REGULATION....................................................................E-48
9.3. STAMP DUTIES...............................................................................E-48
9.4. HEADINGS...................................................................................E-48
9.5. ENTIRE AGREEMENT; INDEPENDENCE OF COVENANTS................................................E-48
9.6. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT............................................E-48
9.7. EXPENSES; INDEMNIFICATION..................................................................E-48
9.8. NUMBERS OF DOCUMENTS.......................................................................E-49
9.9. ACCOUNTING.................................................................................E-49
9.10. SEVERABILITY OF PROVISIONS................................................................E-49
9.11. NONLIABILITY OF LENDERS...................................................................E-49
9.12. CHOICE OF LAW.............................................................................E-49
9.13. CONSENT TO JURISDICTION...................................................................E-49
9.14. WAIVER OF JURY TRIAL......................................................................E-49
9.15. CONFIDENTIALITY...........................................................................E-50
ARTICLE X THE AGENT
10.1. APPOINTMENT...............................................................................E-50
10.2. POWERS....................................................................................E-50
10.3. GENERAL IMMUNITY..........................................................................E-50
10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC................................................E-50
10.5. ACTION ON INSTRUCTIONS OF LENDERS.........................................................E-50
10.6. EMPLOYMENT OF AGENTS AND COUNSEL..........................................................E-50
10.7. RELIANCE ON DOCUMENTS; COUNSEL............................................................E-51
10.8. AGENT'S REIMBURSEMENT AND INDEMNIFICATION.................................................E-51
10.9. RIGHTS AS A LENDER........................................................................E-51
10.10. LENDER CREDIT DECISION...................................................................E-51
10.11. SUCCESSOR AGENT..........................................................................E-51
</TABLE>
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<TABLE>
<S> <C>
10.12. AGENT'S FEE..............................................................................E-52
ARTICLE XI SETOFF; RATABLE PAYMENTS
11.1. SETOFF....................................................................................E-52
11.2. RATABLE PAYMENTS..........................................................................E-52
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. SUCCESSORS AND ASSIGNS....................................................................E-52
12.2. PARTICIPATIONS............................................................................E-52
12.3. ASSIGNMENTS...............................................................................E-53
12.4. DISSEMINATION OF INFORMATION..............................................................E-54
12.5. TAX TREATMENT.............................................................................E-54
ARTICLE XIII NOTICES
13.1. GIVING NOTICE.............................................................................E-54
13.2. CHANGE OF ADDRESS.........................................................................E-54
ARTICLE XIV COUNTERPARTS
</TABLE>
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SCHEDULES
---------
Schedule 1 - Disclosure Schedule
Schedule 2 - Existing Letters of Credit
EXHIBITS
--------
Exhibit A-1 - Form of Syndicated Note
Exhibit A-2 - Form of Bid Rate Note
Exhibit A-3 - Form of Swing Line Loan Note
Exhibit B - Required Opinions
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Assignment Agreement
Exhibit E - Form of Loan/Credit Related Money Transfer Instruction
Exhibit F-1 - Form of Syndicated Advance Borrowing Notice
Exhibit F-2 - Form of Bid Rate Advance Borrowing Notice
Exhibit G - Form of Prepayment Notice
Exhibit H - Form of Extension Request
Exhibit I - Form of Conversion/Continuation Notice
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<PAGE> 6
THIS CREDIT AGREEMENT, dated as of October 22, 1996, is among
OMNICARE, INC., as the Borrower, THE BANKS NAMED HEREIN, as the Lenders, and THE
FIRST NATIONAL BANK OF CHICAGO, as the Agent. The parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1. CERTAIN DEFINED TERMS. As used in this Agreement the
following terms shall have the following meanings, such meanings being equally
applicable to both the singular and plural forms of the terms defined:
"ABSOLUTE RATE AUCTION" has the meaning specified in Section
2.10(b)(i).
"ACQUISITION" means any transaction, or any series of related
transactions, by which the Borrower or any of its Subsidiaries (a) acquires any
going business or all or substantially all of the assets of any firm,
corporation or division thereof which constitutes a going business, whether
through purchase of assets, merger or otherwise or (b) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
partnership interests of a partnership or a majority (by percentage or voting
power) of the outstanding ownership interests of a limited liability company.
"ADVANCE" means a Syndicated Advance or a Bid Rate Advance.
"AFFILIATE" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
A Person shall be deemed to control another Person if the controlling Person
owns 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.
"AGENT" means First Chicago in its capacity as agent for the
Lenders pursuant to ARTICLE X, and not in its capacity as a Lender, and any
successor Agent appointed pursuant to ARTICLE X.
"AGGREGATE COMMITMENT" means the aggregate of the Commitments
of all the Lenders, as reduced from time to time pursuant to the terms hereof.
"AGREEMENT" means this Credit Agreement, as it may from time
to time be amended, restated, supplemented or otherwise modified.
"AGREEMENT ACCOUNTING PRINCIPLES" means GAAP, applied in a
manner consistent with that used in preparing the financial statements referred
to in SECTION 5.4.
"ALTERNATE BASE RATE" means, for any day, a rate of interest
per annum equal to the higher of (a) the Corporate Base Rate for such day and
(b) the sum of Federal Funds Effective Rate for such day plus 0.50% per annum.
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<PAGE> 7
"APPLICABLE COMMITMENT FEE RATE" means, for any date until
after delivery of the Borrower's audited financial statements pursuant to
SECTION 6.1(a) for the fiscal year ending December 31, 1996, a per annum rate
equal to 0.09% and thereafter the applicable per annum Commitment Fee Rate set
forth below based on the Fixed Charge Coverage Ratio as of the last day of the
Borrower's most recently ended fiscal quarter for the four consecutive fiscal
quarters ending with such fiscal quarter:
Applicable
Fixed Charge Coverage Ratio Commitment Fee Rate
--------------------------- -------------------
Greater than 1.80 to 1.00 0.09%
Less than or equal to 1.80 to 1.00
but greater than 1.50 to 1.00 0.125%
Less than or equal to 1.50 to 1.00 0.20%
Beginning with the delivery of the Borrower's audited annual financial
statements pursuant to SECTION 6.1(a) for the fiscal year ending December 31,
1996, the Applicable Commitment Fee Rate shall be adjusted effective on the
fifth Business Day after the delivery of Borrower's quarterly or annual
financial statements pursuant to SECTION 6.1(a) OR 6.1(b), as applicable,
provided that if timely delivery of such quarterly or annual financial
statements is not made, for purposes of determining the Applicable Commitment
Fee Rate, the Fixed Charge Coverage Ratio shall be assumed to be less than 1.50
to 1.00 until such delivery is made.
"APPLICABLE LETTER OF CREDIT FEE RATE" means, for any date,
with respect to Letters of Credit issued pursuant to or governed by the terms of
this Agreement, until after delivery of the Borrower's audited financial
statements pursuant to SECTION 6.1(a) for the fiscal year ending December 31,
1996, a per annum rate equal to 0.25% and thereafter the applicable per annum
Letter of Credit Fee Rate set forth below based on the Fixed Charge Coverage
Ratio as of the last day of the Borrower's most recently ended fiscal quarter
for the four consecutive fiscal quarters ending with such fiscal quarter:
Applicable Letter of
Fixed Charge Coverage Ratio Credit Fee Rate
--------------------------- ---------------
Greater than 1.80 to 1.00 0.25%
Less than or equal to 1.80 to 1.00
but greater than 1.50 to 1.00 0.35%
Less than or equal to 1.50 to 1.00 0.60%
Beginning with the delivery of the Borrower's audited annual financial
statements pursuant to SECTION 6.1(a) for the fiscal year ending December 31,
1996, the Applicable Letter of Credit Fee Rate shall be adjusted effective on
the fifth Business Day after the delivery of Borrower's quarterly or annual
financial statements pursuant to SECTION 6.1(a) OR 6.1(b), as applicable,
provided that if timely delivery of such quarterly or annual financial
statements is not made, for purposes of determining the Applicable Letter of
Credit Fee Rate, the Fixed Charge Coverage Ratio shall be assumed to be less
than 1.50 to 1.00 until such delivery is made.
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<PAGE> 8
"APPLICABLE MARGIN" means, for any date, with respect to the
Loans comprising any Eurodollar Advance, from the date hereof until after the
delivery of the Borrower's audited financial statements pursuant to SECTION
6.1(a) for the fiscal year ending December 31, 1996, a per annum rate equal to
0.25% and thereafter, the applicable rate per annum set forth below for such
Loans based on the Fixed Charge Coverage Ratio as of the last day of the
Borrower's most recently ended fiscal quarter for the four consecutive fiscal
quarters ending with such fiscal quarter:
Fixed Charge Coverage Ratio Applicable Margin
--------------------------- -----------------
Greater than 1.80 to 1.00 0.25%
Less than or equal to 1.80 to 1.00
but greater than 1.50 to 1.00 0.35%
Less than or equal to 1.50 to 1.00 0.60%
Beginning with the delivery of the Borrower's audited annual financial
statements pursuant to SECTION 6.1(a) for the fiscal year ending December 31,
1996, the Applicable Margin shall be adjusted effective on the fifth Business
Day after the delivery of Borrower's quarterly or annual financial statements
pursuant to SECTION 6.1(a) OR 6.1(b), as applicable, provided that if timely
delivery of such quarterly or annual financial statements is not made, for
purposes of determining the Applicable Margin, the Fixed Charge Coverage Ratio
shall be assumed to be less than 1.50 to 1.00 until such delivery is made.
"ARTICLE" means an article of this Agreement unless another
document is specifically referenced.
"Authorized Officer" means any of the President, Executive
Vice President, Senior Vice President, Vice President, Finance or Treasurer of
the Borrower, or any Person designated by any two of the foregoing, acting
singly.
"BID RATE ADVANCE" means a borrowing consisting of
simultaneous Bid Rate Loans to the Borrower from each of the Lenders whose offer
to make a Bid Rate Loan as part of such borrowing has been accepted by the
Borrower under the applicable auction bidding procedure described in Section
2.10.
"BID RATE ADVANCE BORROWING NOTICE" has the meaning specified
in SECTION 2.10(b)(i).
"BID RATE LOAN" means a loan by a Lender to the Borrower as
part of a Bid Rate Advance resulting from the applicable auction bidding
procedure described in SECTION 2.10.
"BID RATE NOTE" means a promissory note of the Borrower
payable to the order of any Lender, in substantially the form of EXHIBIT A-2
hereto, evidencing the indebtedness of the Borrower to such Lender resulting
from the Bid Rate Loans made by such Lender to the Borrower.
"BID RATE REDUCTION" has the meaning specified in SECTION 2.1.
"BORROWER" means Omnicare, Inc., a Delaware corporation, and
its successors and assigns.
"BORROWING DATE" means a date on which an Advance or a Swing
Line Loan is made hereunder.
"BORROWING NOTICE" means a Syndicated Advance Borrowing Notice
or a Bid Rate Advance Borrowing Notice.
"BUSINESS DAY" means (a) with respect to any borrowing,
payment or rate selection of Eurodollar Advances, a day (other than a Saturday
or Sunday) on which banks generally are open in Chicago, New York and London for
the conduct of substantially all of their commercial lending activities and (b)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago and New York for the conduct of substantially all
of their commercial lending activities.
E-16
<PAGE> 9
"CAPITALIZED LEASE" of a Person means any lease of Property by
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with Agreement Accounting Principles.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount
of the obligations of such Person under Capitalized Leases which would be shown
as a liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"CHANGE IN CONTROL" means the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended) of 45% or more of the outstanding
shares of voting stock of the Borrower.
"CHIEF FINANCIAL OFFICER" means, at any time, the Person who
reports to the board of directors of the Borrower on the financial affairs of
the Borrower and the Subsidiaries.
"CODE" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"COMMITMENT" means, for each Lender, the obligation of such
Lender to make Syndicated Loans and to purchase participations in Letters of
Credit and in Swing Line Loans not exceeding the amount set forth opposite its
signature below or as set forth in any Notice of Assignment relating to any
assignment that has become effective pursuant to SECTION 12.3.2, as such amount
may be modified from time to time pursuant to the terms hereof.
"CONDEMNATION" has the meaning specified in SECTION 7.8.
"CONSOLIDATED FIXED CHARGES" for any period means on a
consolidated basis for the Borrower and all of its Subsidiaries for such period,
the sum of (a) all interest paid in cash by the Borrower and all of its
Subsidiaries (net of interest income), including the cash interest component of
Capitalized Lease Obligations, (b) all payments of the principal amount of any
Indebtedness of the Borrower or any of its Subsidiaries (including any
redemption or purchase of any such Indebtedness but excluding any payment of
Indebtedness of a Subsidiary acquired subsequent to the date of this Agreement
if such Indebtedness is repaid within sixty (60) days of the Acquisition of such
Subsidiary), (c) all income or similar taxes paid in cash by the Borrower or any
of its Subsidiaries, and (d) all payments of Rentals by the Borrower or any of
its Subsidiaries, all as determined in accordance with Agreement Accounting
Principles.
"CONSOLIDATED NET INCOME" means, for any period, the
consolidated net income (or loss) of the Borrower and its Subsidiaries for such
period determined in accordance with Agreement Accounting Principles; PROVIDED,
that there shall be excluded (i) the income (or loss) of any Affiliate of the
Borrower or other Person (other than a Subsidiary of the Borrower) in which any
Person (other than the Borrower or any of its Subsidiaries) has a joint
interest, except to the extent of the amount of dividends or other distributions
actually paid to the Borrower or any of its Subsidiaries by such Affiliate or
other Person during such period and (ii) the income (or loss) of any Person
accrued prior to the date it becomes a Subsidiary of the Borrower or is merged
into or consolidated with the Borrower or any of its Subsidiaries or that
Person's assets are acquired by the Borrower or any of its Subsidiaries.
"CONSOLIDATED NET WORTH" means, as of the date of any
determination thereof, the amount of the shareholders' equity of the Borrower
and its Subsidiaries as would be shown on the consolidated balance sheet of the
Borrower and its Subsidiaries determined on a consolidated basis in accordance
with Agreement Accounting Principles.
"CONTINGENT OBLIGATION" of a Person means any agreement,
undertaking or arrangement by which such Person assumes, guarantees, endorses,
contingently agrees to purchase or provide funds for the payment of, or
otherwise becomes or is contingently liable upon, the obligation or liability of
any other Person, or agrees to maintain the net worth or working capital or
other financial condition of any other Person, or otherwise assures any creditor
of such other Person against loss, including, without limitation, any operating
agreement, take-or-pay contract or application for or reimbursement agreement
with respect to a letter of credit (including any Letter of Credit).
E-17
<PAGE> 10
"CONVERSION/CONTINUATION NOTICE" has the meaning specified in
SECTION 2.7.
"CONVERTIBLE NOTES" means the 5 3/4% Convertible Subordinated
Notes due 2003 issued by the Borrower pursuant to the terms of the Indenture.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"CORPORATE BASE RATE" means a rate per annum equal to the
corporate base rate of interest announced by First Chicago from time to time,
changing when and as said corporate base rate changes.
"DEBT" of any Person means and includes all obligations of
such Person for money borrowed which in accordance with GAAP shall be classified
upon a balance sheet of such Person as liabilities of such Person, and in any
event shall include (a) all Capitalized Lease Obligations of such Person and (b)
all Contingent Obligations of such Person with respect to obligations of others
of the character referred to in this definition, but shall exclude (i) notes,
bills and checks presented in the ordinary course of business by such Person to
banks for collection or deposit and (ii) with reference to the Borrower and its
Subsidiaries, all obligations of the Borrower and its Subsidiaries of the
character referred to in this definition to the extent owing to the Borrower or
any Subsidiary of the Borrower .
"DEFAULT" means an event described in ARTICLE VII.
"DOLLARS" and "$" mean the lawful money of the United States.
"EBIT" for any period means the sum of (a) Consolidated Net
Income during such period, plus (to the extent deducted in determining
Consolidated Net Income), (b) all provisions for any income or similar taxes
paid or accrued by the Borrower or any of its Subsidiaries during such period,
(c) interest paid or payable by the Borrower or any of its Subsidiaries during
such period as determined in accordance with Agreement Accounting Principles and
minus (to the extent included in Consolidated Net Income) (d) interest earned by
the Borrower or any of its Subsidiaries during such period.
"EFFECTIVE DATE" means October 22, 1996.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any rule or regulation issued
thereunder.
"EURODOLLAR ADVANCE" means a Syndicated Advance denominated in
Dollars that bears interest at a Eurodollar Rate.
"EURODOLLAR BASE RATE" means, with respect to a Eurodollar
Advance for the relevant Eurodollar Interest Period, or a Bid Rate Advance
priced based on the Eurodollar Base Rate for an interest period designated by
the Borrower, the per annum rate at which deposits in Dollars are offered by
First Chicago to first-class banks in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Eurodollar Interest Period or interest period designated by the
Borrower, as applicable, in the approximate amount of First Chicago's relevant
Eurodollar Loan or such Bid Rate Advance and having a maturity approximately
equal to such Eurodollar Interest Period or interest period designated by the
Borrower.
"EURODOLLAR INTEREST PERIOD" means, with respect to a
Eurodollar Advance, a period of one, two, three or six months commencing on a
Business Day selected by the Borrower pursuant to this Agreement. Such
Eurodollar Interest Period shall end on (but exclude) the day which corresponds
numerically to such date one, two, three or six months thereafter, unless there
is no such numerically corresponding day in such next, second, third or sixth
succeeding month, in which case such Eurodollar Interest Period shall end on the
last Business Day of such next, second, third or sixth succeeding month. If a
Eurodollar Interest Period would otherwise end on a day which is not a Business
Day, such Eurodollar Interest Period shall end on the next succeeding Business
Day, unless said next succeeding Business Day falls in a new calendar month, in
which case such Eurodollar Interest Period shall end on the immediately
preceding Business Day.
"EURODOLLAR LOAN" means a Syndicated Loan denominated in
Dollars which bears interest at a Eurodollar Rate.
E-18
<PAGE> 11
"EURODOLLAR RATE" means, with respect to a Eurodollar Advance
for the relevant Eurodollar Interest Period, the sum of (a) the quotient of (i)
the Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided
by (ii) one minus the Reserves (expressed as a decimal) applicable to such
Eurodollar Interest Period, plus (b) the Applicable Margin in effect from time
to time during such Eurodollar Interest Period. The Eurodollar Rate shall be
rounded to the next higher multiple of 1/16 of 1% if the rate is not such a
multiple.
"EXISTING LETTERS OF CREDIT" means the letters of credit
described on SCHEDULE 2 hereto.
"EXTENSION NOTIFICATION DATE" has the meaning specified in
SECTION 2.19.
"EXTENSION REQUEST" has the meaning specified in SECTION 2.19.
"FACILITY TERMINATION DATE" means October 22, 2001, or such
later date in effect from time to time as the Facility Termination Date,
determined in accordance with the procedures described in SECTION 2.19.
"FAIR VALUE" means the value of the relevant asset determined
in an arm's-length transaction conducted in good faith between an informed and
willing buyer and an informed and willing seller under no compulsion to buy or
sell.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest
rate per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published for such day (or, if such day is
not a Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations at approximately 10:00 a.m.
(Chicago time) on such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by the Agent in its sole
discretion.
"FINANCIAL UNDERTAKING" of a Person means (a) any repurchase
obligation or liability of such Person or any of its Subsidiaries with respect
to accounts or notes receivable sold by such Person or any of its Subsidiaries,
(b) any liability under any sale and leaseback transactions which do not create
a liability on the consolidated balance sheet of such Person and its
Subsidiaries, (c) obligations arising with respect to any other transaction
which is the functional equivalent of or takes the place of borrowing but which
does not constitute a liability on the consolidated balance sheet of such Person
and its Subsidiaries or (d) net liabilities under any agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, and forward rate
currency or interest rate options.
"FIRST CHICAGO" means The First National Bank of Chicago in
its individual capacity, and its successors.
"FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio
of (a) the sum of (i) EBIT of the Borrower and all of its Subsidiaries plus (ii)
Rentals of the Borrower and all of its Subsidiaries on a consolidated basis to
(b) Consolidated Fixed Charges.
"FLOATING RATE" means, for any day, a rate per annum equal to
the Alternate Base Rate for such day, changing when and as the Alternate Base
Rate changes.
"FLOATING RATE ADVANCE" means a Syndicated Advance denominated
in Dollars which bears interest at the Floating Rate.
"FLOATING RATE LOAN" means a Syndicated Loan denominated in
Dollars which bears interest at the Floating Rate.
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"FUNDED DEBT" of any Person means, without duplication, (a)
all Debt of such Person having a final maturity of one year or more from the
date of determination thereof (or which is renewable or extendible at the option
of the obligor for a period or periods more than one year from the date of
determination), (b) all Capitalized Lease Obligations of such Person and (c) all
Contingent Obligations of such Person with respect to Funded Debt of others. In
addition, Funded Debt of the Borrower shall include all Debt outstanding under
this Agreement and the Notes.
"GAAP" means the generally accepted accounting principles as
generally applied by the Borrower as at December 31, 1995.
"GOVERNMENTAL ACTS" has the meaning specified in SECTION
2.21.6(a).
"GOVERNMENTAL AUTHORITY" means any country or nation, any
political subdivision of such country or nation, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government of any country or nation or political subdivision
thereof.
"GROSS NEGLIGENCE" means either recklessness or actions taken
or omitted with conscious indifference to or the complete disregard of
consequences. Gross Negligence does not mean the absence of ordinary care or
diligence, or an inadvertent act or inadvertent failure to act. If the term
"gross negligence" is used with respect to the Agent or any Lender or any
indemnitee in any of the other Loan Documents, it shall have the meaning set
forth herein.
"GUARANTOR" means (a) as of the date of this Agreement, the
Initial Guarantors and (b) each other Subsidiary added as a Guarantor pursuant
to the terms of SECTION 6.20 (a "SUPPLEMENTAL GUARANTOR"), and in each such case
their respective successors and assigns.
"GUARANTY" means (a) each guaranty executed as of the date of
this Agreement by each of the Initial Guarantors and (b) each other guaranty
executed by a Supplemental Guarantor pursuant to the terms of SECTION 6.20, and
in each such case as the same may from time to time be amended, modified,
supplemented and/or restated.
"INDEBTEDNESS" of a Person means, without duplication, such
Person's (a) obligations for borrowed money, (b) obligations representing the
deferred purchase price of Property or services (other than accounts payable
arising in the ordinary course of such Person's business payable on terms
customary in the trade), (c) obligations, whether or not assumed, secured by
Liens or payable out of the proceeds or production from Property now or
hereafter owned or acquired by such Person, (d) obligations which are evidenced
by notes, acceptances, or other instruments, (e) Capitalized Lease Obligations,
(f) Financial Undertakings, (g) Contingent Obligations and (h) obligations under
or in connection with a letter of credit (including any Letter of Credit); but
excluding, in any event, (i) amounts payable by such Person in respect of
covenants not to compete, and (ii) with reference to the Borrower and its
Subsidiaries, all obligations of the Borrower and its Subsidiaries of the
character referred to in this definition to the extent owing to the Borrower or
any Subsidiary of the Borrower.
"INDENTURE" shall mean the Indenture dated as of October 1,
1993 by and between the Borrower and NBD Bank (formerly known as NBD Bank, N.A.)
pursuant to which the Convertible Notes were issued as the same may be amended
or modified from time to time.
"INDEXED RATE AUCTION" has the meaning specified in SECTION
2.10(b)(i).
"INITIAL GUARANTORS" has the meaning specified in SECTION 5.8.
"INTEREST PERIOD" means a Eurodollar Interest Period.
"INVESTMENT" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade), deposit account or contribution of capital by such Person to any other
Person or any investment in, or purchase or other acquisition of, the stock,
partnership interests, ownership interests in any limited liability company,
notes, debentures or other securities of any other Person made by such Person.
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"JOINT VENTURE" means any corporation, partnership, limited
liability company association, joint stock company, business trust or other
combined enterprise other than a Subsidiary in which or to which the Borrower or
any of its Subsidiaries has made an Investment to fund a business enterprise
which engages or will engage in a business in which the Borrower or any of its
Subsidiaries is engaged from time to time during the term of this Agreement.
"L/C DRAFT" means a draft drawn on the Agent pursuant to any
of the Letters of Credit.
"L/C INTEREST" has the meaning specified in SECTION 2.21.2.
"L/C OBLIGATIONS" means an amount equal to the sum (without
duplication) of (i) the aggregate of the amount then available for drawing under
each of the Letters of Credit, (ii) the face amounts of all outstanding L/C
Drafts corresponding to the Letters of Credit, which L/C Drafts have been
accepted by the Agent and (iii) the aggregate outstanding amount of
Reimbursement Obligations at such time.
"LENDERS" means the lending institutions listed on the
signature pages of this Agreement and their respective successors and assigns.
"LENDING INSTALLATION" means, with respect to a Lender, any
office, branch, subsidiary or affiliate of such Lender.
"LETTER OF CREDIT" means any of the Existing Letters of Credit
or any letter of credit issued pursuant to SECTION 2.21.
"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"LOAN" means a Syndicated Loan, a Bid Rate Loan or a Swing
Line Loan.
"LOAN DOCUMENTS" means this Agreement, the Notes, the
Guaranties and the applications, reimbursement agreements and other instruments
and agreements related to the Letters of Credit and L/C Interests.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, Property, condition (financial or otherwise), results of
operations, or prospects of the Borrower and its Subsidiaries taken as a whole,
(b) the ability of the Borrower or the Guarantors to perform their respective
obligations under the Loan Documents, or (c) the validity or enforceability of
any of the Loan Documents or the rights or remedies of the Agent or the Lenders
thereunder.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a Plan, if any, maintained pursuant
to a collective bargaining agreement or any other arrangement to which the
Borrower or any member of the Controlled Group is a party to which more than one
employer is obligated to make contributions.
"NON-CONSENTING LENDER" has the meaning specified in SECTION
2.19.
"NOTE" means a Syndicated Note, a Bid Rate Note or a Swing
Line Loan Note.
"NOTICE OF ASSIGNMENT" has the meaning specified in SECTION
12.3.2.
"OBLIGATIONS" means all unpaid principal of and accrued and
unpaid interest on the Notes, all L/C Obligations, all accrued and unpaid fees
and all expenses, reimbursements, indemnities and other obligations of the
Borrower to the Lenders or to any Lender, the Agent or any indemnified party
hereunder arising under the Loan Documents.
"PARTICIPANTS" has the meaning specified in SECTION 12.2.1.
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"PAYMENT OFFICE" means the principal office of the Agent in
Chicago, Illinois, located on the date hereof at One First National Plaza,
Chicago, Illinois 60670 or such other office of the Agent as the Agent may from
time to time designate by written notice to the Borrower and the Lenders.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PERMITTED ACQUISITION" means any Acquisition made by the
Borrower or any of its Subsidiaries provided that: (a) as of the date of such
Acquisition, no Default or Unmatured Default shall have occurred and be
continuing or would result from such Acquisition or from the incurrence of any
Indebtedness in connection with such Acquisition; (b) prior to the date of such
Acquisition, such Acquisition shall have been approved by the board of directors
and, if applicable, the shareholders of the Person whose stock or assets are
being acquired in connection with such Acquisition and no claim or challenge has
been asserted or threatened by any shareholder or director of such Person which
could reasonably be expected to have a material adverse effect on such
Acquisition or a Material Adverse Effect; and (c) as of the date of any such
Acquisition, all approvals required in connection with such Acquisition shall
have been obtained.
"PERSON" means any natural person, corporation, firm, joint
venture, partnership, limited liability company, association, enterprise, trust
or other entity or organization, or any government or political subdivision or
any agency, department or instrumentality thereof.
"PLAN" means an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code as to which the Borrower or any member of the Controlled Group
may have any liability.
"PREPAYMENT NOTICE" has the meaning specified in SECTION 2.5.
"PROPERTY" of a Person means any and all property, whether
real, personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"PURCHASERS" has the meaning specified in SECTION 12.3.1.
"REIMBURSEMENT OBLIGATION" is defined in SECTION 2.21.3.
"REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.
"REGULATION U" means Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by banks for the purpose of purchasing or carrying
margin stocks applicable to member banks of the Federal Reserve System.
"RENTALS" of a Person means the aggregate fixed amounts
payable by such Person under any lease of Property having an original term
(including any required renewals or any renewals at the option of the lessor or
lessee) of one year or more.
"REPORTABLE EVENT" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such section, with
respect to a Plan, excluding, however, such events as to which the PBGC by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event; PROVIDED, HOWEVER, that
a failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of the issuance of
any such waiver of the notice requirement in accordance with either Section
4043(a) of ERISA or Section 412(d) of the Code.
"REQUIRED LENDERS" means Lenders in the aggregate having at
least 51% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 51% of the aggregate
unpaid principal amount of the outstanding Advances and the L/C Obligations.
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"RESERVES" means, with respect to a Eurodollar Interest
Period, the maximum aggregate reserves (including all basic, supplemental,
marginal and other reserves) imposed under Regulation D on Eurocurrency
liabilities.
"SECTION" means a numbered section of this Agreement, unless
another document is specifically referenced.
"SINGLE EMPLOYER PLAN" means a Plan, if any, maintained by the
Borrower or any member of the Controlled Group for employees of the Borrower or
any member of the Controlled Group.
"SPECIFIED REMITTANCE TIME" means (a) if the relevant Payment
Office is located in Chicago, 12:00 noon (Chicago time) and (b) if the relevant
Payment Office is located elsewhere, such time as the Agent shall specify after
consultation with the Borrower and the Lenders.
"STANDARD & POOR'S" means Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc.
"SUBSIDIARY" of a Person means (a) any corporation more than
50% of the outstanding securities having ordinary voting power of which shall at
the time be owned or controlled, directly or indirectly, by such Person or by
one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (b) any partnership, limited liability company, association,
joint venture or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"SUBSTANTIAL PORTION" means, with respect to the Property of
the Borrower and the Subsidiaries, Property that has a Fair Value representing
more than 5% of Consolidated Net Worth determined as of the end of the fiscal
quarter of the Borrower most recently ended prior to the date on which such
determination is made.
"SUPPLEMENTAL GUARANTOR" has the meaning given that term in
the definition of "Guarantor" above.
"SWING LINE COMMITMENT" means the obligation of the Swing Line
Lender to make Swing Line Loans up to a maximum principal amount of $25,000,000
at any one time outstanding.
"SWING LINE LENDER" means First Chicago or any other Lender
as a successor Swing Line Lender.
"SWING LINE LOAN" means a loan made available to the Borrower
by the Swing Line Lender pursuant to SECTION 2.9.
"SWING LINE NOTE" means a Note in substantially the form of
EXHIBIT A-3 hereto duly executed by the Borrower and payable to the order of the
Swing Line Lender in the amount of its Swing Line Commitment.
"SYNDICATED ADVANCE" means a borrowing consisting of
simultaneous Syndicated Loans of the same Type made to the Borrower by each of
the Lenders pursuant to SECTION 2.1, and for, in the case of Eurodollar
Advances, the same Interest Period.
"SYNDICATED ADVANCE BORROWING NOTICE" has the meaning
specified in SECTION 2.6.
"SYNDICATED LOAN" means a loan by a Lender to the Borrower as
part of a Syndicated Advance.
"SYNDICATED NOTE" means a promissory note of the Borrower
payable to the order of any Lender, in substantially the form of EXHIBIT A-1
hereto, evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Syndicated Loans made by such Lender to the Borrower.
"TRANSFEREE" has the meaning specified in SECTION 12.4.
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"TYPE" means, (a) with respect to any Syndicated Loan, its
nature as a Floating Rate Loan or a Eurodollar Loan and (b) with respect to any
Syndicated Advance, its nature as a Floating Rate Advance or a Eurodollar
Advance.
"UNFUNDED LIABILITIES" means the amount (if any) by which the
present value of all vested nonforfeitable benefits under all Single Employer
Plans exceeds the Fair Value of all such Plan assets allocable to such benefits,
all determined as of the then most recent valuation date for such Plans.
"UNITED STATES" and "U.S." mean the United States of America.
"UNMATURED DEFAULT" means an event which but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"WHOLLY-OWNED SUBSIDIARY" of a Person means (a) any Subsidiary
all of the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (b) any partnership, association, joint venture
or similar business organization 100% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.
ARTICLE II
THE CREDITS
2.1. THE SYNDICATED LOANS. From and including the date of this
Agreement and prior to the Facility Termination Date, each Lender severally
agrees, on the terms and conditions set forth in this Agreement (including,
without limitation, the terms and conditions of SECTION 2.11 and SECTION 8.1
relating to the reduction, suspension or termination of the Aggregate
Commitment), to make Syndicated Loans to the Borrower from time to time in an
aggregate amount not to exceed at any one time outstanding the amount of such
Lender's Commitment; PROVIDED, HOWEVER, that the Aggregate Commitment shall be
deemed used from time to time to the extent of (a) the aggregate amount of the
Bid Rate Loans then outstanding, and such deemed use of the Aggregate Commitment
shall be applied to the Lenders ratably according to their respective
Commitments (such deemed use of the aggregate amount of the Commitments being a
"BID RATE REDUCTION") and (b) the aggregate L/C Obligations then outstanding,
and such deemed use of the Aggregate Commitment shall be applied to the Lenders
ratably according to their respective Commitments. Subject to the terms of this
Agreement (including, without limitation, the terms and conditions of SECTION
2.11 and SECTION 8.1 relating to the reduction, suspension or termination of the
Aggregate Commitment), the Borrower may borrow, repay and reborrow Syndicated
Loans at any time prior to the Facility Termination Date. Unless earlier
terminated in accordance with the terms and conditions of this Agreement, the
Commitments of the Lenders to lend hereunder shall expire on the Facility
Termination Date. Notwithstanding anything herein to the contrary, each of the
Lenders shall be required to fund its ratable share of any Advance made in
connection with any L/C Drafts notwithstanding that such Advance may be made on
or after the date of any reduction, suspension or termination of the Aggregate
Commitment pursuant to SECTION 2.11(b) or SECTION 8.1.
2.2. REPAYMENT OF THE SYNDICATED LOANS. Any outstanding
Syndicated Loans shall be paid in full by the Borrower on the Facility
Termination Date; PROVIDED, HOWEVER, that (a) all Syndicated Loans made in
connection with any of the Letters of Credit shall be paid in full by the
Borrower on the later of the Facility Termination Date and the Business Day
immediately following the date the relevant Syndicated Loan is made, and (b)
nothing in this SECTION 2.2 shall be construed as limiting or modifying the
obligation of the Borrower to repay any or all of the outstanding Syndicated
Loans at any earlier time in accordance with the terms of this Agreement.
2.3. RATABLE LOANS; TYPES OF SYNDICATED ADVANCES. Each
Syndicated Advance hereunder shall consist of Syndicated Loans made from the
several Lenders ratably in proportion to the ratio that their respective
Commitments bear to the Aggregate Commitment. Any Syndicated Advance may be a
Floating Rate Advance or a Eurodollar Advance, as the Borrower shall select in
accordance with SECTIONS 2.6 and 2.7.
2.4. MINIMUM AMOUNT OF EACH SYNDICATED ADVANCE. Each
Syndicated Advance shall be in a minimum amount not less than $15,000,000 or an
integral multiple of $1,000,000 in excess thereof; PROVIDED, HOWEVER, that any
Syndicated Advance may be in the amount of the unused Aggregate Commitment.
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2.5. OPTIONAL PREPAYMENTS OF SYNDICATED LOANS. Subject to
SECTION 3.4 and the requirements of Section 2.4, the Borrower may (a) following
notice given to the Agent by the Borrower, in the form attached hereto as
EXHIBIT G (a "PREPAYMENT NOTICE") by not later than 10:00 a.m. (Chicago time) on
the date of the proposed prepayment, such notice specifying the aggregate
principal amount of and the proposed date of the prepayment, and if such notice
is given the Borrower shall, prepay the outstanding principal amounts of the
Floating Rate Loans comprising part of the same Syndicated Advance in whole or
ratably in part, together with accrued interest to the date of such prepayment
on the principal amount prepaid and (b) following a Prepayment Notice given to
the Agent by the Borrower by not later than 10:00 a.m. (Chicago time) on, if the
Advance to be prepaid is a Eurodollar Advance, the third Business Day preceding
the date of the proposed prepayment, such notice specifying the Advance to be
prepaid and the proposed date of the prepayment, and, if such notice is given,
such Borrower shall, prepay the outstanding principal amounts of the Eurodollar
Loans comprising a Eurodollar Advance in whole (and not in part), together with
accrued interest to the date of such prepayment on the principal amount prepaid.
In the case of a Floating Rate Advance, each partial prepayment shall be in an
aggregate principal amount not less than $1,000,000.
2.6. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR NEW
SYNDICATED ADVANCES. The Borrower shall select the Type of each Syndicated
Advance and, in the case of a Eurodollar Advance, the Interest Period applicable
to such Syndicated Advance from time to time. The Borrower shall give the Agent
irrevocable notice, in the form attached hereto as EXHIBIT F-1 (a "SYNDICATED
ADVANCE BORROWING NOTICE"), not later than 10:00 a.m. (Chicago time) (i) on the
Borrowing Date for each Floating Rate Advance and (ii) at least three Business
Days before the Borrowing Date for each Eurodollar Advance, specifying:
(a) the Borrowing Date, which shall be a Business Day, of
such Advance,
(b) the aggregate amount of such Advance,
(c) the Type of such Advance, and
(d) in the case of each Eurodollar Advance, the Interest
Period applicable thereto.
Not later than the Specified Remittance Time on each Borrowing Date, each
Lender shall make available its Syndicated Loan or Syndicated Loans to the
Agent in immediately available funds at the relevant Payment Office. To the
extent that the Agent has received funds from the Lenders as specified in the
preceding sentence and the applicable conditions set forth in ARTICLE IV have
been fulfilled, the Agent will make such funds available to the Borrower at the
relevant Payment Office within two hours following the Specified Remittance
Time, it being understood that if the relevant Payment Office is located in
Chicago, the Agent will make the applicable funds available to the Borrower by
depositing such funds to such account with First Chicago as the Borrower shall
designate.
2.7. CONVERSION AND CONTINUATION OF OUTSTANDING SYNDICATED
ADVANCES. Floating Rate Advances shall continue as Floating Rate Advances unless
and until such Floating Rate Advances are converted into Eurodollar Advances or
prepaid pursuant to SECTION 2.5. Each Eurodollar Advance of any Type shall
continue as a Eurodollar Advance of such Type until the end of the then
applicable Interest Period therefor, at which time such Eurodollar Advance shall
be automatically converted into a Floating Rate Advance unless the Borrower
shall have given the Agent a Conversion/Continuation Notice requesting that, at
the end of such Interest Period, such Eurodollar Advance either continue as a
Eurodollar Advance of such Type for the same or another Interest Period or be
converted into an Advance of another Type. Subject to the terms of SECTION 2.6,
the Borrower may elect from time to time to convert all or any part of a
Syndicated Advance of any Type into any other Type or Types of Syndicated
Advances; provided that any conversion of any Eurodollar Advance shall be made
on, and only on, the last day of the Interest Period applicable thereto. The
Borrower shall give the Agent irrevocable notice in the form of EXHIBIT I hereto
(a "CONVERSION/CONTINUATION NOTICE") of each conversion of an Advance or
continuation of a Eurodollar Advance not later than 10:00 a.m. (Chicago time)
(i) in the case of a conversion into a Floating Rate Advance on the date of such
conversion and (ii) in the case of a conversion into or continuation of a
Eurodollar Advance, at least three Business Days before the date of such
conversion or continuation, specifying:
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(a) the requested date, which shall be a Business Day, of
such conversion or continuation;
(b) the aggregate amount and Type of the Syndicated Advance
which is to be converted or continued; and
(c) the amount and Type(s) of Syndicated Advance(s) into which
such Syndicated Advance is to be converted or continued and, in the
case of a conversion into or continuation of a Eurodollar Advance, the
duration of the Interest Period applicable thereto.
2.8. PAYMENT OF INTEREST ON SYNDICATED ADVANCES; CHANGES IN
INTEREST RATE. (a) Interest accrued on each Floating Rate Advance shall be
payable on the last Business Day of each calendar month and on the earliest of
the Facility Termination Date, the date of the reduction to zero of the
Aggregate Commitment pursuant to SECTION 2.11 and the date of the acceleration
of the Obligations pursuant to SECTION 8.1. Interest accrued on each Eurodollar
Advance shall be payable on the last day of its applicable Interest Period, on
any date on which such Eurodollar Advance is prepaid, whether by acceleration or
otherwise, and at maturity. Interest accrued on each Eurodollar Advance having
an Interest Period longer than three months shall also be payable on the last
day of each three-month interval during such Interest Period. Interest on
Floating Rate Advances shall be calculated for actual days elapsed on the basis
of a 365/366-day year. Interest on Eurodollar Advances shall be calculated for
actual days elapsed on the basis of a 360-day year. Interest shall be payable
for the day a Syndicated Advance is made but not for the day of any payment on
the amount paid if payment is received prior to noon (local time) at the place
of payment. If any payment of principal of or interest on a Syndicated Advance
shall become due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and, in the case of a principal
payment, such extension of time shall be included in computing interest in
connection with such payment.
(b) Each Floating Rate Advance shall bear interest on the
outstanding principal amount thereof, for each day from and including the date
such Advance is made or is converted from a Eurodollar Advance into a Floating
Rate Advance pursuant to SECTION 2.7(b) to but excluding the date it becomes due
or is converted into a Eurodollar Advance pursuant to SECTION 2.7(b), at a rate
per annum equal to the Floating Rate for such day. Changes in the rate of
interest on each Syndicated Advance maintained as a Floating Rate Advance will
take effect simultaneously with each change in the Alternate Base Rate. Each
Eurodollar Advance shall bear interest from and including the first day of the
Interest Period applicable thereto to (but not including) the last day of such
Interest Period at the Eurodollar Rate determined as applicable to such
Eurodollar Advance. No Interest Period may end after the Facility Termination
Date.
2.9. SWING LINE LOANS. (a) AMOUNT OF SWING LINE LOANS. Upon
the satisfaction of the conditions precedent set forth in SECTIONS 4.1 and 4.2,
from and including the date of this Agreement and prior to the Facility
Termination Date, the Swing Line Lender agrees, on the terms and conditions set
forth in this Agreement, to make Swing Line Loans to the Borrower from time to
time in an amount not to exceed the lesser of (i) $25,000,000 or (ii) the amount
by which the Aggregate Commitment exceeds the sum of the outstanding principal
amount of Syndicated Advances, Bid Rate Advances and L/C Obligations. Each Swing
Line Loan shall be in a minimum amount of not less than $1,000,000 or an
integral multiple of $500,000 in excess thereof, and all interest payable on the
Swing Line Loans shall be payable to the Swing Line Lender for the account of
such Swing Line Lender. In no event shall the number of Swing Line Loans
outstanding at any time be greater than four (4).
(b) BORROWING NOTICE. The Borrower shall deliver to the Agent
and the Swing Line Lender a Borrowing Notice signed by it not later than 10:00
a.m. (Chicago time) on the Borrowing Date of each Swing Line Loan specifying (i)
the applicable Borrowing Date (which shall be a Business Day) and (ii) the
aggregate amount of the requested Swing Line Loan. The Swing Line Loans shall at
all times be Floating Rate Loans.
(c) MAKING OF SWING LINE LOANS. Promptly after receipt of the
Borrowing Notice under SECTION 2.9(b), the Agent shall notify each Lender of the
requested Swing Line Loan. Not later than 2:00 p.m. (Chicago time) on the
applicable Borrowing Date, the Swing Line Lender shall make available its Swing
Line Loan in funds immediately available in Chicago to the Agent at the address
specified by the Agent. The Agent will promptly make such funds available to the
Borrower.
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(d) REPAYMENT OF SWING LINE LOANS. The Swing Line Loans shall
be evidenced by the Swing Line Note and each Swing Line Loan shall be paid in
full by the Borrower on or before the fifth Business Day after the Borrowing
Date for such Swing Line Loan. Outstanding Swing Line Loans may be repaid from
the proceeds of Syndicated Advances, Bid Rate Advances or Swing Line Loans. Any
repayment of a Swing Line Loan shall be accompanied by accrued interest thereon
and shall be in the minimum amount of $500,000 and in increments of $100,000 in
excess thereof or the full amount of such Swing Line Loan. If the Borrower at
any time fails to repay a Swing Line Loan on the applicable date when due, the
Borrower shall be deemed to have elected to borrow a Floating Rate Advance under
SECTION 2.1 as of such date equal in amount to the unpaid amount of such Swing
Line Loan (notwithstanding the minimum amount of Syndicated Advances as provided
in SECTION 2.4). The proceeds of any such Advance shall be used to repay such
Swing Line Loan. Unless the Required Lenders shall have notified the Swing Line
Lender prior to the Swing Line Lender making any Swing Line Loan, that the
applicable conditions precedent set forth in ARTICLE IV have not then been
satisfied, each Lender's obligation to make Loans pursuant to SECTION 2.1 and
this SECTION 2.9(d) to repay Swing Line Loans shall be unconditional,
continuing, irrevocable and absolute and shall not be affected by any
circumstances, including the occurrence or continuance of a Default. In the
event that any Lender fails to make payment to the Agent of any amount due under
this SECTION 2.9(d), the Agent shall be entitled to receive, retain and apply
against such obligation the principal and interest otherwise payable to such
Lender hereunder until the Agent receives such payment from such Lender or such
obligation is otherwise fully satisfied. In addition to the foregoing, if for
any reason any Lender fails to make payment to the Agent of any amount due under
this SECTION 2.9(d), such Lender shall be deemed, at the option of the Agent, to
have unconditionally and irrevocably purchased from the Swing Line Lender,
without recourse or warranty, an undivided interest in and participation in the
applicable Swing Line Loan in the amount of the Loan such Lender was required to
make pursuant to this SECTION 2.9(d) and such interest and participation may be
recovered from such Lender together with interest thereon at the Federal Funds
Effective Rate for each day during the period commencing on the date of demand
by the Agent and ending on the date such obligation is fully satisfied.
2.10. THE BID RATE ADVANCES. (a) Each Lender severally agrees
that, on the terms and conditions set forth in this Agreement, the Borrower may
request and receive Bid Rate Advances under this SECTION 2.10 from time to time
on any Business Day during the period from the date hereof until the date
occurring 30 days prior to the Facility Termination Date in the manner set forth
below; PROVIDED, HOWEVER, that, following the making of each Bid Rate Advance,
the aggregate amount of the Advances then outstanding plus the aggregate amount
of the Swing Line Loans then outstanding plus the aggregate amount of the L/C
Obligations then outstanding shall not exceed the Aggregate Commitment (computed
without regard to any Bid Rate Reduction).
(b) The procedures for the solicitation and acceptance of
Bid Rate Loans are set forth below:
(i) The Borrower may request a Bid Rate Advance under this
SECTION 2.10(b) by giving the Agent irrevocable notice, in the form
attached hereto as EXHIBIT F-2 (a "BID RATE ADVANCE BORROWING NOTICE"),
specifying the date and aggregate amount of the proposed Bid Rate
Advance, the maturity date for repayment of each Bid Rate Loan to be
made as part of such Bid Rate Advance (which maturity date may not be
earlier than in the case of an Absolute Rate Auction, the date
occurring seven days, and in the case of an Indexed Rate Auction, the
date occurring 30 days after the date of the related Bid Rate Advance
or later than, in either case, the earlier of the day occurring 270
days after the date of such Bid Rate Advance and the Facility
Termination Date), the interest payment date or dates relating thereto,
and any other terms to be applicable to such Bid Rate Advance, not
later than 10:00 a.m. (Chicago time) (A) one Business Day prior to the
date of the proposed Bid Rate Advance, if the Borrower shall specify in
the Bid Rate Advance Borrowing Notice that the rates of interest to be
offered by the Lenders shall be absolute rates per annum (such type of
solicitation being an "ABSOLUTE RATE AUCTION"), and (B) five Business
Days prior to the date of the proposed Bid Rate Advance, if the
Borrower shall specify in the Bid Rate Advance Borrowing Notice that
the rates of interest to be offered by the Lenders shall be based on
the Eurodollar Base Rate (such type of solicitation being an "INDEXED
RATE AUCTION"). The Agent shall, promptly following its receipt of a
Bid Rate Advance Borrowing Notice under this SECTION 2.10(b), notify
each Lender of such request by sending such Lender a copy of such Bid
Rate Advance Borrowing Notice.
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(ii) Each Lender may, if, in its sole discretion, it elects to
do so, irrevocably offer to make one or more Bid Rate Loans to the
Borrower as part of such proposed Bid Rate Advance at a rate or rates
of interest specified by such Lender in its sole discretion, by
notifying the Agent (which shall give prompt notice thereof to the
Borrower), before 10:00 a.m. (Chicago time) (or if such Lender is the
Agent, before 9:45 a.m. (Chicago time)) (A) on the date of such
proposed Bid Rate Advance, in the case of an Absolute Rate Auction, and
(B) four Business Days before the date of such proposed Bid Rate
Advance, in the case of an Indexed Rate Auction of the minimum amount
and maximum amount of each Bid Rate Loan which such Lender would be
willing to make as part of such proposed Bid Rate Advance (which
amounts may, subject to the proviso to the first sentence of SECTION
2.10(a), exceed such Lender's Commitment), the rate or rates of
interest therefor and such Lender's Lending Installation with respect
to such Bid Rate Loan.
(iii) The Borrower shall, in turn, before (A) 11:00 a.m.
(Chicago time) on the date of such proposed Bid Rate Advance, in the
case of an Absolute Rate Auction, and (B) 10:00 a.m. (Chicago time)
three Business Days before the date of such proposed Bid Rate Advance,
in the case of an Indexed Rate Auction for a Bid Rate Advance, either:
(x) cancel such Bid Rate Advance by giving the Agent
notice to that effect, or
(y) accept, subject to SECTION 2.10(d), one or more
of the offers made by any Lender or Lenders pursuant to
SECTION 2.10(b)(ii), in its sole discretion, by giving notice
to the Agent of the amount of each Bid Rate Loan (which amount
shall be equal to or greater than the minimum amount, and
equal to or less than the maximum amount, notified to the
Borrower by the Agent on behalf of such Lender for such Bid
Rate Loan pursuant to SECTION 2.10(b)(ii)) to be made by each
Lender as part of such Bid Rate Advance, and reject any
remaining offers made by Lenders pursuant to SECTION
2.10(b)(ii) by giving the Agent notice to that effect.
(iv) If the Borrower notifies the Agent that such Bid Rate
Advance is canceled pursuant to SECTION 2.10(b)(iii)(x), the Agent
shall give prompt notice thereof to the Lenders and such Bid Rate
Advance shall not be made.
(v) If the Borrower accepts one or more of the offers made by
any Lender or Lenders pursuant to SECTION 2.10(b)(iii)(y), the Agent
shall in turn promptly notify (A) each Lender that has made an offer as
described in SECTION 2.10(b)(ii) of the date, and aggregate amount of
such Bid Rate Advance and whether or not any offer or offers made by
such Lender pursuant to SECTION 2.10(b)(ii) have been accepted by the
Borrower and (B) each Lender that is to make a Bid Rate Loan as part of
such Bid Rate Advance, of the amount of each Bid Rate Loan to be made
by such Lender as part of such Bid Rate Advance. Each Lender that is to
make a Bid Rate Loan as part of such Bid Rate Advance shall, not later
than the Specified Remittance Time on the date of such Bid Rate Advance
specified in the notice received from the Agent pursuant to clause (A)
of the preceding sentence, make available for the account of its
Lending Installation to the Agent at the relevant Payment Office such
Lender's portion of such Bid Rate Advance, in same day funds. Upon
fulfillment of the applicable conditions set forth in ARTICLE IV and
after receipt by the Agent of such funds, the Agent will make such
funds available to the Borrower at the Agent's aforesaid address.
Promptly after each Bid Rate Advance the Agent will notify each Lender
of the amount of such Bid Rate Advance, the consequent Bid Rate
Reduction and the dates upon which such Bid Rate Reduction commenced
and will terminate.
(c) Each Bid Rate Advance shall be in an aggregate amount not
less than $10,000,000 or an integral multiple of $5,000,000 in excess thereof,
and, following the making of each Bid Rate Advance, the Borrower shall be in
compliance with the limitation set forth in the proviso to the first sentence of
SECTION 2.10(a).
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(d) Each acceptance by the Borrower pursuant to SECTION
2.10(b)(iii)(y) of the offers made in response to a Bid Rate Advance Borrowing
Notice shall be treated as an acceptance of such offers in ascending order of
the rates or margins, as applicable, at which the same were made but if, as a
result thereof, two or more offers at the same such rate or margin would be
partially accepted, then the amounts of the Bid Rate Loans in respect of which
such offers are accepted shall be treated as being the amounts which bear the
same proportion to one another as the respective amounts of the Bid Rate Loans
so offered bear to one another but, in each case, rounded as the Agent may
consider necessary to ensure that the amount of each such Bid Rate Loan is
$500,000 or an integral multiple thereof.
(e) Within the limits and on the conditions set forth in this
SECTION 2.10, the Borrower may from time to time borrow under this SECTION 2.10,
repay pursuant to SECTION 2.10(f), and reborrow under this SECTION 2.10.
(f) The Borrower shall repay to the Agent for the account of
each Lender which has made a Bid Rate Loan to it, on the maturity date of such
Bid Rate Loan (such maturity date being that specified by the Borrower for
repayment of such Bid Rate Loan in the related Bid Rate Advance Borrowing
Notice), or, if earlier, the acceleration of the Obligations pursuant to SECTION
8.1, the then unpaid principal amount of such Bid Rate Loan. The Borrower shall
have no right to prepay any principal amount of any Bid Rate Loan unless, and
then only on the terms, specified by the Borrower for such Bid Rate Loan in the
related Bid Rate Advance Borrowing Notice, and subject to SECTION 3.4.
(g) The Borrower shall pay interest on the unpaid principal
amount of each Bid Rate Loan made to it, from the date of such Bid Rate Loan to
the date the principal amount of such Bid Rate Loan is repaid in full, at the
rate of interest for such Bid Rate Loan specified by the Lender making such Bid
Rate Loan in the related notice submitted by such Lender pursuant to SECTION
2.10(b)(ii), payable on the interest payment date or dates specified by the
Borrower for such Bid Rate Loan in the related Bid Rate Advance Borrowing Notice
and on any date on which such Bid Rate Loan is prepaid, whether by acceleration
or otherwise. In the event the term of any Bid Rate Loan shall be longer than
three months, interest thereon shall be payable not less frequently than once
each three-month period during such term.
2.11. COMMITMENT FEE; REDUCTIONS IN AGGREGATE COMMITMENT. (a)
The Borrower agrees to pay to the Agent for the account of each Lender a
commitment fee at a rate per annum equal to the Applicable Commitment Fee Rate
in effect from time to time on the daily unused portion of such Lender's
Commitment (determined without giving effect to any Bid Rate Reduction, but
treating the L/C Obligations and, with respect solely to the Swing Line Lender,
the outstanding balance of any Swing Line Loans, as usage) from the date hereof
to but excluding the earliest of the Facility Termination Date, the date of the
reduction to zero of the Aggregate Commitment pursuant to SECTION 2.11 and the
date of the termination of the Aggregate Commitment pursuant to SECTION 8.1.
Such commitment fees shall be payable in arrears on the last Business Day of
each March, June, September and December, and on the earliest of the Facility
Termination Date, the date of the reduction to zero of the Aggregate Commitment
pursuant to SECTION 2.11 and the date of the termination of the Aggregate
Commitment pursuant to SECTION 8.1. Commitment fees shall be calculated for
actual days elapsed on the basis of a 360-day year.
(b) The Borrower may permanently reduce the Aggregate
Commitment in whole, or in part ratably among the Lenders in integral multiples
of not less than $20,000,000 or an integral multiple of $5,000,000 in excess
thereof, upon at least three Business Days' written notice to the Agent, which
notice shall specify the amount of any such reduction; PROVIDED, HOWEVER, that
the amount of the Aggregate Commitment may not be reduced below the sum of the
aggregate principal amount of the outstanding Advances and the aggregate
outstanding L/C Obligations and Swing Line Loans.
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2.12. RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything
to the contrary contained in SECTION 2.8, during the continuance of a Default or
Unmatured Default no Syndicated Advance may be made as, converted into or
continued as a Eurodollar Advance. During the continuance of a Default pursuant
to SECTION 7.2 and, if the Required Banks so elect, during the continuance of
any other Default, (a) each Eurodollar Advance, until paid in full or converted
to a Floating Rate Advance, shall bear interest at the Eurodollar Rate then
applicable to such Advance plus 3% per annum, (b) each Floating Rate Advance
shall bear interest until paid in full at a rate per annum equal to the Floating
Rate plus 3% per annum and (c) each Bid Rate Advance shall bear interest until
paid in full at the interest rate then applicable to such Advance plus 3% per
annum.
2.13. METHOD OF PAYMENT. All payments of the Obligations
hereunder shall be made, without setoff, deduction, or counterclaim, in
immediately available funds to the Agent at the Agent's address specified
pursuant to ARTICLE XIII, or at any other Lending Installation of the Agent
specified in writing by the Agent to the Borrower, by 12:00 noon (local time) on
the date when due and shall be remitted by the Agent to the Lenders according to
their respective interests therein. Each payment delivered to the Agent for the
account of any Lender shall be delivered promptly by the Agent to such Lender in
the same type of funds that the Agent received at its address specified pursuant
to ARTICLE XIII or at any Lending Installation specified in a notice received by
the Agent from such Lender. The Agent is hereby authorized, but is not
obligated, to charge the accounts of the Borrower maintained with First Chicago
into which proceeds of Advances are remitted pursuant to SECTION 2.6 for each
payment of interest and fees as it becomes due hereunder, for each payment of
principal, in accordance with the applicable Prepayment Notice or when otherwise
due and payable in accordance with the terms hereof, and for each payment of
Reimbursement Obligations when due and payable in accordance with the terms
hereof.
2.14. NOTES; TELEPHONIC NOTICES. Each Lender is hereby
authorized to record the date and principal amount of each of its Syndicated
Loans and the date and amount of each repayment on the schedule attached to its
Syndicated Note; PROVIDED, HOWEVER, that the failure to so record shall not
affect the Borrower's obligations under such Syndicated Note. Each Lender making
a Bid Rate Loan is hereby authorized to record the principal amount, interest
rate, maturity date and other terms of such Bid Rate Loan, as specified in the
relevant Bid Rate Advance Borrowing Notice and the related notice submitted by
such Lender pursuant to SECTION 2.10(b)(ii), on the schedule attached to its Bid
Rate Note; PROVIDED, HOWEVER, that the failure to so record shall not affect the
Borrower's obligations under such Bid Rate Note. The Borrower hereby authorizes
the Lenders and the Agent to extend, convert or continue Advances and effect
selections of Types of Syndicated Advances based on telephonic notices made by
any person or persons the Agent in good faith believes to be acting on behalf of
the Borrower. The Borrower agrees to deliver promptly to the Agent a written
confirmation, if such confirmation is requested by the Agent or any Lender, of
each telephonic notice, signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the Agent
and the Lenders, the records of the Agent of the relevant telephonic notice
shall govern absent manifest error.
2.15. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS
AND COMMITMENT REDUCTIONS. Promptly after receipt thereof, the Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Borrowing Notice, Conversion/Continuation Notice, and Prepayment Notice received
by it hereunder. The Agent will notify each Lender of the interest rate
applicable to each Eurodollar Advance promptly upon determination of such
interest rate and will give each Lender prompt notice of each change in the
Alternate Base Rate.
2.16. LENDING INSTALLATIONS. Each Lender may book its Loans at
any one or more Lending Installations selected by such Lender and may change any
such Lending Installation from time to time. All terms of this Agreement shall
apply to any such Lending Installation and the Notes shall be deemed held by
each Lender for the benefit of such Lending Installation. Each Lender may, by
written or telex notice to the Agent and the Borrower, designate a Lending
Installation through which Loans will be made by it and for whose account Loan
payments are to be made.
2.17. NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Borrower
or a Lender, as the case may be, notifies the Agent prior to the date on which
it is scheduled to make payment to the Agent of (a) in the case of a Lender, the
proceeds of a Loan or (b) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent
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the amount so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a rate per annum
equal to (a) in the case of repayment by a Lender, the Federal Funds Effective
Rate for such day or (b) in the case of repayment by the Borrower, the interest
rate applicable to the relevant Loan.
2.18. WITHHOLDING TAX EXEMPTION. At least five Business Days
prior to the first date on which interest or fees are payable hereunder for the
account of any Lender, each Lender that is not incorporated under the laws of
the United States of America, or a state thereof, agrees that it will deliver to
each of the Borrower and the Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either case that such
Lender is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes. Each
Lender which so delivers a Form 1001 or 4224 further undertakes to deliver to
each of the Borrower and the Agent two additional copies of such form (or any
successor form or related form as may from time to time be required under
applicable law) on or before the date that such form expires (currently, three
successive calendar years for Form 1001 and one calendar year for Form 4224) or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent forms so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by the Borrower or the Agent,
in each case certifying that such Lender is entitled to receive payments under
this Agreement and the Notes without deduction or withholding of any United
States federal income taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender advises the Borrower
and the Agent that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax.
2.19. EXTENSION OF FACILITY TERMINATION DATE. The Borrower may
request an extension of the Facility Termination Date for a period of one year
on each of October 22, 1997, and, if such first extension shall have become
effective in accordance with the provisions of this SECTION 2.19, October 22,
1998, and, if the second extension shall have become effective in accordance
with the provisions of this SECTION 2.19, October 22, 1999, by delivering a
notice of such request in the form attached hereto as EXHIBIT H (an "EXTENSION
REQUEST") to the Agent no more than 90 days and no fewer than 60 days preceding
the relevant extension date. The Agent shall promptly notify each Lender of a
requested extension. On or before the 30th day (or if such day is not a Business
Day, the next succeeding Business Day) preceding the relevant extension date
(the "EXTENSION NOTIFICATION DATE"), each Lender shall notify the Agent whether
that Lender consents to the requested extension of the Facility Termination
Date, which consent may be given or withheld by each Lender in its sole and
absolute discretion. Any Lender that fails to notify the Agent of its consent or
non-consent by the Extension Notification Date will be deemed to have withheld
consent (each such Lender together with each Lender that has provided notice of
its non-consent to be referred to herein as a "NON-CONSENTING LENDER"). If as of
the close of business on the Extension Notification Date, any Lender is a
Non-Consenting Lender, the Agent shall immediately so advise the Borrower.
During the period beginning on the first day following the Extension
Notification Date and ending on the relevant extension date, each Non-Consenting
Lender will, at the request of the Borrower, either (a) assign without recourse
or warranty all of its rights and obligations under this Agreement (i) first, to
the Lenders who have consented to the extension and are willing to accept such
assignment, subject to ratable allocation by the Agent among such Lenders and
(ii) to the extent such Non-Consenting Lender's rights and obligations hereunder
have not been assigned to an existing Lender as contemplated in the foregoing
clause (i), to another financial institution, nominated by the Borrower and
acceptable to the Agent, that is willing to become a Lender hereunder through
the Facility Termination Date as extended in accordance with the relevant
Extension Request or (b) terminate its Commitment hereunder; PROVIDED, that upon
such Non-Consenting Lender's replacement or cancellation of such Non-Consenting
Lender's Commitment, such Non-Consenting Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of SECTIONS 3.1, 3.2, 3.4, 3.5
and 9.7, as well as to any fees accrued for its account hereunder and not yet
paid, and shall continue to be obligated under SECTION 10.8 to the extent such
obligations relate to the period such Non-Extending Lender is a Lender
hereunder. The obligation of a Non-Consenting Lender to assign its rights and
obligations hereunder or terminate its Commitment hereunder as contemplated by
this SECTION 2.19 is subject to the requirements that (x) all amounts owing to
that Non-Consenting Lender under the Loan Documents, including, without
limitation, any amounts owing pursuant to SECTION 3.4, are paid in full upon the
completion of such assignment or prior to such termination and (y) any
assignment is effected in accordance with the terms of SECTION 12.3 and on terms
otherwise satisfactory to the Non-Consenting Lender (it being understood that
Borrower shall pay the processing fee payable to the Agent pursuant
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<PAGE> 24
to SECTION 12.3.2 in connection with any such assignment). A requested extension
of the Facility Termination Date shall become effective only if (1) it has been
approved by the Required Lenders as of the close of business on the Extension
Notification Date, and (2) prior to the expiration of the ensuing period
described above, each Non-Consenting Lender has either (A) assigned all of its
rights and obligations hereunder to a successor financial institution or (B)
terminated its Commitment hereunder and the Aggregate Commitment has been
reduced correspondingly. In any other event, the requested extension will be
deemed to have been denied and the Facility Termination Date will remain
unchanged without liability to any Non-Consenting Lender.
2.20. TERMINATION. All unpaid Obligations shall be paid in
full by the Borrower on the Facility Termination Date; PROVIDED, HOWEVER, that
(a) all Syndicated Loans made in connection with any of the Letters of Credit
shall be paid in full by the Borrower on the later of the Facility Termination
Date and the Business Day immediately following the date the relevant Syndicated
Loan is made, and (b) nothing in this SECTION 2.20 shall be construed as
limiting or modifying the obligation of the Borrower to repay any or all of the
outstanding Obligations at any earlier time in accordance with the terms of this
Agreement.
2.21. LETTER OF CREDIT FACILITY.
2.21.1. LETTERS OF CREDIT. (a) Upon receipt of duly executed
applications therefor, and such other documents, instruments and agreements as
the Agent may reasonably require, and subject to the provisions of ARTICLE IV,
the Agent shall issue Letters of Credit for the account of the Borrower, on
terms as are satisfactory to the Agent; PROVIDED, HOWEVER, that no Letter of
Credit will be issued for the account of the Borrower by the Agent if on the
date of issuance, before or after taking such Letter of Credit into account (i)
the amount of the Advances and the L/C Obligations and the Swing Line Loans
outstanding at such time would exceed the Aggregate Commitment or (ii) the
aggregate outstanding amount of the L/C Obligations would exceed $25,000,000;
and PROVIDED, FURTHER, that no Letter of Credit shall be issued unless it has an
expiration date that is (1) no more than three years after the date of issuance
of such Letter of Credit (provided that a Letter of Credit may provide for an
annual renewal if such renewal is consented to by the Agent and the conditions
precedent to the issuance of such Letter of Credit are met at the time of such
renewal) and (2) no later than the date which is five Business Days immediately
preceding the Facility Termination Date. Upon the effectiveness of this
Agreement, the Existing Letters of Credit shall be deemed to constitute Letters
of Credit hereunder having as their issuance date the effective date of this
Agreement. Fees shall accrue in respect of the Existing Letters of Credit as
provided in SECTION 2.21.5 beginning as of the effective date of this Agreement.
2.21.2. LETTER OF CREDIT PARTICIPATION. Immediately upon
issuance of each Letter of Credit by the Agent hereunder, each Lender shall be
deemed to have automatically, irrevocably and unconditionally purchased and
received from the Agent an undivided interest and participation in and to such
Letter of Credit, the obligations of the Borrower in respect thereof, and the
liability of the Agent thereunder (collectively, an "L/C INTEREST") in an amount
equal to the amount available for drawing under such Letter of Credit multiplied
by a fraction having as its numerator such Lender's Commitment and as its
denominator the Aggregate Commitment. If the Borrower at any time fails to repay
a "Reimbursement Obligation" (as defined in SECTION 2.21.3), the Agent will
notify each Lender promptly upon presentation to it of an L/C Draft or upon any
other draw under any Letter of Credit, such notice to be given at least three
(3) Business Days before the Business Day on which the Agent makes payment of
each such L/C Draft, or, in the case of any other draw on the Letter of Credit,
at the time of demand by the Agent. On or before the Business Day on which the
Agent makes payment of each such L/C Draft or, in the case of any other draw on
the Letter of Credit, on demand of the Agent, each Lender shall make payment to
the Agent, in immediately available funds in an amount equal to such Lender's
ratable share (determined in accordance with the fraction described above) of
the amount of such payment or draw. Unless the Required Lenders shall have
notified the Agent prior to the Agent issuing any Letter of Credit, that the
applicable conditions precedent set forth in ARTICLE IV have not then been
satisfied, the obligation of each Lender to reimburse the Agent under this
SECTION 2.21.2 shall be unconditional, continuing, irrevocable and absolute and
shall not be affected or impaired by, among other things, the reduction,
suspension or termination of the Aggregate Commitment pursuant to SECTION
2.11(b) or SECTION 8.1. In the event that any Lender fails to make payment to
the Agent of any amount due under this SECTION 2.21.2, the Agent shall be
entitled to receive, retain and apply against such obligation the principal and
interest otherwise payable to such Lender hereunder until the Agent receives
such payment from such Lender or such obligation is otherwise fully satisfied;
PROVIDED, HOWEVER, that nothing contained in this sentence shall relieve such
Lender of its obligation to reimburse the Agent for such amount in accordance
with this SECTION 2.21.2.
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2.21.3. REIMBURSEMENT OBLIGATION. The Borrower agrees
unconditionally, irrevocably and absolutely to pay immediately to the Agent, for
the account of the Lenders, the amount of each advance drawn under or pursuant
to a Letter of Credit or an L/C Draft related thereto (such obligation of the
Borrower to reimburse the Agent for an advance made under a Letter of Credit or
L/C Draft being hereinafter referred to as a "REIMBURSEMENT OBLIGATION"). If the
Borrower at any time fails to repay a Reimbursement Obligation pursuant to this
SECTION 2.21.3, the Borrower shall be deemed to have elected to borrow a
Floating Rate Advance from the Lenders, as of the date of the advance giving
rise to the Reimbursement Obligation, equal in amount to the amount of the
unpaid Reimbursement Obligation, the proceeds of which Advance shall be used to
repay such Reimbursement Obligation and such an Advance shall be available from
the Lenders notwithstanding the fact that the Aggregate Commitment may have been
reduced, suspended or terminated pursuant to SECTION 2.11(b) or SECTION 8.1. If,
for any reason, the Borrower fails to repay a Reimbursement Obligation on the
day such Reimbursement Obligation arises, then such Reimbursement Obligation
shall bear interest from and after such day, until paid in full, at the interest
rate applicable to Floating Rate Advances.
2.21.4. CASH COLLATERAL. Notwithstanding anything to the
contrary herein or in any application for any Letter of Credit, after the
occurrence and during the continuance of a Default, the Borrower shall, upon the
Agent's demand, deliver to the Agent for the benefit of the Lenders, cash
collateral in an amount equal to the aggregate outstanding L/C Obligations. Any
such collateral shall be held by the Agent in a separate, interest-bearing
account appropriately designated as a cash collateral account in relation to
this Agreement and the Letters of Credit and retained by the Agent for the
benefit of the Agent and the Lenders as collateral security for the Borrower's
obligations in respect of this Agreement and the Letters of Credit and L/C
Drafts. Such amounts shall be applied to reimburse the Agent for drawings or
payments under or pursuant to the Letters of Credit or L/C Drafts, or if no such
reimbursement is required, to payment of any other due and unpaid costs, fees,
expenses and other Obligations related to the Letters of Credit, any L/C Drafts
and such cash collateral account, as the Agent shall determine. If no Default
shall be continuing, amounts remaining in any cash collateral account
established pursuant to this SECTION 2.21.4 which are not to be applied to
reimburse the Agent for amounts drawn under the Letters of Credit or L/C Drafts
or to the payment of related costs, fees, expenses and other Obligations as
described above, shall be returned to the Borrower. Investment earnings (net of
investment losses and any unpaid costs, fees, expenses and other Obligations
related to the Letters of Credit, any L/C Drafts and such cash collateral
account) on amounts on deposit in the cash collateral account shall be for the
account of the Borrower, and the Agent shall remit any such accrued earnings to
the Borrower no less frequently than quarterly.
2.21.5. LETTER OF CREDIT FEES. The Borrower agrees to pay (a)
to the Agent for the ratable benefit of the Lenders, a letter of credit fee
equal to the Applicable Letter of Credit Fee Rate in effect from time to time on
the aggregate daily amount available for drawing under the outstanding Letters
of Credit, such fee to be paid in arrears on the last Business Day of each
calendar month, and on the Facility Termination Date and (b) to the Agent for
the benefit of the Agent, as issuing bank, such fronting fee as may be agreed
upon between the Borrower and the Agent and all customary fees and other
issuance, amendment, negotiation and presentment expenses and related charges in
connection with the issuance, amendment, presentation of L/C Drafts, and the
like customarily charged by the Agent to other customers of the Agent of
comparable creditworthiness with respect to standby letters of credit, payable
at the time of invoice of such amounts.
2.21.6. INDEMNIFICATION; EXONERATION. (a) In addition to
amounts payable as elsewhere provided in this Agreement, Borrower hereby agrees
to pay, and to protect, indemnify and save harmless the Agent and each Lender
from and against, any and all liabilities and costs which the Agent or any
Lender may incur or be subject to as a consequence, direct or indirect, of (i)
the issuance of any Letter of Credit other than, in the case of the issuer
thereof, as a result solely of its Gross Negligence or willful misconduct, as
determined by the final judgment of a court of competent jurisdiction, or (ii)
the failure of the issuer thereof to honor a drawing under any Letter of Credit
as a result of any act or omission, whether rightful or wrongful, of any present
or future de jure or de facto governmental authority (all such acts or omissions
herein called "Governmental Acts").
(b) As among the Borrower, the Lenders and the Agent, the
Borrower assumes all risks of the acts and omissions of, or misuse of a Letter
of Credit by, the beneficiary of any Letter of Credit. In furtherance and not in
limitation of the foregoing, subject to the provisions of the letter of credit
application and the letter of credit reimbursement agreement executed by the
Borrower in connection with any Letter of Credit, the issuer of any Letter of
Credit, the Agent and the Lenders shall not be responsible (in the absence of
gross negligence or willful misconduct in connection therewith): (i) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any
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party in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) for failure of the beneficiary of any Letter
of Credit to comply duly with conditions required in order to draw upon any
Letter of Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telecopy,
telex, or other similar form of teletransmission or otherwise; (v) for errors in
interpretation of technical trade terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any Letter of Credit of the proceeds of any
drawing under any Letter of Credit; and (viii) for any consequences arising from
causes beyond the control of the Agent, the issuer of any Letter of Credit, or
any of the Lenders including, without limitation, any Governmental Acts. None of
the above shall affect, impair, or prevent the vesting of any rights or powers
of the issuer of any Letter of Credit under this SECTION 2.21.6.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by the
issuer of any Letter of Credit under or in connection with a Letter of Credit
issued on behalf of the Borrower or any related certificates shall not, in the
absence of gross negligence or willful misconduct, as determined by the final
judgment of a court of competent jurisdiction, put such issuer, the Agent or any
Lender under any resulting liability to the Borrower or any Guarantor or relieve
the Borrower or any Guarantor of any of its obligations hereunder or under the
relevant Guaranty to any such Person.
(d) Without prejudice to the survival of any other agreement
of Borrower hereunder, the agreements and obligations of Borrower contained in
this SECTION 2.21.6 shall survive the payment in full of principal and interest
hereunder, the termination of the Letters of Credit and the termination of this
Agreement.
(e) Notwithstanding anything therein to the contrary, in the
event any of the provisions of any application submitted by the Borrower in
connection with any Letter of Credit conflict with the provisions of this
Agreement, the terms of this Agreement shall govern.
2.21.7. TRANSITIONAL LETTER OF CREDIT PROVISIONS. From and
after the Effective Date, the Existing Letters of Credit shall be deemed to
constitute Letters of Credit issued pursuant to SECTION 2.21.1 in which the
Lenders participate pursuant to SECTION 2.21.2. Fees shall accrue in respect of
the Existing Letters of Credit as provided in SECTION 2.21.5 beginning as of the
Effective Date but the Borrower shall receive full credit for fees paid in
advance with respect to such Existing Letters of Credit.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. YIELD PROTECTION. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the compliance
by any Lender therewith,
(a) subjects any Lender or any applicable Lending Installation
to any tax, duty, charge or withholding on or from payments due from
the Borrower (excluding federal taxation of the overall net income of
any Lender), or changes the basis of taxation of payments to any Lender
in respect of its Loans, L/C Interests or other amounts due it
hereunder, or
(b) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Advances), or
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(c) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Installation
of making, funding or maintaining Loans or issuing or participating in
Letters of Credit or reduces any amount receivable by any Lender or any
applicable Lending Installation in connection with Loans or Letters of
Credit, or requires any Lender or any applicable Lending Installation
to make any payment calculated by reference to the amount of Loans or
Letters of Credit held, or interest received, by it by an amount deemed
material by such Lender, then, within 15 days of demand by such Lender,
the Borrower shall pay such Lender that portion of such increased
expense incurred or reduction in an amount received which such Lender
determines is attributable to making, funding and maintaining its
Loans, its L/C Interests, the Letters of Credit and its Commitment.
3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender
determines that the amount of capital required or expected to be maintained by
such Lender, any Lending Installation of such Lender or any corporation
controlling such Lender is increased as a result of a Change (as defined below
in this SECTION 3.2), then, within 15 days of demand by such Lender, the
Borrower shall pay such Lender the amount necessary to compensate for any
shortfall in the rate of return on the portion of such increased capital which
such Lender determines is attributable to this Agreement, its Loans, its L/C
Interests, the Letters of Credit or its obligation to make Loans or participate
in Letters of Credit hereunder (after taking into account such Lender's or such
controlling corporation's policies as to capital adequacy). "CHANGE" means (a)
any change after the date of this Agreement in the Risk-Based Capital Guidelines
(as defined below in this SECTION 3.2) or (b) any adoption of or change in any
other law, governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the force of law)
after the date of this Agreement which affects the amount of capital required or
expected to be maintained by any Lender or any Lending Installation or any
corporation controlling any Lender. "RISK-BASED CAPITAL GUIDELINES" means (a)
the risk-based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (b) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
3.3. AVAILABILITY OF TYPES OF SYNDICATED ADVANCES. If any
Lender determines that maintenance of its Eurodollar Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation, or directive,
whether or not having the force of law, or if the Required Lenders determine
that (a) deposits of a type and maturity appropriate to match fund Eurodollar
Advances are not available or (b) the interest rate applicable to a Type of
Syndicated Advance does not accurately reflect the cost of making or maintaining
such Advance, then the Agent shall suspend the availability of the affected Type
of Syndicated Advance and require any Eurodollar Advances of the affected Type
to be prepaid.
3.4. FUNDING INDEMNIFICATION. If any payment of a Eurodollar
Advance or a Bid Rate Advance occurs on a date which is not the last day of the
applicable Interest Period in the case of a Eurodollar Advance, or the
applicable maturity date in the case of a Bid Rate Advance, whether because of
acceleration, prepayment or otherwise, or a Eurodollar Advance or a Bid Rate
Advance is not made (whether by borrowing, continuation or conversion) on the
date specified by the Borrower for any reason other than default by the Lenders,
or an optional prepayment, notice of which has been given in accordance with
SECTION 2.5, is not made on the date specified therefor in such notice, the
Borrower will indemnify each Lender for any loss or cost incurred by it
resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain such Eurodollar
Advance or Bid Rate Advance, as the case may be.
3.5. MITIGATION; LENDER STATEMENTS; SURVIVAL OF INDEMNITY. (a)
To the extent reasonably possible, each Lender shall designate an alternate
Lending Installation with respect to its Eurodollar Loans to reduce any
liability of the Borrower to such Lender under SECTIONS 3.1 and 3.2 or to avoid
the unavailability of a Type of Syndicated Advance under SECTION 3.3, so long as
such designation is not disadvantageous to such Lender. If the obligation of the
Lenders to make Eurodollar Advances has been suspended pursuant to SECTION 3.3
as a consequence of a determination by any Lender that maintenance of its
Eurodollar Loans at a suitable Lending Installation would violate any applicable
law or any Lender has demanded compensation under SECTION 3.1 or 3.2, the
Borrower may elect (i) subject to SECTION 3.4, to prepay any outstanding
Syndicated Advances to the extent necessary to mitigate its liability under
SECTION 3.1 or 3.2, (ii) to terminate the applicable Lender's Commitment
hereunder or (iii) to require the applicable Lender to assign its outstanding
Syndicated Loans, L/C Interests and Commitment hereunder to another financial
institution designated by the Borrower and reasonably acceptable to the Agent.
The
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obligation of a Lender to assign its rights and obligations hereunder or
terminate its Commitment hereunder as contemplated by this SECTION 3.5(a) is
subject to the requirements that (x) all amounts owing to that Lender under the
Loan Documents are paid in full upon the completion of such assignment or prior
to such termination and (y) any assignment is effected in accordance with the
terms of SECTION 12.3 and on terms otherwise satisfactory to that Lender (it
being understood that the Borrower shall pay the processing fee payable to the
Agent pursuant to SECTION 12.3.2 in connection with any such assignment).
(b) Each Lender shall deliver a written statement of such
Lender as to the amount due, if any, under SECTION 3.1, 3.2 or 3.4. Such written
statement shall set forth in reasonable detail the calculations upon which such
Lender determined such amount and shall be final, conclusive and binding on the
Borrower in the absence of manifest error. Determination of amounts payable
under such Sections in connection with a Eurodollar Loan or Bid Rate Loan made
pursuant to an Indexed Rate Auction shall be calculated as though each Lender
funded such Loan through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the interest
rate applicable to such Loan, whether in fact that is the case or not. Unless
otherwise provided herein, the amount specified in the written statement shall
be payable on demand after receipt by the Borrower of the written statement. The
obligations of the Borrower under SECTIONS 3.1, 3.2 and 3.4 shall survive
payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. EFFECTIVENESS; INITIAL ADVANCE. This Agreement shall
become effective and the Lenders shall be obligated to make the initial Advance
or Swing Line Loan or purchase participations in the Letters of Credit or Swing
Line Loans hereunder only after the Agent shall have received from the Borrower,
with sufficient copies (other than in the case of the Notes) for each of the
Lenders, each of the following items in form and substance satisfactory to the
Agent:
(a) copies of the certificate of incorporation of the
Borrower, together with all amendments, and, to the extent applicable,
a certificate of good standing, certified by the Delaware Secretary of
State.
(b) copies, certified by the Secretary, Assistant Secretary or
other appropriate officer or director of the Borrower of its by-laws
(or any comparable constitutive laws, rules or regulations) and of its
board of directors' resolutions (and resolutions of other bodies, if
any are deemed necessary by counsel for any Lender) authorizing the
execution of the relevant Loan Documents;
(c) incumbency certificates, executed by the Secretary or
Assistant Secretary or other appropriate officer or director of the
Borrower, which shall identify by name and title and bear the signature
of the officers of the Borrower authorized to sign the relevant Loan
Documents and to make borrowings hereunder, as applicable, upon which
certificate the Agent and the Lenders shall be entitled to rely until
informed of any change in writing by the Borrower.
(d) a certificate, signed by the Chief Financial Officer,
stating that, to the best of his knowledge after due inquiry, on the
date hereof no Default or Unmatured Default has occurred and is
continuing;
(e) an opinion of Thompson Hine & Flory LLP, counsel to the
Borrower;
(f) the Syndicated Notes and the Bid Rate Notes payable to
the order of each of the Lenders;
(g) written money transfer instructions, in substantially the
form of EXHIBIT E hereto, addressed to the Agent and signed by an
Authorized Officer, together with such other related money transfer
authorizations as the Agent may have reasonably requested, which
instructions shall, among other things, direct the Agent to repay in
full (i) the loans and advances outstanding under that certain
Revolving Credit Agreement dated as of April 7, 1995 between the
Borrower and Comerica Bank, as Agent, as of the effective date of this
Agreement, together with all accrued and unpaid interest thereon and
all breakage fees and other amounts payable with respect thereto and
(ii) all commitment fees accrued and unpaid under that certain
Revolving
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Credit Agreement dated as of April 7, 1995 between the Borrower and
Comerica Bank, as Agent, as of the effective date of this Agreement;
(h) a Guaranty signed by each of the Guarantors; and
(i) such other documents as any Lender or its counsel may
have reasonably requested.
4.2. EACH ADVANCE AND LETTER OF CREDIT. No Lender shall be
required to make any Loan, nor shall the Agent be required to issue any Letter
of Credit hereunder, unless on the applicable Borrowing Date or date for
issuance of such Letter of Credit:
(a) there exists no Default or Unmatured Default;
(b) the representations and warranties contained in ARTICLE V
are true and correct as of such Borrowing Date or date for issuance of
such Letter of Credit except to the extent any such representation or
warranty is stated to relate solely to an earlier date, in which case
such representation or warranty shall be true and correct on and as of
such earlier date; and
(c) after giving effect to such Loan or the issuance of such
Letter of Credit, the aggregate outstanding principal amount of all
Advances and outstanding L/C Obligations and Swing Line Loans does not
exceed the Aggregate Commitment.
Each Borrowing Notice and each Conversion/Continuation Notice with respect to a
Loan or application with respect to a Letter of Credit shall constitute a
representation and warranty by the Borrower that the conditions contained in
SECTIONS 4.2(a), (b) AND (c) have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5. REPRESENTATIONS AND WARRANTIES. The Borrower represents
and warrants to the Lenders that:
5.1. CORPORATE EXISTENCE AND STANDING. The Borrower and each
of its Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite authority to conduct its business
in each jurisdiction in which its business is conducted, except to the
extent that, in the case of any Subsidiary of the Borrower, the failure
to be in good standing or authorized to conduct business in any
jurisdiction could not, when taken together with all similar failures
by such Subsidiary and each other Subsidiary, reasonably be expected to
have a Material Adverse Effect.
5.2. AUTHORIZATION AND VALIDITY. The Borrower and each
Guarantor has the corporate power and authority and legal right to
execute and deliver the Loan Documents to which it is party and to
perform its obligations thereunder. The execution and delivery by each
of the Borrower and each Guarantor of the Loan Documents to which it is
party and the performance of its obligations thereunder have been duly
authorized by proper corporate proceedings, and each Loan Document to
which the Borrower or any Guarantor is party constitutes the legal,
valid and binding obligation of the Borrower or such Guarantor, as
applicable, enforceable against the Borrower or such Guarantor, as
applicable, in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and general principles of
equity, regardless of whether the application of such principles is
considered in a proceeding in equity or at law.
5.3. NO CONFLICT; GOVERNMENT CONSENT. Neither the execution
and delivery by each of the Borrower and each Guarantor of the Loan
Documents to which it is party, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions
thereof will violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any Subsidiary
or the Borrower's or any Subsidiary's articles of incorporation or
by-laws or comparable constitutive documents or the provisions of any
indenture, instrument or agreement to which the Borrower or any
Subsidiary is a party or is subject, or by which it, or its Property,
is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the
Property of the Borrower or any Subsidiary pursuant to the terms of any
such indenture, instrument or
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agreement which violation, conflict or imposition could reasonably be
expected to have a Material Adverse Effect. No order, consent,
approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental or
public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with the execution, delivery
and performance of, or the legality, validity, binding effect or
enforceability of, any of the Loan Documents.
5.4. FINANCIAL STATEMENTS. The December 31, 1995, consolidated
financial statements of the Borrower and its Subsidiaries, heretofore
delivered to the Lenders, were prepared in accordance with GAAP in
effect on the date such statements were prepared and fairly present the
consolidated financial condition and operations of the Borrower and its
Subsidiaries at the date thereof and the consolidated results of their
operations for the period then ended.
5.5. MATERIAL ADVERSE CHANGE. Since December 31, 1995, there
has been no change in the business, Property, prospects, condition
(financial or otherwise) or results of operations of the Borrower and
its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect.
5.6. TAXES. All tax returns required to be filed by the
Borrower or any of its Subsidiaries in any jurisdiction have, in fact,
been filed, all such tax returns have been prepared in accordance with
applicable laws, and all taxes, assessments, fees and other
governmental charges upon the Borrower or any Subsidiary or upon any of
their respective properties, income or franchises, which are shown on
such returns have been paid except to the extent such tax payments are
being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with Agreement Accounting Principles.
For all taxable years ending on or before December 31, 1992, the United
States Federal income tax liability of the Borrower and its
Subsidiaries has been satisfied and either the period of limitations on
assessment of additional United States Federal income tax has expired
or the Borrower or the applicable Subsidiary has entered into an
agreement with the United States Internal Revenue Service closing
conclusively the total tax liability for the taxable year. Neither the
Borrower nor any of its Subsidiaries knows of any proposed additional
tax assessment against it or any of them for which adequate provision
has not been made on its or their accounts, and no controversy in
respect of additional income or other taxes due or claimed to be due to
any Governmental Authority is pending or to the knowledge of the
Borrower or its Subsidiaries threatened the outcome of which could
reasonably be expected to have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries
in respect of any taxes or other governmental charges are adequate.
5.7. LITIGATION AND CONTINGENT LIABILITIES. Except as set
forth on SCHEDULE 1 hereto, there is no litigation, arbitration,
governmental investigation, proceeding or inquiry pending or, to the
knowledge of any of their officers, threatened against or affecting the
Borrower or any Subsidiary of the Borrower which could reasonably be
expected to have a Material Adverse Effect. Other than any liability
incident to such litigation, arbitration or proceedings, to the
knowledge of the Borrower's officers neither the Borrower nor any of
its Subsidiaries has any material contingent liabilities not provided
for or disclosed in the financial statements referred to in SECTION
5.4.
5.8. SUBSIDIARIES. SCHEDULE 1 hereto, together with the most
recent update, if any, delivered pursuant to SECTION 6.1(i), contains
an accurate list of all of the Subsidiaries (except for inactive
Subsidiaries with immaterial assets and liabilities) of the Borrower,
setting forth their respective jurisdictions of incorporation and the
percentage of their respective capital stock owned by the Borrower or
its Subsidiaries (the Subsidiaries listed on such SCHEDULE 1 as of the
date of this Agreement being sometimes referred to herein as the
"INITIAL GUARANTORS"). All of the issued and outstanding shares of
capital stock of the Subsidiaries of the Borrower listed on SCHEDULE 1
hereto, together with the most recent update, if any, delivered
pursuant to SECTION 6.1(i), have been duly authorized and issued and
are fully paid and non-assessable.
5.9. ERISA. The Unfunded Liabilities of all Single Employer
Plans do not in the aggregate exceed $10,000,000. Neither the Borrower
nor any other member of the Controlled Group has incurred, or is
reasonably expected to incur, any withdrawal liability to Multiemployer
Plans in excess of $10,000,000 in the aggregate. Each Plan complies in
all material respects with all applicable requirements of law and
regulations, no Reportable Event has occurred with respect to any Plan,
none of the Borrower or any other member of the
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Controlled Group has withdrawn from any Plan or initiated steps to do
so, and no steps have been taken to reorganize or terminate any Plan.
5.10. ACCURACY OF INFORMATION. No written information, exhibit
or report prepared and furnished by the Borrower or any Subsidiary to
the Agent or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents, taken as a whole, contained any
material misstatement of fact or omitted to state a material fact or
any fact necessary to make the statements contained therein not
misleading.
5.11. REGULATION U. The Borrower and its Subsidiaries are
in compliance with Regulation U.
5.12. MATERIAL AGREEMENTS. Neither the Borrower nor any of
its Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement to which it is a party, which default could
have a Material Adverse Effect.
5.13. COMPLIANCE WITH LAWS. The Borrower and its Subsidiaries
have complied in all material respects with all applicable statutes,
rules, regulations, orders and restrictions of any Governmental
Authority having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property except for
such non-compliance as could not reasonably be expected to have a
Material Adverse Effect. Neither the Borrower nor any of its
Subsidiaries has received any notice to the effect that, or is
otherwise aware that, its operations are not in material compliance
with any of the requirements of applicable environmental, health and
safety statutes and regulations of any Governmental Authority or the
subject of any investigation by any Governmental Authority evaluating
whether any remedial action is needed to respond to a release of any
toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have
a Material Adverse Effect.
5.14. OWNERSHIP OF PROPERTIES. Except as set forth on SCHEDULE
1 hereto, on the date of this Agreement, there are no Liens, other than
those permitted by SECTION 6.16, on the Property and assets reflected
as owned by the Borrower or any of its Subsidiaries in the financial
statements delivered from time to time pursuant hereto.
5.15. INVESTMENT COMPANY ACT. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment Company
Act of 1940, as amended.
5.16. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower
nor any of its Subsidiaries is a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as
amended.
ARTICLE VI
COVENANTS
6. COVENANTS. During the term of this Agreement, unless the
Required Lenders shall otherwise consent in writing:
6.1. FINANCIAL REPORTING. The Borrower will maintain, and
cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with generally accepted
accounting principles, and will furnish or cause to be furnished to the
Lenders:
(a) (i) within 120 days after the close of each of
the Borrower's fiscal years, an unqualified (except for
qualifications relating to changes in accounting principles or
practices reflecting changes in GAAP and required or approved
by the Borrower's independent chartered accountants or
independent public accountants) audit report certified by
independent public accountants acceptable to the Lenders,
prepared in accordance with Agreement Accounting Principles on
a consolidated basis for itself and its Subsidiaries,
including balance sheets as of the end of such period, related
profit and loss and reconciliation of surplus statements, and
a statement of cash flows,
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accompanied by a letter which conforms to professional
pronouncements promulgated by the American Institute of
Certified Public Accountants from the firm of said accountants
to the effect that in the course of, and based solely upon
their audit of such financial statements, nothing has come to
their attention to cause them to believe that there existed on
the date of such statements any Default or Unmatured Default
under SECTIONS 6.17 or 6.18, or, if in the opinion of such
accountants, any Default or Unmatured Default exists, the
statement shall state its nature and length of time it has
existed; and (ii) within 180 days after the close of each of
the Borrower's fiscal years, the management letter, if any,
prepared by the applicable accountants in connection with the
financial statements for such fiscal year delivered pursuant
to the foregoing clause (i);
(b) within 60 days after the close of the first three
quarterly periods of each of the Borrower's fiscal years, for
the Borrower and its Subsidiaries, consolidated unaudited
balance sheets as at the close of each such period and
consolidated profit and loss and reconciliation of surplus
statements and a statement of cash flows for the period from
the beginning of such fiscal year to the end of such quarter,
all certified by the Chief Financial Officer;
(c) together with the financial statements required
pursuant to the foregoing clauses (a) and (b), a compliance
certificate in substantially the form of EXHIBIT C hereto
signed by the Chief Financial Officer showing the calculations
necessary to determine compliance with this Agreement
(including, without limitation the financial covenants,
compliance with Section 6.20, and compliance with the various
other covenants which contain financial tests or baskets) and
stating that no Default or Unmatured Default exists, or if any
Default or Unmatured Default exists, stating the nature and
status thereof and any and all actions taken with respect
thereto;
(d) within 270 days after the close of each fiscal
year, a statement of the Unfunded Liabilities of each Single
Employer Plan, certified as correct by an actuary enrolled
under ERISA;
(e) as soon as possible and in any event within ten
days after the Borrower knows that any Reportable Event has
occurred with respect to any Plan, the occurrence of which may
reasonably be expected to give rise to a Material Adverse
Effect, a statement, signed by the Chief Financial Officer,
describing said Reportable Event and the action which the
Borrower proposes to take with respect thereto;
(f) as soon as possible and in any event within 30
days after receipt by the Borrower or any of its Subsidiaries,
a copy of (i) any notice or claim to the effect that the
Borrower or any of its Subsidiaries is or may reasonably be
expected to be liable for $10,000,000 or more of potential
liability (when aggregated with other similar potential
liability) to any Person as a result of the release by the
Borrower, any of its Subsidiaries, or any other Person of any
toxic or hazardous waste or substance into the environment,
and (ii) any notice alleging any violation of any federal,
state or local environmental, health or safety law or
regulation by the Borrower or any of its Subsidiaries, which
violation could reasonably be expected to give rise to a
Material Adverse Effect;
(g) promptly upon the furnishing thereof to the
shareholders of the Borrower, copies of all financial
statements, reports and proxy statements so furnished;
(h) promptly upon their becoming available, one copy
of each financial statement, report, notice or proxy statement
sent by the Borrower to stockholders generally and of each
regular report and any registration statement or prospectus,
filed by the Borrower with the Securities and Exchange
Commission or any other United States federal or state
securities exchange, securities trading system or with any
United States national stock exchange and one copy of each
periodic report filed by the Borrower with any other similar
regulatory authority, in all cases without duplication;
PROVIDED, HOWEVER, that the Borrower shall not be obligated to
provide to the Agent and the Lenders routine reports which are
required to be provided to any of the above-listed entities
concerning the management of employee benefit plants,
including, without limitation, stock purchases or the exercise
of stock options made under any such employee benefit plan;
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(i) together with the financial statements delivered
pursuant to SECTION 6.1(a), a current list of all of the
Subsidiaries of the Borrower, setting forth their respective
jurisdictions of incorporation and the percentage of their
respective capital stock owned by the Borrower or its
Subsidiaries; and
(j) promptly, such other information (including
non-financial information) as the Agent or any Lender may from
time to time reasonably request.
6.2. USE OF PROCEEDS. The Borrower will, and will cause each
of its Subsidiaries to, use the proceeds of the Advances and the Swing
Line Loans to repay outstanding loans and advances made under that
certain Revolving Credit Agreement dated as of April 7, 1995 between
the Borrower and Comerica Bank, as Agent, to repay Advances and the
Swing Ling Loans, to make Permitted Acquisitions or for general
corporate purposes. The Borrower will not, nor will it permit any of
its Subsidiaries to, use any of the proceeds of the Advances or the
Swing Line Loans to purchase or carry any "margin stock" (as defined in
Regulation U). The Borrower will not, nor will it permit any
Subsidiary, to use proceeds of the Advances and the Swing Line Loans
other than as contemplated in this SECTION 6.2.
6.3. NOTICE OF DEFAULT. The Borrower will, and will cause each
of its Subsidiaries to, give notice in writing to the Lenders of the
occurrence (a) of any Default or Unmatured Default and (b) of any other
development, financial or otherwise, which could reasonably be expected
to have a Material Adverse Effect, which notice, in either case, shall
be given promptly and in any event within five Business Days after the
Borrower or relevant Subsidiary becomes aware of the Default, Unmatured
Default or other development and shall state the nature and status
thereof and any and all actions taken with respect thereto.
6.4. CONDUCT OF BUSINESS. The Borrower will, and will cause
each of its Subsidiaries to, carry on and conduct its business in
substantially the same manner and in substantially the same fields of
enterprise as it is presently conducted and to do all things necessary
to remain duly incorporated, validly existing and in good standing as a
domestic corporation in its jurisdiction of incorporation and maintain
all requisite authority to conduct its business in each jurisdiction in
which its business is conducted except where the failure to maintain
such authority could not reasonably be expected to have a Material
Adverse Effect.
6.5. TAXES. The Borrower will, and will cause each of its
Subsidiaries to, pay when due all taxes, assessments and governmental
charges and levies upon it or its income, profits or Property, except
those which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with
Agreement Accounting Principles.
6.6. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable
insurance companies insurance on all their Property in such amounts and
covering such risks as is consistent with sound business practice and
customary for companies similar in size and nature, and the Borrower
will furnish to any Lender upon request full information as to the
insurance carried.
6.7. COMPLIANCE WITH LAWS. The Borrower will, and will cause
each of its Subsidiaries to, comply in all material respects with all
laws (including, without limitation, all environmental laws), rules,
regulations, orders, writs, judgments, injunctions, decrees or awards
to which it may be subject.
6.8. MAINTENANCE OF PROPERTIES. The Borrower will, and will
cause each of its Subsidiaries to, do all things necessary to maintain,
preserve, protect and keep its Property in good repair, working order
and condition, ordinary wear and tear excepted, and make all necessary
and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all
times.
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6.9. INSPECTION. The Borrower will, and will cause each of its
Subsidiaries to, permit the Agent and any or each Lender, by its
respective representatives and agents, to inspect any of the Property,
corporate books and financial records of the Borrower and each of its
Subsidiaries, to examine and make copies of the books of accounts and
other financial records of the Borrower and each of its Subsidiaries,
and to discuss the affairs, finances and accounts of the Borrower and
each of its Subsidiaries with, and to be advised as to the same by,
their respective officers at such reasonable times and intervals during
normal business hours, upon oral or written request of the Agent or any
Lender at least three Business Days in advance so long as no Default or
Unmatured Default shall have occurred and is continuing, or, if a
Default or Unmatured Default has occurred and is continuing, upon the
Agent's request. Such inspection rights are subject to reasonable
limitations imposed by the Borrower and its Subsidiaries with respect
to safety and shall not extend to trade secrets of the Borrower or its
Subsidiaries or to information covered by attorney-client or other
privilege.
6.10. MERGER. The Borrower will not, nor will it permit any of
its Subsidiaries to, merge or consolidate with any other Person, or
permit any other Person to consolidate with it, except that:
(a) any Subsidiary may consolidate with or merge with
or into (i) the Borrower or any Wholly-Owned Subsidiary (if
the Borrower or such Wholly-Owned Subsidiary shall be the
continuing or surviving corporation) or (ii) any other
corporation (if such Subsidiary shall be the continuing or
surviving corporation); and
(b) the Borrower may merge with or into any other
corporation if the Borrower shall be the continuing or
surviving corporation;
PROVIDED, that as of the date of such merger or consolidation,
no Default or Unmatured Default shall have occurred and be
continuing or would result from such merger or consolidation
or from the incurrence of any Indebtedness in connection with
such merger or consolidation.
6.11. SALE OF ASSETS. The Borrower will not, nor will it
permit any of its Subsidiaries to, lease, sell or otherwise dispose of
its Property to any other Person except for (a) sales of Property in
the ordinary course of business, (b) leases, sales or other
dispositions of its Property to the Borrower or a Subsidiary of the
Borrower, and (c) other leases, sales or other dispositions of its
Property subject to the requirement that at least 90% of the aggregate
net proceeds of each such lease, sale or other disposition of Property
in each fiscal year are reinvested in the business of the Borrower and
the Subsidiaries as conducted in accordance with the requirements of
SECTION 6.4.
6.12. PREPAYMENTS. The Borrower will not, nor will it permit
or any of its Subsidiaries to, either directly or indirectly,
voluntarily redeem, retire or otherwise pay prior to its scheduled
maturity, or accelerate the maturity of, Indebtedness of the Borrower
or any of its Subsidiaries (other than Indebtedness arising hereunder
or the conversion of Indebtedness of the Borrower or any of its
Subsidiaries to equity of the Borrower or any of its Subsidiaries) in
an amount in excess of $20,000,000 in the aggregate.
6.13. AFFILIATES. The Borrower will not, nor will it permit
any of its Subsidiaries to, enter into any transaction (including,
without limitation, the purchase or sale of any Property or service)
with, or make any payment or transfer to, any Affiliate except in the
ordinary course of business and pursuant to the reasonable requirements
of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary
than the Borrower or such Subsidiary would obtain in a comparable
arm's-length transaction; PROVIDED, HOWEVER, that nothing contained in
this SECTION 6.13 shall prohibit transactions between the Borrower and
any Guarantor, or between or among Guarantors, in each case in the
ordinary course of business.
6.14. INVESTMENTS. The Borrower will not, nor will it permit
any of its Subsidiaries to, make or suffer to exist any Investments,
or commitments therefor, except:
(a) Investments (i) in existence as of the close of
business on December 31, 1995, and described in SCHEDULE 1
hereto or (ii) arising on or after January 1, 1996, but only
to the extent expressly described on SCHEDULE 1 hereto;
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(b) Investments by the Borrower or any of its
Subsidiaries in and to any Subsidiary, including any
Investment in a corporation which, after giving effect to such
Investment, will become a Subsidiary;
(c) Investments in property or assets to be used in
the ordinary course of business of the Borrower and any of its
Subsidiaries conducted as described in SECTION 6.4;
(d) Investments in commercial paper maturing in 270
days or less from the date of issuance which, at the time of
acquisition by the Borrower or any Subsidiary, is accorded a
rating of A2 or better by Standard & Poor's or P2 or better by
Moody's or any other United States nationally recognized
credit rating agency of similar standing;
(e) Investments in direct obligations of the United
States, any agency or instrumentality of the United States,
the payment or guarantee of which constitutes a full faith and
credit obligation of the United States, maturing in three
years or less from the date of acquisition thereof;
(f) Investments in direct obligations of any State or
municipality within the United States maturing in three years
or less from the date of acquisition thereof which, in any
such case, at the time of acquisition by the Borrower or any
Subsidiary, is accorded one of the two highest long-term or
short-term, as applicable, debt ratings by Standard & Poor's
or Moody's or any other United States nationally recognized
credit rating agency of similar standing;
(g) Investments in certificates of deposit or
bankers' acceptances issued by a bank or trust company having
capital, surplus and undivided profits aggregating at least
$100,000,000 and having a short-term unsecured debt rating of
at least "P-1" by Moody's or "A-1" by Standard & Poor's;
(h) Investments made in connection with Permitted
Acquisitions;
(i) Investments made as of the Effective Date in
connection with Joint Ventures described on SCHEDULE 1 hereto;
(j) any loan or other advance by the Borrower or any
of its Subsidiaries, as the case may be, to any of its or
their officers or employees, as the case may be, in the normal
course of business, so long as the aggregate of all such loans
or advances by the Borrower and its Subsidiaries does not
exceed $5,000,000 at any time outstanding, plus reasonable,
reimbursable business and travel expenses;
(k) any fund or other pooling arrangement which
exclusively purchases and holds Investments described in this
SECTION 6.14;
(l) any Oasis Account or Pegasus Fund Account
maintained by the Agent on behalf of the Borrower; and
(m) other Investments, together with Contingent
Obligations permitted pursuant to SECTION 6.15(e) not to
exceed in the aggregate more than 5% of Consolidated Net
Worth.
6.15. CONTINGENT OBLIGATIONS. The Borrower will not, nor will
it permit any of its Subsidiaries to, make or suffer to exist any
Contingent Obligation, except (a) by endorsement of instruments for
deposit or collection in the ordinary course of business, (b) pursuant
to the Guaranties, (c) Contingent Obligations of the Borrower and any
of its Subsidiaries described on SCHEDULE 1 hereto, (d) Contingent
Obligations in respect of the obligations of any Subsidiary, and (e)
other Contingent Obligations, together with Investments permitted
pursuant to SECTION 6.14(m), not to exceed in the aggregate more than
5% of Consolidated Net Worth.
6.16. LIENS. The Borrower will not, nor will it permit any
of its Subsidiaries to, create, incur, or suffer to exist any Lien in,
of or on the Property of the Borrower or such Subsidiary,
as applicable, except:
(a) Liens for taxes, assessments or governmental
charges or levies on its
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Property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested
in good faith and by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set
aside on its books;
(b) Liens imposed by law, such as carriers',
warehousemen's and mechanics' liens and other similar liens
arising in the ordinary course of business which secure
payment of obligations not more than 60 days past due or which
are being contested in good faith by appropriate proceedings
and for which adequate reserves shall have been set aside on
its books;
(c) Liens arising out of pledges or deposits under
worker's compensation laws, unemployment insurance, old age
pensions, or other social security or retirement benefits, or
similar legislation;
(d) utility easements, building restrictions and such
other encumbrances or charges against real property as are of
a nature generally existing with respect to properties of a
similar character and which do not in any material way affect
the same or interfere with the use thereof in the business of
the Borrower or any Subsidiary of the Borrower;
(e) Liens (i) existing as of the close of business on
December 31, 1995, and described in SCHEDULE 1 hereto or (ii)
created or incurred on or after January 1, 1996, but only to
the extent expressly described on SCHEDULE 1 hereto;
(f) Liens created or incurred after December 31,
1995, given to secure the Indebtedness incurred or assumed in
connection with the acquisition of property or assets useful
and intended to be used in carrying on the business of the
Borrower or any Subsidiary of the Borrower, including Liens
existing on such property or assets at the time of acquisition
thereof or at the time of acquisition by the Borrower or such
Subsidiary, as applicable, of an interest in any business
entity then owning such property or assets, whether or not
such existing Liens were given to secure the consideration for
the property or assets to which they attach, subject to the
requirement that the Lien shall attach solely to the assets
acquired or purchased;
(g) any extension, renewal or replacement of any Lien
permitted by the preceding clauses (e) and (f) in respect of
the same property or assets theretofore subject to such Lien
in connection with the extension, renewal or refunding of the
Indebtedness secured thereby; provided that (i) such Lien
shall attach solely to the same property or assets, and (ii)
such extension, renewal or refunding of such Indebtedness
shall be without increase in the principal remaining unpaid as
of the date of such extension, renewal or refunding; and
(h)(i) Liens incurred in the ordinary course of
business to secure the performance of statutory obligations
arising in connection with progress payments or advance
payments due under contracts with the United States, any state
or any foreign government or agency thereof entered into in
the ordinary course of business and (ii) Liens incurred in the
ordinary course of business to secure the performance of
statutory obligations, bids, leases, fee and expense
arrangements with trustees and fiscal agents and other similar
obligations, PROVIDED that full provision for the payment of
all such obligations set forth in clauses (i) and (ii) has
been made on the books of the Borrower or such Subsidiary as
may be required by Agreement Accounting Principles.
6.17. MINIMUM CONSOLIDATED NET WORTH. The Borrower will
maintain at all times a Consolidated Net Worth of at least the sum of:
(a) 80% of Consolidated Net Worth as of September
30, 1996, plus
(b) the sum of 50% of Consolidated Net Income for
each fiscal quarter ended after October 1, 1996 (but only to
the extent that, in the case of any such fiscal quarter,
Consolidated Net Income for such fiscal quarter is at least
$1.00), plus
(c) 100% of the aggregate amount of the net cash
proceeds received by the
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Borrower or any of its Subsidiaries from the issuance or sale
on and after October 1, 1996 of capital stock of the Borrower
or any of its Subsidiaries, plus
(d) 100% of the aggregate principal amount of
Convertible Notes which have been converted after October 1,
1996 into capital stock of the Borrower.
6.18. FIXED CHARGES COVERAGE. The Borrower will at all times
maintain a Fixed Charge Coverage Ratio for the most recently ended
period of four consecutive fiscal quarters of at least 1.35 to 1.00.
6.19. ACQUISITIONS. The Borrower will not, nor will it
permit any of its Subsidiaries to, make any Acquisition other than a
Permitted Acquisition.
6.20. SUPPLEMENTAL GUARANTORS. The Borrower will at all times
maintain Guaranties from the Initial Guarantors and Supplemental
Guarantors such that as of the end of each fiscal quarter (a) the
aggregate assets of the Guarantors are not less than 90% of the
consolidated assets of the Borrower and its Subsidiaries and (b) the
aggregate gross revenues of the Guarantors (calculated as of the last
day of the Guarantors' most recently ended fiscal quarter for the four
consecutive fiscal quarters ending with such fiscal quarter) do not
constitute less than 90% of the aggregate gross revenues of the
Borrower and its Subsidiaries (calculated as of the last day of the
Borrower's and its Subsidiaries' most recently ended fiscal quarter for
the four consecutive fiscal quarters ending with such fiscal quarter);
PROVIDED, that in the event that any Subsidiary of the Borrower (other
than a Guarantor) at any time has assets, determined in accordance with
GAAP, with a book value equal to or greater than an amount equal to two
and one half percent (2 1/2%) of the consolidated assets of the
Borrower and its Subsidiaries determined as of the last day of the
immediately preceding fiscal quarter, such Subsidiary shall promptly
execute and deliver a Guaranty as a Supplemental Guarantor pursuant to
this SECTION 6.20. In maintaining such Guaranties, the guaranties
executed by any Supplemental Guarantors shall be executed and delivered
to the Agent for the benefit of each of the Lenders and shall be
substantially identical to the guaranties previously executed by each
of the Initial Guarantors, together with such supporting documentation,
including corporate resolutions and opinions of counsel with respect to
such additional guaranty, as may be reasonably required by the Agent
and the Required Lenders.
ARTICLE VII
DEFAULTS
7. DEFAULTS. The occurrence of any one or more of the
following events shall constitute a Default:
7.1. Any representation or warranty made or deemed made by or
on behalf of the Borrower or any of its Subsidiaries to the Lenders or
the Agent under or in connection with this Agreement, any Loan, any
Letter of Credit, any Guaranty or any certificate or information
delivered in connection with this Agreement or any other Loan Document
shall be materially false on the date as of which made or deemed made.
7.2. Nonpayment of principal of any Loan or Note or L/C
Obligation when due, or nonpayment of interest upon any Loan or Note or
of any commitment fee or other obligations under any of the Loan
Documents within five Business Days after the same becomes due.
7.3. The breach by the Borrower or any of its Subsidiaries of
any of the terms or provisions of SECTION 6.1, 6.2, 6.3(a), 6.10, 6.11,
6.12, 6.14, 6.15, 6.16, 6.17, 6.18, 6.19, or 6.20.
7.4. The breach by the Borrower or any of its Subsidiaries
(other than a breach which constitutes a Default under SECTION 7.1, 7.2
or 7.3) of any of the terms or provisions of this Agreement which is
not remedied within 30 days after written notice from the Agent or any
Lender.
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7.5. Failure of the Borrower or any of its Subsidiaries to pay
any Indebtedness equal to or exceeding $25,000,000 in the aggregate
when due; or the default by the Borrower or any of its Subsidiaries in
the performance of any term, provision or condition contained in any
agreement under which any Indebtedness equal to or exceeding
$25,000,000 in the aggregate was created or is governed, or any other
event shall occur or condition exist, the effect of which is to cause,
or to permit the holder or holders of such Indebtedness to cause, such
Indebtedness to become due prior to its stated maturity; or any
Indebtedness of the Borrower or any of its Subsidiaries equal to or
exceeding $25,000,000 in the aggregate shall be declared to be due and
payable or required to be prepaid (other than by a regularly scheduled
payment) prior to the stated maturity thereof; or the Borrower or any
of its Subsidiaries shall not pay, or shall admit in writing its
inability to pay, its debts generally as they become due.
7.6. The Borrower or any of its Subsidiaries shall (a) have an
order for relief entered with respect to it under the United States
bankruptcy laws as now or hereafter in effect or cause or allow any
similar event to occur under any bankruptcy or similar law or laws for
the relief of debtors as now or hereafter in effect in any other
jurisdiction, (b) make an assignment for the benefit of creditors, (c)
apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator, monitor or similar
official for it or any Substantial Portion of its Property, (d)
institute any proceeding seeking an order for relief under the United
States bankruptcy laws as now or hereafter in effect or seeking to
adjudicate it a bankrupt or insolvent, or seeking dissolution, winding
up, liquidation, reorganization, arrangement, adjustment or composition
of it or any of its property or its debts under any law relating to
bankruptcy, insolvency or reorganization or compromise of debt or
relief of debtors as now or hereafter in effect in any jurisdiction, or
any organization, arrangement or compromise of debt under the laws of
its jurisdiction of incorporation or fail to promptly file an answer or
other pleading denying the material allegations of any such proceeding
filed against it, (e) take any corporate action to authorize or effect
any of the foregoing actions set forth in this SECTION 7.6 or (f) fail
to contest in good faith, or consent to or acquiesce in, any
appointment or proceeding described in SECTION 7.7.
7.7. Without the application, approval or consent of the
Borrower or any of its Subsidiaries, a receiver, custodian, trustee,
examiner, liquidator or similar official shall be appointed (either
privately or by a court) for the Borrower or any of its Subsidiaries or
any Substantial Portion of its Property, or a proceeding described in
SECTION 7.6(d) shall be instituted against the Borrower or any of its
Subsidiaries and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of 60
consecutive days.
7.8. Any court, government or governmental agency shall
condemn, seize or otherwise appropriate, or take custody or control of
(each a "CONDEMNATION"), all or any portion of the Property of the
Borrower and its Subsidiaries which, when taken together with all other
Property of the Borrower and its Subsidiaries so condemned, seized,
appropriated, or taken custody or control of, during the twelve-month
period ending with the month in which any such Condemnation occurs,
constitutes a Substantial Portion.
7.9. The Borrower or any of its Subsidiaries shall fail within
60 days to pay, bond or otherwise discharge any judgment or order for
the payment of money in excess of $25,000,000, which is not stayed on
appeal or otherwise being appropriately contested in good faith.
7.10. The Unfunded Liabilities of all Single Employer Plans
shall exceed in the aggregate $10,000,000 or any Reportable Event, the
occurrence which may reasonably be expected to give rise to Material
Adverse Effect, shall occur in connection with any Plan.
7.11. The Borrower or any other member of the Controlled Group
shall have been notified by the sponsor of a Multiemployer Plan that it
has incurred withdrawal liability to such Multiemployer Plan in an
amount which, when aggregated with all other amounts required to be
paid to Multiemployer Plans by the Borrower or any other member of the
Controlled Group as withdrawal liability (determined as of the date of
such notification), exceeds $10,000,000 or requires payments exceeding
$5,000,000 per annum.
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7.12. The Borrower or any other member of the Controlled Group
shall have been notified by the sponsor of a Multiemployer Plan that
such Multiemployer Plan is in reorganization or is being terminated,
within the meaning of Title IV of ERISA, if as a result of such
reorganization or termination the aggregate annual contributions of the
Borrower and the other members of the Controlled Group (taken as a
whole) to all Multiemployer Plans which are then in reorganization or
being terminated have been or will be increased over the amounts
contributed to such Multiemployer Plans for the respective plan years
of each such Multiemployer Plan immediately preceding the plan year in
which the reorganization or termination occurs by an amount exceeding
$10,000,000.
7.13. The Borrower or any of its Subsidiaries shall be the
subject of any proceeding or investigation pertaining to the release by
the Borrower or any such Subsidiary, or any other Person of any toxic
or hazardous waste or substance into the environment, or any violation
of any environmental, health or safety law or regulation of any
Governmental Authority, which, in either case, could reasonably be
expected to have a Material Adverse Effect.
7.14. Any Guaranty shall fail to remain in full force or
effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of any Guaranty, or any Guarantor shall
fail to perform its obligations under or otherwise comply with any of
the terms or provisions of any Guaranty to which it is a party, or any
Guarantor shall deny that it has any further liability under any
Guaranty to which it is a party, or shall give notice to such effect.
7.15. Any Change in Control shall occur.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. ACCELERATION. If any Default described in SECTION 7.6 or
7.7 occurs, the obligations of the Lenders to make Loans or purchase
participations in Letters of Credit or Swing Line Loans hereunder and the
obligation of the Agent to issue Letters of Credit hereunder shall automatically
terminate and the Obligations shall immediately become due and payable without
any election or action on the part of the Agent or any Lender, and without
presentment, demand, protest or notice of any kind, all of which the Borrower
hereby expressly waives. If any other Default occurs, the Required Lenders may
(a) terminate or suspend the obligations of the Lenders to make Loans and
purchase participations in Letters of Credit or Swing Line Loans hereunder,
whereupon the obligation of the Agent to issue Letters of Credit hereunder shall
also terminate or be suspended, or (b) declare the Obligations to be due and
payable, whereupon the Obligations shall become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which the
Borrower hereby expressly waives, or (c) take the action described in both the
preceding clause (a) and the preceding clause (b).
If, within 30 days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default (other than any Default as described in
SECTION 7.6 or 7.7) and before any judgment or decree for the payment of the
Obligations due shall have been obtained or entered, the Required Lenders (in
their sole discretion) shall so direct, the Agent shall, by notice to the
Borrower, rescind and annul such acceleration and/or termination.
8.2. AMENDMENTS. Subject to the provisions of this ARTICLE
VIII, the Required Lenders (or the Agent with the consent in writing of the
Required Lenders) and the Borrower may enter into agreements supplemental hereto
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders and the Borrower hereunder or
waiving any Default hereunder; PROVIDED, HOWEVER, that no such supplemental
agreement shall, without the consent of each Lender affected thereby:
(a) extend the maturity of any Loan, Note or Reimbursement
Obligation or forgive all or any portion of the principal amount
thereof, any interest thereon or any fees or other amounts payable
hereunder, or reduce the rate or extend the time of payment of
interest, fees or other amounts payable hereunder;
(b) reduce the percentage specified in the definition of
Required Lenders;
(c) reduce the amount or extend the payment date for the
mandatory payments required
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under SECTION 2.2, 2.10 or 2.20, or increase the amount of the
Commitment of any Lender hereunder, or permit the Borrower to assign
its rights or obligations under this Agreement;
(d) amend this SECTION 8.2; or
(e) release any Guarantor.
No amendment of any provision of this Agreement relating in any way to the
Agent or any or all of the Letters of Credit shall be effective without the
written consent of the Agent. No amendment of any provision of this Agreement
relating to Swing Line Loans shall be effective without the written consent of
the Swing Line Lender. The Agent may waive payment of the fee required under
SECTION 12.3.2 without obtaining the consent of any other party to this
Agreement.
8.3. PRESERVATION OF RIGHTS. No delay or omission of the
Lenders or any of them or the Agent to exercise any right under the Loan
Documents shall impair such right or be construed to be a waiver of any Default
or an acquiescence therein, and the making of a Loan notwithstanding the
existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Loan shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude any other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by (or with the consent of) the Lenders required pursuant to SECTION 8.2,
and then only to the extent specifically set forth in such writing. All remedies
contained in the Loan Documents or afforded by law shall be cumulative and all
shall be available to the Agent and the Lenders until the Obligations have been
paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. SURVIVAL OF REPRESENTATIONS. All representations and
warranties of the Borrower contained in this Agreement shall survive delivery
of the Notes and the making of the Loans herein contemplated.
9.2. GOVERNMENTAL REGULATION. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be obligated to
extend credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
9.3. STAMP DUTIES. The Borrower shall pay and forthwith on
demand indemnify each of the Agent and each Lender against any liability it
incurs in respect of any stamp, registration and similar tax which is or becomes
payable in connection with the entry into, performance or enforcement of any
Loan Document.
9.4. HEADINGS. Section headings in the Loan Documents are
for convenience of reference only and shall not govern the interpretation of
any of the provisions of the Loan Documents.
9.5. ENTIRE AGREEMENT; Independence of Covenants. The Loan
Documents embody the entire agreement and understanding among the Borrower, the
Agent and the Lenders and supersede all prior agreements and understandings
among the Borrower, the Agent and the Lenders relating to the subject matter
thereof. Except as otherwise expressly provided herein, no provision of this
Agreement shall be construed as waiving, negating or otherwise qualifying any
restriction, limitation or other condition imposed by any other provision of
this Agreement.
9.6. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The
respective obligations of the Lenders hereunder are several and not joint and no
Lender shall be the partner or agent of any other (except to the extent to which
the Agent is authorized to act as such). The failure of any Lender to perform
any of its obligations hereunder shall not relieve any other Lender from any of
its obligations hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement
(and their directors, officers and employees with respect to SECTION 9.7) and
their respective successors and assigns.
9.7. EXPENSES; INDEMNIFICATION. The Borrower shall reimburse
the Agent for any reasonable costs, internal charges and out-of-pocket expenses
(including reasonable attorneys' fees and time charges of attorneys for the
Agent, which attorneys may be employees of the Agent) paid or
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incurred by the Agent in connection with the preparation, negotiation,
execution, delivery, review, amendment, modification, and administration of the
Loan Documents. The Borrower also agrees to reimburse the Agent and the Lenders
for any reasonable costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' fees and time charges of attorneys for the Agent and the
Lenders, which attorneys may be employees of the Agent or the Lenders) paid or
incurred by the Agent or any Lender in connection with the collection and
enforcement of the Loan Documents. The Borrower further agrees to indemnify the
Agent and each Lender, its directors, officers and employees (each an
"Indemnitee") against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all reasonable expenses
of litigation or preparation therefor whether or not the Agent or any Lender is
a party thereto) which any of them may pay or incur arising out of or relating
to this Agreement, the other Loan Documents, the transactions contemplated
hereby or the direct or indirect application or proposed application of the
proceeds of any Loan or Letter of Credit hereunder except to the extent that
such losses, claims, damages, penalties, judgments, liabilities and expenses are
found in a final judgment by a court of competent jurisdiction to have arisen
solely from the Gross Negligence or willful misconduct of such Indemnitee. The
obligations of the Borrower under this Section shall survive the termination of
this Agreement.
9.8. NUMBERS OF DOCUMENTS. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders.
9.9. ACCOUNTING. Except as provided to the contrary herein,
all accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles; PROVIDED, HOWEVER, that to the extent that any change in GAAP shall
alter the result of any financial covenant or test or any other accounting
determination to be computed or made hereunder, the Borrower agrees that such
covenant, test or other determination shall continue to be computed or made on
the basis of Agreement Accounting Principles as in effect prior to such change
in GAAP, unless the Required Lenders shall otherwise consent.
9.10. SEVERABILITY OF PROVISIONS. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
9.11. NONLIABILITY OF LENDERS. The relationship between the
Borrower, on the one hand, and the Lenders and the Agent, on the other hand,
shall be solely that of borrower and lender. Neither the Agent nor any Lender
shall have any fiduciary responsibilities to the Borrower or any of its
Subsidiaries. Neither the Agent nor any Lender undertakes any responsibility to
the Borrower or any of its Subsidiaries to review or inform the Borrower or any
of its Subsidiaries of any matter in connection with any phase of the business
or operations of the Borrower or any of its Subsidiaries.
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
9.14. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT
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OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
9.15. CONFIDENTIALITY. Each of the Agent and each Lender
agrees to hold any confidential information which it may receive from the
Borrower or any of its Subsidiaries pursuant to this Agreement in confidence,
except for disclosure (a) to other Lenders or their respective affiliates, (b)
to legal counsel, accountants, and other professional advisors to that Lender or
to a Transferee, (c) to regulatory officials and examiners, (d) to any Person as
requested pursuant to or as required by law, regulation, or legal process, (e)
to any Person in connection with any legal proceeding to which that Lender is a
party, and (f) permitted by SECTION 12.4; PROVIDED, HOWEVER, with respect to any
disclosure pursuant to SUBSECTIONS (d) and (e), the Agent or such Lender, as
applicable, uses its best efforts to notify the Borrower in writing immediately
upon its or their receipt of any demand for such disclosures except to the
extent such notice to the Borrower is prohibited by any law or regulatory
authority.
ARTICLE X
THE AGENT
10.1. APPOINTMENT. First Chicago is hereby appointed Agent
hereunder and under each other Loan Document, and each of the Lenders
irrevocably authorizes the Agent to act as the agent of such Lender. The Agent
agrees to act as such upon the express conditions contained in this ARTICLE X.
The Agent shall not have a fiduciary relationship in respect of the Borrower,
any Subsidiary of the Borrower or any Lender by reason of this Agreement.
10.2. POWERS. The Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to the Agent by
the terms of each thereof, together with such powers as are reasonably
incidental thereto. The Agent shall have no implied duties to the Lenders, or
any obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.
10.3. GENERAL IMMUNITY. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to any or all of the
Borrower, any Subsidiary of the Borrower or the Lenders for any action taken or
omitted to be taken by it or them hereunder or under any other Loan Document or
in connection herewith or therewith, except to the extent that such action or
inaction is found in a final judgment by a court of competent jurisdiction to
have arisen solely from the Gross Negligence or wilful misconduct of such
Person.
10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (a) any
statement, warranty or representation made in connection with any Loan Document
or any borrowing hereunder; (b) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information directly
to each Lender; (c) the satisfaction of any condition specified in Article IV,
except receipt of items required to be delivered to the Agent; or (d) the
validity, effectiveness or genuineness of any Loan Document or any other
instrument or writing furnished in connection therewith. The Agent shall have no
duty to disclose to the Lenders information that is not required to be furnished
by the Borrower to the Agent at such time, but is voluntarily furnished by the
Borrower to the Agent (either in its capacity as Agent or in its individual
capacity).
10.5. ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Document in accordance with written instructions signed
by the Required Lenders or, in the case of any act or failure to act calculated
to give rise to any of the events or circumstances described in clauses (a)
through (e) of SECTION 8.2, each affected Lender, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders and on all holders of Notes. The Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its satisfaction by the Lenders
pro rata against any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action.
10.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute
any of its duties as Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
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selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
10.7. RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
of legal matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent.
10.8. AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders
agree to reimburse and indemnify the Agent ratably in proportion to their
respective Commitments (a) for any amounts not reimbursed by the Borrower for
which the Agent is entitled to reimbursement by the Borrower under the Loan
Documents, (b) for any amounts not reimbursed by the Borrower for any other
expenses incurred by the Agent on behalf of the Lenders, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents and (c) for any amounts not reimbursed by the Borrower for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents, provided that no Lender shall
be liable for any of the foregoing to the extent they are determined in a final
judgment of a court of competent jurisdiction to have arisen solely from the
Gross Negligence or willful misconduct of the Agent. The obligations of the
Lenders under this SECTION 10.8 shall survive payment of the Obligations and
termination of this Agreement.
10.9. RIGHTS AS A LENDER. In the event the Agent is a Lender,
the Agent shall have the same rights and powers hereunder and under any other
Loan Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which the Borrower or any of its
Subsidiaries is not restricted hereby from engaging with any other Person. The
Agent, in its individual capacity, is not obligated to remain a Lender;
PROVIDED, HOWEVER, that in the event that the Agent ceases to be a Lender
hereunder, the Required Lenders may remove the Agent and appoint a successor
Agent, if no Default has occurred and is continuing, with the consent of the
Borrower.
10.10. LENDER CREDIT DECISION. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other Lender
and based on the financial statements prepared by the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan Documents.
Each Lender also acknowledges that it will, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement and the other Loan
Documents.
10.11. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower, such resignation
to be effective upon the appointment of a successor Agent or, if no successor
Agent has been appointed, 45 days after the resigning Agent gives notice of its
intention to resign. Upon any such resignation the Required Lenders shall have
the right to appoint, on behalf of the Borrower and the Lenders, a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders within 30 days after the resigning Agent's giving notice of its
intention to resign, then the resigning Agent may appoint, on behalf of the
Borrower and the Lenders, a successor Agent. If the Agent has resigned and no
successor Agent has been appointed, the Lenders may perform all the duties of
the Agent hereunder and the Borrower shall make all payments in respect of the
Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment and, if no
Default or Unmatured Default has occurred and is continuing, the Borrower has
consented to such appointment. Any such successor Agent shall be a commercial
bank having capital and retained earnings of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Agent, shall be obligated
to
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issue substitute letters of credit for the outstanding Letters of Credit issued
by the resigning Agent or otherwise to provide credit assurance satisfactory to
the resigning Agent with respect to such outstanding Letters of Credit. Upon the
effectiveness of the resignation of the Agent, the resigning Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an Agent, the
provisions of this Article X shall continue in effect for the benefit of such
Agent in respect of any actions taken or omitted to be taken by it while it was
acting as the Agent hereunder and under the other Loan Documents.
10.12. AGENT'S FEE. The Borrower agrees to pay to the Agent,
for its own account, the fees agreed to by the Borrower and the Agent by
separate letter agreement, or as otherwise agreed from time to time.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. SETOFF. In addition to, and without limitation of, any
rights of the Lenders under applicable law, if the Borrower becomes insolvent,
however evidenced, or any Default or Unmatured Default occurs, any and all
deposits (including all account balances, whether provisional or final and
whether or not collected or available) and any other Indebtedness at any time
held or owing by any Lender to or for the credit or account of the Borrower may
be offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part hereof, shall then be due.
11.2. RATABLE PAYMENTS. If any Lender, whether by setoff or
otherwise (other than pursuant to SECTIONS 2.19 and 3.5 and ARTICLE XII), has
payment made to it upon its Syndicated Loans (other than payments received
pursuant to SECTION 3.1, 3.2 or 3.4) in a greater proportion than that received
by any other Lender, such Lender agrees, promptly upon demand, to purchase a
portion of the Syndicated Loans held by the other Lenders so that after such
purchase each Lender will hold its ratable proportion of Syndicated Loans. If
any Lender, whether in connection with setoff or amounts which might be subject
to setoff or otherwise, receives collateral or other protection for its
Obligations or such amounts which may be subject to setoff, such Lender agrees,
promptly upon demand, to take such action necessary such that all Lenders share
in the benefits of such collateral ratably in proportion to their Syndicated
Loans. In case any such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. SUCCESSORS AND ASSIGNs. The terms and provisions of the
Loan Documents shall be binding upon and inure to the benefit of the Borrower,
the Agent and the Lenders and their respective successors and assigns, except
that (a) the Borrower shall not have the right to assign its rights or
obligations under the Loan Documents without the consent of all of the Lenders
and (b) any assignment by any Lender must be made in compliance with SECTION
12.3. Notwithstanding clause (b) of the preceding sentence, any Lender may at
any time, without the consent of the Borrower or the Agent, assign all or any
portion of its rights under this Agreement and its Notes to a Federal Reserve
Bank; PROVIDED, HOWEVER, that no such assignment shall release the transferor
Lender from its obligations hereunder. The Agent may treat the payee of any Note
as the owner thereof for all purposes hereof unless and until such payee
complies with SECTION 12.3 in the case of an assignment thereof or, in the case
of any other transfer, a written notice of the transfer is filed with the Agent.
Any assignee or transferee of a Note agrees by acceptance thereof to be bound by
all the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
12.2. PARTICIPATIONS.
12.2.1 PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the
ordinary course of its business and in accordance with applicable law,
(a) with contemporaneous notice to the Borrower, at any time sell to
one or more banks or (b) with the consent of the Borrower, which
consent shall not be unreasonably withheld, at any time sell to one or
more other entities (each
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such bank or other entity being referred to herein as a "PARTICIPANT")
participating interests in any Loan owing to such Lender, any Note held
by such Lender, any L/C Interest held by such Lender, the Commitment of
such Lender or any other interest of such Lender under the Loan
Documents; PROVIDED, HOWEVER, that if a Default has occurred and is
continuing, the consent of the Borrower shall not be required. In the
event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, such
Lender shall remain the holder of any such Note for all purposes under
the Loan Documents, all amounts payable by the Borrower under this
Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrower and the Agent shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents. The
participation agreement effecting the sale of any participating
interest shall contain a representation by the Participant to the
effect that none of the consideration used to make the purchase of the
participating interest in the Commitment, Loans and L/C Interests under
such participation agreement are "plan assets" as defined under ERISA
and that the rights and interests of the Participant in and under the
Loan Documents will not be "plan assets" under ERISA.
12.2.2. VOTING RIGHTS. Each Lender shall retain the sole right
to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other
than any amendment, modification or waiver with respect to any Loan,
L/C Interest or Commitment in which such Participant has an interest
which forgives principal, interest or fees or reduces the interest rate
or fees payable with respect to any such Loan, L/C Interest or
Commitment, postpones any date fixed for any regularly-scheduled
payment of principal of, or interest or fees on, any such Loan, L/C
Interest or Commitment, or releases any guarantor of any such Loan or
L/C Interest.
12.2.3. BENEFIT OF SETOFF. The Borrower agrees that to the
extent permitted by applicable law each Participant shall be deemed to
have the right of setoff provided in SECTION 11.1 in respect of its
participating interest in amounts owing under the Loan Documents to the
same extent as if the amount of its participating interest were owing
directly to it as a Lender under the Loan Documents, provided that each
Lender shall retain the right of setoff provided in SECTION 11.1 with
respect to the amount of participating interests sold to each
Participant. The Lenders agree to share with each Participant, and each
Participant shall be deemed to agree, by exercising the right of setoff
provided in SECTION 11.1, to share with each Lender, any amount
received pursuant to the exercise of its right of setoff, such amounts
to be shared in accordance with SECTION 11.2 as if each Participant
were a Lender.
12.3. ASSIGNMENTS.
12.3.1. PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any
time assign to one or more banks or other entities ("PURCHASERS") all
or any part of its Commitment and outstanding Loans and L/C Interests,
together with its rights and obligations under the Loan Documents with
respect thereto; PROVIDED, HOWEVER, that (a) each such assignment shall
be of a constant, and not a varying, percentage of all of the assigning
Lender's rights and obligations so assigned; (b) the amount of the
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of such assignment) may be in the
amount of such Lender's entire Commitment but otherwise shall not be
less than $10,000,000 or an integral multiple of $1,000,000 in excess
of that amount; and (c) notwithstanding the foregoing clause (b), (i)
if the assignment is made to a Lender, the amount of the Commitment
assigned shall not be less than $1,000,000 or an integral multiple
thereof and (ii) if the assignment is made pursuant to SECTIONS
2.19(a)(ii) or 3.5, the Commitment assigned may be in the amount of the
relevant NonConsenting Lender's entire remaining Commitment after
giving effect to all assignments pursuant to SECTION 2.19(a)(i). Such
assignment shall be substantially in the form of EXHIBIT D hereto or in
such other form as may be agreed to by the parties thereto. The consent
of the Borrower and the Agent shall be required prior to an assignment
becoming effective with respect to a Purchaser which is not a Lender;
PROVIDED, HOWEVER, that if a Default has occurred and is continuing,
the consent of the Borrower shall not be required. Such consents shall
not be unreasonably withheld.
12.3.2. EFFECT; EFFECTIVE DATE. Upon the later of (i) two
Business Days (or such shorter period agreed to by the Agent) after
(a) delivery to the Agent of a notice of assignment,
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<PAGE> 46
substantially in the form attached to EXHIBIT D hereto (a "NOTICE OF
ASSIGNMENT"), together with any consents required by SECTION 12.3.1,
and (b) payment of a $3,000 fee to the Agent for processing such
assignment, and (ii) the date certain specified in such Notice of
Assignment, such assignment shall become effective. The Notice of
Assignment shall contain a representation by the Purchaser to the
effect that none of the consideration used to make the purchase of the
Commitment and Loans under the applicable assignment agreement are
"plan assets" as defined under ERISA and that the rights and interests
of the Purchaser in and under the Loan Documents will not be "plan
assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to
this Agreement and any other Loan Document executed by the Lenders and
shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party hereto
and thereto, and no further consent or action by the Borrower, the
Lenders or the Agent shall be required to release the transferor Lender
with respect to the percentage of the Aggregate Commitment and Loans
assigned to such Purchaser. Upon the consummation of any assignment to
a Purchaser pursuant to this SECTION 12.3.2, the transferor Lender, the
Agent, and the Borrower shall make appropriate arrangements so that
replacement Notes are issued to such transferor Lender and new Notes
or, as appropriate, replacement Notes, are issued to such Purchaser, in
each case in principal amounts reflecting its Commitment, as adjusted
pursuant to such assignment.
12.4. DISSEMINATION OF INFORMATION. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"TRANSFEREE") and any prospective Transferee any and all information in such
Lender's possession concerning the creditworthiness of the Borrower and its
Subsidiaries; provided that each Transferee and prospective Transferee agrees to
be bound by SECTION 9.15.
12.5. TAX TREATMENT. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of SECTION 2.18.
ARTICLE XIII
NOTICES
13.1. GIVING NOTICE. Except as otherwise permitted by SECTION
2.14 with respect to Borrowing Notices, all notices and other communications
provided to any party hereto under this Agreement or any other Loan Document
shall be in writing or by telex or by facsimile and addressed or delivered to
such party at its address set forth below its signature hereto or at such other
address as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid, shall be deemed
given when received; any notice, if transmitted by telex or facsimile, shall be
deemed given when transmitted (answerback confirmed in the case of telexes).
13.2. CHANGE OF ADDRESS. The Borrower, the Agent and any
Lender may each change the address for service of notice upon it by a notice
in writing to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one agreement, and any of the
parties hereto may execute this Agreement by signing any such counterpart.
Subject to SECTION 4.1, this Agreement shall be effective when it has been
executed by the Borrower, the Agent and the Lenders and each party has notified
the Agent by telex or telephone, that it has taken such action.
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<PAGE> 47
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent
have executed this Agreement as of the date first above written.
OMNICARE, INC.
By: /s/David W. Froesel, Jr.
----------------------------
Name: David W. Froesel, Jr.
Title: Chief Financial Officer
2800 Chemed Center
225 East Fifth Street
Cincinnati, Ohio 45202-4728
Attn: Chief Financial Officer
Facsimile No. 513-762-6678
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<PAGE> 48
Commitment:
-----------
$60,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender and as Agent
By: /s/Kenneth Kramer
---------------------------
Name: Kenneth Kramer
Title: Vice President
Address:
One First National Plaza
Chicago, Illinois 60670
Attention: Ken Kramer
Facsimile No.:312/732-1117
$40,000,000 BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO
BRANCH, as a Lender
By: /s/Noboru Kobayashi
-------------------------------
Name: Noboru Kobayashi
Title: Deputy General Manager
Address:
227 W. Monroe, Suite 2300
Chicago, IL 60606
Attention: Bruce Mettel
Facsimile No.:312/696-4535
$40,000,000 COMERICA BANK
as a Lender
By:/s/Hugh G. Porter
-------------------------------
Name: Hugh G. Porter
Title: Vice President
Address:
One Detroit Center
500 Woodward Ave., MC-3268
Detroit, MI 48226
Attention: Hugh G. Porter
Facsimile No.: 313/222-9514
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<PAGE> 49
$40,000,000 KEYBANK NATIONAL ASSOCIATION
as a Lender
By:/s/Susan M. Lipowicz
----------------------------------
Name: Susan M. Lipowicz
Title: Vice President
Address:
34 North Main Street
Dayton, OH 45402
Attention: Susan Lipowicz
Facsimile No.: 937/336-7695
$40,000,000 PNC BANK OHIO
as a Lender
By:/s/Anne B. Kelley
---------------------------------
Name: Anne B. Kelley
Title: Vice President
Address:
201 E. Fifth Street
Cincinnati, OH 45201
Attention: Anne Kelly
Facsimile No.: 513/651-8952
$20,000,000 THE BANK OF NEW YORK
as a Lender
By:/s/Douglas Ober
--------------------------------
Name: Douglas Ober
Title: Vice President
Address:
One Wall Street
New York, NY 10286
Attention: Gail Kurz
Facsimile No.: 212/635-6434
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<PAGE> 50
$20,000,000 BANQUE NATIONALE DE PARIS
as a Lender
By:/s/Arnaud Collin du Bocage
-----------------------------------
Name: Arnaud Collin du Bocage
Title: EVP and General Manager
Address:
209 South LaSalle Street, 5th Floor
Chicago, Illinois 60604
Attention: William J. Krummen
Facsimile No.: 312/977-1380
$20,000,000 CIBC, INC.
as a Lender
By:/s/Michelle Moreno, as Agent
---------------------------------------
Name: Michelle Moreno
Title: Director
Address:
200 W. Madison
Suite 2300
Chicago, IL 60606
Attention: Michelle Moreno
Facsimile No.: 312/726-8884
$20,000,000 FIFTH THIRD BANK
as a Lender
By:/s/Edward H. Silva, Jr.
----------------------------------
Name: Edward H. Silva, Jr.
Title: Senior Vice President
Address:
Fifth Third Center
38 Fountain Square Plaza
Cincinnati, OH 45623
Attention: Ed Silva
Facsimile No.: 513/579-4185
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<PAGE> 51
$20,000,000 THE FUJI BANK, LIMITED
as a Lender
By:/s/Peter L. Chinnici
------------------------------
Name: Peter L. Chinnici
Title: Joint General Manager
Address:
225 W. Wacker Drive
Chicago, IL 60606
Attention: Christian Kaul
Facsimile No.: 312/621-0539
$20,000,000 SAKURA BANK, LIMITED
as a Lender
By:/s/Shunji Sakurai
-------------------------------
Name: Shunji Sakurai
Title: Joint General Manager
Address:
227 W. Monroe Street
Suite 4700
Chicago, IL 60606
Attention: Ron Stazuk
Facsimile No.: 312/332-5345
$20,000,000 THE SANWA BANK, LIMITED, CHICAGO BRANCH
as a Lender
By:/s/James P. Burns
-------------------------------
Name: James P. Burns
Title: Vice President and Representative
Address:
10 South Wacker
31st Floor
Chicago, Illinois 60606
Attention: Patrick McGushin
Facsimile No.: 312/346-6677
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<PAGE> 52
$20,000,000 STAR BANK
as a Lender
By:/s/Richard W. Neltner
-----------------------------------
Name: Richard W. Neltner
Title: Vice President
Address:
425 Walnut Street
Location 8160
Cincinnati, OH 45201
Attention: Rick Neltner
Facsimile No.: 513/632-2068
$10,000,000 THE DAI-ICHI KANGYO BANK, LTD., CHICAGO
BRANCH, as a Lender
By:/s/Seiichiro Ino
---------------------------------
Name: Seiichiro Ino
Title: Vice President
Address:
10 So. Wacker
Chicago, IL 60606
Attention: Norm Fedder, Vice President
Facsimile No.: 312/876-2011
$10,000,000 LONG TERM CREDIT BANK OF JAPAN, LTD.
as a Lender
By:/s/Brady S. Sadek
--------------------------------
Name: Brady S. Sadek
Title: Vice President and Deputy General
Manager
Address:
190 S. LaSalle, #800
Chicago, IL 60603
Attention: Brady Sadek
Facsimile No.: 312/704-8505
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<PAGE> 53
$10,000,000 BANCA CRT S.P.A..
as a Lender
By:/s/Slade Carter, Jr.
-------------------------------
Name: Slade Carter, Jr.
Title: Vice President
Address:
500 Park Avenue
New York, NY 10022
Attention: Ajaz Shaikh
Facsimile No.: 212/980-0809
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<PAGE> 1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this 1st day of January, 1994 by and between OMNICARE, INC., a Delaware
corporation (the "Company") and Timothy E. Bien (the "Employee").
WHEREAS, the Company now desires to employ Employee for the purpose
of continuing to provide professional services as an executive of the Omnicare
Pharmacy Services Group (referred to as the "Business") and Employee desires to
be employed by the Company for that purpose;
THEREFORE, in consideration of these recitals and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
SECTION 1. EMPLOYMENT
----------------------
The Company agrees to employ Employee as the Vice President of
Professional Services and Purchasing of the Omnicare Pharmacy Services Group for
the term of this Agreement. Employee will be assigned such duties with regard to
the Business as are generally performed by such an employee of the Company, and
such other duties as may from time to time be assigned to Employee by the
President or Vice President of Operations of the Omnicare Pharmacy Services
Group.
Employee agrees to devote his exclusive and full professional time
and attention to his duties as an employee of the Company (except as hereinafter
permitted) and to perform such duties in an efficient, trustworthy and
businesslike manner. In addition, Employee agrees that he will not render to
others any service of any kind for compensation or engage in any other business
activity (including without limitation any involvement in any business in which
the Employee has any administrative or operating responsibility except as to any
other activities which are approved in writing by the President or Vice
President of Operations of the Omnicare Pharmacy Services Group). It is herein
acknowledged that any professional services organization (e.g., ASCP, NARD, AHA,
etc.) position, elected or appointed, will be considered as part of Employee's
normal business duties and does not violate this Agreement.
SECTION 2. TERM OF EMPLOYMENT
------------------------------
2.1 TERM. The initial term of employment of Employee pursuant to this
Agreement shall be a period of three years from the commencement date of this
Agreement, such date being the 1st day of June, 1993, (the "Commencement Date")
through May 31, 1996. This Agreement shall be automatically renewed at the end
of this term for an additional three-year term, and shall continue to
automatically renew at the end of each three-year term for like three-year
terms, unless, within 120 days prior to the end of the initial three-year term
or any subsequent three-year term, either party notifies the other party that
this Agreement shall not renew for the next additional term. Notwithstanding the
term of this Agreement, Employee's employment may be sooner terminated as
described in Sections 2.2 through 2.5 hereof.
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<PAGE> 2
2.2 TERMINATION FOR CAUSE. The Board of Directors of the Company
shall have the right to terminate this Agreement by written notice for the
following causes (a "Termination for Cause"):
(a) Conduct which is intentionally detrimental to the
Company's reputation, goodwill or business operations;
(b) Gross or habitual neglect of Employee's duties or breach
of Employee's duties or misconduct in discharging such
duties;
(c) Employee's repeated absence from his duties without the
consent of the President or Vice President of Operations of
the Omnicare Pharmacy Services Group, which consent shall not
be unreasonably withheld;
(d) Employee's failure or refusal to comply with the directions
of the President or the Vice President of Operations of the
Omnicare Pharmacy Services Group or with the policies,
standards, and regulations of the Company as from time to
time may be made known to the Employee.
Upon any Termination for Cause, payment of all compensation to Employee under
Section 3 of this Agreement shall cease immediately.
2.3 DISABILITY OF ILLNESS. If Employee is unable to perform his
duties under this Agreement by reason of illness or other physical or mental
disability, then his employment hereunder shall be deemed terminated
("Termination for Disability"). Upon Termination for Disability, Employee
shall continue to receive the compensation described in Section 3 hereof for a
period of three (3) months after the date of termination reduced by any
disability payment to which the Employee may be entitled in lieu of such
compensation but not by any disability payment for which the Employee has
privately contracted without the Company's involvement. At the expiration of
the three month period, payment of such compensation pursuant to Section 3
shall cease until such time during the term of this Agreement as Employee may
return to his duties under this Agreement. The term "disability" as used herein
shall mean a condition which prohibits the Employee from performing his duties
in substantially the manner he is capable of such performance on the date of
this Agreement for sixty (60) consecutive days or more during any one-year
period. If Employee should die before the termination of this Agreement,
Employee's compensation under Section 3 hereof shall terminate upon the date of
his death.
2.4 TERMINATION FOR REASONS OTHER THAN WITH CAUSE. Should Employee be
terminated by the Company for any reason other than those included in Sections
2.2 or 2.3 herein, full payment of the remaining salary for the remainder of
the then current three-year term of this Agreement or eighteen (18) months,
whichever is greater, in accordance with the terms of Section 3.1, and bonus
based upon the most recent full year bonus paid shall be made following
Employee's termination in accordance with Section 3.2. In the event, however,
that termination is the result of the sale or takeover of the Company, the
minimum salary and bonus due would be for the remainder of the then current
three-year term or a two year period, whichever is greater. In the event the
Company gives notice of its intent not to renew this Agreement pursuant to
Section 2.1, and the employment of Employee is subsequently terminated, the
Company shall pay to Employee his then current compensation for a period of 18
months following his termination, provided that he abides by the covenants of
confidentiality and noncompetition contained in Sections 4 and 5 of this
Agreement. Should Employee breach the covenants contained in Sections 4 and 5
of this Agreement, the Company shall have no further obligation to make any
payment to Employee pursuant to this Agreement.
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<PAGE> 3
2.5 VOLUNTARY TERMINATION. In the event Employee voluntarily
terminates his employment for any reason prior to May 31, 1996, or the date of
termination of any then current three-year term, payment of all compensation
under Section 3 shall immediately cease.
Section 3. COMPENSATION
-----------------------
3.1 ANNUAL SALARY. The Company shall pay to Employee during the term of
this Agreement an annual salary ("Base Salary") of One Hundred Twenty-One
Thousand Seven Hundred Dollars ($121,700.00) payable in equal monthly
installments, or more frequently if the President or Vice President of
Operations of the Omnicare Pharmacy Services Group determines that such salary
shall be paid in more frequent installments.
3.2 INCENTIVE COMPENSATION. Employee will be entitled to
participate in all bonus and incentive compensation plans as may be maintained
by the Company for its senior management generally.
3.3 REIMBURSEMENT OF BUSINESS EXPENSES. During the term of this
Agreement, the Company will remimburse the Employee for all authorized,
ordinary and necessary business expenses incurred by him in connection with the
Business. Reimbursement of such expenses shall be paid monthly, upon submission
by Employee to the Company of vouchers itemizing such expenses in a form
satisfactory to the Company, properly identifying the nature and business of
any expenditures.
3.4 BENEFITS. During the term of this Agreement, Employee will be
entitled to such insurance, medical, savings, and investment plans, vacation,
sick leave, holiday, education and continuing education assistance and other
benefits as may be given from time to time to other employees of the Company as
set forth from time to time by the Board of Directors and management of the
Company. Employee may request non-paid leave benefits at any time, which
benefits may be granted at the sole discretion of the Board of Directors of the
Company or the President or Vice President of Operations of the Omnicare
Pharmacy Services Group.
SECTION 4. CONFIDENTIAL INFORMATION
-----------------------------------
Employee agrees that during the term of his agreement or thereafter,
he and any persons or entities over which Employee has control shall not
directly or indirectly (without the Company's prior written consent), use for
himself or use for, or disclose to any party other than the Company, any
secret, proprietary or confidential information or data regarding the business
of the Company, or any secret, proprietary or confidential information or data
regarding the costs, uses, methods, applications or customers, trade accounts
or suppliers (and pertinent information regarding transactions and prospective
transactions therewith) or products made, sold by the Company, or regarding any
secret, proprietary or confidential design, apparatus, process, system,
manufacturing or other method at any time used, developed or investigated by
the Company, whether or not such item was invented, developed, acquired,
discovered or investigated by Employee. At the termination of Employee's
employment with the Company, or at any other time the Company requests,
Employee agrees to promptly deliver to the Company all computer software or
data, memoranda, notes, records, sketches, plans or other documents made or
compiled by, delivered to, or otherwise acquired by Employee concerning the
costs, uses, methods, designs, applications or purchases of products made by or
sold by the Company or any secret, proprietary or confidential product,
apparatus or process manufactured, used, developed, acquired or investigated by
the Company or by any person in a contractual relationship with the Company.
Employee will undertake all reasonably necessary and appropriate steps to
insure that the confidentiality of such Company proprietary or confidential
information shall be maintained.
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<PAGE> 4
SECTION 5. COVENANT NOT TO COMPETE
-----------------------------------
Employee agrees that while employment agreement is in place, and for
eighteen months after termination of the employment agreement whether voluntary
or involuntary, including nonrenewal of the Agreement pursuant to Section 2.1,
he will neither, directly or indirectly, engage or be interested in any
business competing with the Company, its subsidiary or parent companies, or
their respective successors, nor, directly or indirectly, have any interest in,
own, manage, operate, control, be connected with as a stockholder (other than
as a stockholder of less than five percent (5%) of the issued and outstanding
stock of a publicly held corporation), joint venturer, officer, director,
partner, employee or consultant, or otherwise engage or invest or participate
in, any business which shall compete with the Company or any business conducted
by the Company, its subsidiary companies or any of their respective successors,
in the United States of America. For purposes of this Section 5, the business
of the Company shall include any business in which the Company is engaged
during the Company's fiscal year immediately preceding the date on which
Employee's employment with the Company is terminated, the sales of which
business account for 5% or more of the total consolidated sales of the Company
during such fiscal year.
SECTION 6. INDEMNIFICATION
---------------------------
Except to the extent prohibited by law, the Company shall save and hold
harmless the Employee from and against any claim of liability or loss (including
reasonable attorney's fees) arising as a result of Employee's good faith
activities in the course of his employment hereunder.
SECTION 7. MISCELLANEOUS PROVISIONS
------------------------------------
7.1 ASSIGNMENT AND SUCCESSORS. The rights and obligations of the Company
under this Agreement may be freely assigned and shall inure to the benefit of
and be binding upon the successors and assigns of the Company. Employee's
obligation to provide services hereunder may not be assigned to or assumed by
any other person or entity.
7.2 NOTICES. All notices, requests, demands or other communications under
this Agreement shall be in writing and shall only be deemed to be duly given if
made in writing and sent by first class mail, overnight courier, or telecopy to
the following addresses:
Mr. Kenneth W. Chesterman
Executive Vice President of Omnicare, Inc.
and President of Omnicare Pharmacy Services Group
2800 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
and
Mr. Timothy E. Bien
946 Spruceglen Drive
Cincinnati, Ohio 45224
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<PAGE> 5
7.3 SEVERABILITY. Any provision of this Agreement which is deemed invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and
subject to this paragraph, be ineffective to the extent of such invalidity,
illegality or unenforceabilty, without affecting in any way the remaining
provisions hereof in such jurisdiction or rendering that or any other provisions
of this Agreement invalid, illegal, or unenforceable in any other
juridisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant shall be
modified so that the scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable.
7.4 AMENDMENT AND WAIVER. This Agreement constitutes the entire agreement
between the parties hereto as to the matters addressed herein and may be
modified, amended or waived only by a written instrument signed by all the
parties hereto. No waiver or breach of any provision hereof shall be a waiver of
any future breach, whether similar or dissimilar in nature.
7.5 RIGHT TO CURE. In the event that this Company believes that the
Employee has violated any of the terms of this Agreement then Company shall
give notice in writing to Employee at 946 Spruceglen Dr., Cincinnati, Ohio
45224, of the alleged violation and Employee shall have ten (10) days following
receipt of said notice to cure any such alleged violation.
7.6 INJUNCTIVE RELIEF. The parties hereto agree that money damages would
be an inadequate remedy for the Company in the event of breach or threatened
breach of this Agreement and thus, in any such event, the Company may, either
with or without pursuing any potential damage remedies, immediately obtain and
enforce any injunction prohibiting Employee from violating this Agreement.
7.7 APPLICABLE LAW. This Agreement has been made and its validity,
performance and effect shall be determined in accordance with the laws of the
State of Ohio.
7.8 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
7.9 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any ways the meaning or
interpretation of this Agreement. The language in all parts of this Agreement
shall in all cases be construed according to its fair meaning, and not strictly
for or against any party hereto. In this Agreement, unless the context
otherwise requires, the masculine, feminine and neuter genders and the singular
and the plural include one another.
7.10 NON-WAIVER OF RIGHTS AND BREACHES. No failure or delay of any party
herein in the exercise of any right given to such party hereunder shall
constitute a waiver thereof unless the time specified herein for the exercise of
such right has expired, nor shall any single or partial exercise of any right
preclude other or further exercise thereof or of any other right. The waiver of
a party hereto of any default of any other party shall not be deemed to be a
waiver of any subsequent default or other default by such party.
7.11 ATTORNEY'S FEES RELIEF. In the event either party brings any legal
action to enforce the terms hereof, the prevailing party shall, in addition to
any other remedies available to it, be entitled to reasonable attorney's fees
and prosecuted to completion.
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
OMNICARE, INC.
BY:/s/Joel F. Gemunder
--------------------------
Its:President
-------------------------
/s/Timothy E. Bien
-----------------------------
Timothy E. Bien
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<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into this 17th day of February, 1996 by and between OMNICARE, INC., a
Delaware corporation (the "Company") and DAVID W. FROESEL, JR. ("Mr.
Froesel").
WHEREAS, the Company now desires to employ Mr. Froesel as an executive
of the Company for the purpose of conducting its institutional pharmacy
services for nursing homes, other long-term care institutions, home healthcare
and managed care organizations including, but not limited to, the sale and
distribution of pharmaceutical and medical supply products, the lease of oxygen
and other medical equipment and the provisions of pharmacy- related services
(referred to as the "Business") and Mr. Froesel desires to be employed by the
Company for that purpose;
THEREFORE, in consideration of these recitals and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT
----------------------
1.1 The Company agrees to employ Mr. Froesel as an executive
of the Company for the term of this Agreement. Mr. Froesel will be assigned
such duties with regard to the Business as are generally performed by an
executive of the Company, and such other duties as may from time to time be
assigned to Mr. Froesel by the President.
1.2 Mr. Froesel agrees to devote his exclusive and full
professional time and attention to his duties as an employee of the Company
and to perform such duties in an efficient, trustworthy and businesslike
manner. In addition, Mr. Froesel agrees that he will not render to others any
service of any kind for compensation or engage in any other business activity
including without limitation any involvement in any business in which Mr.
Froesel has any administrative or operating responsibility.
SECTION 2. COMPENSATION, BENEFITS AND EXPENSES
-----------------------------------------------
2.1 BASE SALARY. The Company shall pay to Mr. Froesel a salary
("Base Salary") of $190,000.00 payable in equal semi-monthly installments, or
more frequently if the President of the Company determines that such salary
shall be paid in more frequent installments. Mr. Froesel's Base Salary may be
reviewed every 14-15 months, and may be adjusted at the Company's discretion
taking into consideration Mr. Froesel's performance, Company performance and
general economic conditions.
2.2 INCENTIVE COMPENSATION. At the commencement of this Agreement,
the Company will grant to Mr. Froesel $425,000.00 in Omnicare restricted
stock, which will vest in accordance with the terms and conditions of the
Company's plan, unless they sooner vest pursuant to the terms of Paragraphs
3.4 or 3.5 of this Agreement. Mr. Froesel will be eligible to participate in
the bonus and incentive compensation plans as may be maintained by the
Company for its executives.
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<PAGE> 2
2.3 REIMBURSEMENT OF BUSINESS EXPENSES. During the term of this
Agreement, the Company will reimburse Mr. Froesel for all authorized, ordinary
and necessary business expenses incurred by him in connection with the
Business, including but not limited to the purchase and installation of
computer and facsimile equipment in Mr. Froesel's residence and a telephone
in his car, and the expenses incurred in utilizing such equipment in
connection with the Business. Reimbursement of such expenses shall be paid
monthly, upon submission by Mr. Froesel to the Company of vouchers itemizing
such expenses in a form satisfactory to the Company, properly identifying the
nature and business of any expenditures.
2.4 EXECUTIVE BENEFITS. Mr. Froesel will be eligible to
receive the same level of benefits provided by the Company to its
executives. In addition, the Company will contribute annually an amount
equal to 6% of Mr. Froesel's annual cash compensation to a Rabbi Trust which
will vest in five equal annual installments commencing one year following
the date each such contribution is made.
2.5 RELOCATION EXPENSES. All reasonable and customary out-of-pocket
expenses associated with relocating Mr. Froesel's family from Barrington,
Illinois, to Cincinnati, Ohio, shall be handled by the Company, including all
closing costs associated with the sale of the residence in Barrington
(including, but not limited to, real estate commission, survey, title
insurance, attorney's fees); all closing costs associated with the purchase
of a residence in the Cincinnati area (including, but not limited to,
inspections, attorney fees, survey, title insurance, and mortgage-related
fees and expenses such as points, processing fees, underwriting fees,
application and appraisal fees); the packing and movement of household goods;
transportation and hotel and food expenses associated with house- hunting
trips to Cincinnati; and temporary living expenses incurred during
transition.
SECTION 3. TERM OF EMPLOYMENT
------------------------------
3.1 TERM. The initial term of employment of Mr. Froesel pursuant to
this Agreement shall commence on March 4, 1996, and shall continue for a
period of three years, until March 3, 1999. This Agreement shall be renewed
automatically at the end of this term for an additional three-year term, and
shall continue to automatically renew at the end of each three-year term for
like three-year terms, unless within 120 days prior to the end of the initial
three-year term or any subsequent three-year term, either party notifies the
other party that this Agreement shall not renew for the next additional term.
Notwithstanding the foregoing, this Agreement may be terminated at any time
as described in Sections 3.2 through 3.6 hereof.
3.2 TERMINATION FOR CAUSE. The Company shall have the right to
terminate this Agreement by written notice for the following causes (a
"Termination for Cause"):
(a) Conduct which is materially detrimental to the
Company's reputation, goodwill or business
operations;
(b) Gross or habitual neglect of Mr. Froesel's duties or
breach of Mr. Froesel's duties or misconduct in
discharging such duties;
(c) Mr. Froesel's repeated absence from his duties
without the consent of the President of the Company;
(d) Mr. Froesel's failure or refusal to comply with the
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<PAGE> 3
policies, standards and regulations of the Company
or to follow the directions of the President of the
Company in complying with those policies, standards
and regulations.
Upon any Termination for Cause, all payments to Mr. Froesel under
Section 2 of this Agreement shall cease immediately, with the exception of
reimbursement of authorized, ordinary and necessary business expenses already
incurred, and any compensation already earned or vested as of that date.
3.3 DISABILITY, ILLNESS OR DEATH. If Mr. Froesel is unable to perform
his duties under this Agreement by reason of illness or other physical or mental
disability, then this Agreement shall be deemed terminated ("Termination for
Disability"). Upon Termination for Disability, Mr. Froesel shall continue to
receive the compensation described in Section 3 hereof for a period of three
(3) months after the date of termination reduced by any disability payment to
which Mr. Froesel may be entitled in lieu of such compensation but not by any
disability payment for which Mr. Froesel has privately contracted without the
Company's involvement. If Mr. Froesel should die before the termination of this
Agreement, all payments to Mr. Froesel under Section 2 of this Agreement shall
terminate upon the date of his death, with the exception of reimbursement of
authorized, ordinary and necessary business expenses already incurred, and any
compensation already earned or vested as of that date.
3.4 TERMINATION FOR REASONS OTHER THAN WITH CAUSE. The Company shall
have the right to terminate this Agreement without cause upon ten (10) days
written notice to Mr. Froesel. If the Company terminates this Agreement without
cause, Mr. Froesel shall receive his Base Salary as that term is defined in
Section 2.1 of this Agreement for two years, and any restricted stock, stock
options and Rabbi Trust contributions Mr. Froesel has received shall vest
immediately upon termination. In the event of termination without cause, Mr.
Froesel acknowledges that the Company shall have no obligations or liability to
him whatsoever other than the obligations set forth in this paragraph.
3.5 TERMINATION DUE TO A CHANGE IN CONTROL. The Company shall have the
right to terminate this Agreement in the event of a change in control of
the Company. If the Company terminates this Agreement, Mr. Froesel will
receive his Base Salary and cash bonus compensation for the unexpired term
of this Agreement, plus an additional two years of Base Salary and cash
bonus compensation. For purposes of this Section 3.5, annual cash bonus
compensation after termination shall be equal to the last annual cash bonus
paid to Mr. Froesel prior to termination. In addition, the restricted
stock, stock options and Rabbi Trust contributions will vest immediately
upon termination. Notwithstanding the foregoing, payments to Mr. Froesel
under this Section, in the aggregate, shall be limited to an amount that
does not constitute an excess parachute payment under Section 280G of the
Internal Revenue Code of 1986, and any successor provisions thereof, and
the regulations thereunder
3.6 VOLUNTARY TERMINATION. In the event Mr. Froesel voluntarily
terminates his employment for any reason prior to the date of termination
of the initial three-year term or any subsequent terms, all payments to Mr.
Froesel under Section 2 shall cease, with the exception of reimbursement of
authorized, ordinary and necessary business expenses already incurred, and
any compensation already earned or vested as of that date.
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SECTION 4. CONFIDENTIAL INFORMATION
------------------------------------
4.1 Mr. Froesel agrees that during the term of his agreement or
thereafter, he and any persons or entities over which Mr. Froesel has
control shall not directly or indirectly (without the Company's prior
written consent), use for himself or use for, or disclose to any party
other than the Company, any secret, proprietary or confidential information
or data regarding the business of the Company, or any secret, proprietary
or confidential information or data regarding the costs, uses, methods,
applications or customers, trade accounts or suppliers (and pertinent
information regarding transactions and prospective transactions therewith)
or products made, sold by the Company, or regarding any secret, proprietary
or confidential design, apparatus, process, system, manufacturing or other
method at any time used, developed or investigated by the Company, whether
or not such item was invented, developed, acquired, discovered or
investigated by Mr. Froesel. At the termination of Mr. Froesel's employment
with the Company, or at any other time the Company requests, Mr. Froesel
agrees to promptly deliver to the Company all computer software or data,
memoranda, notes, records, sketches, plans or other documents made or
compiled by, delivered to, or otherwise acquired by Mr. Froesel concerning
the costs, uses, methods, designs, applications or purchases of products
made by or sold by the Company or any secret, proprietary or confidential
product, apparatus or process manufactured, used, developed, acquired or
investigated by the Company or by any person in a contractual relationship
with the Company. Mr. Froesel will undertake all reasonably necessary and
appropriate steps to insure that the confidentiality of such Company
proprietary or confidential information shall be maintained.
SECTION 5. COVENANT NOT TO COMPETE
-----------------------------------
5.1 In consideration of his employment by the Company, and other good
and valuable consideration, Mr. Froesel agrees that during his employment
by Company, and for two years after termination of his employment,
regardless of whether such termination is voluntary or involuntary, he will
not, directly or indirectly, engage or be interested in any business
competing with the Company, its subsidiary or parent companies, or their
respective successors, or, directly or indirectly, have any interest in,
own, manage, operate, control, be connected with as a stockholder (other
than as a stockholder of less than five percent (5%) of the issued and
outstanding stock of a publicly held corporation), joint venturer, officer,
director, partner, employee or consultant, or otherwise engage or invest or
participate in, any business which shall compete with the Company or any
Business conducted by the Company, its subsidiary or parent companies, or
their respective successors, throughout the United States of America. For
purposes of this Section 5, the term "Business" shall also include any
business in which the Company is engaged during the Company's fiscal year
immediately preceding the date on which Mr. Froesel's employment is
terminated, the sales of which Business account for 10% or more of the
total consolidated sales of the Company during such fiscal year.
SECTION 6. INDEMNIFICATION
---------------------------
6.1 Except to the extent prohibited by law, the Company shall save and
hold harmless Mr. Froesel from and against any claim of liability or loss
(including reasonable attorney's fees) arising as a result of Mr. Froesel's
good faith activities in the course of his employment hereunder.
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<PAGE> 5
SECTION 7. MISCELLANEOUS PROVISIONS
------------------------------------
7.1 ASSIGNMENT AND SUCCESSORS. The rights and obligations of
the Company under this Agreement may be freely assigned and shall inure to
the benefit of and be binding upon the successors and assigns of the
Company. Mr. Froesel's obligation to provide services hereunder may not be
assigned to or assumed by any other person or entity.
7.2 NOTICES. All notices, requests, demands or other communications
under this Agreement shall be in writing and shall only be deemed to be duly
given if made in writing and sent by first class mail, overnight courier, or
telecopy to the following addresses:
Cheryl D. Hodges, Senior Vice President
and Secretary
Omnicare, Inc.
2800 Chemed Center
255 E. Fifth Street
Cincinnati, Ohio 45202
and
David W. Froesel, Jr.
11712 Grandstone
Montgomery, Ohio 45249
7.3 SEVERABILITY. Any provision of this Agreement which is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to
that jurisdiction and subject to this paragraph, be ineffective to the
extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provisions of this
Agreement invalid, illegal, or unenforceable in any other
jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant
shall be modified so that the scope of the covenant is reduced only to
the minimum extent necessary to render the modified covenant valid,
legal and enforceable.
7.4 COMPLETE AGREEMENT. This Agreement contains the entire
agreement between the parties and supersedes previous verbal and written
discussions, negotiations, agreements or understandings between the parties.
7.5 AMENDMENT AND WAIVER. This Agreement may be modified, amended or
waived only by a written instrument signed by all the parties hereto. No waiver
or breach of any provision hereof shall be a waiver of any future breach,
whether similar or dissimilar in nature.
7.6 INJUNCTIVE RELIEF. The parties hereto agree that money damages
would be an inadequate remedy for the Company in the event of breach or
threatened breach of this Agreement and thus, in any such event, the Company
may, either with or without pursuing any potential damage remedies, immediately
obtain and enforce any injunction prohibiting Mr. Froesel from violating this
Agreement.
7.7 APPLICABLE LAW. This Agreement has been made and its
validity, performance and effect shall be determined in accordance with the
laws of the State of Ohio.
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<PAGE> 6
7.8 CONSENT TO JURISDICTION. The parties hereby (a) agree that any
suit, proceeding or action at law or in equity (hereinafter referred to as an
"Action") arising out of or relating to this Agreement must be instituted in
state or federal court located within Hamilton County, Ohio, (b) waive any
objection which he or it may have now or hereafter to the laying of the
venue of any such Action, (c) irrevocably submit to the jurisdiction of any
such court in any such Action, and (d) hereby waive any claim or defense of
inconvenient forum. The parties irrevocably agree that service of any and
all process which may be served in any such Action may be served upon him or
it by registered mail to the address referred to in Section 7.2 hereof or to
such other address as the parties shall designate in writing by notice duly
given in accordance with Section 7.2 hereof and that such service shall be
deemed effective service of process upon the parties in any such Action. The
parties irrevocably agree that any such service of process shall have the
same force and validity as if service were made upon him or it according to
the law governing such service in the State of Ohio, and waives all claims
of error by reason of any such service.
7.9 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
7.10 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any ways the meaning or
interpretation of this Agreement. The language in all parts of this Agreement
shall in all cases be construed according to its fair meaning, and not strictly
for or against any party hereto. In this Agreement, unless the context otherwise
requires, the masculine, feminine and neuter genders and the singular and the
plural include one another.
7.11 NON-WAIVER OF RIGHTS AND BREACHES. No failure or delay of any
party herein in the exercise of any right given to such party hereunder shall
constitute a waiver thereof unless the time specified herein for the exercise of
such right has expired, nor shall any single or partial exercise of any right
preclude other or further exercise thereof or of any other right. The waiver of
a party hereto of any default of any other party shall not be deemed to be a
waiver of any subsequent default or other default by such party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
OMNICARE, INC.
By:/s/Joel F. Gemunder
----------------------
/s/David W. Froesel, Jr.
-------------------------
David W. Froesel, Jr.
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<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Employment Agreement") is made and
entered into this 4th day of April, 1996, by and between OMNICARE, INC., a
Delaware corporation (the "Company") and MARY LOU FOX ("Ms. Fox").
WHEREAS, the Company desires to employ Ms. Fox as an employee of
Westhaven Services Co., a Delaware corporation, which is a subsidiary of the
Company ("Westhaven") under the terms and conditions of this Employment
Agreement for the purpose of providing professional services as an executive in
furtherance of Westhaven's and the Company's institutional pharmacy business
and such other businesses in which the Company or its subsidiaries or
affiliates including without limitation Westhaven may be engaged during the
term of this Employment Agreement (referred to collectively as the "Business")
and Ms. Fox desires to be employed by Westhaven for that purpose; and
WHEREAS, contemporaneous with the execution of this Employment
Agreement, the Company has entered into a Consulting Agreement with MLF Co.
("MLF"), a company in which Ms. Fox has an ownership interest (the "Consulting
Agreement");
THEREFORE, in consideration of these recitals and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT
----------------------
1.1 DUTIES. The Company will employ Ms. Fox as an employee of
Westhaven and will elect her as a Senior Vice President of the Company at
its 1996 Annual Meeting. Ms. Fox will supervise and coordinate the sales
and marketing efforts as and to the extent same are assigned to her from
time to time by the President of the Company and shall report only to the
President of the Company. The Company shall set reasonable good faith
annual performance goals for Ms. Fox.
1.2 PERFORMANCE. Ms. Fox will perform her duties under this
Employment Agreement in an efficient, trustworthy and businesslike manner. Ms.
Fox will not render to others any service of any kind for compensation or engage
in any other business activity, except that Ms. Fox may render services to MLF,
provided those services do not violate the restrictive covenants set forth in
Section 5 of this Employment Agreement, do not breach her obligations of loyalty
and good faith owed by Ms. Fox to the Company, and do not prevent her from
performing her duties as Senior Vice President to the satisfaction of the
Company. Ms. Fox shall spend at least five (5) business days each month at the
Company headquarters in Cincinnati as directed by the President of the Company.
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<PAGE> 2
1.3 BOARD OF DIRECTORS. Provided that Ms. Fox performs her duties
under this Employment Agreement in a manner satisfactory to him, the President
of the Company will recommend to its Board of Directors that Ms. Fox be
nominated to serve as a Director while she serves as Senior Vice President,
which recommendation is subject to the approval of the Company Board of
Directors and if nominated is subject to election by shareholders.
SECTION 2. TERM OF EMPLOYMENT
------------------------------
2.1 TERM. The term of employment of Ms. Fox pursuant to this
Employment Agreement shall be a period of five years from the commencement date
of this Employment Agreement, such date being the 1st day of February, 1996,
(the "Commencement Date") through January 31, 2001. Notwithstanding the term of
this Employment Agreement, Ms. Fox' employment may be sooner terminated as
described in Sections 2.2 through 2.4 hereof.
2.2 TERMINATION BY THE COMPANY FOR CAUSE. The Company shall have
the right to terminate Ms. Fox' employment by written notice for the
following causes (a "Termination for Cause"):
(a) Conviction of Ms. Fox for, or entry of a plea of guilty or
nolo contendere by Ms. Fox with respect to, any felony or
any crime involving an act of moral turpitude;
(b) Commission by Ms. Fox of any act of fraud or dishonesty;
(c) Conduct which is intentionally detrimental to the
reputation, goodwill or business operations of the Company
or any of its affiliates or subsidiaries;
(d) Neglect of Ms. Fox' duties or obligations under this
Employment Agreement or breach of such duties, or any
failure to perform satisfactorily such duties, or
misconduct in discharging such duties, including without
limitation, her duties pursuant to Section 3.1 of this
Employment Agreement;
(e) Failure or refusal to comply with the directions of the
President of the Company or with the policies, standards,
and regulations of the Company as from time to time may be
made known to Ms. Fox;
(f) Material breach or threatened breach of the restrictive
covenants set forth in Section 5 of this Employment
Agreement;
(g) Termination of the Consulting Agreement by the Company or
by MLF, unless such termination is pursuant to that certain
letter agreement dated the date hereof (the "Letter
Agreement").
Upon any Termination for Cause, payment of all compensation to Ms. Fox under
Section 3 of this Employment Agreement shall cease immediately, with the
exception of reimbursement of authorized, ordinary and necessary business
expenses already incurred, and any compensation already earned or vested as of
that date.
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<PAGE> 3
2.3 TERMINATION BY THE COMPANY DUE TO DISABILITY OR DEATH. Ms. Fox
acknowledges that her duties pursuant to this Employment Agreement, including
without limitation Section 1.1, constitute the essential functions of her job.
If Ms. Fox is unable to perform her duties under this Employment Agreement by
reason of illness or other physical or mental disability, the Company may notify
her that an event of disability ("Event of Disability") exists whereupon,
provided she remains disabled, Ms. Fox shall continue to receive the
compensation described in Section 3 hereof for a period of three (3) months
after the date of the Event of Disability. Such payments shall be reduced by any
disability payment to which Ms. Fox may be entitled in lieu of such compensation
but not by any disability payment for which Ms. Fox has privately contracted
without the Company's involvement. At the expiration of the three month period,
payment of such compensation pursuant to Section 3 shall cease and this
Employment Agreement may be terminated by the Company at its sole discretion.
The term "disability" as used herein shall mean a condition which prohibits Ms.
Fox from performing her duties hereunder with reasonable accommodation which she
may request. If Ms. Fox should die before the termination of this Employment
Agreement, Ms. Fox' compensation under Section 3 hereof shall terminate upon the
date of her death, with the exception of reimbursement of authorized, ordinary
and necessary business expenses already incurred, and any compensation already
earned or vested as of that date.
2.4 TERMINATION BY MS. FOX. This Employment Agreement shall
terminate upon Ms. Fox' death. Further, Ms. Fox shall have the right to
terminate the Employment Agreement by written notice for the following
reasons (a "Termination by Ms. Fox"):
(a) Joel Gemunder ceases to be either Company President or
principal Executive Officer;
(b) Ms. Fox is not elected to the Company Board of Directors;
(c) Disability of Ms. Fox as defined in Section 2.3 above;
(d) Termination of the Consulting Agreement by the Company or
by MLF unless such termination is pursuant to the Letter
Agreement;
(e) Material breach or threatened breach by the Company of its
duties under this Employment Agreement.
Upon any Termination by Ms. Fox, all payments to Ms. Fox under Section 3
of this Employment Agreement shall cease immediately, with the exception of
reimbursement of authorized, ordinary and necessary business expenses already
incurred, and any compensation already earned or vested as of that date.
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<PAGE> 4
2.5 EFFECT OF TERMINATION UPON GRANTS OF RESTRICTED STOCK OR STOCK OPTIONS
AND ADVANCED BONUSES. In the event this Employment Agreement is terminated, Ms.
Fox' rights in respect of any stock or options granted to her shall be governed
by the terms of Section 3.2 hereof and of the agreement(s) with respect thereto
which has/have been or may be entered into at the time of such grant(s). In the
event this Employment Agreement is terminated, any bonus theretofore advanced to
her shall be repaid pro rata (as of the date of termination) for the twelve (12)
month period with respect to which said bonus is or would be applicable.
SECTION 3. COMPENSATION, BENEFITS AND EXPENSES
-----------------------------------------------
3.1 ANNUAL SALARY. The Company shall pay to Ms. Fox an annual salary ("Base
Salary") of $168,000.00, payable in equal monthly installments, or at such
different intervals as the President of the Company may determine but not less
than monthly. Ms. Fox shall devote her full professional time and attention to
her duties as an employee of Westhaven, but may devote her personal time to MLF.
The foregoing notwithstanding, and without limiting the Company's rights
pursuant to Section 2.2(d), in the event Ms. Fox devotes any of her professional
time to MLF, the Company shall reduce her Base Salary in proportion to the
percentage of her professional time she devotes to MLF. At the end of each
month, Ms. Fox shall advise the Company as to the percentage of her professional
time (if any) she has devoted to MLF during that month. The Company shall review
Ms. Fox' Base Salary every 14-15 months, and shall make such upward adjustments
as are generally made for Senior Vice Presidents of the Company at the Company's
discretion, but subject to a measure of judgment which is not less than that
applied to members of the Company's senior management, taking into consideration
Ms. Fox' performance and results as compared with those of other senior
executives of the Company, the performance of the Company and general economic
conditions.
3.2 INCENTIVE COMPENSATION. On a date which is within one hundred twenty
(120) days following the Commencement Date (said date being the "Grant Date")
the Company will grant to Ms. Fox an option to purchase, at a purchase price per
share equal to the market price thereof on the date of the grant, 14,000 shares
of the Company's common stock, par value $1.00 per share, which will vest as
follows:
Anniversary Date of
Grant Date Number of Shares
---------- ----------------
1st 3,500
2nd 3,500
3rd 3,500
4th 3,500
As a condition of her receipt of such option, Ms. Fox shall enter into a
separate agreement with the Company which reflects the foregoing as well as such
restrictions, terms and conditions as are then usual and customary under the
Company's existing plan governing stock options. The foregoing notwithstanding,
in the event this Employment Agreement expires by its terms on January 31, 2001
and is not extended or renewed, any unvested options shall continue to vest in
accordance with the original vesting schedule therefor.
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<PAGE> 5
On the Grant Date the Company will grant to Ms. Fox 14,000 shares of
Omnicare restricted stock, which will vest as follows:
Anniversary Date of Percentage of
Grant Date Shares Granted
---------- --------------
1st 5
2nd 5
3rd 15
4th 15
5th 20
6th 20
7th 20
As a condition to her receipt of such stock, Ms. Fox shall enter into a
restricted share agreement which reflects the foregoing as well as such
restrictions, terms and conditions as are then usual and customary under the
Company's existing stock incentive plan. The foregoing notwithstanding, in the
event this Employment Agreement expires by its terms on January 31, 2001 and is
not extended or renewed, any unvested shares shall continue to vest in
accordance with the original vesting schedule therefor.
The Company shall pay to Ms. Fox incentive compensation, including bonuses,
stock awards and/or stock options, at a level as is generally paid to Senior
Vice Presidents of the Company, and subject to a measure of judgment which is
not less than that applied to members of the Company's senior management, taking
into consideration Ms. Fox' performance, the performance of the Company and
general economic conditions. Within one hundred twenty (120) days following the
Commencement Date the Company shall pay to Ms. Fox the sum of Fifty Two Thousand
Dollars ($52,000.00) as an advance against any bonus which may be awarded to her
in respect of 1996. Ms. Fox' incentive compensation will be determined at the
discretion of the Compensation Committee and/or Incentive Committee of the Board
of Directors, as the case may be, and is contingent upon approval by the full
Board of Directors.
3.3 REIMBURSEMENT OF BUSINESS EXPENSES. The Company will reimburse Ms. Fox
for all authorized, ordinary and necessary business expenses incurred by her in
connection with the Business. Reimbursement of such expenses shall be paid
monthly, upon submission by Ms. Fox to the Company of vouchers itemizing such
expenses in a form satisfactory to the Company, properly identifying the nature
and business purpose of any expenditures.
3.4 BENEFITS. The Company will provide to Ms. Fox, at a minimum, the
benefits which she received during her prior employment with Westhaven;
provided, however, that, relative to insurance, medical, savings and investment
plans, sick leave, holiday, and other similar benefits, Ms. Fox will be entitled
to the same level of such benefits as may be given from time to time to other
employees of Westhaven as set forth from time to time by the Board of Directors
and management of the Company. Ms. Fox shall be entitled to four (4) weeks' paid
vacation during each twelve (12) month period of this Employment Agreement. Ms.
Fox may request non-paid leave benefits at any time, which benefits may be
granted at the sole discretion of the Board of Directors of the Company or the
President of the Company.
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<PAGE> 6
SECTION 4: ALL BUSINESS TO BE THE PROPERTY OF THE COMPANY
----------------------------------------------------------
4.1 BUSINESS TO BE PROPERTY OF THE COMPANY. Ms. Fox agrees that any and all
business and "confidential information" (as defined in Section 5.1 hereof) which
are part of or relate to the Business and which are or have been developed by
her or by any employee of the Company or any of its affiliates or subsidiaries,
or their respective successors, or by MLF or its employees or agents, including,
without limitation, contracts, fees, commissions, customer lists and any other
incident of any business developed by the Company, or carried on by Ms. Fox for
the Company, are and shall be the exclusive property of the Company for its sole
use.
4.2 PERSONAL POSSESSIONS. Nothing herein shall limit Ms. Fox' rights in or
to any specific items of personal property to which, pursuant to their
identification in any previous agreements with the Company, Ms. Fox
may be entitled.
SECTION 5. COVENANTS OF NONDISCLOSURE, NONSOLICITATION AND NONCOMPETITION
--------------------------------------------------------------------------
5.1 NONDISCLOSURE. Ms. Fox shall not at any time during or after
termination of Ms. Fox' employment with Westhaven or the Company, or any
affiliate or subsidiary of the Company, or their respective successors, directly
or indirectly, use any proprietary, "confidential information" of the Company,
or any of its affiliates or subsidiaries, including, without limitation,
Westhaven, for any purpose not associated with Company activities, or
disseminate or disclose any such information to any person or entity not
affiliated with the Company. Such Company proprietary, "confidential
information" includes, without limitation, customer lists, computer technology,
programs and data, whether online or off-loaded on disk format, sales, marketing
and prospecting methodologies, plans and materials, and any other such plans,
programs, methodologies and materials used in managing, marketing or furthering
the Business. Upon termination of Ms. Fox' employment with Westhaven or the
Company, or any affiliate or subsidiary of the Company, or their respective
successors, Ms. Fox will return to the Company all documents, records,
notebooks, manuals, plans and materials, computer disks and similar repositories
of or containing Company proprietary, "confidential information", including all
copies thereof, then in Ms. Fox' possession or control, whether prepared by Ms.
Fox or otherwise. Ms. Fox will undertake all reasonably necessary and
appropriate steps to ensure that the confidentiality of Company proprietary,
"confidential information" shall be maintained.
5.2 NONSOLICITATION. During Ms. Fox' employment with Westhaven or the
Company or any affiliate or subsidiary of the Company or their respective
successors, and for a period of two (2) years after the termination of such
employment, for any reason, Ms. Fox will not solicit, take away, hire, employ or
endeavor to employ any of the employees of the Company or any affiliate or
subsidiary or their respective successors.
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<PAGE> 7
5.3 NONCOMPETITION. Ms. Fox agrees that, during her employment with
Westhaven or the Company, or any affiliate or subsidiary of the Company, or
their respective successors, and for two (2) years immediately after such
employment ceases, she will neither, directly or indirectly, engage or hold an
interest in any business competing with the Business as then conducted by the
Company, its subsidiaries or affiliated companies, or their respective
successors, nor directly or indirectly have any interest in, own, manage,
operate, control, be connected with as a stockholder (other than as a
stockholder of less than five percent (5%) of a publicly held corporation),
joint venturer, officer, director, partner, employee or consultant, or otherwise
engage or invest or participate in, any business which shall compete with the
Business as then conducted by the Company, its subsidiaries or affiliated
companies, or their respective successors, in the States of Indiana, Michigan
and Ohio and such other States or defined geographic areas with respect to which
Ms. Fox may have had active involvement on behalf of the Company during the
period of employment hereunder. Ms. Fox' obligations of noncompetition hereunder
are in addition to the terms and conditions of the Non-Compete Agreement between
Omnicare Holding Company and Ms. Fox dated October 13, 1992, (the "Acquisition
Non-Compete Agreement") which terms and conditions are reaffirmed by Ms. Fox
but which expire, in accordance with their terms on October 12, 1997.
5.4 APPLICABILITY. The provisions of Sections 5.1, 5.2, and 5.3 immediately
preceding shall remain in effect in accordance with their respective terms
notwithstanding any termination of Ms. Fox' employment with Westhaven or the
Company or any affiliate or subsidiary of the Company, or their respective
successors, regardless of the cause or circumstances thereof and whether such
termination was voluntary or involuntary. Further, Ms. Fox' covenants of
nondisclosure, noncompetition and nonsolicitation along with the Company's
remedies for the breach or threatened breach of those covenants shall remain in
effect in accordance with their respective terms following any termination of
this Employment Agreement.
5.5 REMEDIES. In view of the services which Ms. Fox will perform hereunder,
which are special, unique, extraordinary and intellectual in character, which
place her in a position of confidence and trust with the customers and employees
of the Company and which provide her with access to confidential financial
information, trade secrets, "know-how" and other confidential and proprietary
information of the Company, in view of the geographic scope and nature of the
business in which the Company is engaged, and recognizing the value of this
Employment Agreement to her, Ms. Fox expressly acknowledges that the restrictive
covenants set forth in this Employment Agreement and the Consulting Agreement,
including, without limitation, the duration, the business scope and the
geographic scope of such covenants, are necessary in order to protect and
maintain the proprietary interests and other legitimate business interests of
the Company, and that the enforcement of such restrictive covenants will not
prevent her from earning a livelihood. Ms. Fox further acknowledges that the
remedy at law for any breach or threatened breach of this Employment Agreement
will be inadequate and, accordingly, that the Company shall, in addition to all
other available remedies (including, without limitation, seeking such damages as
it can show it has sustained by reason of such breach), be entitled to
injunctive or any other appropriate form of equitable relief. In the event Ms.
Fox breaches or threatens to breach these restrictive covenants, she shall not
receive any further payments from the Company pursuant to this Employment
Agreement, following the operation of the thirty (30) day cure period provided
for in Section 6.7 hereof, but only if such breach or threatened breach has not
been cured. Non-payment by the Company does not waive any right or remedy of Ms.
Fox that she may assert or have the right to assert hereunder.
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<PAGE> 8
SECTION 6. MISCELLANEOUS PROVISIONS
------------------------------------
6.1 CONFIDENTIALITY. Ms. Fox and the Company shall keep the terms of this
Employment Agreement and the Consulting Agreement absolutely confidential, and
will not disclose such terms to any person or entity except by the Company to
the extent necessary or desirable for it to comply with applicable laws and
regulations.
6.2 INDEMNIFICATION. Except to the extent prohibited by law, the Company
shall save and hold harmless Ms. Fox from and against any claim of liability or
loss (including reasonable attorney's fees) arising as a result of Ms. Fox' good
faith activities in the course of her employment hereunder.
6.3 ASSIGNMENT AND PERFORMANCE. The Company may assign its rights and
obligations under this Employment Agreement to any corporation or other entity
which is controlled by or is under common control with the Company, or which
succeeds to all or substantially all of the assets of the Company, without Ms.
Fox' consent. This Employment Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company. The Company may perform
any or all of its obligations under this Employment Agreement directly, or
through any of its subsidiaries or affiliates, including but not limited to
Westhaven. Ms. Fox' obligation to provide services hereunder may not be assigned
to or assumed by any other person or entity.
6.4 NOTICES. All notices, requests, demands or other communications under
this Employment Agreement shall be in writing and shall only be deemed to be
duly given if made in writing and sent by first class mail, overnight courier,
or telecopy to the following addresses:
Cheryl D. Hodges, Senior Vice President
and Secretary
Omnicare, Inc.
2800 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
and
Ms. Mary Lou Fox
30171 Waterford Drive West
Perrysburg, Ohio 43551-3493
6.5 SEVERABILITY. Any provision of this Employment Agreement which is
deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this paragraph, be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provisions of this Employment Agreement invalid, illegal, or unenforceable in
any other jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant shall be
modified so that the scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable.
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<PAGE> 9
6.6 AMENDMENT AND WAIVER. This Employment Agreement, the Letter Agreement,
and the Acquisition Non-Compete Agreement constitute the entire agreement
between the parties hereto as to the matters addressed herein and may be
modified, amended or waived only by a written instrument signed by all the
parties hereto. No waiver or breach of any provision hereof shall be a waiver of
any future breach, whether similar or dissimilar in nature.
6.7 RIGHT TO CURE. In the event that either party in good faith believes
that the other has violated (whether by breach, threatened breach or otherwise)
any of the terms of this Employment Agreement, then that party shall give notice
in writing to the other party as provided in Sections 6.4 of this Employment
Agreement of the alleged violation and that party shall have thirty (30) days
following receipt of said notice to cure any such alleged violation.
6.8 INJUNCTIVE RELIEF. The parties hereto agree that money damages would be
an inadequate remedy for the Company in the event of breach or threatened breach
of this Employment Agreement and thus, in any such event, the Company may,
either with or without pursuing any potential damage remedies, immediately
obtain and enforce any injunction prohibiting Ms. Fox from violating this
Employment Agreement.
6.9 APPLICABLE LAW. This Employment Agreement has been made and its
validity, performance and effect shall be determined in accordance with
the laws of the State of Ohio.
6.10 COUNTERPARTS. This Employment Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
6.11 INTERPRETATION. The headings contained in this Employment Agreement
are for reference purposes only and shall not affect in any ways the meaning or
interpretation of this Employment Agreement. The language in all parts of this
Employment Agreement shall in all cases be construed according to its fair
meaning, and not strictly for or against any party hereto. In this Employment
Agreement, unless the context otherwise requires, the masculine, feminine and
neuter genders and the singular and the plural include one another. The parties
acknowledge that this Employment Agreement has been developed and drafted
jointly and with the assistance of counsel.
6.12 NON-WAIVER OF RIGHTS AND BREACHES. No failure or delay of any party
herein in the exercise of any right given to such party hereunder shall
constitute a waiver thereof unless the time specified herein for the exercise of
such right has expired, nor shall any single or partial exercise of any right
preclude other or further exercise thereof or of any other right. The waiver of
a party hereto of any default of any other party shall not be deemed to be a
waiver of any subsequent default or other default by such party.
6.13 BOARD APPROVAL. Notwithstanding any provision hereof to the contrary,
this Agreement is subject to approval of the Board of Directors of the Company,
which approval will be recommended by Joel Gemunder.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
OMNICARE, INC.
By:/s/Joel F. Gemunder
----------------------
Its:President
----------------------
/s/Mary Lou Fox
----------------------
Mary Lou Fox
E-83
<PAGE> 1
CONSULTING AGREEMENT
--------------------
THIS CONSULTING AGREEMENT (the "Consulting Agreement") is made this 4th
day of April, 1996, by and between MLF CO. ("MLF") and OMNICARE, INC., a
Delaware corporation with its principal place of business in Cincinnati, Ohio
(the "Company").
WHEREAS, contemporaneous with the execution of this Consulting Agreement,
the Company has entered into an Employment Agreement with Mary Lou Fox ("Ms.
Fox"), who has an ownership interest in MLF (the "Employment Agreement"),
whereby Ms. Fox will be employed by Westhaven Services Co., a Delaware
corporation which is a subsidiary of the Company ("Westhaven").
WHEREAS, the Company now desires to retain MLF for the purpose of providing
consulting services in furtherance of Westhaven's and the Company's
institutional pharmacy business and such other businesses in which the Company
or its subsidiaries or affiliates may be engaged during the term of this
Consulting Agreement (collectively the "Business"), and MLF desires to provide
those services; and
WHEREAS, MLF shall have access to confidential financial information, trade
secrets and other confidential and proprietary information of the Company;
NOW, THEREFORE, in consideration of these recitals and the mutual covenants
and agreements hereinafter set forth, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1: CONSULTING SERVICES
-------------------------------
1.1 SERVICES. MLF shall provide advisory and consulting services to the
Company during the term of this Consulting Agreement as the Company may
reasonably direct. MLF agrees to devote its best efforts to providing advisory
and consulting services pursuant to this Consulting Agreement, and to provide
those services in an efficient, trustworthy and businesslike manner. MLF shall
not act in any manner directly or indirectly which may damage the business of
the Company or which would adversely affect the goodwill, reputation and
business relations of the Company with the public generally or with any of its
employees.
1.2 OTHER BUSINESS OF MLF. To the extent that MLF does not have consulting
services to perform for the Company, MLF may engage in consulting and other
projects, as long as MLF's engaging in those activities does not breach any term
of this Consulting Agreement, including but not limited to the restrictive
covenants contained in Section 5, and MLF does not appropriate any opportunities
of the Company. If MLF desires to engage in a non-competing project or activity
which arises out of or is related in any way to the health care industry, MLF
will first bring it to the attention of the Company and ascertain whether the
Company is interested in pursuing it. If, after a period of thirty (30) days,
the Company has no good faith interest in pursuing such project or activity, MLF
shall be free to pursue it, provided that it does not breach any term of this
Agreement. Any disputes arising between the parties under this Section shall be
resolved pursuant to procedure set forth in Section 6.8. The Company agrees,
subject to the restrictions set forth in Section 5, that MLF may engage in a
cruise ship pharmacy project and consulting to Medico, provided that such cruise
ship pharmacy project is not now and shall not henceforth be deemed to be
competitive pursuant to Section 5.3 even if, subsequent hereto, the Company
shall elect to engage in such business.
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<PAGE> 2
SECTION 2: TERM
----------------
2.1 TERM. This Consulting Agreement shall commence as of February 1, 1996
(the "Effective Date") and shall continue for a period of five years from the
Effective Date, unless such term shall be extended by mutual agreement between
the parties or this Consulting Agreement is terminated as provided for in
Sections 2.2 and 2.3 of this Consulting Agreement.
2.2 TERMINATION BY THE COMPANY FOR CAUSE. The Company shall have the right
to terminate this Consulting Agreement for the following causes (a "Company
Termination for Cause"):
(a) Conviction of any employee of MLF, its owners, and other
persons or entities over which MLF has control for, or
entry of a plea of guilty or nolo contendere by MLF with
respect to, any felony or any crime involving an act of
moral turpitude;
(b) Commission by any employee of MLF, its owners, and other
persons or entities over which MLF has control of any act
of fraud or dishonesty;
(c) Conduct by any employee of MLF, its owners, and other
persons or entities over which MLF has control which is
intentionally detrimental to the reputation, goodwill or
business operations of the Company;
(d) Negligent conduct by any employee of MLF, its owners, and
other persons or entities over which MLF has control which
is detrimental to the reputation, goodwill or business
operations of the Company;
(e) MLF's failure to provide satisfactory consulting or
advisory services reasonably requested by the Company;
(f) MLF's material breach or threatened breach of the
restrictive covenants set forth in Section 5 of this
Consulting Agreement;
(g) Termination of Ms. Fox' employment with Westhaven or with
the Company, or any affiliate or subsidiary of the
Company, or termination of Ms. Fox' active involvement
with or ownership of MLF for any reason;
(h) MLF is dissolved.
Upon any Company Termination for Cause, all payments to MLF under Section 3
of this Consulting Agreement shall cease immediately, with the exception of
reimbursement of authorized, ordinary and necessary business expenses already
incurred, and any payments already earned or vested as of that date.
E-85
<PAGE> 3
2.3 TERMINATION BY MLF FOR CAUSE. MLF shall have the right to terminate
this Consulting Agreement for the following causes (a "MLF Termination for
Cause"):
(a) Termination of Ms. Fox' employment with Westhaven or with
the Company, or with any affiliate or subsidiary of the
Company, for any reason;
(b) Ms. Fox ceases her involvement with MLF or MLF is
dissolved;
(c) Material breach or threatened breach by the Company of its
obligations hereunder.
Upon any MLF Termination for Cause, all payments to MLF under Section 3 of
this Consulting Agreement shall cease immediately, with the exception of
reimbursement of authorized, ordinary and necessary business expenses already
incurred, and any payments already earned or vested as of that date.
SECTION 3: PAYMENTS
---------- --------
3.1 PAYMENTS. The Company shall pay to MLF during the term of this
Consulting Agreement, the sum of Twelve Thousand Five Hundred Dollars
($12,500.00), per month for its advisory and consulting services.
3.2 BENEFITS. The Company and Ms. Fox acknowledge that, MLF's employees are
not eligible for and shall not participate in any pension, health or other
fringe benefit plan of the Company during the term of this Consulting Agreement.
However, Ms. Fox is entitled to benefits as an employee of Westhaven pursuant to
paragraph 3.4 of the Employment Agreement.
3.3 REIMBURSEMENT OF BUSINESS EXPENSES. The Company will reimburse MLF for
all authorized, ordinary and necessary business expenses incurred by it in
connection with the Business. Reimbursement of such expenses shall be paid
monthly, upon submission by MLF to the Company of vouchers itemizing such
expenses in a form satisfactory to the Company, properly identifying the nature
and business purpose of any expenditures.
SECTION 4: ALL BUSINESS TO BE THE PROPERTY OF THE COMPANY; ASSIGNMENT
----------------------------------------------------------------------
4.1 BUSINESS TO BE PROPERTY OF THE COMPANY. MLF agrees that any and all
business and "confidential information" (as defined in Section 5.1 hereof) which
are part of or related to the Business and which are or have been developed by
it or by any employee or agent of the Company or any of its affiliates or
subsidiaries, or their respective successors, or MLF, including, without
limitation, contracts, fees, commissions, customer lists and any other incident
of any business developed by the Company, or carried on by MLF for the Company,
are and shall be the exclusive property of the Company for its sole use.
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<PAGE> 4
SECTION 5: COVENANTS OF NONDISCLOSURE, NONSOLICITATION AND NONCOMPETITION
--------------------------------------------------------------------------
5.1 NONDISCLOSURE. MLF, its owners, employees, and any other persons or
entities over which MLF has control shall not at any time during or after
termination of MLF's consulting relationship with the Company, directly or
indirectly, use any proprietary, "confidential information" of the Company or
any of its affiliates or subsidiaries, including, without limitation, Westhaven,
for any purpose not associated with Company activities, or disseminate or
disclose any such information to any person or entity not affiliated with the
Company. Such Company proprietary, "confidential information" includes, without
limitation, customer lists, computer technology, programs and data, whether
online or off-loaded on disk format, sales, marketing and prospecting
methodologies, plans and materials, and any other such plans, programs,
methodologies and materials used in managing, marketing or furthering the
Business. Upon termination of MLF's consulting relationship with the Company,
MLF will return, and cause to be returned, to the Company all documents,
records, notebooks, manuals, plans and materials, computer disks and similar
repositories of or containing Company proprietary, "confidential information",
including all copies thereof, then in MLF's possession or control, whether
prepared by MLF or otherwise. MLF will undertake all reasonably necessary and
appropriate steps to insure that the confidentiality of Company proprietary,
"confidential information" shall be maintained.
5.2 NONSOLICITATION. During its consulting relationship with the Company
and for a period of two (2) years after termination of the consulting
relationship, whether such termination was voluntary or involuntary, with or
without cause, MLF, its owners, employees, and any other persons or entities
over which MLF has control will not solicit, take away, hire, employ or endeavor
to employ any of the employees of the Company or any affiliate or subsidiary of
the Company, or their respective successors.
5.3 NONCOMPETITION. MLF agrees that during its consulting relationship with
the Company and for two years after termination of the consulting relationship,
whether such termination was voluntary or involuntary, with or without cause,
it, its owners, employees, and any other persons or entities over which MLF has
control will not, directly or indirectly, engage or be interested in any
business competing with the Business of the Company, its subsidiaries,
affiliated companies, or their respective successors, or, directly or
indirectly, have any interest in, own, manage, operate, control, be connected
with as a stockholder (other than as a stockholder of less than five percent
(5%) of the issued and outstanding stock of a publicly held corporation), joint
venturer, partner or consultant, or otherwise engage or invest or participate
in, any business which shall compete with the Company or any Business conducted
by the Company, its subsidiaries or affiliated companies, or their respective
successors, throughout the United States of America. For purposes of this
Section 5, the term "Business" shall mean the institutional pharmacy business,
all other businesses in which the Company or its affiliates or subsidiaries are
engaged on the Effective Date, and any other business in which the Company or
its affiliates or subsidiaries are engaged during the Company's fiscal year
immediately preceding the date on which the consulting relationship is
terminated, the sales of which business account for four percent (4%) or more of
the total consolidated sales of the Company and its affiliates or subsidiaries
during such fiscal year. Further, nothing herein shall limit or waive any rights
of the Company under any other agreement between the parties regarding
noncompetition.
E-87
<PAGE> 5
5.4 APPLICABILITY. The provisions of Sections 5.1, 5.2, and 5.3 immediately
preceding shall remain in effect in accordance with their respective terms
notwithstanding any termination of MLF's consulting relationship with the
Company regardless of the cause or circumstances thereof and whether such
termination was voluntary or involuntary. Further, MLF's covenants of
nondisclosure, noncompetition and nonsolicitation along with the Company's
remedies for the breach or threatened breach of those covenants shall remain in
effect in accordance with their respective terms following any termination of
this Consulting Agreement.
5.5 REMEDIES. In view of the services which MLF will perform for the
Company, which are special, unique, extraordinary and intellectual in character,
which place it in a position of confidence and trust with the customers and
employees of the Company and which provide it with access to confidential
financial information, trade secrets, "know-how" and other confidential and
proprietary information of the Company, in view of the geographic scope and
nature of the business in which the Company is engaged, and recognizing the
value of this Consulting Agreement to it, MLF expressly acknowledges that the
restrictive covenants set forth in this Consulting Agreement, including, without
limitation, the geographic scope of such covenants, are necessary in order to
protect and maintain the proprietary interests and other legitimate business
interests of the Company. MLF further acknowledges that the remedy at law for
any breach or threatened breach of this Consulting Agreement will be inadequate
and, accordingly, that the Company shall, in addition to all other available
remedies (including, without limitation, seeking such damages as it can show it
has sustained by reason of such breach), be entitled to injunctive or any other
appropriate form of equitable relief. Without limitation upon any other remedies
available to the Company, in the event MLF breaches or threatens to breach these
restrictive covenants, it shall not receive any further payments from the
Company pursuant to this Consulting Agreement, following the operation of the
thirty (30) day cure period provided for in Section 6.12 hereof, but only if
such breach or threatened breach has not been cured. Non-payment by the Company
does not waive any right or remedy of MLF that it may assert or have the right
to assert hereunder.
5.6 As an express condition of this Consulting Agreement and to the
Company's performance of its obligations hereunder, MLF shall obtain from its
owners, employees, significant independent contractors and any other persons or
entities over which MLF has control, as soon as possible in each case,
agreements in form and substance satisfactory to the Company, which reflect the
provisions and restrictions of Sections 5.1, 5.2 and 5.3 respectively as to each
such person or entity. Such agreements shall be entered into for the benefit of
the Company and copies thereof shall be furnished to the Company promptly. In
the case of Ms. Nancy Bucci (who, to the extent she is involved in the
activities and business of MLF, shall be a full time employee of MLF), such
agreement shall be entered into and delivered to the Company upon the earlier of
the execution and delivery of this Consulting Agreement, or the date on which
she commences employment with MLF.
SECTION 6: MISCELLANEOUS PROVISIONS
------------------------------------
6.1 CONFIDENTIALITY. MLF, and any person or entity within its control, and
the Company shall keep the terms of this Consulting Agreement and the Employment
Agreement absolutely confidential and will not disclose them to any person or
entity, except by the Company to the extent necessary or desirable for it to
comply with applicable laws and regulations.
E-88
<PAGE> 6
6.2 INDEMNIFICATION. The Company shall save and hold harmless MLF from and
against any claim of liability or loss (including reasonable attorneys' fees)
arising as a result of MLF's proper performance of its obligations under this
Consulting Agreement. Notwithstanding the foregoing, the Company shall not be
required to indemnify MLF for any unlawful or unauthorized action or actions
beyond the scope of this Consulting Agreement.
6.3 ASSIGNMENT AND PERFORMANCE. The Company may assign its rights and
obligations under this Consulting Agreement to any corporation or other entity
which is controlled by or is under common control with the Company, or which
succeeds to all or substantially all of the assets of the Company without MLF's
consent. This Consulting Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the Company. The Company may perform any or
all of its obligations under this Consulting Agreement directly, or through any
of its subsidiaries or affiliates, including but not limited to Westhaven. MLF's
obligation to provide services hereunder may not be assigned to or assumed by
any other person or entity.
6.4 NOTICES. All notices, requests, demands, or other communications under
this Consulting Agreement shall be in writing and shall only be deemed to be
duly given if made in writing and sent by first class mail, overnight courier or
telecopy to the following address:
Cheryl D. Hodges, Senior Vice President
and Secretary
Omnicare, Inc.
2800 Chemed Center
255 E. Fifth Street
Cincinnati, Ohio 45202
and
MLF Co.
c/o Ms. Mary Lou Fox
30171 Waterford Drive West
Perrysburg, Ohio 43551-3493
6.5 SEVERABILITY. If any provision or portion of this Consulting Agreement
shall be or become illegal, invalid or unenforceable in whole or in part for any
reason, such provision shall be ineffective only to the extent of such
illegality or invalidity without invalidating the remainder of such provision or
the remaining provisions of this Consulting Agreement. If any court should deem
any covenant herein to be invalid, illegal or unenforceable because its scope is
considered excessive, such covenant shall be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.
6.6 AMENDMENT AND WAIVER. This Consulting Agreement constitutes the entire
agreement between the parties hereto and may be modified, amended or waived only
by a written instrument signed by the parties hereto.
6.7 GOVERNING LAW. This Consulting Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of Ohio
applicable to contracts executed and wholly performed within such State and, in
enforcing such governing laws, any court of competent jurisdiction shall afford
all relief which an Ohio court would afford under similar circumstances.
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<PAGE> 7
6.8 DISPUTE RESOLUTION. Any matter subject to arbitration under Section 1.2
hereof, and any other matter which the parties, in the future, may agree to
submit to arbitration shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association and
judgment on the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof. Such arbitration proceedings shall be held in
Cincinnati, Ohio, U.S.A.
6.9 COUNTERPARTS. This Consulting Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
6.10 INTERPRETATION. The headings contained in this Consulting Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Consulting Agreement. The language in all parts of this
Consulting Agreement shall in all cases be construed according to its fair
meaning, and not strictly for or against any party hereto. In this Consulting
Agreement, unless the context otherwise requires, the masculine, feminine and
neuter genders and the singular and the plural include one another.
6.11 NON-WAIVER OF RIGHTS AND BREACHES. No failure or delay of any party
herein in the exercise of any right given to such party hereunder shall
constitute a waiver thereof unless the time specified herein for the exercise of
such right has expired, nor shall any single or partial exercise of any right
preclude other or further exercise thereof or of any other right. The waiver of
a party hereto of any default of any other party shall not be deemed to be a
waiver of any subsequent default or other default by such party. The parties
acknowledge that this Consulting Agreement has been developed and drafted
jointly and with the assistance of counsel.
6.12 RIGHT TO CURE. In the event that either party in good faith believes
that the other has violated (whether by breach, threatened breach or otherwise)
any of the terms of this Consulting Agreement, then that party shall give notice
in writing to the other party as provided in Section 6.4 of this Agreement of
the alleged violation, and that party shall have thirty (30) days following
receipt of said notice to cure any such alleged violation.
6.13 BOARD APPROVAL. Notwithstanding any provision hereof to the contrary,
this Agreement, including, though without limitation, the provisions of Section
3.1, and the rights and responsibilities of the parties hereunder, are subject
to approval of the Board of Directors of the Company, which approval will be
recommended by Joel Gemunder.
SECTION 7: RIGHT OF FIRST REFUSAL
----------------------------------
7.1 The Company shall have a right of first refusal in respect of the sale
or transfer of all or substantially all of the shares or assets of MLF (a
"Sale"). In the event of any proposed Sale, MLF shall notify the Company of the
material terms and conditions thereof and the identity of the proposed purchaser
or transferee, certifying that same is ready, willing and able to consummate the
proposed purchase or transfer. The Company shall have a period of sixty (60)
days from its receipt of such notice and certification in which to notify MLF of
its intention to exercise said right upon the same terms and conditions. Unless
otherwise agreed, the parties shall complete such sale and purchase or transfer
within thirty (30) days of MLF's receipt of such notice.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date first written above.
OMNICARE, INC.
By:/s/Joel F. Gemunder
----------------------
Its:President
----------------------
MLF CO.
By: /s/Mary Lou Fox
----------------------
Its:President
----------------------
E-91
<PAGE> 1
NINTH
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
JOEL F. GEMUNDER of Cincinnati, Ohio ("Employee"), and OMNICARE MANAGEMENT
COMPANY, a Delaware corporation with its principal place of business in
Cincinnati, Ohio (the "Company"), hereby agree as follows:
1. Recitals
--------
(a) The Company is an indirect subsidiary of Omnicare, Inc. as a
result of a corporate restructuring of Omnicare, Inc. and its affiliates.
(b) In connection with such restructuring certain assets and liabilities of
Omnicare, Inc. were transferred to the Company effective December 31, 1988,
including an Employment Agreement between Omnicare, Inc. and Employee dated
August 4, 1988 (the "Employment Agreement").
(c) The Company, as assignee, and Employee amended the Employment Agreement by
mutual written agreement on December 31, 1988, May 23, 1989, May 22, 1990, May
21, 1991, May 19, 1992, May 17, 1993, May 16, 1994 and May 15, 1995 (the "Prior
Amendments").
2. Amendments
----------
(a) Section 1.2 of the Employment Agreement is amended by deleting the year
"2000" from the third line of Section 1.2 and substituting the year "2001"
therefor.
(b) Section 2.1 of the Employment Agreement is amended by deleting "$500,000"
from the second line thereof and substituting "$558,600" therefor.
(c) The amount of unrestricted stock award recognized in lieu of incentive
compensation in 1995 is $401,667.
3. General
-------
Except as previously changed by the Prior Amendments and as specifically
amended herein, the Employment Agreement will remain in full force and effect in
accordance with its original terms, conditions and provisions.
IN WITNESS WHEREOF, the parties have duly executed this amendatory agreement
as of May 20, 1996.
OMNICARE MANAGEMENT COMPANY
/s/ Joel F. Gemunder By: /s/ Cheryl D. Hodges
- --------------------------- ---------------------------
JOEL F. GEMUNDER
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<PAGE> 2
THIRD
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
KENNETH W. CHESTERMAN of Cincinnati Ohio ("Employee") and OMNICARE
MANAGEMENT COMPANY, a Delaware corporation with its principal place of business
in Cincinnati, Ohio (the "Company"), hereby agree as follows:
1. Recitals
--------
(a) The Company is an indirect subsidiary of Omnicare, Inc. as a
result of a corporate restructuring of Omnicare, Inc. and its affiliates.
(b) In connection with such restructuring certain assets and
liabilities of Omnicare, Inc. were transferred to the Company effective
December 31, 1988. The Employment Agreement between Omnicare, Inc. and
Employee dated May 17, 1993 (the "Employment Agreement") was transferred
pursuant to the Assignment and Assumption Agreement dated May 16, 1994 among
the company, Employee and Omnicare, Inc. (the "Assignment and Assumption
Agreement").
(c) The Company, as assignee, and Employee amended the Employment Agreement by
mutual written agreement on May 16, 1994 and May 15, 1995.
2. Amendments
----------
(a) Section 1.2 of the Employment Agreement is hereby amended by deleting the
year "2000" from the third line of Section 1.2 and substituting the year "2001"
therefor.
(b) The amount of unrestricted stock award recognized in lieu of incentive
compensation in 1995 is $203,759.
3. General
-------
Except as specifically amended herein the Employment Agreement will remain in
full force and effect in accordance with its original terms, conditions and
provisions and those of the Assignment and Assumption Agreement.
IN WITNESS WHEREOF, the parties have duly executed this amendatory
agreement as of May 20, 1996.
OMNICARE MANAGEMENT COMPANY
/s/ Kenneth W. Chesterman By: /s/Cheryl D. Hodges
------------------------- -----------------------
KENNETH W. CHESTERMAN
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<PAGE> 3
THIRD
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
PATRICK E. KEEFE of Cincinnati Ohio ("Employee") and OMNICARE MANAGEMENT
COMPANY, a Delaware corporation with its principal place of business in
Cincinnati, Ohio (the "Company"), hereby agree as follows:
1. Recitals
--------
(a) The Company is an indirect subsidiary of Omnicare, Inc. as a
result of a corporate restructuring of Omnicare, Inc. and its affiliates.
(b) In connection with such restructuring certain assets and
liabilities of Omnicare, Inc. were transferred to the Company effective
December 31, 1988. The Employment Agreement between Omnicare, Inc. and
Employee dated March 4, 1993 (the "Employment Agreement") was transferred
pursuant to the Assignment and Assumption Agreement dated May 16, 1994 among
the company, Employee and Omnicare, Inc. (the "Assignment and Assumption
Agreement").
(c) The Company, as assignee, and Employee amended the Employment
Agreement by mutual written agreement on May 16, 1994 and May 15, 1995.
2. Amendments
----------
(a) Section 1.2 of the Employment Agreement is hereby amended by deleting
the year "2000" from the third line of Section 1.2 and substituting the year
"2001" therefor.
(b) The amount of unrestricted stock award recognized in lieu of
incentive compensation in 1995 is $44,141.
3. General
-------
Except as specifically amended herein the Employment Agreement will
remain in full force and effect in accordance with its original terms,
conditions and provisions and those of the Assignment and Assumption Agreement.
IN WITNESS WHEREOF, the parties have duly executed this amendatory
agreement as of May 20, 1996.
OMNICARE MANAGEMENT COMPANY
/s/Patrick E. Keefe By: /s/Cheryl D. Hodges
- ------------------------------ ---------------------------
PATRICK E. KEEFE
E-94
<PAGE> 4
NINTH
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
CHERYL D. HODGES of Cincinnati, Ohio ("Employee"), and OMNICARE MANAGEMENT
COMPANY, a Delaware corporation with its principal place of business in
Cincinnati, Ohio (the "Company"), hereby agree as follows:
1. Recitals
--------
(a) The Company is an indirect subsidiary of Omnicare, Inc. as a
result of a corporate restructuring of Omnicare, Inc. and its affiliates.
(b) In connection with such restructuring certain assets and liabilities of
Omnicare, Inc. were transferred to the Company effective December 31, 1988,
including an Employment Agreement between Omnicare, Inc. and Employee dated
August 4, 1988 (the "Employment Agreement").
(c) The Company, as assignee, and Employee amended the Employment Agreement by
mutual written agreement on December 31, 1988, May 23, 1989, May 22, 1990, May
21, 1991, May 19, 1992, May 17, 1993, May 16, 1994 and May 15, 1995 (the "Prior
Amendments").
2. Amendments
----------
(a) Section 1.2 of the Employment Agreement is amended by deleting the year
"2000" from the third line of Section 1.2 and substituting the year "2001"
therefor.
(b) The amount of unrestricted stock award recognized in lieu of incentive
compensation in 1995 is $70,000.
3. General
-------
Except as previously changed by the Prior Amendments and as specifically
amended herein, the Employment Agreement will remain in full force and effect in
accordance with its original terms, conditions and provisions.
IN WITNESS WHEREOF, the parties have duly executed this amendatory agreement
as of May 20, 1996.
OMNICARE MANAGEMENT COMPANY
/s/ Cheryl D. Hodges By: /s/ Joel F. Gemunder
- ---------------------------------- ------------------------------
CHERYL D. HODGES
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<PAGE> 1
EXHIBIT 11
<TABLE>
<CAPTION>
Omnicare, Inc. and Subsidiary Companies
Computation of Earnings Per Common Share
(in thousands, except per share data)
For the years ended December 31,
1996 1995 1994
------------------------------------------
<S> <C> <C> <C>
PRIMARY EARNINGS*
Net income $43,450 $24,760 $13,531
Aftertax expense related to preferred stock
dividend payable to minority interest in
subsidiary 10 10 -
Minority interest in net income of subsidiary (33) (38) -
------- ------- -------
Primary net income $43,427 $24,732 $13,531
======= ======= =======
Shares
Weighted average number of common
shares outstanding 65,298 52,396 44,958
Additional shares assuming conversion of:
Stock options and stock warrants 2,090 1,530 688
------- ------- -------
Average common shares outstanding and
equivalents as adjusted 67,388 53,926 45,646
======= ======= =======
Primary earnings per common share $ .64 $ .46 $ .30
======= ======= =======
FULLY DILUTED EARNINGS
Net income $43,450 $24,760 $13,531
Aftertax expense related to preferred stock
dividend payable to minority interest in
subsidiary 10 10 -
Minority interest in net income of subsidiary (33) (38) -
Aftertax interest expense related to
5-3/4% convertible subordinated debentures 2,266 3,209 3,218
------- ------- -------
Fully diluted net income $45,693 $27,941 $16,749
======= ======= =======
Shares
Weighted average number of common
shares outstanding 65,298 52,396 44,958
Additional shares assuming conversion of:
Stock options and stock warrants 2,182 1,740 748
Convertible subordinated debentures 7,949 11,148 11,152
------ ------ ------
Average common shares outstanding and
equivalents as adjusted 75,429 65,284 56,858
====== ====== ======
Fully diluted earnings per common share $ .61 $ .43 $ .30
====== ====== ======
<FN>
*This calculation is submitted in accordance with Regulation S-K Item
601(b)(11)although not required by APB Opinion No. 15 because it results in
dilution of less than 3%.
</TABLE>
E-96
<PAGE> 1
EXHIBIT 12
<TABLE>
<CAPTION>
Omnicare, Inc.
Computation of Ratio of Earnings to Fixed Charges
(in thousands)
For the Years Ended December 31,
1996 1995 1994
------------------------------------------
<S> <C> <C> <C>
Income before Income Taxes $72,143 $41,180 $22,678
Add:
Interest on Indebtedness 3,432 5,644 6,223
Amortization of Debt Expense 220 310 310
Interest Portion of Rent Expense 1,963 1,522 1,157
------- ------- ------
Income as Adjusted $77,758 $48,656 $30,368
======= ======= =======
Fixed Charges
Interest on Indebtedness $ 3,432 $ 5,644 $ 6,223
Amortization of Debt Expense 220 310 310
Capitalized Interest 386 158 49
Interest Portion of Rent Expense 1,963 1,522 1,157
------- ------- -------
Fixed Charges $ 6,001 $ 7,634 $ 7,739
======= ======= =======
Ratio of Earnings to Fixed Charges (1) 12.96X 6.37x 3.92x
======= ======= =======
<FN>
(1) The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes plus fixed charges (excluding capitalized
interest expense) by fixed charges. Fixed charges consist of interest
expense on debt (including capitalized interest) and one-third (the
proportion deemed representative of the interest portion) of rent
expense.
</TABLE>
E-97
<PAGE> 1
Subsidiaries of Omnicare, Inc.
------------------------------
The following is a list of subsidiaries of the Company as of December 31,
1996. Other subsidiaries which have been omitted from the list would not, when
considered in the aggregate, constitute a significant subsidiary. Each of the
companies is incorporated under the laws of the state following its name.
All of the companies listed below are included in the consolidated
financial statements of the Company as of December 31, 1996 and were 100% owned
at December 31, 1996, with the exception of Shore Pharmaceutical Providers,
Inc., which has outstanding convertible preferred stock held by two individuals.
Accu-Med Services, Inc. (Delaware, 100%)
Anderson Medical Services, Inc. (Delaware, 100%)
Apex Long Term Care Pharmacy, Inc. (Delaware, 100%)
Beeber Pharmacies, Inc. (Ohio, 100%)
Care Pharmaceutical Services, Inc. (Delaware, 100%)
Consulting and Pharmaceutical Services, Inc. (Delaware, 100%)
Datascript Corp. (Delaware, 100%)
Downeast Pharmacy, Inc. (Maine, 100%)
Pharmacy Long Term Care, Inc. (Maine, 100%)
Downeast Pharmacy of Bangor, Inc. (Maine, 100%)
Downeast Pharmacy of Sanford, Inc. (Maine, 100%)
D&R Pharmaceutical Services, Inc. (Kentucky, 100%)
Dynatran Computer Systems, Inc. (Delaware, 100%)
Electra Acquisition Corp. (DBA Prometheus Pharmacy Company)
(Delaware, 100%)
Enloe Drugs, Inc. (Delaware, 100%)
Evergreen Pharmaceutical East, Inc. (Washington, 100%)
Evergreen Pharmaceutical, Inc. (Washington, 100%)
Evergreen Pharmaceutical Supply, Inc. (Washington, 100%)
Evergreen Wound Management, Inc. (Delaware, 100%)
Freed's Pharmacy, Inc. (Delaware, 100%)
Home Care Pharmacy, Inc. (Delaware, 100%)
Home Pharmacy Services, Inc. (Missouri, 100%)
Interlock Pharmacy Systems, Inc. (Missouri, 100%)
Langsam Health Services, Inc. (DBA Sequoia
Health Services) (Delaware, 100%)
Langsam Medical Products, Inc. (DBA Sequoia
Medical Products) (Delaware, 100%)
Lawrence Medical Supply, Inc. (Delaware, 100%)
Lo-Med Prescription Services, Inc. (Ohio, 100%)
Managed Healthcare, Inc. (Delaware, 100%)
Medical Arts Health Care, Inc. (Georgia, 100%)
MSD Acquisition Corp. (DBA Squire Drugs, Inc.) (Delaware, 100%)
North Shore Pharmacy Services, Inc. (Delaware, 100%)
Northwest Pharmaceutical, Inc. (Delaware, 100%)
OCR-RA Acquisition Corp. (Delaware, 100%)
OCR Services Corporation (Delaware, 100%)
Omnicare Holding Company (Delaware, 100%)
Omnicare Management Company (Delaware, 100%)
Pharmacon Corp. (New York, 100%)
Pharmacy Acquisition, Inc.(DBA Clasen Pharmacy)(Delaware, 100%)
Pompton Nursing Home Suppliers, Inc. (Delaware, 100%)
PRN Pharmaceutical Services, Inc. (Delaware, 100%)
Robby Acquisition Corp.(DBA Robby Pharmacy
Service, Inc.)(Delaware, 100%)
Roeschen's Healthcare Corp. (Wisconsin, 100%)
Shore Pharmaceutical Providers, Inc. (Delaware, 90%)
E-98
<PAGE> 2
Specialized Pharmacy Services, Inc. (Michigan, 100%)
Three Forks Apothecary, Inc. (Kentucky, 100%)
UC Acquisition Corp. (DBA UniCare, Inc.) (Delaware, 100%)
Weber Medical Systems, Inc. (Delaware, 100%)
Westhaven Services Co. (Ohio, 100%)
E-99
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (Nos. 2-78161,
33-34635, 33-48209, 33-88856 and 333-02667), Form S-3 (Nos. 333-01203, 33-81644,
33-83752, 33-59689, 33-62975, 333-07695 and 333-00635) and Form S-4 (No.
333-22765) of Omnicare, Inc. of our report dated January 29, 1997 appearing on
page 26 of this Form 10-K.
/s/Price Waterhouse LLP
- --------------------------
Price Waterhouse LLP
Cincinnati, Ohio
March 31, 1997
E-100
<PAGE> 1
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 18, 1997
/s/ Ronald K. Baur
-----------------------
Ronald K. Baur
E-101
<PAGE> 2
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 18, 1997
/s/ Kenneth W. Chesterman
----------------------------
Kenneth W. Chesterman
E-102
<PAGE> 3
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 17, 1997
/s/ Charles H. Erhart
---------------------------
Charles H. Erhart
E-103
<PAGE> 4
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 24, 1997
/s/ Mary Lou Fox
---------------------------
Mary Lou Fox
E-104
<PAGE> 5
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 18, 1997
/s/ Thomas C. Hutton
---------------------------
Thomas C. Hutton
E-105
<PAGE> 6
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 24, 1997
/s/ Patrick E. Keefe
---------------------------
Patrick E. Keefe
E-106
<PAGE> 7
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 22, 1997
/s/ Sandra E. Laney
---------------------------
Sandra E. Laney
E-107
<PAGE> 8
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 24, 1997
/s/ Andrea R. Lindell
---------------------------
Andrea R. Lindell
E-108
<PAGE> 9
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 18, 1997
/s/ Sheldon Margen
---------------------------
Sheldon Margen
E-109
<PAGE> 10
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 24, 1997
/s/ Kevin J. McNamara
---------------------------
Kevin J. McNamara
E-110
<PAGE> 11
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 24, 1997
/s/ John M. Mount
---------------------------
John M. Mount
E-111
<PAGE> 12
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 24, 1997
/s/ Timothy S. O'Toole
---------------------------
Timothy S. O'Toole
E-112
<PAGE> 13
POWER OF ATTORNEY
-----------------
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and all amendments thereto, to be
filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 17, 1997
/s/ D. Walter Robbins, Jr.
---------------------------
D. Walter Robbins, Jr.
E-113
