<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
AMERICAN MEDSERVE CORPORATION
(NAME OF SUBJECT COMPANY)
OMNICARE ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
OMNICARE, INC.
(BIDDERS)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
027448109
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
JOEL F. GEMUNDER
PRESIDENT
OMNICARE, INC.
50 EAST RIVERCENTER BOULEVARD
COVINGTON, KENTUCKY 41011
(606) 291-6800
(NAMES, ADDRESSES AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
WITH COPIES TO:
MORTON A. PIERCE
DEWEY BALLANTINE
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 259-8000
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$229,230,950 $45,846
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* Estimated for purposes of calculating fee only. The calculation assumes the
purchase of (i) 12,217,936 shares of Common Stock par value $0.01 per share
(the "Shares"), issued and outstanding as of August 7, 1997, and (ii) 517,117,
Shares issuable upon the exercise of presently outstanding stock options, in
each case, at a price per Share of $18.00 in cash.
[ ] Check box if any part of the fee is offset by Rule O-11(a)(2) and identify
the filing with which the offsetting fee was previously paid. Identify the
previous filing by registration statement number, or the Form or Schedule
and the date of its filing.
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Amount Previously Paid: NOT APPLICABLE
Form or Registration No.: NOT APPLICABLE
Filing Party: NOT APPLICABLE
Date Filed: NOT APPLICABLE
</TABLE>
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<PAGE> 2
CUSIP No. 027448109
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: OMNICARE ACQUISITION CORP. S.S. OR I.R.S. IDENTIFICATION NO. OF
ABOVE PERSON: 31-1554409
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ]
- ---------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCES OF FUNDS AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION STATE OF DELAWARE
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON NONE
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A
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10 TYPE OF REPORTING PERSON CO
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</TABLE>
2
<PAGE> 3
CUSIP No. 027448109
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: OMNICARE, INC.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 31-1001351
- ---------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ]
- ---------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------
4 SOURCES OF FUNDS WC/BK
- ---------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION STATE OF DELAWARE
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON NONE
- ---------------------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ]
- ---------------------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A
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10 TYPE OF REPORTING PERSON CO
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</TABLE>
3
<PAGE> 4
This Statement relates to a tender offer by Omnicare Acquisition Corp., a
Delaware corporation (the "Purchaser") and a wholly owned subsidiary of
Omnicare, Inc., a Delaware corporation ("Parent"), to purchase all outstanding
shares of common stock, par value $0.01 per share (the "Shares"), of American
Medserve Corporation, a Delaware corporation (the "Company"), at a purchase
price of $18.00 per Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated August 14, 1997 (the "Offer to Purchase") and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer"). Copies of the Offer to Purchase and the Letter of
Transmittal are annexed to and filed with this Statement as Exhibits (a)(1) and
(a)(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is American Medserve Corporation, a
Delaware corporation. The principal executive offices of the Company are located
at 184 Shuman Boulevard, Naperville, Illinois 60563.
(b) The exact title of the class of equity securities being sought in the
Offer is the common stock, par value $0.01 per share, of the Company. The
information set forth in the Introduction to the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends on the Shares") of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) through (d) and (g). This Statement is being filed by the Purchaser and
Parent. The information set forth in the "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent") and Schedule I of the Offer to
Purchase, is incorporated herein by reference.
(e) and (f). None of the Purchaser or Parent, nor, to the best of their
knowledge, any of the persons listed in Schedule I of the Offer to Purchase, has
during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b). The information set forth in the "Introduction," Section 9
("Certain Information Concerning the Purchaser and Parent"), Section 11
("Background of the Offer") and Section 12 ("Purpose of the Offer and the
Merger; Plans for the Company; Proposed Merger") of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b). The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF BIDDER.
(a) through (e). The information set forth in the "Introduction," Section
11 ("Background of the Offer") and Section 12 ("Purpose of the Offer and the
Merger; Plans for the Company; Proposed Merger") of the Offer to Purchase is
incorporated herein by reference.
(f) and (g). The information set forth in Section 7 ("Effect of the Offer
on the Market for the Shares; Nasdaq Stock Market Listing; Exchange Act
Registration; Margin Regulations") of the Offer to Purchase is incorporated
herein by reference.
4
<PAGE> 5
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b). The information set forth in the "Introduction," Section 9
("Certain Information Concerning the Purchaser and Parent") and Schedule I of
the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Background of
the Offer"), Section 12 ("Purpose of the Offer and the Merger, Plans for the
Company; Proposed Merger") and Schedule I of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the "Introduction" and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
The incorporation by reference herein of the above-mentioned financial
information does not constitute an admission that such information is material
to a decision by a security holder of the Company whether to sell, tender or
hold securities being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
(b) and (c). The information set forth in Section 15 ("Certain Legal
Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein
by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Nasdaq Stock Market Listing; Exchange Act Registration;
Margin Regulations") and Section 15 ("Certain Legal Matters; Regulatory
Approvals") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated August 14, 1997.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Letter from Credit Suisse First Boston Corporation, as
Dealer Manager, to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(4) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of summary advertisement, dated August 14, 1997.
(a)(8) Form of press release issued by Parent on August 8, 1997.
5
<PAGE> 6
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of August 7, 1997, among
Parent, the Purchaser and the Company.
(d) None.
(e) Not Applicable.
(f) None.
6
<PAGE> 7
SIGNATURE
After due inquiry and to the best of its knowledge and belief, each of the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: August 14, 1997
OMNICARE ACQUISITION CORP.
By: /s/ Joel F. Gemunder
------------------------------------
Joel F. Gemunder
President
OMNICARE, INC.
By: /s/ Joel F. Gemunder
------------------------------------
Joel F. Gemunder
President
7
<PAGE> 8
EXHIBIT INDEX
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EXHIBIT DESCRIPTION PAGE
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(a)(1) Offer to Purchase, dated August 14, 1997.....................................
(a)(2) Form of Letter of Transmittal................................................
(a)(3) Form of Letter from Credit Suisse First Boston Corporation, as Dealer
Manager, to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.....................................................................
(a)(4) Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees to Clients....................................................
(a)(5) Notice of Guaranteed Delivery................................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.....................................................................
(a)(7) Form of summary advertisement, dated August 14, 1997.........................
(a)(8) Form of press release issued by Parent on August 8, 1997.....................
(b) None.........................................................................
(c)(1) Agreement and Plan of Merger, dated as of August 7, 1997, among Parent, the
Purchaser and the Company....................................................
(d) None.........................................................................
(e) Not Applicable...............................................................
(f) None.........................................................................
</TABLE>
8
<PAGE> 1
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
AMERICAN MEDSERVE CORPORATION
at
$18.00 NET PER SHARE
by
OMNICARE ACQUISITION CORP.
a wholly owned subsidiary of
OMNICARE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED.
------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT
NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE "SHARES"), OF
AMERICAN MEDSERVE CORPORATION (THE "COMPANY") WHICH REPRESENTS AT LEAST A
MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS AND (2) ANY WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF THE SHARES
PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. SEE SECTION 14.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER
AND THE MERGER DESCRIBED HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT
THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it and any other required documents to the
Depositary (as defined below) and either deliver the certificates for such
Shares to the Depositary along with the Letter of Transmittal (or a manually
signed facsimile) or deliver such Shares pursuant to the procedures for
book-entry transfer set forth in Section 3 hereof or (2) request his or her
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such person if such stockholder desires to tender such Shares.
If a stockholder desires to tender Shares and such stockholder's certificates
for such Shares are not immediately available, or the procedures for book-entry
transfer, if applicable, cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such stockholder may tender such Shares by following the procedures for
guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent, the Dealer Manager or from
brokers, dealers, commercial banks or trust companies.
The Dealer Manager for the Offer is:
[CREDIT SUISSE FIRST BOSTON LOGO]
August 14, 1997
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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<S> <C>
INTRODUCTION.......................................................................... 1
1. Terms of the Offer............................................................... 2
2. Acceptance for Payment and Payment for Shares.................................... 3
3. Procedure for Tendering Shares................................................... 4
4. Withdrawal Rights................................................................ 6
5. Certain Federal Income Tax Consequences of the Offer and the Merger.............. 7
6. Price Range of Shares; Dividends on the Shares................................... 8
7. Effect of the Offer on the Market for the Shares; Nasdaq Stock Market Listing; 8
Exchange Act Registration; Margin Regulations....................................
8. Certain Information Concerning the Company....................................... 9
9. Certain Information Concerning the Purchaser and Parent.......................... 14
10. Source and Amounts of Funds...................................................... 16
11. Background of the Offer.......................................................... 16
12. Purpose of the Offer and the Merger; Plans for the Company; Proposed Merger...... 17
13. Dividends and Distributions...................................................... 25
14. Certain Conditions to the Offer.................................................. 26
15. Certain Legal Matters; Regulatory Approvals...................................... 27
16. Fees and Expenses................................................................ 29
17. Miscellaneous.................................................................... 30
Schedule I -- Directors and Executive Officers of Parent and the Purchaser............ I-1
</TABLE>
<PAGE> 3
To the Holders of Common Stock
of American Medserve Corporation:
INTRODUCTION
Omnicare Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Omnicare, Inc., a Delaware corporation ("Parent"),
hereby offers to purchase all outstanding shares of Common Stock, par value
$0.01 per share (the "Shares"), of American Medserve Corporation, a Delaware
corporation (the "Company"), at a purchase price of $18.00 per Share net to the
seller in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 7, 1997 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company. The Merger Agreement provides, among other things,
for the commencement of the Offer by the Purchaser and further provides that
upon the terms and subject to the conditions therein, as soon as practicable
after the consummation of the Offer and any required approval of the Merger
Agreement by the stockholders of the Company (the "Stockholders"), the Purchaser
will be merged with and into the Company (the "Merger"), with the Company being
the corporation surviving the Merger (the "Surviving Corporation"). Each
outstanding Share (other than Dissenting Shares (as hereinafter defined)) not
owned by the Company, Parent, the Purchaser or any other wholly owned subsidiary
of Parent will be converted into and represent the right to receive $18.00 in
cash or any higher price that may be paid per Share pursuant to the Offer,
without interest. See Section 12.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF DIRECTORS" OR THE
"BOARD") HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER DESCRIBED
HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS,
HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), financial
advisor to the Company, has delivered to the Board of Directors its written
opinion to the effect that, as of the date of the Merger Agreement, the $18.00
in cash to be received by the Stockholders in the Offer and the Merger, is fair
to such Stockholders from a financial point of view. A copy of such opinion is
included with the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9") with respect to the Offer, and Stockholders are
urged to read the opinion in its entirety for a description of the assumptions
made, factors considered and procedures followed by DLJ. A copy of the Schedule
14D-9 is being furnished herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT
NUMBER OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING
ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION") AND (2) ANY WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND
THE REGULATIONS THEREUNDER (THE "HSR ACT") APPLICABLE TO THE PURCHASE OF THE
SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS
ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 14, WHICH SETS FORTH THE
CONDITIONS TO CONSUMMATION OF THE OFFER, AND SECTION 15, WHICH DISCUSSES CERTAIN
LEGAL MATTERS AND REGULATORY CONSENTS AND APPROVALS.
Pursuant to the Merger Agreement, the Company has represented and warranted
that as of August 7, 1997, 12,217,936 Shares were issued and outstanding and
1,310,790 Shares were reserved for issuance pursuant to employee options, of
which 517,117 shares are subject to outstanding, unexercised options.
Tendering Stockholders who have Shares registered in their names will not
be obligated to pay brokerage fees or commissions to the Dealer Manager, the
Depositary or the Information Agent or, except as set forth in Instruction 6 of
the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer. The Purchaser will pay all charges and expenses
of Credit Suisse First Boston Corporation ("Credit
1
<PAGE> 4
Suisse First Boston"), which is acting as Dealer Manager for the Offer (in such
capacity, the "Dealer Manager"), First Chicago Trust Company of New York, which
is acting as Depositary (the "Depositary"), and D.F. King & Co., Inc., which is
acting as the Information Agent (the "Information Agent"), incurred in
connection with the Offer. See Section 16.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares that
have been validly tendered prior to the Expiration Date and not withdrawn as
permitted by Section 4. The term "Expiration Date" means 12:00 Midnight, New
York City time, on Thursday, September 11, 1997, unless and until the Purchaser,
in its sole discretion, shall have extended the period of time for which the
Offer is open, subject to the terms of the Merger Agreement, in which event the
term "Expiration Date" shall refer to the latest time and date at which the
Offer, as so extended by the Purchaser, shall expire.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission (the "Commission"), the
Purchaser reserves the right, in its sole discretion, at any time or from time
to time, and regardless of whether any of the events set forth in Section 14
hereof shall have occurred or shall have been determined by the Purchaser to
have occurred, (a) if, immediately prior to the Expiration Date of the Offer,
the Shares tendered and not withdrawn pursuant to the Offer equal less than 90%
of the outstanding Shares but more than 80% of the outstanding Shares, to extend
the Offer for a period not to exceed seven business days, notwithstanding that
all conditions to the Offer are satisfied as of such date, and thereby delay
acceptance for payment of and the payment for any Shares, by giving oral or
written notice of such extension to the Depositary and (b) prior to the
Expiration Date, to waive any of the conditions set forth in Section 14 (other
than the Minimum Condition) and to make any other changes in the terms and
conditions of the Offer by giving oral or written notice of such waiver or
amendment to the Depositary; provided, however, that unless previously approved
by the Company in writing, no change may be made which decreases the Offer
Price, which reduces the maximum number of Shares to be purchased in the Offer
or which otherwise adversely affects the Stockholders. During any such
extension, all Shares previously tendered and not properly withdrawn will remain
subject to the Offer, subject to the right of a tendering Stockholder to
withdraw such Stockholder's Shares. See Section 4.
If by the Expiration Date any or all of the conditions to the Offer have
not been satisfied or waived, the Purchaser reserves the right (but shall not be
obligated), in its sole discretion, subject to the terms of the Merger Agreement
and the applicable rules and regulations of the Commission, (a) to terminate the
Offer and not accept for payment or pay for any Shares and return all tendered
Shares to tendering Stockholders, (b) prior to the Expiration Date, to waive all
the unsatisfied conditions (other than the Minimum Condition) and accept for
payment and pay for all Shares validly tendered prior to the Expiration Date, or
(c) extend the Offer and, subject to the right of Stockholders to withdraw
Shares during such extension, retain the Shares that have been tendered during
the period or periods for which the Offer is extended.
The rights reserved by the Purchaser in the two preceding paragraphs are in
addition to the Purchaser's rights pursuant to Section 14. There can be no
assurance that the Purchaser will exercise its rights to extend the Offer. Any
extension, amendment or termination will be followed as promptly as practicable
by a public announcement. In the case of an extension, Rule 14e-l(d) under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), requires
that the announcement be issued no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of Rule 14d-4(c) under the
Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that any material change in the
information published, sent or given to Stockholders be promptly disseminated in
a manner reasonably designed to inform the Stockholders of such change) and
without limiting the manner in which the Purchaser may choose to make any public
announcement, the Purchaser currently intends to make announcements by issuing a
release to the Dow
2
<PAGE> 5
Jones News Service. For purposes of the Offer, "business day" has the meaning
set forth in Rule 14d-1 under the Exchange Act.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's right under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering Stockholders are
entitled to withdrawal rights as described in Section 4.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer, other than a change in
price or a change in the percentages of securities sought, will depend on the
facts and circumstances, including the materiality, of the changes. With respect
to a change in price or, subject to certain limitations, a change in the
percentage of securities sought, a minimum ten business day period from the day
of such change is generally required to allow for adequate dissemination to
stockholders. Accordingly, if prior to the Expiration Date, the Purchaser
decreases the number of Shares being sought or increases or decreases the Offer
Price and if the Offer is scheduled to expire at any time earlier than the
period ending on the tenth business day from the date on which that notice of
such increase or decrease is first published, sent or given to Stockholders,
then the Offer will be extended at least until the expiration of such ten
business day period.
The Company has provided the Purchaser with the Company's Stockholder lists
and security position listings for the purpose of disseminating the Offer to
Stockholders. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares, and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the
securityholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment, and will pay for, all
Shares validly tendered and not withdrawn prior to the Expiration Date promptly
after the Expiration Date. All questions as to the satisfaction of such terms
and conditions will be determined in good faith by the Purchaser. Subject to the
applicable rules of the Commission, the Purchaser expressly reserves the right
to delay acceptance for payment of or payment for Shares in order to comply, in
whole or in part, with any applicable law or government regulation. Any such
delays will be effected in compliance with Rule 14e-l(c) under the Exchange Act
(relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer).
In all cases, Shares accepted for payment pursuant to the Offer will be
paid for only after timely receipt by the Depositary of (i) certificates
evidencing (or a timely Book-Entry Confirmation (as defined in Section 3 below)
with respect to) such Shares, (ii) a Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined below), and (iii) any other documents required by the Letter of
Transmittal. See Section 3 below.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment tendered Shares when, as and if the Purchaser gives oral or written
notice to the Depositary of its acceptance of the tenders of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent for
the tendering Stockholders for the purpose of receiving payments from the
Purchaser and transmitting such payments to tendering Stockholders. For a
description of the procedure for tendering Shares pursuant to the Offer, see
Section 3. Accordingly, payment may be made to tendering Stockholders at
different times if delivery of the Shares and other required documents occur at
different times. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE PURCHASER
ON THE CONSIDERATION PAID FOR SHARES PURSUANT TO THE OFFER, WHETHER OR NOT
3
<PAGE> 6
THE PURCHASER EXERCISES ITS RIGHTS TO EXTEND THE OFFER OR DELAYS IN MAKING SUCH
PAYMENT.
If the Purchaser increases the consideration to be paid for Shares pursuant
to the Offer, the Purchaser will pay such increased consideration for all Shares
purchased pursuant to the Offer, whether or not such Shares were tendered prior
to such increase in consideration.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent or any direct or indirect wholly owned
subsidiary or subsidiaries of Parent the right to purchase Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer or prejudice the rights of
tendering Stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted for more Shares than are tendered,
certificates for such unpurchased or untendered Shares will be returned (or, in
the case of Shares tendered by book-entry transfer, such Shares will be credited
to an account maintained at one of the Book-Entry Transfer Facilities (as
defined in Section 3)), without expense to the tendering Stockholder, as
promptly as practicable following the expiration or termination of the Offer.
3. PROCEDURE FOR TENDERING SHARES
Valid Tenders. For a Stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof) and any other documents required by the Letter of
Transmittal must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase and either (i) Certificates for the
Shares to be tendered must be received by the Depositary at one of such
addresses or (ii) such Shares must be delivered pursuant to the procedures for
book-entry transfer described below (and a confirmation of such delivery
received by the Depositary, including an Agent's Message (as defined below) if
the tendering Stockholder has not delivered a Letter of Transmittal (or a
facsimile thereof)), in each case prior to the Expiration Date, or (b) the
guaranteed delivery procedure described below must be complied with. As used
herein, "Certificates" shall mean certificates representing Shares.
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (each, a "Book-Entry Transfer Facility") for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant of the Book-Entry Transfer Facilities' systems
may make book-entry delivery of Shares by causing a Book-Entry Transfer Facility
to transfer such Shares into the Depositary's account in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Shares may be effected through book-entry transfer at a Book-Entry
Transfer Facility, the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message, and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering Stockholder must comply with the guaranteed delivery procedures
described below.
The confirmation of a book-entry transfer into the Depositary's account at
a Book-Entry Facility as described herein is referred to herein as a "Book-Entry
Confirmation". DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgement from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER,
4
<PAGE> 7
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK ENTRY TRANSFER, A BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by a registered holder
(which term, for purposes of this Section, includes any participant in any of
the Book-Entry Transfer Facilities' systems whose name appears on a security
position listing as the owner of the applicable security) of Shares tendered
therewith and such registered Stockholder has not completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if the Shares are tendered for
the account of a financial institution (including most commercial banks, savings
and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal.
If the Certificates are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made or Certificates
not tendered or not accepted for payment are to be returned to a person other
than the registered Stockholder, then the tendered Certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the Certificates, with
the signatures guaranteed as described above. See Instructions 1 and 5 of the
Letter of Transmittal.
Guaranteed Delivery. If a Stockholder desires to tender Shares pursuant to
the Offer and such Stockholder's Certificates are not immediately available or
time will not permit all required documents to reach the Depositary prior to the
Expiration Date, or the procedure for book-entry transfer cannot be completed on
a timely basis, such Shares may nevertheless be tendered if all the following
conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary prior to the Expiration Date; and
(iii) the appropriate Certificates (or, if applicable, a Book-Entry
Confirmation) representing all tendered Shares, in proper form for
transfer, together with the appropriate Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message)
and any other documents required by the Letter of Transmittal, are received
by the Depositary within three trading days after the execution of such
Notice of Guaranteed Delivery. A trading day is any day on which the Nasdaq
National Market is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution and a representation that the stockholder
owns the Shares tendered within the meaning of, and the tender of Shares
effected thereby complies with, Rule 14e-4 under the Exchange Act, each in the
form set forth in the Notice of Guaranteed Delivery.
IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) IS
RECEIVED BY THE DEPOSITARY.
Notwithstanding any other provision of this Offer to Purchase, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of Certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, a Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees and any other documents required by the Letter of
Transmittal (or in the case of a book-entry transfer, an Agent's Message).
5
<PAGE> 8
The Purchaser's acceptance for payment of Shares validly tendered pursuant
to the Offer will constitute a binding agreement between the tendering
Stockholder and the Purchaser upon the terms and subject to the conditions of
the Offer.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
Stockholder irrevocably appoints designees of the Purchaser as the Stockholder's
attorneys-in-fact and proxies in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of the
Stockholder's rights with respect to the Shares tendered by the Stockholder and
accepted for payment by the Purchaser (and any and all other securities issued
or issuable in respect of such Shares on or after the date of this Offer to
Purchase). All such powers of attorney and proxies shall be considered coupled
with an interest in the tendered Shares. This appointment will be effective
when, and only to the extent that, the Purchaser accepts the tendered Shares for
payment pursuant to the Offer. Upon such acceptance for payment, all prior
powers of attorney, proxies or consents given by the Stockholder with respect to
the tendered Shares will, without further action, be revoked, and no subsequent
powers of attorney, proxies or consents may be given (and, if given, will not be
deemed to be effective) with respect thereto. The designees of the Purchaser
will, with respect to the tendered Shares, be empowered to exercise all voting
and other rights of such Stockholder as they in their sole discretion may deem
proper at any annual, special or adjourned meeting of the Company's
Stockholders, by written consent or otherwise. The Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Shares, the Purchaser must
be able to exercise full voting and other rights of a record and beneficial
Stockholder, including action by written consent, with respect to such Shares.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, which determination shall
be final and binding on all parties. The Purchaser reserves the absolute right
to reject any or all tenders of any Shares determined by it not to be in proper
form or if the acceptance for payment of or payment for such Shares may, in the
opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the
absolute right to waive any defect or irregularity in any tender with respect to
Shares of any particular Stockholder, whether or not similar defects or
irregularities are waived in the case of other Stockholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of the Purchaser, Parent, the Depositary, the
Information Agent, the Dealer Manager or any other person will be under any duty
to give notification of any defects or irregularities in tenders or will incur
any liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding on all
parties.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable, provided that such Shares tendered
pursuant to the Offer may be withdrawn pursuant to the procedures set forth
below at any time prior to the Expiration Date and, unless theretofore accepted
for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after October 12, 1997.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
securities to be withdrawn, the number of Shares to be withdrawn and the name of
the registered Stockholder, if different from that of the person who tendered
such Shares. If Certificates have been delivered or otherwise identified to the
Depositary, then, prior to the release of such Certificates, the serial numbers
of the particular Certificates evidencing the Shares to be withdrawn and a
signed notice of withdrawal with signatures guaranteed by an Eligible
Institution, except in the case of Shares tendered for the account of an
Eligible Institution, must also be furnished to the Depositary as described
above. If Shares have been tendered pursuant to the procedures for book-entry
transfer as set forth in Section 3, any notice of withdrawal must also specify
the reference number assigned to such transfer along with the name and number of
the account at the appropriate Book-Entry Transfer Facility to be credited with
the withdrawn Shares and otherwise comply with such Book-Entry Transfer
Facility's procedures.
6
<PAGE> 9
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will not be deemed to be validly tendered for purposes of the Offer and the
satisfaction of the Minimum Condition. Withdrawn Shares may, however, be
retendered for purposes of the Offer by following one of the procedures
described in Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of the Purchaser, Parent, the Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
The following is a summary of certain federal income tax consequences of
the Offer and the Merger to Stockholders whose Shares are purchased pursuant to
the Offer or whose Shares are converted, in accordance with the Merger
Agreement, into the right to receive the price per Share paid pursuant to the
Offer (the "Merger Consideration") (including any cash amounts received by
dissenting Stockholders pursuant to the exercise of appraisal rights). This
discussion is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), the applicable Treasury Regulations promulgated and
proposed thereunder, judicial authority and administrative rulings and practice.
Legislative, judicial or administrative actions or interpretations are subject
to change, possibly on a retroactive basis, at any time and therefore could
alter or modify the statements and conclusions set forth below. This discussion
assumes that the Stockholders hold the Shares as "capital assets" within the
meaning of Section 1221 of the Code (i.e., property held for investment). This
discussion does not address all aspects of federal income taxation that may be
important to a particular Stockholder in light of such Stockholder's personal
investment circumstances or tax consequences to Stockholders subject to special
treatment under the federal income tax laws (for example, life insurance
companies, tax-exempt organizations, foreign corporations and nonresident alien
individuals) or Stockholders who acquired their Shares through the exercise of
employee stock options or other compensation arrangements. In addition, the
discussion does not address any aspect of foreign, state, local or estate and
gift taxation that may be applicable to a Stockholder.
Consequences of the Offer and the Merger to Stockholders. The receipt of
the Offer Price or the Merger Consideration (including any cash amounts received
by dissenting Stockholders pursuant to the exercise of appraisal rights) will be
a taxable transaction for federal income tax purposes and also may be a taxable
transaction under applicable state, local and other income tax laws. In general,
for federal income tax purposes, a Stockholder will recognize gain or loss equal
to the difference between the Stockholder's adjusted tax basis in the Shares and
the amount of cash received therefor. Gain or loss must be determined separately
for each block of Shares (i.e., Shares acquired at the same cost in a single
transaction). Such gain or loss will be capital gain or loss and will be
long-term gain or loss if on the date of sale (or, if applicable, the date of
the Merger), the Shares were held for more than one year. If on that date the
Shares were held for more than 18 months, any such gain or loss will be taken
into account in determining a Stockholder's adjusted net capital gain, which is
subject to a reduced maximum rate of federal income tax under a recent amendment
to the Code. A portion of amounts received by dissenting Stockholders pursuant
to the exercise of appraisal rights, may be deemed to be interest income for
federal income tax purposes.
Backup Withholding. A Stockholder may be subject to "backup withholding"
at a 31% rate with respect to payments made in connection with the Offer or the
Merger. Backup withholding generally applies if the Stockholder (i) fails to
furnish his or her Social Security Number or taxpayer identification number
("TIN"), (ii) furnishes an incorrect TIN, (iii) fails properly to report
interest or dividends or (iv) in certain circumstances, fails to provide a
statement, under penalties of perjury, that the TIN provided is correct and that
he or she is not subject to backup withholding. Backup withholding is not an
additional tax but an advance payment, which may be refunded to the extent it
results in an overpayment of tax. Certain persons generally are exempt from
backup withholding, including corporations and financial institutions. Penalties
apply for failure to furnish correct information and for failure to include the
reportable payments in income. Foreign Stockholders should consult their own tax
advisors regarding withholding taxes in general. See Instruction 10 of the
Letter of Transmittal.
7
<PAGE> 10
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE OFFER
AND THE MERGER TO THEM IN VIEW OF THEIR PARTICULAR CIRCUMSTANCES.
6. PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES
The Shares are quoted on the Nasdaq National Market under the symbol AMCI.
The following table sets forth the reported high and low sales prices per Share
for the Shares on the Nasdaq National Market as published in financial sources
for each of the periods indicated since public trading commenced on November 13,
1996.
<TABLE>
<CAPTION>
HIGH LOW
--- ---
<S> <C> <C>
1996
Fourth Quarter (from November 13, 1996)......................... $18 1/4 $15 1/4
1997
First Quarter................................................... 19 10 7/8
Second Quarter.................................................. 15 9
Third Quarter (through August 13, 1997)......................... 17 3/4 13
</TABLE>
On August 7, 1997, the last full trading day prior to the public
announcement of the execution of the Merger Agreement and the Purchaser's
intention to commence the Offer, the reported closing price per Share on the
Nasdaq National Market was $15 1/2.
On August 13, 1997, the last full trading day prior to the commencement of
the Offer, the reported closing sales price per Share on the Nasdaq National
Market was $17 9/16.
According to the Company, the Company did not declare any cash dividends on
the Shares during the periods set forth above.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ STOCK MARKET
LISTING; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and the number
of holders of Shares which could adversely affect the liquidity and market value
of the remaining Shares held by Stockholders other than the Purchaser. The
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Shares or whether such reduction
would cause future market prices to be greater or less than the Offer price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in the Nasdaq
National Market, which require that an issuer have at least 200,000 publicly
held shares with a market value of $1 million held by at least 400 stockholders
or 300 stockholders holding round lots, and have net tangible assets of at least
either $1 million, $2 million or $4 million depending on profitability levels
during the issuer's four most recent fiscal years. If these standards are not
met, the Shares might nevertheless continue to be included in the NASD's Nasdaq
Stock Market with quotations published in the Nasdaq over-the-counter
"additional list" or in one of the "local lists", but if the number of
Stockholders were to fall below 300, or if the number of publicly held Shares
were to fall below 100,000, or if there are not at least two registered and
active market makers for such Shares, the NASD's rules provide that the Shares
would no longer be "qualified" for Nasdaq Stock Market reporting, and the Nasdaq
Stock Market would cease to provide any quotations. Shares held directly or
indirectly by an officer or director of the Company, or by any beneficial owner
of more than 10% of the Shares, ordinarily will not be considered as being
publicly held for this purpose. According to the Company, as of August 12, 1997,
there were approximately 41 holders of record and 12,217,936 Shares were
outstanding.
8
<PAGE> 11
If, as a result of the purchase of Shares pursuant to the Offer or otherwise,
the Shares no longer meet the NASD requirements for continued inclusion in the
Nasdaq National Market or in any other tier of the Nasdaq Stock Market, and the
Shares are no longer included in the Nasdaq National Market or any other tier of
the Nasdaq Stock Market, the market for such Shares could be adversely affected.
In the event the Shares no longer meet the requirements of the NASD for
inclusion in any tier of the Nasdaq Stock Market, quotations might still be
available from other sources. The extent of the public market for Shares and
availability of such quotations would, however, depend upon the number of
Stockholders of Shares remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act, as described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. The purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Registration
of the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if such class is not listed on a national securities
exchange and there are fewer than 300 record holders of such Shares. Termination
of registration of the Shares under the Exchange Act would reduce substantially
the information required to be furnished by the Company to its Stockholders and
to the Commission and would make certain provisions of the Exchange Act no
longer applicable to the Company, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement or
information statement pursuant to Section 14(a) or (c) of the Exchange Act in
connection with stockholders' meetings and the related requirement of furnishing
an annual report to Stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions. Furthermore, if the
Purchaser acquires a substantial number of Shares or the registration of the
Shares under the Exchange Act were to be terminated, the ability of "affiliates"
of the Company and persons holding "restricted securities" of the Company to
dispose of such securities pursuant to Rule 144 or 144A under the Securities Act
of 1933, as amended (the "Securities Act"), may be impaired or eliminated. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be "margin securities" or be eligible for listing or Nasdaq
reporting. It is the present intention of the Purchaser to seek to cause the
Company to make an application for termination of registration of the Shares as
soon as possible following the consummation of the Offer if the requirements for
termination of registration are met.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations,
following the Offer it is possible that the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers. In addition, if registration of the Shares under the Exchange Act
were terminated, the Shares would no longer constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation, with its principal executive offices
located at 184 Shuman Boulevard, Suite 200, Naperville, Illinois 60563, and,
through its subsidiaries, is a leading independent provider of pharmacy services
to long-term care institutions, including skilled nursing facilities, assisted
living facilities and other long-term health care settings. The Company
purchases, repackages and dispenses pharmaceuticals to patients or residents in
its client facilities and provides such facilities with related consultant
pharmacist and information services, including formulary management (i.e.,
management of pharmaceuticals dispensed to minimize cost and maximize
therapeutic benefit), automated medical record-keeping, drug therapy evaluation
and assistance with regulatory compliance. The Company also provides infusion
therapy (i.e., intravenous introduction of fluids containing medications and/or
nutrients), parenteral and enteral nutrition therapy (i.e., introduction, either
intravenously or directly into a patient's digestive system, of nutrient fluids
or other fluids), inhalation and respiratory therapy and wound care management
services, as well as medical supplies and devices.
The Company was formed by Timothy L. Burfield (the Company's President and
Chief Executive Officer) and an investment fund affiliated with Golder, Thoma,
Cressey, Rauner, Inc. to participate in the consolidation of
9
<PAGE> 12
the long-term care pharmacy industry. To meet this objective, the Company has
pursued an acquisition program designed to expand its presence in selected
geographic markets. Since commencing operations in August 1994, the Company has
completed 30 acquisitions.
Selected Consolidated Financial Data. Set forth below is certain selected
consolidated financial data with respect to the Company and its consolidated
subsidiaries excerpted or derived from financial information contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
(the "Company 10-K"), and the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997 (the "Company 10-Q"). More comprehensive financial
information is included in the Company 10-K and the Company 10-Q and other
documents filed by the Company with the Commission. The financial information
that follows is qualified in its entirety by reference to the Company 10-K, the
Company 10-Q and such other documents, including the financial statements and
related notes therein. The Company 10-K, the Company 10-Q and such other
documents should be available for inspection and copies thereof should be
obtainable from the offices of the Commission in the manner set forth below.
10
<PAGE> 13
AMERICAN MEDSERVE CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PREDECESSOR(1)
PERIOD --------------
FROM PERIOD
YEAR ENDED AUGUST 3, FROM SIX MONTHS ENDED
--------------------------- 1994 TO JANUARY 1, -------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, 1994 TO AUGUST JUNE 30, JUNE 30,
1996 1995 1994 2, 1994 1997 1996
------------ ------------ ------------ -------------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................... $ 82,027 $ 44,049 $ 8,091 $ 6,917 $ 75,563 $ 32,357
Cost of revenues........... 58,807 31,464 5,991 4,963 54,484 23,259
-------- ------- ------- ------ -------- -------
Gross Profit............... 23,220 12,585 2,100 1,954 21,079 9,098
Selling, general and
administrative
expenses................ 19,605 10,029 1,909 1,315 17,413 7,290
Nonrecurring charges(2).... 3,019 -- -- -- -- --
-------- ------- ------- ------ -------- -------
Operating income........... 596 2,556 191 639 3,666 1,808
Interest expense........... 2,741 1,762 292 78 389 1,213
Other (income) expense..... (84) (312) (69) -- (39) (75)
Minority interest.......... (89) 32 6 -- (200) (4)
-------- ------- ------- ------ -------- -------
Income (loss) before income
taxes and extraordinary
item.................... (1,972) 1,074 (38) 561 3,516 674
Provision (benefit) for
income taxes............ 162 669 (21) 24 1,499 324
-------- ------- ------- ------ -------- -------
Income (loss) before
extraordinary item...... (2,134) 405 (17) 537 2,017 350
Write off of deferred
financing costs, net of
income tax benefit of
$404.................... 437 -- -- -- -- 437
-------- ------- ------- ------ -------- -------
Net income (loss).......... $ (2,571) $ 405 $ (17) $ 537 $ 2,017 $ (87)
======== ======= ======= ====== ======== =======
Income (loss) per share
before extraordinary
item.................... $ (0.29) $ 0.06 $ 0.17 $ 0.05
Extraordinary item per
share................... 0.06 -- -- 0.06
-------- ------- -------- -------
Net income (loss) per
share................... $ (0.35) $ 0.06 $ 0.17 $ (0.01)
======== ======= ======== =======
Weighted average shares
outstanding............. 7,311 6,467 12,212 6,466
BALANCE SHEET DATA (AT PERIOD
END):
Working capital............ $ 38,494 $ 9,540 $ 3,517 $ 216 $ 29,385 $ 9,818
Total assets............... 113,298 44,997 16,965 5,240 133,508 61,830
Long-term debt, excluding
current portion......... 6,087 23,505 8,071 264 13,219 28,167
Stockholders' equity (net
capital deficiency)..... 92,999 14,573 5,596 1,205 97,303 (1,995)
</TABLE>
- ---------------
(1) Represents results of operations of Gatti LTC Services Inc., which was
acquired by the Company on August 2, 1994.
(2) Represents (a) a noncash, nonrecurring charge of $2.5 million (with no tax
benefit) related to (i) the sale of 310,208 shares of Common Stock of the
Company to certain directors and officers at a price less than the
11
<PAGE> 14
initial public offering price of the Common Stock on November 13, 1996, and
(ii) the conversion of options to purchase shares of common stock of certain
subsidiaries into options to purchase 146,635 shares of Common Stock of the
Company at a weighted average exercise price less than the initial public
offering price of the Common Stock on November 13, 1996, (b) a charge of
$0.3 million ($0.2 million net of tax) related to the termination of a
professional services agreement with an affiliate of the Company's principal
stockholder and (c) a charge of $0.2 million ($0.1 million net of tax)
related to special bonuses paid to management in connection with the
Company's initial public offering.
Projected Financial Information. During the course of discussions between
Parent, the Purchaser and the Company that led to the execution of the Merger
Agreement (see Section 11), the Company provided Parent with certain projected
financial data for the year ending December 31, 1997 relating to the Company
(the "Projections").
THE COMPANY DOES NOT, AS A MATTER OF COURSE, PUBLICLY DISCLOSE
FORWARD-LOOKING INFORMATION (SUCH AS THE PROJECTIONS REFERRED TO ABOVE) AS TO
FUTURE REVENUES, EARNINGS OR OTHER FINANCIAL INFORMATION. PROJECTIONS OF THIS
TYPE ARE BASED ON ESTIMATES AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO
SIGNIFICANT ECONOMIC, INDUSTRY AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES,
ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL
OF THE COMPANY. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE PROJECTED
RESULTS WOULD BE REALIZED OR THAT ACTUAL RESULTS WOULD NOT BE SIGNIFICANTLY
HIGHER OR LOWER THAN THOSE PROJECTED. IN ADDITION, THESE PROJECTIONS WERE
PREPARED BY THE COMPANY SOLELY FOR INTERNAL USE AND NOT FOR PUBLICATION OR WITH
A VIEW TO COMPLYING WITH THE PUBLISHED GUIDELINES OF THE COMMISSION REGARDING
PROJECTIONS OR WITH THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS GUIDE
FOR PROSPECTIVE FINANCIAL STATEMENTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE
ONLY BECAUSE THEY WERE FURNISHED TO PARENT. THE PROJECTIONS NECESSARILY MAKE
NUMEROUS ASSUMPTIONS WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS AND
ECONOMIC CONDITIONS, ACCESS TO MARKETS AND DISTRIBUTION CHANNELS, PRICING OF
PHARMACEUTICAL PRODUCTS AND OTHER MATTERS, ALL OF WHICH ARE INHERENTLY SUBJECT
TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES AND MANY OF WHICH ARE BEYOND THE
COMPANY'S CONTROL. ONE CANNOT PREDICT WHETHER THE ASSUMPTIONS MADE IN PREPARING
THE PROJECTIONS WILL BE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY HIGHER OR
LOWER THAN THOSE CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THIS
FORWARD-LOOKING INFORMATION SHOULD NOT BE REGARDED AS FACT OR AN INDICATION THAT
PARENT, THE PURCHASER, THE COMPANY OR ANYONE WHO RECEIVED THIS INFORMATION
CONSIDERED IT A RELIABLE PREDICTOR OF FUTURE RESULTS, AND THIS INFORMATION
SHOULD NOT BE RELIED ON AS SUCH. NONE OF PARENT, THE PURCHASER OR THE COMPANY
ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR
COMPLETENESS OF THE PROJECTIONS AND THE COMPANY HAS MADE NO REPRESENTATION TO
PARENT OR THE PURCHASER REGARDING THE PROJECTIONS.
12
<PAGE> 15
The following information has been excerpted from the materials presented
by the Company to Parent and the Purchaser:
AMERICAN MEDSERVE CORPORATION
MANAGEMENT PROJECTIONS FOR YEAR ENDING DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDING
------------
DECEMBER 31,
1997
------------
<S> <C>
Revenues........................................................................ $169,657
Cost of revenues................................................................ 120,052
--------
Gross profit.................................................................... 49,605
Gross profit percentage....................................................... 29.2%
Operating expenses.............................................................. 33,217
--------
Operating expenses percentage................................................. 19.6%
EBITDA.......................................................................... 16,388
Depreciation.................................................................... 1,906
--------
EBITA........................................................................... 14,482
EBITA percentage.............................................................. 8.5%
Amortization.................................................................... 2,393
--------
EBIT............................................................................ 12,089
EBIT percentage............................................................... 7.1%
Interest........................................................................ 2,078
--------
Earnings before income taxes and minority interest.............................. 10,012
Income taxes (benefit).......................................................... 4,381
Other income.................................................................... 104
Minority interest............................................................... 161
Net income (loss)............................................................... 5,573
Average number of shares outstanding............................................ 12,231
--------
Earnings per share, primary..................................................... $ 0.46
</TABLE>
Other Information. The Company is subject to the information filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, any material interests of such persons in
transactions with the Company and other matters is required to be described in
proxy statements distributed to the Company's Stockholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available for
inspection and copying at prescribed rates at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of this material may also be obtained by mail, upon
payment of the Commission's customary fees, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains a site on the World Wide Web at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
Except as otherwise noted in this Offer to Purchase, all of the information
concerning the Company contained in this Offer to Purchase, including financial
information, has been taken from or based upon publicly available documents and
records on file with the Commission and other publicly available information.
Although
13
<PAGE> 16
neither the Purchaser nor Parent has any knowledge that any such information is
untrue, neither the Purchaser nor Parent nor the Dealer Manager takes any
responsibility for the accuracy or completeness of such information or for any
failure by the Company to disclose events that may have occurred or may affect
the significance or accuracy of such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser is a newly incorporated Delaware corporation and a wholly
owned subsidiary of Parent. To date, the Purchaser has not conducted any
business other than in connection with the Offer. Until immediately prior to the
time the Purchaser purchases Shares pursuant to the Offer, it is not anticipated
that the Purchaser will have any significant assets or liabilities or engage in
activities other than those incident to its formation and capitalization and the
transactions contemplated by the Offer. Because the Purchaser is a newly formed
corporation and has minimal assets and capitalization, no meaningful financial
information regarding the Purchaser is available.
Parent 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 Parent's common stock commenced.
As part of a multi-year restructuring program undertaken in 1985, Parent,
through a series of divestitures and acquisitions, redeployed all of its capital
in the long-term pharmacy business. As a result, Parent 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. Parent operates principally in one business segment, institutional
pharmacy services for the long-term care market. Currently, Parent provides
these services to approximately 361,400 residents in 4,400 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, Utah,
Washington, West Virginia and Wisconsin. Parent does not make any export sales.
The name, citizenship, business address, principal occupation or employment
and five year employment history of each of the directors and executive officers
of the Purchaser and Parent are set forth in Schedule I hereto. The principal
executive offices of Parent and the Purchaser are located at 50 East RiverCenter
Boulevard, Covington, Kentucky 41011.
Set forth below is a summary of certain consolidated financial information
with respect to Parent and its consolidated subsidiaries excerpted or derived
from the information contained in or incorporated by reference in Parent's
Annual Report on Form 10-K for the year ended December 31, 1996, as amended on
Form 10-K/A on August 6, 1997 (the "Parent 10-K"), and Parent's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1997 (the "Parent 10-Q"),
in each case, as filed with the Commission by Parent. More comprehensive
financial information is included in or incorporated by reference in the Parent
10-K, the Parent 10-Q and other documents filed by Parent with the Commission,
and the financial information summary set forth below is qualified in its
entirety by reference to the Parent 10-K, the Parent 10-Q and such other
documents and all the financial information and related notes contained therein.
14
<PAGE> 17
OMNICARE, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
---------------------------------------------- -----------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1996 1995 1994 1997 1996
------------ ------------ ------------ --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA: (A)
Sales............................... $536,604 $399,636 $307,655 $384,668 $239,018
Net income.......................... $ 43,450(b) $ 24,760(c) $ 13,531(d) $ 28,581 (e) $ 18,525
Earnings per share data:
Primary:
Net income.......................... $ .64(b) $ .47(c) $ .30(d) $ .36 (e) $ .30
Fully diluted:
Net income.......................... $ .61(b) $ .43(c) $ .30(d) $ .36 (e) $ .28
Dividends per share................. $ .06 $ .05 $ 0.045 $ .035 $ .03
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF AS OF AS OF AS OF
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1996 1995 1994 1997 1996
------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................... $329,002 $106,384 $125,550 $271,191 $394,642
Total assets........................ 721,697 360,836 317,205 817,166 663,669
Long-term debt (f).................. 1,992 82,692 85,323 1,211 78,071
Stockholders' equity (g) (h)........ 634,378 214,761 180,104 715,674 523,753
</TABLE>
- ---------------
(a) The Company has had an active acquisition program in effect since 1989.
(b) Includes acquisition expenses related to the 1996 pooling-of-interests
transaction of $690,000. Such expenses, on an after-tax basis, were
$534,000, or $.01 per primary and fully diluted share. Net income, excluding
these expenses, was $43,984,000, or $.65 per primary share ($.61 fully
diluted).
(c) Includes acquisition expenses related to the 1995 Specialized
pooling-of-interests transaction of $1,292,000. Such expenses, on an
after-tax 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).
(d) Includes acquisition expenses related to the 1994 Evergreen
pooling-of-interests transaction of $2,380,000. Such expenses, on an
after-tax 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).
(e) Includes acquisition expenses related to the 1997 pooling-of-interests
transactions of $1,671,000. Such expenses, on an after tax basis, were
$1,429,000, or $.02 per primary and fully diluted share. Net income,
excluding these expenses, was $30,010,000, or $.38 per primary and fully
diluted share.
(f) 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.
(g) In 1994, the Company sold 6,494,964 shares of common stock, in a public
offering, resulting in net proceeds of $59,211,000.
(h) 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.
Parent is subject to the informational filing requirements of the Exchange
Act and is required to file reports and other information with the Commission
relating to its business, financial condition and other matters. Information, as
of particular dates, concerning Parent's directors and officers, their
remuneration, the principal holders of Parent's securities and any material
interest of such persons in transactions with Parent is required to be described
in periodic statements filed with the Commission. Such reports and other
information, including the Parent 10-K and the Parent 10-Q, may be inspected and
copies may be obtained from the offices of the Commission in the same manner as
set forth in Section 8.
15
<PAGE> 18
Except as set forth in this Offer to Purchase, none of Parent, the
Purchaser or any of their affiliates (collectively, the "Purchaser Entities"),
nor, to the best knowledge of any of the Purchaser Entities, any of the persons
listed on Schedule I, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of the Purchaser Entities,
nor, to the best knowledge of any of the Purchaser Entities, any of the persons
listed on Schedule I, has had any business relationships or transactions with
the Company or any of its executive officers, directors or affiliates that would
require reporting under the rules of the Commission. Except as set forth in this
Offer to Purchase, there have been no contacts, negotiations or transactions
between the Purchaser Entities, or their respective subsidiaries or, to the best
knowledge of any of the Purchaser Entities, any of the persons listed on
Schedule I, and the Company or its affiliates, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
election of directors or a sale or other transfer of a material amount of
assets.
Except as set forth in this Offer to Purchase, during the last five years,
none of the Purchaser Entities, nor, to the best knowledge of any of the
Purchaser Entities, any of the persons listed in Schedule I hereto, (i) has been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
Except as set forth in this Offer to Purchase, none of the Purchaser
Entities, nor, to the best knowledge of the Purchaser Entities, any of the
persons listed on Schedule I hereto, beneficially owns any equity securities of
the Company. Except as set forth in this Offer to Purchase, none of the
Purchaser Entities, nor, to the best knowledge of the Purchaser Entities, any of
the persons listed on Schedule I, beneficially owns any Shares or has effected
any transaction in such equity securities during the past 60 days.
10. SOURCE AND AMOUNTS OF FUNDS
The offer is not conditioned upon any financing arrangements. The total
amount of funds required by the Purchaser to consummate the Offer and the Merger
is expected to be approximately $222.6 million, which amount excludes related
fees and expenses. Purchaser expects to obtain these funds in the form of
capital contributions and/or loans from Parent. Parent expects to fund the
capital contributions and/or loans provided to Purchaser from existing cash
balances and/or from an existing credit facility.
11. BACKGROUND OF THE OFFER
In the past, Parent reviewed certain properties currently owned by the
Company in connection with Parent's consideration of purchasing such properties
prior to the Company's acquisition of such properties. In June, 1997,
representatives of DLJ contacted Joel F. Gemunder, President of Parent, to
inquire as to Parent's interest in pursuing a transaction with the Company.
Parent indicated such an interest and entered into a confidentiality agreement
with the Company on June 4, 1997, which provided, among other things, that
Parent would treat confidentially certain information to be provided to it
concerning the Company. On June 12, 1997, DLJ sent a preliminary bid request
letter to Parent.
Parent engaged Credit Suisse First Boston to serve as its financial advisor
in connection with the potential acquisition of the Company. On June 18, 1997,
Parent submitted a written proposal to acquire the Company at a price range of
$17.00-$19.00 per share, payable in cash. Parent then received an initial draft
of the proposed Merger Agreement together with a letter from DLJ inviting Parent
to submit a final proposal for the acquisition of the Company.
On June 30, 1997, Parent and its advisors met with advisors of the Company
and DLJ and conducted a preliminary review of certain non-public information.
During the period from June 30, 1997 through July 9, 1997, Parent and its
advisors continued a review of the Company's business, financial results and
related data. From
16
<PAGE> 19
July 2, 1997, through July 9, 1997, Parent, Parent's advisors, the Company's
senior management and the Company's advisors engaged in various discussions
regarding the business of the Company.
On July 10, 1997, Parent submitted, along with a proposed Merger Agreement,
a written offer to acquire the Company at a price of $17.75 per Share, subject
to certain conditions, but not subject to a financing condition. On July 11,
1997, DLJ informed Parent that it was one of the final bidders and invited the
Company to submit a revised offer. On July 15, 1997, Parent submitted a revised
written offer at a price of $18.00 per Share. Shortly thereafter, DLJ informed
Credit Suisse First Boston that Parent had been selected by the Company to
attempt to consummate an acquisition of the Company.
During the period from July 18, 1997 through August 7, 1997, Parent,
Parent's advisors, the Company's senior management and the Company's advisors
negotiated the terms of the Merger Agreement. After approval of such Merger
Agreement by the Board of Directors of Parent, on August 7, 1997, the Board of
Directors of the Company met and approved the proposed transaction and the
Merger Agreement.
The Merger Agreement was executed on August 7, 1997. Prior to the
commencement of trading on August 8, 1997, each of the Company and Parent issued
a press release regarding the execution of the Merger Agreement.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; PROPOSED MERGER
Purpose of the Offer. The purpose of the Offer is for Parent, through the
Purchaser, to acquire control of the Board of Directors of, and the entire
equity interest in, the Company. The Purchaser intends to acquire all
outstanding Shares not tendered and purchased pursuant to the Offer. The
acquisition of the entire equity interest in the Company has been structured as
a cash tender offer followed by a cash merger in order to provide a prompt and
orderly transfer of ownership of the Company from the public Stockholders to
Parent and to provide Stockholders with cash for all their Shares.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OR
A SOLICITATION OF CALLS FOR A SPECIAL MEETING OF THE COMPANY'S STOCKHOLDERS. ANY
SUCH SOLICITATION WHICH PARENT OR THE PURCHASER MIGHT MAKE WOULD BE MADE ONLY
PURSUANT TO SEPARATE PROXY OR SOLICITATION MATERIALS COMPLYING WITH THE
REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT, AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER.
Plans for the Company. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business and
operations of the Company will be continued by the Surviving Corporation
substantially as they are being conducted. Initially upon consummation of the
Merger (the "Effective Time"), the directors of the Purchaser will be the
directors of the Surviving Corporation and the officers of the Company
immediately prior to the Effective Time will be the officers of the Surviving
Corporation.
Parent will continue to evaluate the business and operations of the Company
during the pendency of the Offer and after the consummation of the Offer and the
Merger, and will take such actions as it deems appropriate under the
circumstances then existing. Parent intends to seek additional information about
the Company during this period. Thereafter, Parent intends to review such
information as part of a comprehensive review of the Company's business,
operations, capitalization and management with a view to optimizing the
Company's potential in conjunction with the business of Parent.
Except as described in this Offer to Purchase, neither Parent nor the
Purchaser has any present plans or proposals that would relate to or would
result in (i) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries,
(ii) a sale or transfer of a material amount of assets of the Company or any of
its subsidiaries, (iii) any other material change in the Company's corporate
structure or business, (iv) a class of securities of the Company being delisted
from a national securities exchange or ceasing to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities association
or (v) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act.
17
<PAGE> 20
Proposed Merger.
The Merger Agreement. The following is a summary of certain provisions of
the Merger Agreement, a copy of which has been filed as an exhibit to the
Schedule 14D-1 filed by the Purchaser with the Commission and is available for
copying and inspection at the Commission in the manner set forth in Section 8.
Such summary is qualified in its entirety by reference to the Merger Agreement.
The Offer. The Merger Agreement provides for the making of the Offer by
the Purchaser. The obligation of Purchaser to accept for payment and pay for
Shares tendered pursuant to the Offer is subject to the satisfaction of the
Minimum Condition and certain other conditions that are described in Section 14.
The Purchaser has agreed that, without the written consent of the Company,
Purchaser shall not amend or waive the Minimum Condition or decrease the Offer
Price or the number of Shares sought in the Offer or amend any other condition
of the Offer in any manner adverse to the Stockholders. If, immediately prior to
the Expiration Date of the Offer, the Shares tendered and not withdrawn pursuant
to the Offer equal less than 90% of the outstanding Shares but more than 80% of
the outstanding Shares, the Purchaser may extend the Offer for a period not to
exceed seven business day, notwithstanding that all conditions to the Offer are
satisfied as of such date.
The Merger. The Merger Agreement provides that, following the purchase of
Shares pursuant to the Offer, and if required by applicable law in order to
consummate the Merger, the approval of the Merger Agreement by the Stockholders
of the Company and the satisfaction or waiver of the other conditions to the
Merger, the Purchaser will be merged with and into the Company. The Merger shall
become effective at such time as a certificate of merger is filed with the
Secretary of State of the State of Delaware, or at such later time as is
specified in such certificate of merger. As a result of the Merger, all of the
properties, rights, privileges, immunities, powers and franchises of the Company
and the Purchaser shall vest in the Surviving Corporation and all debts,
liabilities and duties of the Company and the Purchaser shall become the debts,
liabilities and duties of the Surviving Corporation.
The Merger Agreement provides that the certificate of incorporation of the
Purchaser at the Effective Time will be the certificate of incorporation of the
Surviving Corporation. The by-laws of the Purchaser at the Effective Time will
be the by-laws of the Surviving Corporation. The Merger Agreement also provides
that the initial directors of the Purchaser at the Effective Time will be the
directors of the Surviving Corporation and the initial officers of the Company
at the Effective Time will be the officers of the Surviving Corporation.
Conversion of Securities. At the Effective Time, (i) each issued and
outstanding Share held in the treasury of the Company, by Parent, the Purchaser
or any other wholly owned subsidiary of Parent shall be cancelled and retired
and shall cease to exist, and no consideration shall be delivered in exchange
therefor; (ii) each share of common stock of the Purchaser then issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of common stock of the Surviving
Corporation; and (iii) each Share issued and outstanding immediately prior to
the Effective Time shall, except as otherwise provided in (i) above and except
for Shares held by any Stockholder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded appraisal for such Shares in
accordance with Section 262 of the DGCL, be converted into the right to receive
$18.00 in cash or any higher price per Share that may be paid pursuant to the
Offer, without interest.
Dissenting Shares. Shares that are outstanding immediately prior to the
Effective Time and which are held by Stockholders who shall not have voted in
favor of the Merger or consented thereto in writing and who shall have demanded
properly in writing appraisal for such Shares in accordance with Section 262 of
the DGCL (collectively, the "Dissenting Shares"), shall not be converted into or
represent the right to receive the Merger Consideration. Such Shares instead
will, from and after the Effective Time, represent only the right to receive
payment of the appraised value of such Shares held by them in accordance with
the provisions of such Section 262, except that all Dissenting Shares held by
Stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under such Section
262 shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender, in the manner
provided in the Merger Agreement, of the Certificate or Certificates that,
immediately prior to the Effective Time, evidenced such Shares.
18
<PAGE> 21
Options. The Merger Agreement provides that on the Expiration Date,
immediately prior to the acceptance for payment of Shares pursuant to the Offer,
each outstanding employee stock option to purchase Shares (a "Company Option")
granted under any stock option or compensation plan or arrangement of the
Company or its subsidiaries (collectively, the "Option Plan"), shall be
surrendered to the Company and shall be forthwith canceled and the Company shall
pay to each holder of a Company Option, by check, an amount equal to (i) the
product of the number of the Shares which are issuable upon exercise of such
Company Option, multiplied by the Offer Price, less (ii) the aggregate exercise
price of such Company Option. Except as may be otherwise agreed to by Parent or
the Purchaser and the Company, the Company's Option Plan shall terminate as of
the Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any of its subsidiaries shall be deleted as of
the Effective Time and no holder of Company Options or any participant in the
Option Plan or any other plans, programs or arrangements shall have any rights
thereunder to acquire any equity securities of the Company, the Surviving
Corporation or any subsidiary thereof.
Recommendation. The Board of Directors has unanimously (i) determined that
the terms of the Offer and the Merger are fair, to and in the best interests of,
the Stockholders, (ii) approved the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, and (iii) resolved to
recommend that the Stockholders accept the Offer, tender their Shares pursuant
to the Offer and approve and adopt the Merger Agreement and the Merger;
provided, that such recommendation may be withdrawn, modified or amended, if, in
the opinion of the Board of Directors, after receipt of advice from outside
legal counsel, failure to withdraw, modify or amend such recommendation would
reasonably be expected to result in the Board of Directors violating its
fiduciary duties to the Company's shareholders under applicable law and the
Company pays the fees and expenses required by the Merger Agreement.
Stockholders' Meeting. The Merger Agreement provides that the Company
shall, if required in accordance with applicable law, in order to consummate the
Merger, duly call, give notice of, convene and hold a special meeting of its
Stockholders as promptly as practicable following consummation of the Offer for
the purpose of considering and taking action on the Merger Agreement and the
transactions contemplated thereby. If required by applicable law, the Company
will file with the Commission a proxy statement including the recommendation of
the Board of Directors that the Stockholders vote in favor of the approval of
the Merger Agreement and the transactions contemplated thereby. The Company
agrees to respond promptly to all Commission comments with respect to the proxy
statement and to cause the proxy statement to be mailed to the Stockholders at
the earliest practicable time.
Notwithstanding the preceding paragraph, in the event that Parent, the
Purchaser and any other subsidiaries of Parent shall acquire in the aggregate at
least 90% of the outstanding shares of each class of capital stock of the
Company, pursuant to the Offer or otherwise, the Company has agreed, at the
request of Parent, to take all necessary and appropriate action to cause the
Merger to become effective, as soon as practicable after such acquisition,
without a meeting of Stockholders, in accordance with Section 253 of the DGCL.
Representation on the Board of Directors. Promptly upon the purchase of
and payment for any Shares by Parent or any of its subsidiaries which represents
at least a majority of the outstanding Shares, Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as is equal to the product of the total number
of directors on such Board (giving effect to the directors designated by Parent
pursuant to this sentence) multiplied by the percentage that the number of
Shares so accepted for payment bears to the total number of Shares then
outstanding. In furtherance thereof, the Company shall, upon request of the
Purchaser, promptly increase the size of its Board of Directors or exercise its
best efforts to secure the resignations of such number of directors, or both, as
is necessary to enable Parent's designees to be so elected to the Company's
Board, and shall cause Parent's designees to be so elected. At such time, the
Company shall, if requested by Parent, also cause persons designated by Parent
to constitute at least the same percentage (rounded up to the next whole number)
as is on the Company's Board of Directors of (i) each committee of the Company's
Board of Directors, (ii) each board of directors (or similar body) of each
subsidiary of the Company and (iii) each committee (or similar body) of each
such board. In the event that Parent's designees are elected to the Company's
Board of Directors, until the Effective Time, the Company's Board shall have at
least two directors who are directors on the date of the Merger Agreement (the
"Independent Directors");
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provided that, in such event, if the number of Independent Directors shall be
reduced below two for any reason whatsoever, any remaining Independent Directors
(or Independent Director, if there be only one remaining) shall be entitled to
designate persons to fill such vacancies who shall be deemed to be Independent
Directors for purposes of the Merger Agreement or, if no Independent Director
then remains, the other directors shall designate two persons to fill such
vacancies who shall not be stockholders, affiliates or associates of Parent or
the Purchaser and such persons shall be deemed to be Independent Directors for
purposes of the Merger Agreement. In the event that Parent's designees are
elected to the Company's Board, after the acceptance for payment of Shares
pursuant to the Offer and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors shall be required to (a) amend or
terminate the Merger Agreement by the Company or (b) exercise or waive any of
the Company's rights, benefits or remedies thereunder.
Interim Operations of the Company. Pursuant to the Merger Agreement, the
Company has covenanted and agreed that, except as otherwise expressly provided
in the Merger Agreement or as agreed in writing by the Parent, during the period
from the date of the Merger Agreement until such time as directors of the
Purchaser have been elected to, and shall constitute a majority of, the Board of
Directors of the Company (a) the business of the Company and its subsidiaries
shall be conducted only in the ordinary and usual course of business and
consistent with past practice and, to the extent consistent therewith, each of
the Company and its subsidiaries shall use its reasonable efforts to preserve
its business organizations and business organizations of its subsidiaries intact
and maintain its existing relations with customers, suppliers, employees,
creditors and business partners, (b) the Company will not directly or indirectly
(i) except upon exercise of employee stock options, pursuant to which up to
517,117 Shares may be issued, outstanding on the date of the Merger Agreement,
issue, sell, transfer or pledge or agree to sell, transfer or pledge any
treasury stock of the Company or any capital stock of any of its subsidiaries
beneficially owned by it, (ii) amend its certificate of incorporation or by-laws
or similar organizational documents, or (iii) split, subdivide, combine or
reclassify the outstanding Shares or preferred stock or any outstanding capital
stock of any of the subsidiaries of the Company, (c) neither the Company nor any
of its subsidiaries shall (i) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock other than dividends paid by subsidiaries of the Company to the Company or
any of its wholly owned subsidiaries in the ordinary course of business, (ii)
issue, sell, pledge, grant, dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class of the Company or its subsidiaries, other than Shares reserved for
issuance on the date hereof pursuant to the exercise of employee stock options
outstanding on the date of the Merger Agreement pursuant to which up to 517,117
shares may be issued, (iii) transfer, lease, license, sell, mortgage, pledge,
dispose of, or encumber any assets other than in the ordinary and usual course
of business and consistent with past practice, or (iv) redeem, purchase or
otherwise acquire directly or indirectly any of its capital stock, (d) neither
the Company nor any of its subsidiaries shall (i) grant any increase in the
compensation payable or to become payable by the Company or any of its
subsidiaries to any of its executive officers or employees, enter into any
contract or other binding commitment in respect of any such increase with any of
its directors, officers or other employees or any director, officer or other
employee of its subsidiaries, and not establish, adopt, enter into, make any new
grants or awards under or amend, any collective bargaining agreement; (ii)(A)
adopt any new, or (B) amend or otherwise increase, or accelerate the payment or
vesting of the amounts payable or to become payable under an existing, bonus,
incentive compensation, deferred compensation, severance, profit sharing, stock
option, stock purchase, insurance, pension, retirement or other employee benefit
plan, agreement or arrangement, or (iii) enter into any employment or severance
agreement with or, except in accordance with the existing written policies of
the Company, grant any severance or termination pay to any officer, director or
employee of the Company or any of its subsidiaries; provided however, that (i)
prior to consummation of the Offer, the Company may enter into severance
agreements with certain individuals set forth in the Company Disclosure Schedule
(the "Designated Employees") in the form as approved by the Company's Board of
Directors, (ii) the aggregate cost of payments and benefits provided to the
Designated Employees pursuant to the terms of such severance agreements (unless
otherwise amended with the written consent of, or at the written direction of,
Parent or Purchaser) shall not exceed $2,000,000 in the aggregate, and (iii)
with respect to the severance plan described in the Company Disclosure Schedule
that covers individuals other than the Designated Employees (the "Nondesignated
Employees"): (a) the implementation of such plan and the entering into of
agreements with Nondesignated Employees shall be subject to the prior written
consent
20
<PAGE> 23
of the Purchaser, which consent shall not be unreasonably withheld (with
reasonableness to be determined based upon Purchaser's reasonable business
objectives and consistent with Purchaser's past practice), and (b) the aggregate
cost of payments and benefits provided to the Nondesignated Employees pursuant
to the terms of such severance agreements (unless otherwise amended with the
written consent of, or at the written direction of, Parent or Purchaser) shall
not exceed $1,000,000 in the aggregate; (e) neither the Company nor any of its
subsidiaries shall permit any insurance policy naming it as a beneficiary or a
loss payable payee to be canceled or terminated except in the ordinary course of
business and consistent with past practice; (f) neither the Company nor any of
its subsidiaries shall enter into any contract or transaction relating to the
purchase of assets that exceed $1,000,000 in the aggregate; (g) neither the
Company nor any of its subsidiaries shall change any of the accounting methods
used by it unless required by GAAP, neither the Company nor any of its
subsidiaries shall make any material tax election except in the ordinary course
of business consistent with past practice, change any material tax election
already made, adopt any material tax accounting method except in the ordinary
course of business consistent with past practice, change any material tax
accounting method unless required by GAAP, enter into any closing agreement,
settle any tax claim or assessment or consent to any tax claim or assessment or
any waiver of the statute of limitations for any such claim or assessment, (h)
neither the Company nor any of its subsidiaries shall (i) incur or assume any
long-term debt, (ii) except in the ordinary course of business and consistent
with past practice and in an aggregate amount not to exceed $3,000,000, incur or
assume any short-term indebtedness, (iii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, (iv) make any loans,
advances or capital contributions to, or investment in, any other person (other
than to wholly owned subsidiaries of the Company), (v) enter into any material
commitment or transaction (including, but not limited to, any borrowing, capital
expenditure or purchase, sale or lease of assets), or (vi) modify, amend or
terminate any of its material contracts or waive, release or assign any material
rights, (i) neither the Company nor any of its subsidiaries shall settle or
compromise any claim, lawsuit, liability or obligation, and neither the Company
nor any of its subsidiaries shall pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction of
any such claims, liabilities or obligation, (x) to the extent reflected or
reserved against in, or contemplated by, the consolidated financial statements
(or the notes thereto) of the Company and its consolidated subsidiaries, (y)
incurred in the ordinary course of business and consistent with past practice or
(z) which are legally required to be paid, discharged or satisfied, (j) neither
the Company nor any of its subsidiaries will take, or agree to commit to take,
any action that would make any representation or warranty of the Company
contained in the Merger Agreement inaccurate in any respect at, or as of any
time prior to, the Effective Time, (k) except as otherwise required by the
fiduciary duties of the board to the Stockholders under applicable law, neither
the Company nor any of its subsidiaries will take any action with the intent of
causing any of the conditions to the Offer not to be satisfied, and (l) except
as otherwise required by the fiduciary duties of the board to the Stockholders
under applicable law, neither the Company nor any of its subsidiaries will enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.
Other Agreements of Parent, the Purchaser and the Company. The Merger
Agreement provides that neither the Company nor any of its subsidiaries shall
(and the Company shall use its best efforts to cause its officers, directors,
employees, representatives and agents, including, but not limited to, investment
bankers, attorneys and accountants, not to), directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any corporation, partnership, person or other entity or
group (other than Parent and any of its affiliates or representatives)
concerning any proposal or offer to acquire all or a substantial part of the
business and properties of the Company or any of its subsidiaries or any capital
stock of the Company or any of its subsidiaries, whether by merger, tender
offer, exchange offer, sale of assets or similar transactions involving the
Company or any subsidiary, division or operating or principal business unit of
the Company (an "Acquisition Proposal"), except that the Merger Agreement does
not prohibit the Company or the Company's Board from (i) taking and disclosing
to the Company's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act, or (ii) making such disclosure to the Company's stockholders as,
in the good faith judgment of the Board, after receiving advice from outside
counsel, is required under applicable law, provided that the Company may not,
except as described below, withdraw or modify, or propose to withdraw or modify,
its position with respect
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<PAGE> 24
to the Offer or the Merger or approve or recommend, or propose to approve or
recommend any Acquisition Proposal, or enter into any agreement with respect to
any Acquisition Proposal. The Merger Agreement provides that the Company will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing. The Merger
Agreement provides that notwithstanding the foregoing, prior to the acceptance
of Shares pursuant to the Offer, the Company may furnish information concerning
the Company and its subsidiaries to any corporation, partnership, person or
other entity or group pursuant to appropriate confidentiality agreements, and
may negotiate and participate in discussions and negotiations with such entity
or group concerning an Acquisition Proposal if (x) such entity or group has
submitted a bona fide written proposal to the Company relating to any such
transaction which the Board determines in good faith, after consulting with a
nationally recognized investment banking firm, represents a superior transaction
to the Offer and the Merger and (y) in the opinion of the Board of Directors of
the Company, only after receipt of advice from outside legal counsel to the
Company, the failure to provide such information or access or to engage in such
discussions or negotiations would reasonably be expected to cause the Board of
Directors to violate its fiduciary duties to the Company's shareholders under
applicable law (an Acquisition Proposal which satisfies clauses (x) and (y)
being referred to herein as a "Superior Proposal"). The Merger Agreement
provides that the Company will immediately notify Parent of the existence of any
proposal or inquiry received by the Company, the identity of the party making
such proposal or inquiry, and the terms (both initial and modified) of any such
proposal or inquiry (and will disclose any written materials delivered in
connection therewith) and the Company will keep Parent reasonably informed of
the status (including amendments or proposed amendments) of any such proposal or
inquiry. The Merger Agreement provides that the Company will promptly provide to
Parent any material non-public information regarding the Company provided to any
other party which was not previously provided to Parent. The Merger Agreement
provides that at any time following notification to Parent of the Company's
intent to do so (which notification shall include the identity of the bidder and
the material terms and conditions of the proposal) and if the Company has
otherwise complied with the terms of the foregoing, the Board of Directors may
withdraw or modify its approval or recommendation of the Offer and may enter
into an agreement with respect to a Superior Proposal, provided it shall (i)
take no such action unless it shall notify Parent promptly of its intention, and
in no event shall such notice be given less than two business days prior to the
earlier of the public announcement of such withdrawal or modification of its
recommendation or the Company's termination of the Merger Agreement, and (ii)
concurrently with entering into such agreement pay or cause to be paid to Parent
the Break-Up Amount (as defined below) plus any amount payable at the time for
reimbursement of expenses pursuant to the Merger Agreement. If the Company shall
have notified Parent of its intent to enter into an agreement with respect to a
Superior Proposal in compliance with the preceding sentence and has otherwise
complied with such sentence, the Company may enter into an agreement with
respect to such Superior Proposal.
From the date of the Merger Agreement, upon reasonable notice, the Company
shall (and shall cause each of its subsidiaries to) afford to the officers,
employees, accountants, counsel, financing sources and other representatives of
Parent, access, during normal business hours during the period prior to the time
that the directors of the Purchaser have been elected to, and shall constitute a
majority of the Board of Directors of the Company, (the "Appointment Date"), to
all its properties, employees, books, contracts, commitments and records and,
during such period, the Company shall (and shall cause each of its subsidiaries
to) furnish promptly to the Parent (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws and (b) all other
information concerning its business, properties and personnel as Parent may
reasonably request. After the Appointment Date, the Company shall provide Parent
and such persons as Parent shall designate with all such information, at such
time as Parent shall request.
Unless otherwise required by law and until the Appointment Date, Parent
will hold any such information which is nonpublic in confidence in accordance
with the provisions of a letter agreement dated June 4, 1997, between the
Company and the Parent.
Pursuant to the Merger Agreement, for five years after the Effective Time,
the Surviving Corporation (or any successor to the Surviving Corporation) shall
indemnify, defend and hold harmless the present and former officers and
directors of the Company and its subsidiaries, determined as of the Effective
Time (each an
22
<PAGE> 25
"Indemnified Party") against all losses, claims, damages, liabilities, costs,
fees and expenses (including reasonable fees and disbursements of counsel and
judgments, fines, losses, claims, liabilities and amounts paid in settlement
(provided that any such settlement is effected only upon receipt of the written
consent of the Parent or the Surviving Corporation which consent shall not
unreasonably be withheld)) arising out of actions or omissions occurring at or
prior to the Effective Time to the full extent required under applicable
Delaware law, the terms of the Company's certificate of incorporation or bylaws,
as in effect at the date of the Merger Agreement, and the terms of any
indemnification agreement entered into with the Company prior to the date of the
Merger Agreement; provided, that in the event any claim or claims are asserted
or made within such five-year period, all rights to indemnification in respect
of any such claim or claims shall continue until disposition of any and all such
claims. Parent or the Surviving Corporation shall maintain the Company's
existing officers and directors' liability insurance ("D&O Insurance") for a
period of not less than three years after the Effective Time; provided, that the
Parent may substitute therefor policies of substantially equivalent coverage and
amounts containing terms no less favorable to such former directors or officers;
provided, further, if the existing D&O Insurance expires, is terminated or
canceled during such period, Parent or the Surviving Corporation will use all
reasonable efforts to obtain substantially similar D&O Insurance; provided,
further, however, that in no event shall Parent, the Surviving Corporation or
the Company be required to pay aggregate premiums for insurance in excess of
150% of the aggregate premiums paid by the Company in 1996 on an annualized
basis for such purpose (the "1996 Premium"); and provided, further, that if the
Parent or the Surviving Corporation is unable to obtain the amount of insurance
required by this sentence for such aggregate premium, Parent or the Surviving
Corporation shall obtain as much insurance as can be obtained for an annual
premium not in excess of 150% of the 1996 Premium.
The Merger Agreement provides that the Company, the Purchaser and Parent
will each use all reasonable efforts to consummate and make effective the
transactions contemplated by the Merger Agreement as soon as practicable.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties made by the Company to Parent and the
Purchaser including, but not limited to, representations and warranties relating
to the Company's organization and qualification, its capitalization, its
authority to enter into the Merger Agreement and to carry out the related
transactions, the absence of conflicts with applicable laws and existing
obligations of the Company and its subsidiaries, financial statements of the
Company, compliance with applicable law, filings made by the Company with the
Commission under the Securities Act or the Exchange Act, undisclosed
liabilities, certain changes or events concerning its businesses, litigation,
employee benefits and labor matters, tax matters, intellectual property,
environmental matters, disclosure documents filed with the Commission in
connection with the Offer and the Merger, brokerage fees and commissions and
other fees, certain business practices, insurance and product warranties.
The Merger Agreement contains various customary representations and
warranties made by Parent and the Purchaser to the Company, including, but not
limited to, representations and warranties relating to Parent's and the
Purchaser's organization and qualification, their authority to enter into the
Merger Agreement and to carry out the related transactions, the absence of
conflicts with applicable laws and existing obligations of Parent and the
Purchaser, certain information provided to the Company by Parent and the
Purchaser for inclusion in disclosure documents filed with the Commission in
connection with the Offer and Merger and the financing of the Offer and Merger.
Conditions to the Merger. The obligations of each of Parent, the Purchaser
and the Company to effect the Merger are subject to the satisfaction of certain
conditions, including that (a) the Merger Agreement shall have been adopted and
the Merger shall have been approved by the requisite vote of the holders of the
Shares, if required by applicable law, in order to consummate the Merger, (b) no
federal or state governmental or regulatory body or court of competent
jurisdiction shall have enacted, issued, promulgated or enforced any statute,
rule, regulation, executive order, decree, judgment, preliminary or permanent
injunction or other order that is in effect and that prohibits, enjoins or
otherwise restrains the consummation of the Merger; provided, however, that the
parties shall use all commercially reasonable efforts to cause any such decree,
judgment, injunction or order to be vacated or lifted, (c) Parent, the Purchaser
or their affiliates shall have purchased Shares pursuant to the Offer, except
that this condition shall not apply if Parent, the Purchaser or their affiliates
shall have failed to purchase Shares pursuant to the Offer in breach of their
obligations under the Merger Agreement, and (d) the waiting
23
<PAGE> 26
period (and any extension thereof) applicable to the Merger under the HSR Act
shall have been terminated or shall have expired.
The obligation of the Parent and Purchaser and the Company to effect the
Merger is also subject to the satisfaction or waiver of the condition that all
representations and warranties made by the Company or Parent and Purchaser,
respectively, in the Merger Agreement shall be true and correct on and as of the
Effective Time, unless the inaccuracies (without giving effect to any
materiality or material adverse effect qualifications or materiality exceptions
contained therein) under such representations and warranties, taking all the
inaccuracies under all such representations and warranties together in their
entirety, do not, individually or in the aggregate, result in any event, change
or effect that has, or is reasonably likely to have, a material adverse effect
(A) on the condition (financial or otherwise), business, assets, liabilities,
results of operations or cash flows of the Company and its subsidiaries or
Parent and its subsidiaries, respectively, taken as a whole, or (B) on the
ability of the Company or the ability of Parent or the Purchaser to perform its
obligations under the Merger Agreement or to consummate the transactions
contemplated by the Merger Agreement.
Termination. The Merger Agreement may be terminated, (a) by the mutual
written consent of Parent and the Company, (b) by either of the Company or
Parent (i) if the Offer shall have expired without any Shares being purchased
therein; provided, however, that the right to terminate the Merger Agreement
under this clause (b)(i) shall not be available to any party whose failure to
fulfill any obligation under the Merger Agreement has been the cause of, or
resulted in, the failure of Parent or the Purchaser, as the case may be, to
purchase the Shares pursuant to the Offer on or prior to such date, (ii) if any
court, arbitrator, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or other
action the parties to the Merger Agreement shall use their reasonable efforts to
lift), which permanently restrains, enjoins or otherwise prohibits the
consummation of the Offer or the Merger and such order, decree, ruling or other
action shall have become final and nonappealable, or (iii) if the Offer has not
been consummated prior to October 5, 1997; provided, that the right to terminate
the Merger Agreement under this clause (b)(iii) shall not be available to any
party whose misrepresentation in the Merger Agreement or whose failure to
perform any of its covenants and agreements or to satisfy any obligation under
the Merger Agreement has been the cause of, or resulted in, the failure of
Parent or the Purchaser, as the case may be, to purchase Shares pursuant to the
Offer on or prior to such date, (c) by the Company (i) if Parent, the Purchaser
or any of their affiliates shall have failed to commence the Offer on or prior
to five business days following the date of the initial public announcement of
the Offer; provided, that the Company may not terminate the Merger Agreement
pursuant to this clause (c)(i) if the Company is at such time in breach of its
obligations under the Merger Agreement such as to cause a material adverse
effect on the condition (financial or otherwise), business, assets, liabilities,
results of operations or cash flows of the Company and its subsidiaries, taken
as a whole, or on the ability of the Company to perform its obligations under
the Merger Agreement or to consummate the transactions contemplated by the
Merger Agreement (a "Company Material Adverse Effect"), (ii) in connection with
entering into an agreement with respect to a Superior Proposal, provided it has
complied with all provisions relating thereto contained in the Merger Agreement,
including the notice provisions, and that it makes simultaneous payment of the
Break-Up Amount (as defined below), or (iii) if Parent or the Purchaser shall
have breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in the Merger Agreement,
which is not cured, in all material respects, within 30 days after the giving of
written notice by the Company to Parent or the Purchaser, as applicable, (d) by
Parent (i) if either Parent or the Purchaser is entitled to terminate the Offer
as a result of (A) the Board of Directors of the Company or any committee
thereof having modified in a manner adverse to Parent or the Purchaser or
withdrawn its approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any Acquisition Proposal, (B) the Company
entering into any agreement with respect to any Superior Proposal in accordance
with the terms of the Merger Agreement, or (C) the Board of Directors of the
Company resolving to do any of the foregoing, (ii) if the Offer is not commenced
as a result of actions or inaction by the Company that result in the failure of
a condition specified in Section 14 hereof or the Offer is terminated or expires
as a result of the failure of a condition specified in Section 14 hereof, unless
such termination or expiration has been caused by or resulted from the failure
of Parent or Purchaser to perform any covenants and agreements of Parent or
Purchaser contained in the Merger Agreement, or (iii) if (A) the Company shall
have breached in any respect any of its representations or warranties contained
in the Merger Agreement,
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<PAGE> 27
unless the inaccuracies (without giving effect to any materiality or material
adverse effect qualifications or materiality exceptions contained therein) under
such representations and warranties taking all the inaccuracies under all such
representations and warranties together in their entirety, do not, individually
or in the aggregate, result in a Company Material Adverse Effect or (B) the
Company shall have breached or failed to perform any obligation or to comply
with any agreement or covenant to be performed or complied with by it under the
Merger Agreement, other than, any breach or failure which would not have, either
individually or in the aggregate, a Company Material Adverse Effect (in each of
cases (A) and (B), which breach or failure has not been cured within thirty (30)
days following receipt of written notice thereof by Parent specifying in
reasonable detail the basis of such alleged breach or failure.
Termination Fee. If (i) the Company terminates the Merger Agreement in
connection with entering into an agreement with respect to a Superior Proposal,
(ii) Parent terminates the Merger Agreement as a result of (A) the Board of
Directors of the Company or any committee thereof having modified in a manner
adverse to Parent or the Purchaser or withdrawn its approval or recommendation
of the Offer, the Merger or the Merger Agreement, or approved or recommended any
Acquisition Proposal, (B) the Company entering into any agreement with respect
to any Superior Proposal in accordance with the terms of the Merger Agreement,
or (C) the Board of Directors of the Company resolving to do any of the
foregoing, or (iii) either the Company or Parent terminates the Merger Agreement
if the Offer shall have expired without any Shares being purchased therein
(provided, however, that such right to terminate is not available to any party
whose failure to fulfill any obligation under the Merger Agreement has been the
cause of, or resulted in, the failure of Parent or the Purchaser, as the case
may be, to purchase the Shares pursuant to the Offer on or prior to such date)
and (1) prior to such termination there shall have been publicly announced
another Acquisition Proposal or (2) the Company shall have entered into a
definitive agreement relating to an Acquisition Proposal or a business
combination or other transaction contemplated by an Acquisition Proposal shall
have been consummated in either case prior to or within six months following
such termination, then the Company agrees that it will immediately thereafter
pay to Parent in same day funds, an amount (the "Break-Up Amount") equal to
$6,700,000.
Pursuant to the Merger Agreement, in the event of the termination of the
Merger Agreement, the Merger Agreement will become null and void and have no
further force or effect, without any liability on the part of any party or its
affiliates, directors, officers, agents or representatives, other than (a)
certain provisions of the Merger Agreement relating to the termination fee,
expenses of the parties and confidentiality of information, publicity and effect
of termination and (b) to the extent that such termination results from the
breach by such party of any of its representations, warranties, covenants or
agreements contained in the Merger Agreement, provided, however, that a party's
damages for any such breach shall be limited to such party's actual damages and
neither party shall be entitled to seek consequential or special damages for any
such breach.
Costs and Expenses. Except as discussed above, the Merger Agreement
provides that all costs and expenses incurred in connection with the Merger
Agreement and the consummation of the transactions contemplated by the Merger
Agreement shall be paid by the party incurring such costs and expenses.
Amendment and Waivers. Subject to applicable law, the Merger Agreement may
be amended, modified and supplemented in any and all respects, whether before or
after any vote of the shareholders of the Company contemplated by the Merger
Agreement, by written agreement of the Parent and Purchaser and the Company, by
action taken by their respective Boards of Directors, at any time prior to the
date of the closing of the Merger with respect to any of the terms contained
therein; provided, however, that after the approval of the Merger Agreement by
the stockholders of the Company, no such amendment, modification or supplement
shall reduce the amount or change the form of the Merger Consideration.
13. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that neither the Company nor its subsidiaries
shall, after the date of the execution and delivery of the Merger Agreement and
until the Appointment Date, declare, set aside, or pay any dividend in cash,
stock or property with respect to its capital stock other than dividends paid by
subsidiaries of the Company to the Company or any of its wholly owned
subsidiaries in the ordinary course of business or issue, sell, pledge, grant,
dispose of or encumber any additional shares of, or securities convertible into
or exchangeable
25
<PAGE> 28
for, or options, warrants, calls, commitments or rights of any kind to acquire,
any shares of capital stock of any class of the Company or its subsidiaries,
other than Shares reserved for issuance on the date of the Merger Agreement
pursuant to the exercise of company options outstanding on the date of the
Merger Agreement, pursuant to which up to 517,117 Shares may be issued.
14. CERTAIN CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to
pay for or return tendered Shares promptly after termination or withdrawal of
the Offer), pay for, and may delay the acceptance for payment of or, subject to
the restriction referred to above, the payment for, any tendered Shares, and may
terminate or amend the Offer as to any Shares not then paid for, if (i) the
Minimum Condition has not been satisfied, (ii) any applicable waiting period for
the Offer under the HSR Act has not expired, or (iii) at any time on or after
the date of the Merger Agreement and before the time of acceptance for payment
for any such Shares, any of the following events shall have occurred:
(a) there shall be threatened, instituted, or pending any suit, action
or proceeding by, or before any court, arbitrator, tribunal, administrative
agency or commission or other governmental or other regulatory authority or
agency (collectively, a "Governmental Entity") against the Purchaser,
Parent, the Company or any subsidiary of the Company (i) seeking to
prohibit or impose any material limitations on Parent's or the Purchaser's
ownership or operation (or that of any of their respective subsidiaries or
affiliates) of all or a material portion of their or the Company's
businesses or assets, or to compel Parent or the Purchaser or their
respective subsidiaries and affiliates to dispose of or hold separate any
material portion of the business or assets of the Company or Parent and
their respective subsidiaries, in each case taken as a whole, (ii)
challenging the acquisition by Parent or the Purchaser of any Shares under
the Offer, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or the performance of any of the other transactions
contemplated by the Merger Agreement, or seeking to obtain from the
Company, Parent or the Purchaser any material damages, (iii) seeking to
impose material limitations on the ability of the Purchaser, or render the
Purchaser unable, to accept for payment, pay for or purchase some or all of
the Shares pursuant to the Offer and the Merger, (iv) seeking to impose
material limitations on the ability of Purchaser or Parent effectively to
exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by them on all matters
properly presented to the Company's stockholders, or (v) which otherwise is
reasonably likely to have a material adverse effect (A) on the condition
(financial or otherwise), business, assets, liabilities, results of
operations or cash flows of the Company or its subsidiaries, taken as a
whole, or (B) on the ability of the Company to perform its obligations
under the Merger Agreement or to consummate the transactions contemplated
by the Merger Agreement (a "Company Material Adverse Effect");
(b) there shall be any action taken by a Governmental Entity or any
statute, rule, regulation, judgment, administrative interpretation, order
or injunction enacted, entered, enforced, promulgated, or deemed
applicable, to the Company, Parent, Purchaser, the Offer or the Merger, or
any other action shall be taken by any Governmental Entity that is
reasonably expected to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any other event, change or effect after
the date of the Merger Agreement which, either individually or in the
aggregate, would have, or be reasonably likely to have, a Company Material
Adverse Effect;
(d) (i) the Board of Directors of the Company or any committee thereof
shall have modified in a manner adverse to Parent or the Purchaser or
withdrawn its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any Acquisition Proposal, (ii)
the Company shall have entered into any agreement with respect to any
Superior Proposal in accordance with the Merger Agreement or (iii) the
Board of Directors of the Company resolves to do any of the foregoing;
26
<PAGE> 29
(e) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct, in each case (i) as of the
date referred to in any representation or warranty which addresses matters
as of a particular date, or (ii) as to all other representations and
warranties, as of the date of the Merger Agreement and as of the scheduled
expiration of the Offer, unless the inaccuracies (without giving effect to
any materiality or material adverse effect qualifications or materiality
exceptions contained therein) under such representations and warranties,
taking all the inaccuracies under all such representations and warranties
together in their entirety, do not, individually or in the aggregate,
result in a Company Material Adverse Effect;
(f) the Company shall have breached or failed to perform any
obligation or to comply with any agreement or covenant to be performed or
complied with by it under the Merger Agreement other than any breach or
failure which would not have, either individually or in the aggregate, a
Company Material Adverse Effect (which breach or failure has not been cured
within thirty (30) days following receipt of written notice thereof by
Parent specifying in reasonable detail the basis of such alleged breach or
failure);
(g) any person entity or "group" (as such term is used in Section
13(d)(3) of the Exchange Act) other than Parent or any of its affiliates
acquires beneficial ownership (as defined in Rule 13d-3 promulgated under
the Exchange Act), of at least 30% of the outstanding Shares of the
Company;
(h) the Merger Agreement shall have been terminated in accordance with
its terms, which, in the sole judgment of Parent or the Purchaser, in any
such case, and regardless of the circumstances (including any action or
inaction by Parent or the Purchaser) giving rise to such condition makes it
inadvisable to proceed with the Offer and/or with such acceptance for
payment of or payment for Shares; or
(i) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) the
declaration of any banking moratorium or any suspension of payments in
respect of banks or any limitation (whether or not mandatory) on the
extension of credit by lending institutions in the United States, (iii) the
commencement of a war, material armed hostilities or any other material
international or national calamity involving the United States, (iv) in the
case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof, or (v) any
decline, measured from the date of the Merger Agreement, in the Standard
and Poor's 500 Index by an amount in excess of 25%.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be asserted or waived by Parent or the Purchaser regardless of
the circumstances giving rise to such condition (including any action or
inaction by Parent or the Purchaser not in violation of the Merger Agreement)
and may be asserted or waived by Parent or the Purchaser in whole or in part at
any time and from time to time in the sole discretion of Parent or the
Purchaser, subject in each case to the terms of the Merger Agreement. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
Except as described in this Section 15, based on a review of publicly
available filings by the Company with the Commission and other publicly
available information concerning the Company, neither Parent nor the Purchaser
is aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Shares by the Purchaser pursuant to the
Offer, the Merger or otherwise or of any approval or other action by any
governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required prior to the acquisition of Shares by the
Purchaser pursuant to the Offer, the Merger or otherwise. Should any such
approval or other action be required, Parent and the Purchaser currently
contemplate that it will be sought. While the Purchaser does not currently
intend to delay the acceptance for payment of Shares tendered pursuant to the
Offer pending the outcome of any such matter, there can be no assurance that any
such approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that adverse consequences might not result to
the business of the Company or the Purchaser or Parent or that certain parts of
the business of the Company or the Purchaser or Parent might not have to be
disposed of in the event that such approvals were
27
<PAGE> 30
not obtained or any other actions were not taken. The Purchaser's obligation
under the Offer to accept for payment and pay for Shares is subject to certain
conditions, including conditions relating to the legal matters discussed in this
Section 15. See Section 14.
State Takeover Statutes. A number of states throughout the United States
have enacted takeover statutes that purport, in varying degrees, to be
applicable to attempts to acquire securities of corporations that are
incorporated or have assets, stockholders, executive offices or places of
business in those states. In 1982, in Edgar v. MITE Corp., the Supreme Court of
the United States held that the Illinois Business Takeover Act, which involved
state securities laws that made the takeover of certain corporations more
difficult, imposed a substantial burden on interstate commerce and was therefore
unconstitutional. However, in 1987, in CTS Corp. v. Dynamics Corp. of America,
the Supreme Court of the United States held that a state may, as a matter of
corporate law and, in particular, those laws concerning corporate governance,
constitutionally disqualify a potential acquirer from voting on the affairs of a
target corporation without prior approval of the remaining stockholders;
provided that the laws were applicable only under certain conditions.
Section 203 of the DGCL prohibits business combination transactions
involving a Delaware corporation and an "interested stockholder" (defined
generally as any person that directly or indirectly beneficially owns 15% or
more of the outstanding voting stock of the subject corporation) for three years
following the date such person became an "interested stockholder," unless
certain exceptions apply, including that before such person became an interested
stockholder the board of directors of the subject corporation approved the
transaction in which such person became an interested stockholder or approved
the business combination. Since the Board, at the special meeting held on August
7, 1997, approved the Merger Agreement and the transactions contemplated
thereby, Section 203 is inapplicable to Parent and the Purchaser in connection
with the Offer and the Merger.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
"takeover" statutes. The Purchaser does not know whether any of these statutes
will, by their terms, apply to the Offer, and has not complied with any such
statutes. To the extent that certain provisions of these statutes purport to
apply to the Offer, the Purchaser believes that there are reasonable bases for
contesting such statutes. If any person should seek to apply any state takeover
statute, the Purchaser would take such action as then appears desirable, which
action may include challenging the validity or applicability of any such statute
in appropriate court proceedings. If it is asserted that one or more takeover
statutes apply to the Offer, and it is not determined by an appropriate court
that such statute or statutes do not apply or are invalid as applied to the
Offer, the Purchaser might be required to file certain information with, or
receive approvals from, the relevant state authorities, and the Purchaser might
be unable to purchase or pay for Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer. In such case, the Purchaser may
not be obligated to accept for payment or pay for Shares tendered.
Antitrust. The Offer and the acquisition of Shares pursuant to the Merger
Agreement are subject to the HSR Act, which provides that certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the Federal Trade Commission ("FTC") and certain waiting period
requirements have been satisfied. Parent intends to file on or before August 18,
1997, a Notification and Report Form with respect to the Offer.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares pursuant to the Offer and the Merger may not be consummated until the
expiration of a 15-calendar day waiting period following the filing by Parent.
Accordingly, in the event such filing is made on August 18, 1997, the waiting
period with respect to the Offer will expire at 11:59 p.m., New York City time,
on September 2, 1997, unless the Antitrust Division and the FTC terminate the
waiting period or Parent receives a request for additional information or
documentary material prior thereto. If, within such 15-day waiting period,
either the Antitrust Division or the FTC requests additional information or
material from Parent concerning the Offer, the waiting period will be extended
and would expire at 11:59 p.m., New York City time, on the tenth calendar day
after the date of substantial compliance by Parent with such request. Only one
extension of the waiting period pursuant to a request for additional information
is authorized by the HSR Act. Thereafter, such waiting period may be extended
only by court order or with the consent of Parent. The Purchaser will not accept
for payment Shares tendered pursuant to
28
<PAGE> 31
the Offer unless and until the waiting period requirements imposed by the HSR
Act with respect to the Offer have been satisfied. See Section 14.
No separate HSR Act waiting period requirements with respect to the Merger
Agreement will apply, so long as the 15-day waiting period expires or is
terminated. Thus, all Shares may be acquired pursuant to the Offer upon the
expiration or termination of the 15-day waiting period or the tenth calendar day
after the date of substantial compliance with a request for additional
information.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger Agreement. At any time before or after the
Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares pursuant
to the Offer or otherwise or seeking divestiture of Shares acquired by the
Purchaser or divestiture of substantial assets of Parent or its subsidiaries, or
the Company or its subsidiaries. Private parties and state attorneys general may
also bring legal action under the antitrust laws under certain circumstances.
There can be no assurance that a challenge to the Offer or other acquisition of
Shares by the Purchaser on antitrust grounds will not be made or, if such a
challenge is made, of the result. See Section 14 for certain conditions to the
Offer, including conditions with respect to litigation and certain governmental
actions.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. If the Merger is consummated, Stockholders of the Company would have the
right to dissent and demand appraisal of their Shares under the DGCL. Under the
DGCL, dissenting Stockholders who comply with the applicable statutory
procedures will be entitled to receive a judicial determination of the fair
value of their Shares (exclusive of any element of value arising from the
accomplishment or expectation of such merger or similar business combination)
and to receive payment of such fair value in cash. In addition, such dissenting
Stockholders would be entitled to receive payment of a fair rate of interest
from the date of consummation of the Merger on the amount determined to be the
fair value of their Shares. Any such judicial determination of the fair value of
the Shares could be based upon considerations other than or in addition to the
price paid in the Offer and the market value of the Shares. In Weinberger v.
UOP, Inc., the Delaware Supreme Court stated, among other things, that "proof of
value by any techniques or methods which are generally considered acceptable in
the financial community and otherwise admissible in court" should be considered
in an appraisal proceeding. Stockholders should recognize that the value so
determined could be higher or lower or the same as the price per Share paid
pursuant to the Offer or the consideration per Share in the Merger.
16. FEES AND EXPENSES
Parent and the Purchaser have engaged Credit Suisse First Boston as the
Dealer Manager in connection with the Offer. Parent has agreed to pay Credit
Suisse First Boston a fee of $1.5 million that will be payable to Credit Suisse
First Boston upon the closing of any acquisition of the Company by Parent.
Parent and the Purchaser also have agreed to indemnify Credit Suisse First
Boston against certain liabilities and expenses, including certain liabilities
under the federal securities laws.
The Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent and First Chicago Trust Company of New York to act as the Depositary in
connection with the Offer. The Information Agent may contact by mail, telephone,
telex, facsimile, telegraph and personal interview and may request brokers,
dealers, commercial banks, trust companies and other nominees to forward the
Offer material to beneficial owners. The Information Agent and Depositary each
will receive reasonable and customary compensation for their services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the federal securities laws. Neither the Information
Agent nor the Depositary has been retained to make solicitations or
recommendations in connection with the Offer.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other persons for soliciting tenders of Shares pursuant to
the Offer (other than the fees of the Dealer Manager and the Information Agent).
Brokers, dealers, commercial banks and trust companies will be reimbursed by the
Purchaser for reasonable expenses incurred by them in forwarding material to
their customers.
29
<PAGE> 32
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) Stockholders in any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the securities, blue sky
or other laws of such jurisdiction. Neither the Purchaser nor Parent is aware of
any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerers in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to such Stockholders prior to the expiration
of the Offer. In any jurisdiction where the securities, blue sky or other laws
of which require the Offer to be made by a licensed broker or dealer, the Offer
is being made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser has filed with the Commission the Schedule 14D-1 pursuant to
Rule 14d-3 under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule 14D-1
and any amendments thereto, including exhibits, may be inspected and copies may
be obtained at the same places and in the same manner as set forth in Section 8
(except they will not be available at the regional offices of the Commission).
OMNICARE ACQUISITION CORP.
August 14, 1997
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<PAGE> 33
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth in the table
below are the name and the present principal occupations or employment and the
name, principal business and address of any corporation or other organization in
which such occupation or employment is conducted, and the five-year employment
history of each of the directors and executive officers of Parent. Parent
directly owns 100% of the equity interest in the Purchaser. Unless otherwise
indicated, each person identified below is employed by Parent. The principal
business address of Parent and, unless otherwise indicated, the business address
of each person identified below, is 50 East RiverCenter Boulevard, Covington,
Kentucky 41011. Directors are identified by an asterisk. All persons identified
below are United States citizens.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR
NAME EMPLOYMENT HISTORY
- --------------------------------- ----------------------------------------------------------
<S> <C>
EDWARD L. HUTTON*................
Director since 1981
Age: 78 Mr. Hutton is Chairman of Parent and has held this
position since May 1981. Additionally, he is Chairman and
Chief Executive Officer and a director of Chemed
Corporation, Cincinnati, Ohio (a diversified public
corporation with interests in plumbing and drain cleaning
services, janitorial supplies and health care services)
(hereinafter "Chemed") and has held these positions since
November 1993 and April 1970, respectively. Previously, he
was President and Chief Executive Officer of Chemed,
positions he had held from April 1970 to November 1993. He
is also Chairman and a director of National Sanitary
Supply Company, Cincinnati, Ohio (sanitary and maintenance
supplies distributor) (hereinafter "National Sanitary").
Mr. Hutton is the father of Thomas C. Hutton, who is a
director of the Parent.
JOEL F. GEMUNDER*................
Director since 1981
Age: 58 Mr. Gemunder is President of Parent and has held this
position since May 1981. From January 1981 until July
1981, he served as Chief Executive Officer of the
partnership organized as a predecessor to Parent for the
purpose of owning and operating certain health care
businesses of Chemed and Daylin, Inc., each then a
subsidiary of W.R. Grace & Co. Mr. Gemunder was an
Executive Vice President of Chemed and Group Executive of
its Health Care Group from May 1981 through July 1981 and
a Vice President of Chemed from 1977 until May 1981. Mr.
Gemunder is a director of Chemed.
RONALD K. BAUR*..................
Director since 1994
Age: 56 Mr. Baur is Regional Vice President-Operations of Parent,
a position he has held since February 1994. Previously, he
was Regional Vice President-Operations of Parent's
Pharmacy Services Group (a group of subsidiaries engaged
in providing pharmacy services to long-term care
facilities) (hereinafter "Pharmacy Services Group") from
March 1993 to February 1994 when the Pharmacy Services
Group was integrated into the corporate management
structure of the Parent. He is also President of Interlock
Pharmacy Systems, Inc., St. Louis, Missouri (pharmacy
services for long-term care facilities) (hereinafter
"Interlock"), a subsidiary of the Parent. He has held this
position since Parent's acquisition of Interlock in July
1992. From 1973 to July 1992, he was the sole stockholder
and the President of Interlock.
TIMOTHY E. BIEN..................
Age: 46 Mr. Bien is Senior Vice President -- Professional Services
and Purchasing of Parent. He has held that position since
1996. Prior to that, Mr. Bien was Vice President of
Professional Services for Parent, a position he had held
since 1992.
</TABLE>
I-1
<PAGE> 34
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR
NAME EMPLOYMENT HISTORY
- --------------------------------- ----------------------------------------------------------
<S> <C>
KENNETH W. CHESTERMAN*...........
Director since 1984
Age: 57 Mr. Chesterman is a consultant to the Parent. Prior to his
retirement in July 1997, he was an Executive Vice
President of Parent and had held this position since 1984.
He had also served as President of the Pharmacy Services
Group from August 1989 to February 1994. From August 1984
to August 1989, he held the position of President of
Parent's subsidiary, HPI Health Care Services, Inc., Los
Angeles, California (health care services (hereinafter
"HPI"), which was sold in August 1989.
CHARLES H. ERHART, JR.*..........
Director since 1981
Age: 72 Mr. Erhart retired as President of W.R. Grace & Co., Boca
Raton, Florida (international specialty chemicals and
health care) (hereinafter "Grace") in August 1990. He had
held this position since July 1989. From November 1986 to
July 1989, he was Chairman of the Executive Committee of
Grace. From May 1981 to November 1986, he served as Vice
Chairman and Chief Administrative Officer of Grace. Mr.
Erhart is a director of Chemed and National Sanitary.
MARY LOU FOX*....................
Director since 1993
Age: 66 Ms. Fox is Senior Vice President-Marketing of Parent and
has held this position since May 1996. Previously she
served as Vice President-Marketing for Parent since
February 1994. From July 1993 to February 1994, she was
Vice President-Marketing of the Pharmacy Services Group.
She is also President of Westhaven Services Co., Toledo,
Ohio (pharmacy services for long-term care facilities)
(hereinafter "Westhaven"), a subsidiary of Parent. She has
held this position since Parent's acquisition of Westhaven
in October 1992. From 1976 to October 1992, she was the
sole stockholder and the President of Westhaven.
DAVID W. FROESEL, JR.............
Age: 45 Mr. Froesel is Senior Vice President and Chief Financial
Officer of Parent. He has held that position since joining
Parent in March 1996. 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.
CHERYL D. HODGES*................
Director since 1992
Age: 45 Ms. Hodges is Senior Vice President and Secretary of
Parent and has held these positions since February 1994.
From August 1986 to February 1994, she was Vice President
and Secretary of Parent. From August 1982 to August 1986,
she served as Vice President-Corporate and Investor
Relations. Ms. Hodges has also served as a director of
Parent for four prior terms: 1984-85; 1986-87; 1988-89 and
1990-91.
THOMAS C. HUTTON*................
Director since 1983
Age: 46 Mr. Hutton is a Vice President of Chemed and has held this
position since February 1988. Mr. Hutton is a director of
Chemed and National Sanitary. He is the son of Edward L.
Hutton, Chairman of Parent.
</TABLE>
I-2
<PAGE> 35
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR
NAME EMPLOYMENT HISTORY
- --------------------------------- ----------------------------------------------------------
<S> <C>
PATRICK E. KEEFE*................
Director since 1993
Age: 52 Mr. Keefe is Executive Vice President-Operations of Parent
and has held this position since February 1997. Previously
he was Senior Vice President-Operations since February
1994. From April 1993 to February 1994, he was Vice
President-Operations of Parent. From April 1992 to April
1993, he served as Vice President-Pharmacy Management
Programs of Diagnostek, Inc., Albuquerque, New Mexico
(mail-service pharmacy and health care services)
(hereinafter "Diagnostek"). From September 1990 to April
1992, Mr. Keefe served as president of HPI, a subsidiary
of Diagnostek, which was acquired from Parent in August
1989. From August 1984 to September 1990, he served as
Executive Vice President of HPI.
SANDRA E. LANEY*.................
Director since 1987
Age: 53 Ms. Laney is Senior Vice President and Chief
Administrative Officer of Chemed and has held these
positions since November 1993 and May 1991, respectively.
From May 1984 to November 1993, she was a Vice President
of Chemed. Ms. Laney is a director of Chemed and National
Sanitary.
ANDREA R. LINDELL, DNSc, RN*.....
Director since 1992
Age: 53 Dr. Lindell is Dean and Professor in the College of
Nursing and Health at the University of Cincinnati, a
position she has held since December 1990. She also serves
as Director -- Center for Allied Health at the University
of Cincinnati. From August 1981 to August 1990, Dr.
Lindell served as Dean and a Professor in the School of
Nursing at Oakland University, Rochester, Michigan.
SHELDON MARGEN, M.D.*............
Director since 1983
Age: 78 Dr. Margen is a Professor Emeritus in the School of Public
Health, University of California, Berkeley, a position he
has held since May 1989. He had served as a Professor of
Public Health at the University of California, Berkeley,
since 1979.
KEVIN J. MCNAMARA*...............
Director since 1986
Age: 44 Mr. McNamara is President of Chemed and has held this
position since August 1994. From November 1993 to August
1994, Mr. McNamara was Executive Vice President, Secretary
and General Counsel of Chemed. Previously, from May 1992
to November 1993, he held the positions of Vice Chairman,
Secretary and General Counsel of Chemed. From August 1986
to May 1992, he served as Vice President, Secretary and
General Counsel of Chemed. From November 1990 to December
1992, Mr. McNamara served as an Executive Vice President
and Chief Operating Officer of the Company. Mr. McNamara
also served as Vice Chairman of National Sanitary. He is a
director of Chemed and National Sanitary.
JOHN M. MOUNT*...................
Director since 1994
Age: 55 Mr. Mount is a Principal of Lynch-Mount Associates,
Cincinnati, Ohio (management consulting) and has held this
position since November 1993. From April 1991 to November
1993, Mr. Mount was Senior Vice President of Diversey
Corporation, Detroit, Michigan (specialty chemicals)
(hereinafter "Diversey"), and President of Diversey's
DuBois Industrial Division. Previously, from May 1989 to
April 1991, Mr. Mount was an Executive Vice President of
Chemed and President of Chemed's then wholly owned
subsidiary, DuBois Chemicals, Inc. He held the latter
position from September 1986 to April 1991. He is a
director of National Sanitary and Chemed. Mr. Mount has
also served as a director of Parent from 1988 to 1991.
</TABLE>
I-3
<PAGE> 36
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR
NAME EMPLOYMENT HISTORY
- --------------------------------- ----------------------------------------------------------
<S> <C>
D. WALTER ROBBINS, JR.*..........
Director since 1981
Age: 77 Mr. Robbins retired as Vice Chairman of Grace in January
1987 and thereafter became a consultant to Grace until
July 1995. He is a director of Chemed and National
Sanitary.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. Set forth in the
table below are the name and the present principal occupations or employment and
the name, principal business and address of any corporation or other
organization in which such occupation or employment is conducted, and the
five-year employment history of each of the directors and executive officers of
the Purchaser. Each person identified below is employed by Parent. The principal
business address of the Purchaser and each person identified below, is 50 East
RiverCenter Boulevard, Covington, Kentucky 41011. Directors are identified by an
asterisk. All persons identified below are United States citizens.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------- ----------------------------------------------------------
<S> <C>
JOEL F. GEMUNDER*................
Age: 58 Mr. Gemunder is President of the Purchaser. He has served
as President of Parent since 1981 and has been a Director
of Parent since 1981.
BRADLEY S. ABBOTT................
Age: 30 Mr. Abbott is Treasurer of the Purchaser and is Assistant
Corporate Controller of Parent, a position he has held
since joining Parent in 1996. Prior to that, he worked for
eight years at Price Waterhouse LLP, most recently as a
manager.
LEO P. (TRACY) FINN III..........
Age: 39 Mr. Finn is Vice President of the Purchaser and is Vice
President-Strategic Planning and Development of Parent, a
position he has held since February 1997. He previously
served as Regional Vice President-Operations for Parent in
Chicago from 1995 through January 1997. Prior to that, Mr.
Finn was Vice President-Development of Parent, a position
he had held since 1989.
DAVID W. FROESEL, JR.*...........
Age: 45 Mr. Froesel is Senior Vice President and Chief Financial
Officer of Parent. He has held that position since joining
Parent in March 1996. 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.
JEFFREY A. GLANCY................
Age: 40 Mr. Glancy is Assistant Secretary of the Purchaser and is
Vice President-Taxation of Parent, a position he has held
since 1994. Prior to that, he served as Assistant
Treasurer and Director of Taxation of Parent, a position
he had held since 1985.
CHERYL D. HODGES*................
Age: 45 Ms. Hodges is Senior Vice President and Secretary of
Parent and has held these positions since 1994. From
August 1986 to February 1994, she was Vice President and
Secretary of Parent and has been a Director of Parent
since 1992.
THOMAS R. MARSH..................
Age: 50 Mr. Marsh is Assistant Treasurer of the Purchaser and is
Vice President-Financial Services and Treasurer of Parent,
a position he has held since 1994. Prior to that, he
served as Controller of Parent, a position he had held
since 1987.
JANICE M. RICE...................
Age: 36 Ms. Rice is Secretary of the Purchaser and is Vice
President-Risk Management and Employee Benefits of Parent,
a position she has held since 1994. Prior to that, she was
Assistant Treasurer and Corporate Risk Manager of Parent,
a position she had held since 1990.
</TABLE>
I-4
<PAGE> 37
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each Stockholder
or his or her broker, dealer, commercial bank or other nominee to the Depositary
at one of its addresses set forth below.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
First Chicago Trust Company First Chicago Trust Company
of New York of New York First Chicago Trust Company
Tenders & Exchanges Tenders & Exchanges of New York
Suite 4660 c/o The Depository Trust Company Tenders & Exchanges
P.O. Box 2569 55 Water Street, DTC TAD Suite 4680-AMC
Jersey City, New Jersey Vietnam Veterans Memorial Plaza 14 Wall Street, 8th Floor
07303-2569 New York, New York 10041 New York, New York 10005
By Facsimile Transmission To Confirm Receipt of
(For Eligible Institutions Only): Notice of Guaranteed Delivery:
(201) 222-4720 (201) 222-4707
or
(201) 222-4721
</TABLE>
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. You may also contact your broker,
dealer, commercial bank or trust company or nominee for assistance concerning
the Offer.
The Information Agent for the Offer is:
D.F. KING & CO.,
INC.
77 Water Street
New York, New York
10005
Call Toll Free:
(800) 697-6975
The Dealer Manager for the Offer is:
[CREDIT SUISSE FIRST BOSTON LOGO]
Eleven Madison Avenue
New York, New York 10010
Call Toll Free: (800) 881-8320
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
of
AMERICAN MEDSERVE CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED AUGUST 14, 1997
by
OMNICARE ACQUISITION CORP.
a wholly owned subsidiary of
OMNICARE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
Suite 4660 c/o The Depository Trust Company Suite 4680-AMC
P.O. Box 2569 55 Water Street, DTC TAD 14 Wall Street, 8th Floor
Jersey City, New Jersey 07303-2569 Vietnam Veterans Memorial Plaza New York, New York 10005
New York, New York 10041
By Facsimile Transmission To Confirm Receipt of
(For Eligible Institutions Only): Notice of Guaranteed Delivery:
(201) 222-4720 (201) 222-4707
or
(201) 222-4721
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED
BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in Section 3 of the Offer to Purchase
(as defined below)) is utilized, if delivery of Shares is to be made by
book-entry transfer to the account of First Chicago Trust Company of New York,
as Depositary, at The Depository Trust Company ("DTC") or the Philadelphia
Depository Trust Company ("PDTC") (each, a "Book-Entry Transfer Facility" and,
collectively, the "Book-Entry Transfer Facilities") pursuant to the book-entry
transfer procedure described in Section 3 of the Offer to Purchase. As used
herein, "Certificates" shall mean certificates representing Shares.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) or who cannot complete the procedure for delivery by book-entry
transfer, if applicable, on a timely basis and who wish to tender their Shares
must do so pursuant to the guaranteed delivery procedure described in Section 3
of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S)
APPEAR(S) ON CERTIFICATES(S)) CERTIFICATE(S) AND SHARE(S) TENDERED
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
------------------------------------------
TOTAL NUMBER OF
SHARES EVIDENCED
CERTIFICATE BY NUMBER OF
NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED**
<S> <C> <C> <C>
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL SHARES--------------------------------------
</TABLE>
* Need not be completed by stockholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each Certificate delivered to the Depositary are being tendered hereby. See
Instruction 4.
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
Check Box of Applicable Book-Entry Transfer Facility:
(check one) [ ] DTC [ ] PDTC
<TABLE>
<S> <C>
Account Number Transaction Code Number
</TABLE>
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY:
Name(s) of Registered Holder(s)
Window Ticket No. (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution which Guaranteed Delivery
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Omnicare Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Omnicare, Inc., a
Delaware corporation, the above described shares of Common Stock, par value
$0.01 per share (the "Shares"), of American Medserve Corporation, a Delaware
corporation (the "Company"), at the price of $18.00 per Share net to the seller
in cash, without interest thereon, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated as of August 14, 1997 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer"). The undersigned understands that the Purchaser reserves
the right to transfer or assign, in whole or from time to time in part, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser, all right, title and interest in and to all the Shares
that are being tendered hereby and all dividends, distributions (including,
without limitation, distributions of additional Shares), paid or distributed in
respect of such Shares on or after August 14, 1997 (collectively,
"Distributions"), and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver Certificates for such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms and subject to the conditions of the Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints designees of the Purchaser and each of them, the attorneys-in-fact and
proxies of the undersigned, each with full power of substitution, to the full
extent of the undersigned's rights with respect to the Shares tendered by the
undersigned and accepted for payment by the Purchaser (and any and all
Distributions). This proxy and power of attorney shall be considered coupled
with an interest in the tendered Shares. This appointment will be effective if,
when, and only to the extent that, the Purchaser accepts such Shares for payment
pursuant to the Offer. Upon such acceptance for payment, all prior proxies given
by the undersigned with respect to such Shares will, without further action, be
revoked, and no subsequent proxies may be given nor any subsequent written
consent executed by the undersigned (and, if given or executed, will not be
deemed to be effective) with respect thereto. The designees of the Purchaser
will, with respect to the Shares (and any Distributions) for which the
appointment is effective, be empowered to exercise all voting and other rights
of the undersigned as they in their sole discretion may deem proper at any
annual or special meeting of the stockholders of the Company or any adjournment
or postponement thereof, by written consent in lieu of any such meeting or
otherwise, and the Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered immediately upon the Purchaser's acceptance
for payment of such Shares, the Purchaser must be able to exercise full voting
rights with respect to such Shares. The powers of attorney and proxies granted
hereby are irrevocable and are granted in consideration of the acceptance for
payment of such Shares in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, and that when such Shares are accepted
for payment by the Purchaser, the Purchaser will acquire good, marketable and
<PAGE> 4
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Distributions. In
addition, the undersigned shall remit and transfer promptly to the Depositary
for the account of the Purchaser all Distributions in respect of the Shares
tendered hereby, accompanied by appropriate documentation of transfer, and,
pending such remittance and transfer or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares tendered
hereby or deduct from such purchase price, the amount or value of such
Distribution as determined by the Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as otherwise stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer, as well as the undersigned's representation and
warranty that (a) the undersigned owns the Shares being tendered within the
meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as
amended ("Rule 14e-4"), (b) the tender of such Shares complies with Rule 14e-4,
and (c) the undersigned has the full power and authority to tender and assign
the Shares tendered, as specified in the Letter of Transmittal. The Purchaser's
acceptance of such Shares for payment will constitute a binding agreement
between the undersigned and the Purchaser upon the terms and subject to the
conditions of the Offer, including, without limitation, the undersigned's
representation and warranty that the undersigned owns the Shares being tendered.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, Purchaser may not be required to accept for payment any
of the Shares tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Certificates evidencing Shares not purchased or not
tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Certificates evidencing Shares
not tendered or not purchased (and accompanying documents, as appropriate) to
the address(es) of the registered holder(s) appearing above under "Description
of Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and return all
Certificates evidencing Shares not purchased or not tendered in the name(s) of,
and mail such check and Certificates to, the person(s) so indicated. The
undersigned recognizes that the Purchaser has no obligation, pursuant to the
Special Payment Instructions, to transfer any Shares from the name of the
registered holder(s) if the Purchaser does not purchase any of the Shares
tendered hereby.
<PAGE> 5
- ------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Certificates evidencing Shares not tendered or not purchased
are to be issued in the name of someone other than the undersigned.
Issue: [ ] Check [ ] Certificate(s) to:
Name:
-----------------------------------------------------
(PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
============================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Certificates evidencing Shares not tendered or not purchased
are to be mailed to someone other than the undersigned, or to the
undersigned at an address other than that shown under either "Description
of Shares Tendered."
Mail: [ ] Check [ ] Certificate(s) to:
Name:
-----------------------------------------------------
(PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(ZIP CODE)
- ------------------------------------------------------------
<PAGE> 6
IMPORTANT
STOCKHOLDER: SIGN HERE
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
X
- --------------------------------------------------------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
X
- --------------------------------------------------------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
Dated:
- ------------------------1997
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificates or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information. See
Instruction 5.)
Name(s):
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
- -------------------------------------------------------------------------------
Address:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(ZIP CODE)
Area Code and Tel. No.:
- -------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.:
- -------------------------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION
GUARANTEE IN SPACE BELOW
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or by a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of applicable security) of the Shares
tendered hereby and such holder(s) has (have) completed neither the box entitled
"Special Payment Instructions" nor the box entitled "Special Delivery
Instructions" above or (ii) such Shares are tendered for the account of an
Eligible Institution. If the Shares are registered in the name of a person other
than the signer of this Letter of Transmittal, or if payment is to be made or
delivered to, or Certificates evidencing unpurchased Shares are to be issued or
returned to, a person other than the registered owner, then the tendered
Certificates must be endorsed or accompanied by duly executed stock powers, in
either case signed exactly as the name or names of the registered owner or
owners appear on the Certificates, with the signatures on the Certificates or
stock powers guaranteed by an Eligible Institution as provided in this Letter of
Transmittal. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Certificates are to be forwarded herewith or
if Shares are to be delivered by book-entry transfer pursuant to the procedure
set forth in Section 3 of the Offer to Purchase. Certificates evidencing all
physically tendered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer as well as a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), unless an Agent's Message is utilized,
and any other documents required by this Letter of Transmittal, must be received
by the Depositary at one of its addresses set forth above prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). If
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Holders whose Certificates are not immediately available, who cannot
deliver their Certificates and all other required documents to the Depositary
prior to the Expiration Date or who cannot complete the procedure for delivery
by book-entry transfer, if applicable, on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by the
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Certificates evidencing all physically delivered Shares in proper form
for transfer by delivery, or a confirmation of a book-entry transfer, if
applicable, into the Depositary's account or a Book-Entry Transfer Facility of
all Shares delivered by book-entry transfer, in each case together with a Letter
of Transmittal (or a facsimile thereof), unless an Agent's Message is utilized,
properly completed and duly executed, with any required signature guarantees,
and any other documents required by this Letter of Transmittal, must be received
by the Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery. A trading day is any day on which the Nasdaq
National Market is open for business.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, CERTIFICATES AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING HOLDER, AND THE DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
<PAGE> 8
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or facsimile hereof), all tendering holders waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Certificate numbers, the number of Shares
evidenced by such Certificates and the number of Shares tendered should be
listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS OF SHARES WHO TENDER BY
BOOK-ENTRY TRANSFER). If fewer than all the Shares evidenced by any Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the boxes entitled "Number of
Shares Tendered." In such cases, new Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Certificates delivered to the Depositary
herewith will be sent to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Delivery Instructions"
above, as soon as practicable after the expiration or termination of the Offer.
All Shares evidenced by Certificates delivered to the Depositary will be deemed
to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Certificates or separate stock powers
are required, unless payment is to be made to, or Certificates evidencing Shares
not tendered or not purchased are to be issued in the name of, a person other
than the registered holder(s), in which case, the Certificate(s) evidencing the
Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such Certificate(s). Signatures on such Certificate(s) and stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Certificate(s). Signatures on such
Certificate(s) and stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Purchaser of such person's authority so to act must be submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, the Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares or purchased, unless
evidence satisfactory to the Purchaser of the payment of such taxes, or
exemption therefrom, is submitted.
<PAGE> 9
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES EVIDENCING THE SHARES
TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Certificate is to be sent to someone other than the person(s)
signing this Letter of Transmittal or to the person(s) signing this Letter of
Transmittal but at an address other than that shown in the box entitled
"Description of Shares Tendered" above, the appropriate box on this Letter of
Transmittal must be completed.
8. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by the
Purchaser (subject to certain limitations in the Merger Agreement (as defined in
the Offer to Purchase)), in whole or in part at any time and from time to time
in Purchaser's sole discretion.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Dealer Manager or the
Information Agent at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information Agent
or from brokers, dealers, commercial banks or trust companies.
10. SUBSTITUTE FORM W-9. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must (a) provide the Depositary with such stockholder's
correct taxpayer identification number ("TIN") on the Substitute Form W-9
provided below and (b) certify under penalty of perjury that such TIN is correct
and that such stockholder is not subject to backup withholding. If a stockholder
does not provide its correct TIN or fails to provide the certifications
described above, the Internal Revenue Service ("IRS") may impose a penalty on
such stockholder and any payment of cash to such stockholder pursuant to the
Offer may be subject to backup withholding of 31%.
Certain stockholders (including, among others, all corporations and
financial institutions) are not subject to backup withholding. Such stockholders
should nevertheless complete the attached Substitute Form W-9 and return it to
the Depositary to avoid possible erroneous back-up withholding. A foreign person
may qualify as an exempt recipient by submitting a properly completed IRS Form
W-8, signed under penalties of perjury, attesting to that stockholder's exempt
status. A Form W-8 may be obtained from the Depositary. Please consult the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional guidance on which stockholders are exempt
from backup withholding.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder or other payee. Backup withholding is
not an additional tax. Rather the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld, provided that the
required information is given to the IRS. If withholding results in an
overpayment of taxes, a refund may be obtained from the IRS.
The box in Part II of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN but has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part II is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part II is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
<PAGE> 10
11. LOST OR DESTROYED CERTIFICATES. If any Certificates representing
Shares have been lost or destroyed, the holders should promptly notify the
Company's transfer agent, LaSalle National Bank, at (312) 904-2553. The holders
will then be instructed as to the procedure to be followed to replace the
Certificates. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND
CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS
DEFINED IN SECTION 1 OF THE OFFER TO PURCHASE).
<PAGE> 11
ALL TENDERING STOCKHOLDERS MUST COMPLETE THE FOLLOWING:
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
SUBSTITUTE PART I -- PLEASE PROVIDE YOUR TIN IN THE BOX ______________________________
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING Social Security Number(s)
BELOW.
--------------------------------------------- OR ___________________________
DEPARTMENT OF THE TREASURY Name (Please Print)_________________________
INTERNAL REVENUE SERVICE Employer Identification Number
Address ____________________________________
City __________ State _______ Zip Code ________
---------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART II -- Awaiting TIN [ ]
IDENTIFICATION NUMBER
("TIN")
-------------------------------------------------------------------------
Certifications--Under the penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me),
(2) I am not subject to backup withholding because: (a) I am exempt from
backup withholding; (b) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result
of failure to report all interest or dividends; or (c) the IRS has
notified me that I am no longer subject to backup withholding; and
(3) Any other information provided on this form is true, correct and
complete.
-------------------------------------------------------------------------
Certificate Instructions -- You must cross out item (2) above if you
have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were
subject to backup withholding you received another notification from the
IRS that you are no longer subject to backup withholding, do not cross
out item 2.
</TABLE>
- --------------------------------------------------------------------------------
Signature ________________________________ Date __________ 1997
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART II OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under the penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable payments made to me will be withheld
until I provide this number.
_________________________________________ _________________________
Signature Date
- --------------------------------------------------------------------------------
<PAGE> 12
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth below.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Call Toll Free (800) 697-6975
The Dealer Manager for the Offer is:
[CREDIT SUISSE FIRST BOSTON LOGO]
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (800) 881-8320
August 14, 1997
<PAGE> 1
[CREDIT SUISSE FIRST BOSTON LOGO]
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010 Telephone 212 325 2000
Offer to Purchase For Cash
All Outstanding Shares of Common Stock
of
AMERICAN MEDSERVE CORPORATION
at
$18.00 NET PER SHARE
by
OMNICARE ACQUISITION CORP.
a wholly owned subsidiary of
OMNICARE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED
August 14, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by Omnicare Acquisition Corp. (the "Purchaser"), a
Delaware corporation and a wholly-owned subsidiary of Omnicare, Inc., a Delaware
corporation ("Parent"), to act as Dealer Manager in connection with the
Purchaser's offer to purchase for cash all of the outstanding shares of Common
Stock, par value $0.01 per share (the "Shares"), of American Medserve
Corporation, a Delaware corporation (the "Company"), at a purchase price of
$18.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase and in
the related Letter of Transmittal (which, as amended or supplemented from time
to time, together constitute the "Offer") enclosed herewith. The Offer is being
made in connection with the Agreement and the Plan of Merger, dated as of August
7, 1997, by and among Parent, the Purchaser and the Company. Holders whose
certificates evidencing such Shares (the "Certificates") are not immediately
available or who cannot deliver their Certificates and all other required
documents to the Depositary (as defined below) prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase), or who, if applicable, cannot
complete the procedures for book-entry transfer on a timely basis, must tender
their Certificates according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
The Offer is subject to there being validly tendered and not withdrawn
prior to the Expiration Date that number of Shares which represents at least a
majority of the Shares outstanding on a fully diluted basis. The Offer is also
subject to other terms and conditions. See the "Introduction" and Section 14 of
the Offer to Purchase.
<PAGE> 2
The following are enclosed herewith:
1. The Offer to Purchase, dated August 14, 1997.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal may
be used to tender Shares.
3. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if Share Certificates are not immediately available, if such Certificates
and all other required documents cannot be delivered to First Chicago Trust
Company of New York (the "Depositary") prior to the Expiration Date, or, if
applicable, the procedure for book-entry transfer cannot be completed by the
Expiration Date.
4. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining your clients' instructions with regard to the
Offer.
5. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information relating to
backup federal income tax withholding.
6. A return envelope addressed to First Chicago Trust Company of New York,
the Depositary.
YOUR PROMPT ACTION IS REQUIRED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, SEPTEMBER 11, 1997,
UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The Offer price is $18.00 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
the Offer.
2. The board of directors of the Company has unanimously determined
that the Offer and the Merger (as defined in the Offer to Purchase) are
fair to, and in the best interests of, the Company's stockholders, has
approved the Merger Agreement (as defined in the Offer to Purchase) and the
transactions contemplated thereby, including the Offer and the Merger, and
recommends that the Company's stockholders accept the Offer and tender
their Shares pursuant to the Offer.
3. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date that number
of Shares which represents at least a majority of the Shares outstanding on
a fully diluted basis. The Offer also is subject to certain other
conditions, which are set forth in the Offer to Purchase.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, September 11, 1997, unless the Offer is
extended.
5. The Offer is being made for all of the outstanding Shares.
6. Tendering stockholders who hold Shares in their names will not be
obligated to pay brokerage fees or commissions to the Dealer Manager, the
Depositary or the Information Agent or, except as otherwise provided in
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase
of Shares by the Purchaser pursuant to the Offer. However, backup federal
income tax withholding at a rate of 31% may be required, unless an
exemption applies or unless the required taxpayer identification
information is provided. See Instruction 10 of the Letter of Transmittal.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) certificates for (or a
timely Book-Entry Confirmation (as defined in Section 3 to the Offer to
Purchase) with respect to) such Shares, (b) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed with any required
signature guarantees or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry transfer, and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment to
all tendering stockholders may not be
<PAGE> 3
made at the same time depending upon when certificates for Shares or
Book-Entry Confirmation with respect to Shares are actually received by the
Depositary.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal with any required signature guarantees, or an
Agent's Message (as defined in Section 3 of the Offer to Purchase) in connection
with a book-entry delivery of Shares, and any other required documents should be
sent to the Depositary, and (ii) Certificates representing the tendered Shares
should be delivered to the Depositary, or, if applicable, Shares should be
tendered by book-entry transfer into the Depositary's account maintained at one
of the Book-Entry Transfer Facilities (as described in Section 3 of the Offer to
Purchase), all in accordance with the instructions set forth in the Letter of
Transmittal and the Offer to Purchase.
If Holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents on or prior to the
Expiration Date or, if applicable, to comply with the book-entry transfer
procedures on a timely basis, a tender may be effected by following the
guaranteed delivery procedures specified in Section 3 of the Offer to Purchase.
The Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Information Agent and the Dealer Manager) in
connection with the solicitation of tenders of Shares pursuant to the Offer. The
Purchaser will, however, upon request, reimburse you for customary clerical and
mailing expenses incurred by you in forwarding any of the enclosed materials to
your clients. The Purchaser will pay or cause to be paid any stock transfer
taxes payable on the transfer of Shares to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Credit Suisse First Boston Corporation, the Dealer Manager, at its address and
telephone numbers set forth on the back cover of the Offer to Purchase. Requests
for additional copies of the enclosed materials may be directed to the
Information Agent, D.F. King & Co., Inc. at its address and telephone numbers
set forth on the back cover of the Offer to Purchase.
Very truly yours,
Credit Suisse First Boston Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE COMPANY, THE
DEPOSITARY OR THE DEALER MANAGER, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF
ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND
THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
Offer to Purchase For Cash
All Outstanding Shares of Common Stock
of
AMERICAN MEDSERVE CORPORATION
at
$18.00 NET PER SHARE
by
OMNICARE ACQUISITION CORP.
a wholly owned subsidiary of
OMNICARE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED.
August 14, 1997
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated August 14,
1997 (the "Offer to Purchase") and the related Letter of Transmittal relating to
an offer by Omnicare Acquisition Corp. (the "Purchaser"), a Delaware corporation
and a wholly owned subsidiary of Omnicare, Inc., a Delaware corporation
("Parent"), to purchase all outstanding shares of Common Stock, par value $0.01
per share (the "Shares"), of American Medserve Corporation, a Delaware
corporation (the "Company"), at a purchase price of $18.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer"). Holders of Shares whose certificates for such Shares
are not immediately available or who cannot deliver their certificates and all
other required documents to the Depositary (as defined in the Offer to
Purchase), or complete the procedures for book-entry transfer, if applicable,
prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase)
must tender their Shares according to the guaranteed delivery procedures set
forth in Section 3 of the Offer to Purchase. WE ARE THE HOLDER OF RECORD OF
SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY
US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY
YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer.
Please note the following:
1. The Offer price is $18.00 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
the Offer.
2. The board of directors of the Company has unanimously determined
that the Offer and the Merger (as defined in the Offer to Purchase) are
fair to, and in the best interests of, the Company's stockholders, has
approved the Merger Agreement (as defined in the Offer to Purchase) and the
transactions contemplated thereby, including the Offer and the Merger, and
recommends that the Company's stockholders accept the Offer and tender
their Shares pursuant to the Offer.
3. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date that number
of Shares which represents at least a majority of the
<PAGE> 2
Shares outstanding on a fully diluted basis. The Offer also is subject to
certain other conditions, which are set forth in the Offer to Purchase.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, September 11, 1997, unless the Offer is
extended.
5. The Offer is being made for all of the outstanding Shares.
6. Tendering stockholders who hold Shares in their names will not be
obligated to pay brokerage fees or commissions to the Dealer Manager, the
Depositary or the Information Agent or, except as otherwise provided in
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase
of Shares by the Purchaser pursuant to the Offer. However, backup federal
income tax withholding at a rate of 31% may be required, unless an
exemption applies or unless the required taxpayer identification
information is provided. See Instruction 10 of the Letter of Transmittal.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) certificates for (or a
timely Book-Entry Confirmation (as defined in Section 3 to the Offer to
Purchase) with respect to) such Shares, (b) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed with any required
signature guarantees or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry transfer, and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment to
all tendering stockholders may not be made at the same time depending upon
when certificates for Shares or Book-Entry Confirmation with respect to
Shares are actually received by the Depositary.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instructions form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified on the instruction form contained in this
letter. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf prior to the expiration of the Offer.
THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE AND THE RELATED LETTER OF
TRANSMITTAL.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer to holders of Shares in such jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of the Purchaser by one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AMERICAN MEDSERVE CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated August 14, 1997 (the "Offer to Purchase"), and the
related Letter of Transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer"), in connection with the Offer by Omnicare
Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of Omnicare, Inc., a Delaware corporation, to purchase all
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of
American Medserve Corporation, a Delaware corporation (the "Company"), at a
price of $18.00 per Share, net to the seller in cash, without interest thereon.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or, if no number is indicated below, all Shares) held by you
for the account of the undersigned, upon the terms and subject to the conditions
set forth in the Offer to Purchase.
Number of Shares Tendered:*
- --------------------------------------------------------------------------------
Certificate Nos. (if available):
- --------------------------------------------------------------------------------
Check ONE box if Shares will be tendered by book-entry transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account No:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
SIGN HERE
Signature(s):
- --------------------------------------------------------------------------------
Please type or print address(es):
- -----------------------------------------------------------------------------
Area Code and Telephone Number:
- --------------------------------------------------------------------------
Taxpayer Identification or Social Security Number(s):
- --------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
for
TENDER OF SHARES OF COMMON STOCK
of
AMERICAN MEDSERVE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED.
As set forth in Section 3 of the Offer to Purchase described below, this
instrument or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if (i) certificates evidencing shares of Common Stock,
par value $0.01 per share (the "Shares"), of American Medserve Corporation, a
Delaware corporation, are not immediately available, (ii) the certificates
evidencing Shares and all other required documents cannot be delivered to the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase), or (iii) the procedure for delivery by book-entry transfer for the
Shares cannot be completed on a timely basis. This instrument may be transmitted
by facsimile transmission or delivered by hand or mail to the Depositary.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
Suite 4660 c/o The Depository Trust Company Suite 4680-AMC
P.O. Box 2569 55 Water Street, DTC TAD 14 Wall Street, 8th Floor
Jersey City, New Jersey 07303-2569 Vietnam Veterans Memorial Plaza New York, New York 10005
New York, New York 10041
</TABLE>
By Facsimile Transmission
(For Eligible Institutions Only):
(201) 222-4720
or
(201) 222-4721
To Confirm Receipt of
Notice of Guaranteed Delivery:
(201) 222-4707
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the instructions thereto, the
signature guarantee must appear in the applicable space provided in the
signature box in the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to the Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tender(s) to Omnicare Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Omnicare, Inc., a Delaware
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated August 14, 1997 (the "Offer to Purchase") and in the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer"), receipt of which is hereby acknowledged, the
number of Shares indicated below of American Medserve Corporation, a Delaware
corporation, pursuant to the guaranteed delivery procedures set forth in Section
3 of the Offer to Purchase.
Signature(s)________________________ Address(es)_________________________
____________________________________ ____________________________________
Name(s) of Record Holders___________ Area Code and Tel. No.(s)___________
____________________________________
PLEASE TYPE OR PRINT
____________________________________ Check one box if Shares will be
tendered by book-entry transfer
Number of Shares____________________ / /The Depository Trust Company
Certificate No.(s) (If Available)___ / /Philadelphia Depository Trust
____________________________________ Company
Dated_______________________ , 1997 Account Number____________________
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a registered national securities exchange or of
the National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States that is a member
in good standing of the Securities Transfer Agents Medallion Program, the New
York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program, or an "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended,
(a) represents that the above named person(s) "own(s)" the Shares tendered
hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of
1934, as amended ("Rule 14e-4"), (b) represents that the tender of those Shares
complies with Rule 14e-4, and (c) guarantees to deliver to the Depositary either
the certificates evidencing all tendered Shares, in proper form for transfer, or
confirmation of book-entry transfer of such shares into the Depositary's account
at The Depository Trust Company or the Philadelphia Depository Trust Company
(each a "Book-Entry Transfer Facility"), in either case together with the Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed
with any required signature guarantees, or an Agent's Message (as defined in
Section 3 of the Offer to Purchase) in the case of a book-entry delivery, and
any other required documents, all within three Nasdaq National Market trading
days after the date hereof.
___________________________________ ____________________________________
NAME OF FIRM AUTHORIZED SIGNATURE
___________________________________ Name________________________________
ADDRESS
__________________________ZIP CODE Title_______________________________
Area Code and Tel. No.____________ Date__________________________,1997
NOTE: DO NOT SEND CERTIFICATES EVIDENCING SHARES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer -- Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------------
FOR THIS TYPE OF GIVE THE SOCIAL
ACCOUNT: SECURITY NUMBER OF:
- ----
<C> <S> <C>
1. Individual The individual
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, any
one of the
individuals(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person(3)
for a designated ward,
minor, or incompetent
person
7. a. The usual revocable The grantor-trustee(1)
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner(1)
account that is not
a legal or valid
trust under State
law
8. Sole proprietorship The owner(4)
account
- --------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF IDENTIFICATION NUMBER
ACCOUNT: OF:
- ----
<C> <S> <C>
9. Sole proprietorship The owner(4)
account
10. A valid trust, estate, Legal entity(5)
or pension trust
11. Corporate The corporation
12. Association, club, The organization
religious, charitable,
educational or other
tax-exempt
organization
13. Partnership The partnership
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government school
district, or prison)
that receives
agricultural program
payments
- --------------------------------------------------
</TABLE>
(1) List all names first and circle the name of the person whose number you
furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Provide the name of the owner. You may also enter your business or "doing
business as" name. You may use either your Social Security Number or
Taxpayer Identification Number (if you have one).
(5) List all names first and circle the name of the legal trust, estate, or
pension trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under Section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a) of the Code.
- - An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1) of the Code.
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under Section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt interest dividends under
Section 852).
- - Payments described in Section 6049(b)(5) to non-resident aliens.
- - Payments on tax-free covenant bonds under Section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9 TO
AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THE SUBSTITUTE FORM W-9 WITH
THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE
FACE OF THE FORM, AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under Sections 6041, 6041A(a),
6045, and 6050A of the Code.
PRIVACY ACT NOTICE--Section 6109 of the Code requires most recipients of
dividends, interest, or other payments to give correct taxpayer identification
numbers to payers who must report the payments to IRS. IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers may be required to withhold 31% of taxable interest,
dividends and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail to furnish
your correct taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS -- If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of an under-payment attributable to
that failure.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated August 14, 1997 and the related Letter of
Transmittal and any amendments or supplements thereto, and is being made to all
holders of Shares. The Offer is not being made to, nor will tenders be accepted
from or on behalf of, holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction. In any jurisdictions where securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer will
be deemed to be made on behalf of the Purchaser (as defined below) by Credit
Suisse First Boston Corporation (the "Dealer Manager") or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AMERICAN MEDSERVE CORPORATION
AT
$18.00 NET PER SHARE
BY
OMNICARE ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
OMNICARE, INC.
Omnicare Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Omnicare, Inc., a Delaware corporation (the
"Parent"), is offering to purchase all outstanding shares of Common Stock, par
value $0.01 per share (the "Shares"), of American Medserve Corporation, a
Delaware corporation (the "Company"), at a price of $18.00 per Share, net to the
seller in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase dated August 14,
1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
as amended or supplemented from time to time, together constitute the "Offer").
Tendering stockholders who hold Shares in their name will not be obligated to
pay brokerage fees or commissions to the Dealer Manager, the Depository (as
defined below) or the Information Agent (as defined below) or, subject to
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of
Shares pursuant to the Offer. The purpose of the Offer is to acquire for cash as
many outstanding Shares as possible as the first step in a negotiated
acquisition of the entire equity interest in the Company. Following the
consummation of the Offer, the Purchaser intends to effect the Merger (as
defined below).
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of August 7, 1997 (the "Merger Agreement"), by and among the Parent, the
Purchaser and the Company. The Merger Agreement provides, among other things,
for the commencement of the Offer by the Purchaser, and further provides that,
following the purchase of Shares pursuant to the Offer and promptly after the
satisfaction or waiver of certain conditions and in accordance with the Delaware
General Corporation Law, the Purchaser will be merged with and into the Company
(the "Merger"). Following consummation of the Merger, the Company will continue
as the surviving corporation and will be a wholly owned subsidiary of the
Parent. At the effective time of the Merger, each outstanding Share (except for
Shares held in the treasury of the Company or owned by the Purchaser, Parent or
any of Parent's other wholly owned subsidiaries and Shares held by stockholders
properly exercising their appraisal rights under the Delaware General
Corporation Law) will be converted into the right to receive the Offer Price (or
any higher price per Share paid for Shares pursuant to the Offer).
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT
THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT
NUMBER OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING
ON A FULLY-DILUTED BASIS (THE "MINIMUM CONDITION") AND (2) ANY WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND
THE REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF THE SHARES PURSUANT TO
THE OFFER HAVING EXPIRED OR BEEN TERMINATED.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to First
Chicago Trust Company of New York, as the Depositary (the "Depositary"), of the
Purchaser's acceptance of such Shares for payment pursuant to the Offer. In all
cases, upon the terms and subject to the conditions of the Offer, payment for
Shares purchased pursuant to the Offer will be made by deposit of the purchase
price therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from the Purchaser and
transmitting payment to validly tendering stockholders. In all cases, payment
for Shares purchased pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates for such Shares (or a confirmation
of a book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company or the Philadelphia Depository Trust Company (each a
"Book-Entry Transfer Facility"), pursuant to the procedures set forth in the
Offer to Purchase and the Letter of Transmittal), (ii) the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase), in connection with a book-entry transfer and (iii) all other
documents required by the Letter of Transmittal. Under no circumstances will
interest on the purchase price for Shares be paid by the Purchaser by reason of
any delay in making such payment.
The term "Expiration Date" shall mean 12:00 Midnight, New York City Time, on
Thursday, September 11, 1997, unless and until the Purchaser, in accordance with
the terms of the Offer and the Merger Agreement, shall have extended the period
of time during which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date at which the Offer, as so extended by
the Purchaser, shall expire. Subject to the terms of the Merger Agreement and
the applicable rules and regulations of the Securities and Exchange Commission
(the "Commission"), the Purchaser expressly reserves the right, in its sole
discretion, at any time or from time to time, and regardless of whether any of
the events set forth in Section 14 of the Offer to Purchase shall have occurred
or shall have been determined by the Purchaser to have occurred, (a) if,
immediately prior to the Expiration Date of the Offer, the Shares tendered and
not withdrawn pursuant to the Offer equal less than 90% of the outstanding
Shares but more than 80% of the outstanding Shares, to extend the Offer for a
period not to exceed seven business days, notwithstanding that all conditions to
the Offer are satisfied as of such date, and thereby delay acceptance for
payment of and the payment for any Shares, by giving oral or written notice of
such extension to the Depositary and (b) prior to the Expiration Date, to waive
any of the conditions set forth in Section 14 of the Offer to Purchase (other
than the Minimum Condition) and to make any other changes in the terms and
conditions of the Offer by giving oral or written notice of such waiver or
amendment to the Depositary. There can be no assurance that the Purchaser will
exercise its right to extend the Offer.
The Offer is subject to certain conditions set forth in the Offer to
Purchase. If, by the Expiration Date any or all of the conditions to the Offer
have not been satisfied or waived, the Purchaser reserves the right (but shall
not be obligated), in its sole discretion, subject to the terms of the Merger
Agreement and the applicable rules and regulations of the Commission, (a) to
terminate the Offer and not accept for payment or pay for any Shares and return
all tendered Shares to tendering stockholders, (b) prior to the Expiration Date,
to waive all the unsatisfied conditions (other than the Minimum Condition) and
accept for payment and pay for all Shares validly tendered prior to the
Expiration Date, or (c) extend the Offer and, subject to the right of
stockholders to withdraw Shares during such extension, retain the Shares that
have been tendered during the period or periods for which the Offer is extended.
Any extension, delay in payment, termination or amendment will be followed as
promptly as practicable by public announcement thereof, the announcement in the
case of an extension to be issued not later than 9:00 A.M., New York City Time,
on the next business day after the previously scheduled Expiration Date. Without
limiting the manner in which the Purchaser may choose to make any public
announcement, the Purchaser currently intends to make announcements by issuing a
press release to the Dow Jones News Service. During any such extension, all
Shares previously tendered and not properly withdrawn will remain subject to the
Offer, subject to the right of a tendering stockholder to withdraw such
stockholder's Shares.
Tenders of Shares made pursuant to the Offer are irrevocable except as
otherwise provided below. Shares tendered pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date and, unless theretofore accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after October 12, 1997. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at its address set forth on the back cover of the
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. If certificates evidencing
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in the Offer to Purchase), unless such Shares have been
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth under
Section 3 in the Offer to Purchase, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Purchaser, in its sole discretion, whose determination will be final and
binding. No withdrawal of Shares shall be deemed to have been properly made
until all defects and irregularities have been cured or waived. None of the
Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failing to
give such notification.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company is providing to the Purchaser its list of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees appear on the Company's
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal and
other tender offer documents may be directed to the Information Agent as set
forth below, and copies will be furnished promptly at the Purchaser's expense.
Questions and requests for assistance may be directed to the Dealer Manager or
the Information Agent at their respective addresses and telephone numbers set
forth below. The Purchaser will not pay any fees or commissions to any broker or
dealer or any other person (other than the Dealer Manager and the Information
Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Call Toll Free (800) 697-6975
The Dealer Manager for the Offer is:
[CREDIT SUISSE FIRST BOSTON LOGO]
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (800) 881-8320
August 14, 1997
<PAGE> 1
[OMNICARE NEWS RELEASE LETTERHEAD]
[GRAPHIC] FOR IMMEDIATE RELEASE
OMNICARE ANNOUNCES DEFINITIVE AGREEMENT TO ACQUIRE
AMERICAN MEDSERVE CORPORATION
CINCINNATI, OHIO, AND NAPERVILLE, ILLINOIS, AUGUST 8, 1997 . . .
Omnicare, Inc. (NYSE:OCR) and American Medserve Corporation (NASDAQ:AMCI) today
announced the execution of a definitive merger agreement pursuant to which
Omnicare will acquire for cash all of the outstanding shares of American
Medserve Corporation.
Under terms of the agreement, a wholly owned subsidiary of Omnicare
will commence a cash tender offer of $18.00 per share for all of the
outstanding shares of American Medserve Corporation, representing a purchase
price of approximately $222.6 million. Additionally, Omnicare will assume
American Medserve Corporation's liabilities, including long-term debt of
approximately $11.6 million. The acquisition will be accounted for as a
purchase transaction. Given the economics of scale and cost synergies
anticipated from the merger, the acquisition of American Medserve Corporation
is expected to be non-dilutive to Omnicare's earnings per share in 1997 and
accretive in 1998.
American Medserve Corporation, based in Naperville, Illinois, provides
comprehensive pharmacy and related services to approximately 51,400 residents
in 720 long-term care facilities in 11 states. Additionally, American Medserve
Corporation is a joint venture partner with an affiliate of The Evangelical
Lutheran Good Samaritan Society, which ranks as the nation's fifth-largest
nursing home operator, serving 27,000 residents. Based on revenues reported for
the quarter ended March 31, 1997, American Medserve Corporation's annualized
revenues are approximately $144.0 million.
The transaction, which has been approved by the boards of
1
<PAGE> 2
directors of both Omnicare and American Medserve Corporation, is subject to the
tender of at least a majority of the outstanding shares of American Medserve
Corporation on a fully diluted basis, customary regulatory approval and the
satisfaction of certain other conditions. The tender offer will commence within
five business days and will remain open for 20 business days, unless extended.
Following the consummation of the tender offer, Omnicare will acquire any of the
remaining outstanding shares of American Medserve Corporation in a cash merger
transaction valued at $18.00 per share.
With the completion of this acquisition, Omnicare will provide pharmacy
and related consulting services to approximately 413,000 residents in over
5,100 long-term care facilities in 35 states. Based on revenues for the quarter
ended June 30, 1997, Omnicare's annualized revenues, following the transaction,
will be in excess of $950.0 million.
"We believe the combination of Omnicare and American Medserve
Corporation, two companies recognized as leading consolidators in the
institutional pharmacy industry, will create a dynamic organization with the
resources, clinical programs and pharmacy management experience necessary to
capitalize on the major growth opportunities in geriatric pharmaceutical care,"
said Joel F. Gemunder, Omnicare president.
"The addition of American Medserve Corporation will significantly
expand Omnicare's core business of providing high-quality pharmaceutical care
to the nation's elderly and will create economies of scale that allow both of
our organizations to operate more efficiently," he said.
The acquisition of American Medserve Corporation will mark Omnicare's
entry into six new states and will broaden Omnicare's network of existing
pharmacies in five other states, including Illinois, Pennsylvania and New York,
which rank among the nation's largest in terms of nursing home population.
"American Medserve Corporation has built a well-managed group of
entrepreneurial pharmacy operations and has developed important strategic
alliances, including its partnership with The Evangelical Lutheran Good
Samaritan Society. We look forward to the opportunity to bring our broad array
of clinical programs,
2
<PAGE> 3
including the Omnicare Geriatric Pharmaceutical Care Guidelines(R), to American
Medserve Corporation's pharmacy operations and their client nursing facilities.
Together, we can provide the basis for outstanding geriatric pharmaceutical are
in the most cost-effective manner," Mr. Gemunder concluded.
"American Medserve Corporation and Omnicare have become strong, successful
long-term care providers by meeting the increasingly complex needs of their
client facilities with innovative services, and this transaction will provide
both organizations with the resources to expand those programs even further,"
said Timothy L. Burfield, American Medserve Corporation president and chief
executive officer.
"We also believe this agreement provides our shareholders with an
attractive value for their investment in our company," Mr. Burfield said.
Omnicare is a leading independent provider of professional pharmacy and
related consulting services for long-term care facilities such as nursing homes,
retirement centers and other institutional health care facilities. Omnicare
currently provides pharmacy and related consulting services to approximately
361,400 residents in over 4,400 long-term care facilities.
(Statements in this press release concerning Omnicare's and American
Medserve Corporation's business outlook or future economic performances,
anticipated profitability, revenues, expenses or other financial items,
anticipated cost synergies, economies of scale and product or service line
growth, together with other statements that are not historical facts, are
forward-looking statements that are estimates reflecting the best judgment of
Omnicare and American Medserve Corporation based on currently available
information. Such forward-looking statements involve risks, uncertainties and
other factors that could cause results to differ materially from those stated.
These include trends for the continued growth of the pharmacy businesses of
Omnicare and American Medserve Corporation, the realization of anticipated
revenues, profitability and cost synergies of the combined companies, and other
risks and uncertainties described in Omnicare's and American Medserve
Corporation's reports and filings with the Securities and Exchange Commission.
There can
3
<PAGE> 4
be no assurance that such factors will not affect the accuracy of such
forward-looking statements, and neither Omnicare nor American Medserve
Corporation assumes any obligation to update the information in this release.)
For more information on Omnicare, Inc. via the Internet, including a
full menu of news releases, visit our Corporate News on The Net site at
http://www.businesswire.com/cnn/ocr.htm
###
OMNICARE CONTACTS: AMERICAN MEDSERVE CORPORATION:
Cheryl D. Hodges Charles R. Wallace
(513) 762-6967 (630) 717-2904
or
Gary L. Rhodes
(513) 762-6660
4
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
by and among
OMNICARE, INC.
OMNICARE ACQUISITION CORP.
and
AMERICAN MEDSERVE CORPORATION
dated as of
August 7, 1997
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. THE OFFER AND MERGER................................................ 1
Section 1.1. The Offer........................................................... 1
Section 1.2. Company Actions..................................................... 2
Section 1.3. Directors........................................................... 3
Section 1.4. The Merger.......................................................... 4
Section 1.5. Effective Time...................................................... 4
Section 1.6. Closing............................................................. 4
Section 1.7. Directors and Officers of the Surviving Corporation................. 4
Section 1.8. Shareholders' Meeting............................................... 5
ARTICLE II. CONVERSION OF SECURITIES............................................ 5
Section 2.1. Conversion of Capital Stock......................................... 5
Section 2.2. Exchange of Certificates............................................ 6
Section 2.3. Appraisal Rights.................................................... 7
Section 2.4. Company Plans....................................................... 8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................... 8
Section 3.1. Organization........................................................ 8
Section 3.2. Capitalization...................................................... 9
Section 3.3. Authorization; Validity of Agreement; Company Action................ 10
Section 3.4. Consents and Approvals; No Violations............................... 10
Section 3.5. SEC Reports and Financial Statements................................ 10
Section 3.6. Absence of Certain Changes.......................................... 11
Section 3.7. No Undisclosed Liabilities.......................................... 11
Section 3.8. Litigation.......................................................... 11
Section 3.9. Employee Benefit Plans.............................................. 11
Section 3.10. Tax Matters; Government Benefits.................................... 13
Section 3.11. Intellectual Property............................................... 14
Section 3.12. Employment Matters.................................................. 15
Section 3.13. Compliance with Laws................................................ 15
Section 3.14. Vote Required....................................................... 16
Section 3.15. Environmental Laws.................................................. 16
Section 3.16. Schedule 14D-9: Offer Documents and Proxy Statement................ 18
Section 3.17. Opinion of Financial Advisor........................................ 18
Section 3.18. Brokers and Finders................................................. 18
Section 3.19. Certain Business Practices.......................................... 18
Section 3.20. Insurance........................................................... 18
Section 3.21. Product Warranties.................................................. 19
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER......... 19
Section 4.1. Organization........................................................ 19
Section 4.2. Authorization; Validity of Agreement; Necessary Action.............. 19
Section 4.3. Consents and Approvals; No Violations............................... 19
Section 4.4. Offer Documents; Proxy Statement; Schedule 14D-9.................... 20
Section 4.5. Financing........................................................... 20
Section 4.6. Litigation.......................................................... 20
ARTICLE V. COVENANTS........................................................... 20
Section 5.1. Interim Operations of the Company................................... 20
Section 5.2. Access; Confidentiality............................................. 22
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
Section 5.3. Proxy Statement..................................................... 23
Section 5.4. Cooperation......................................................... 23
Section 5.5. State Takeover Statutes............................................. 24
Section 5.6. No Solicitation..................................................... 24
Section 5.7. Additional Agreements............................................... 25
Section 5.8. Publicity........................................................... 25
Section 5.9. Notification of Certain Matters..................................... 25
Section 5.10. Directors, and Officers' Insurance and Indemnification.............. 25
ARTICLE VI. CONDITIONS.......................................................... 26
Section 6.1. Conditions to Obligations of Each Party to Effect the Merger........ 26
Section 6.2. Conditions Precedent to the Obligations of the Company.............. 27
Section 6.3. Conditions Precedent to the Obligations of Parent and Purchaser..... 27
ARTICLE VII. TERMINATION......................................................... 27
Section 7.1. Termination......................................................... 27
Section 7.2. Effect of Termination............................................... 29
ARTICLE VIII. MISCELLANEOUS....................................................... 29
Section 8.1. Fees and Expenses................................................... 29
Section 8.2. Amendment and Modification.......................................... 29
Section 8.3. Nonsurvival of Representations and Warranties....................... 30
Section 8.4. Notices............................................................. 30
Section 8.5. Interpretation...................................................... 31
Section 8.6. Counterparts........................................................ 31
Section 8.7. Entire Agreement; No Third Party Beneficiaries...................... 31
Section 8.8. Severability........................................................ 31
Section 8.9. Governing Law....................................................... 31
Section 8.10. Assignment.......................................................... 31
Section 8.11. Waivers............................................................. 31
Section 8.12. Captions............................................................ 32
</TABLE>
Annex A Certain Conditions of the Offer
-ii-
<PAGE> 4
Index of Defined Terms
<TABLE>
<CAPTION>
Defined Term Section No.
- ------------ -----------
<S> <C>
Agreement................................................. Recitals
Acquisition Proposal...................................... 5.6(a)
Appointment Date.......................................... 5.1
Balance Sheet............................................. 3.10(a)
Beds...................................................... 3.22
Break-Up Amount........................................... 8.1(b)
By-Laws................................................... 1.4
Certificate of Incorporation.............................. 1.4
Certificates.............................................. 2.2(b)
Closing................................................... 1.6
Closing Date.............................................. 1.6
Code...................................................... 2.2(f)
Company................................................... Recitals
Company Agreements........................................ 3.4
Company Disclosure Schedule............................... 3.0
Company Material Adverse Effect........................... 3.1(a)
Company SEC Documents..................................... 3.5
Company Option............................................ 2.4(a)
Computer Software......................................... 3.11(c)
Confidentiality Agreement................................. 5.2(b)
Copyrights................................................ 3.11(c)
DGCL...................................................... l.4
Dissenting Shareholders................................... 2.1(c)
Dissenting Shares......................................... 2.3
DLJ....................................................... 3.17
D&O Insurance............................................. 5.10(b)
Effective Time............................................ 1.5
Encumbrances.............................................. 3.2(b)
Environmental Claim....................................... 3.15(g)
Environmental Laws........................................ 3.15(g)
ERISA..................................................... 3.9(a)
ERISA Affiliate........................................... 3.9(a)
Exchange Act.............................................. 1.1(a)
Expiration Date........................................... 1.1(a)
Financial Statements...................................... 3.5
GAAP...................................................... 3.5
Governmental Authority.................................... 3.13(a)
Governmental Entity....................................... 3.4
Hazardous Materials....................................... 3.15(g)
Healthcare Laws........................................... 3.13(a)
HSR Act................................................... 3.4
Indemnified Party......................................... 5.10(a)
Independent Directors..................................... 1.3(c)
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Intellectual Property..................................... 3.11(c)
Licenses.................................................. 3.11(c)
Merger.................................................... 1.4
Merger Consideration...................................... 2.1(c)
Minimum Condition......................................... 1.1(a)
Offer..................................................... 1.1(a)
Offer Documents........................................... 1.1(b)
Offer Price............................................... 1.1(a)
Offer to Purchase......................................... 1.1(a)
Option Plan............................................... 2.4(a)
Parent.................................................... Recitals
Parent Disclosure Schedule ............................... 4.0
Parent Material Adverse Effect............................ 4.1
Patents................................................... 3.11(c)
Paying Agent.............................................. 2.2(a)
PCBs...................................................... 3.15(e)
Personnel................................................. 3.13(a)
Plans..................................................... 3.9(a)
Preferred Stock........................................... 3.2(a)
Preliminary Proxy Statement............................... 5.3
Proxy Statement........................................... 1.8(a)
Purchaser................................................. Recitals
Purchaser Common Stock.................................... 2.1
Schedule 14D-1............................................ 1.1(b)
Schedule 14D-9............................................ 1.2(b)
SEC....................................................... 1.1(b)
Secretary of State........................................ 1.5
Securities Act............................................ 3.5
Shares.................................................... 1.1(a)
Special Meeting........................................... 1.8(a)
Subsidiary................................................ 3.1(a)
Superior Proposal......................................... 5.6(b)
Surviving Corporation..................................... l.4
Tax....................................................... 3.10(k)
Taxes..................................................... 3.10(k)
Tax Return................................................ 3.10(k)
Title IV Plan............................................. 3.9(a)
Trademarks................................................ 3.11(c)
Transactions.............................................. 1.2(a)
Voting Debt............................................... 3.2(a)
1996 Premium.............................................. 5.10(b)
</TABLE>
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated as of August 7, 1997, by and among OMNICARE, INC., a
Delaware corporation ("Parent"), OMNICARE ACQUISITION CORP., a Delaware
corporation and a wholly-owned subsidiary of Parent (the "Purchaser"), and
AMERICAN MEDSERVE CORPORATION, a Delaware corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the
Purchaser and the Company has approved, and deems it advisable and in the best
interests of its respective stockholders to consummate, the acquisition of the
Company by Parent upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree, as follows:
ARTICLE I.
THE OFFER AND MERGER
Section 1.1. The Offer.
(a) As promptly as practicable (but in no event later than five
business days after the public announcement of the execution hereof), the
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer (the
"Offer") for all of the outstanding shares of Common Stock, par value $.01 per
share (the "Shares"), of the Company at a price of $18.00 per Share, net to the
seller in cash (such price, as it may be amended in accordance with the terms of
this Agreement, being referred to herein as the "Offer Price"), subject to there
being validly tendered and not withdrawn prior to the expiration of the Offer,
that number of Shares which represents at least a majority of the Shares
outstanding on a fully diluted basis (the "Minimum Condition") and to the other
conditions set forth in Annex A hereto, and shall consummate the Offer in
accordance with its terms. For purposes of this Agreement, "fully diluted basis"
means issued and outstanding Shares and Shares subject to issuance under
employee stock options and other outstanding rights to acquire Shares. The
Company agrees that no Shares held by the Company or any of its Subsidiaries (as
defined herein) will be tendered to the Purchaser pursuant to the Offer. The
obligations of the Purchaser to accept for payment and to pay for any Shares
validly tendered on or prior to the expiration of the Offer and not withdrawn
shall be subject only to the Minimum Condition and the other conditions set
forth in Annex A hereto. The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") containing the terms set forth in this
Agreement, the Minimum Condition and the other conditions set forth in Annex A
hereto. The Purchaser shall not amend or waive the Minimum Condition and shall
not decrease the Offer Price or decrease the number of Shares sought, or amend
any other condition of the Offer in any manner adverse to the holders of the
Shares without the written consent of the Company, except that Purchaser may, in
its sole discretion, waive any of the conditions to the Offer set forth in Annex
A hereto. The Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares validly tendered and not withdrawn as soon as practicable after
expiration of the Offer; provided, however, that if, immediately prior to the
expiration date of the Offer the Shares tendered and not withdrawn pursuant to
the Offer equal less than 90% of the outstanding Shares but more than 80% of the
outstanding Shares,
<PAGE> 7
the Purchaser may extend the Offer for a period not to exceed seven business
days, notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer.
(b) As soon as practicable on the date the Offer is commenced, Parent
and the Purchaser shall file or cause to be filed with the United States
Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule 14D-1 with respect to the Offer (together with all amendments and
supplements thereto and including the exhibits thereto, the "Schedule 14D-1").
The Schedule 14D-1 will include, as exhibits, the Offer to Purchase and a form
of letter of transmittal and other ancillary Offer documents and instruments
(collectively, together with any amendments and supplements thereto, the "Offer
Documents").
(c) Parent and the Purchaser will cause the Offer Documents to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent required by applicable federal securities laws. Each of Parent
and the Purchaser, on the one hand, and the Company, on the other hand, will
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that it shall have become false or misleading in any
material respect and the Purchaser will cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review the Schedule 14D-1 (including, without limitation, all
documents filed therewith as exhibits) before it is filed with the SEC. In
addition, Parent and the Purchaser will provide the Company and its counsel with
any comments, whether written or oral, Parent, the Purchaser or their counsel
may receive from time to time from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments.
Section 1.2. Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Company's Board of Directors, at a meeting duly
called and held, has (i) unanimously determined that the terms of the Offer and
the Merger (as defined in Section 1.4) are fair to and in the best interests of
the shareholders of the Company, (ii) approved this Agreement and the
transactions contemplated hereby, including the Offer and Merger (collectively,
the "Transactions"), and (iii) resolved to recommend that the shareholders of
the Company accept the Offer, tender their Shares thereunder to the Purchaser
and approve and adopt this Agreement and the Merger; provided, that such
recommendation may be withdrawn, modified or amended if, in the opinion of the
Board of Directors, only after receipt of advice from outside legal counsel,
failure to withdraw, modify or amend such recommendation would reasonably be
expected to result in the Board of Directors violating its fiduciary duties to
the Company's shareholders under applicable law and the Company pays the fees
and expenses required by Section 8.1 hereof.
(b) Concurrently with the commencement of the Offer, the Company shall
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto and including the exhibits
thereto, the "Schedule 14D-9") which shall, subject to the provisions of Section
5.6(b), contain the recommendation referred to in clause (iii) of Section 1.2(a)
hereof. The Company further agrees to take all steps necessary to cause the
Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. Each of the Company, on the one hand, and Parent and the
Purchaser, on the other hand, will promptly correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that it shall have become
false and misleading in any material respect and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent
2
<PAGE> 8
required by applicable federal securities laws. Parent and its counsel shall be
given a reasonable opportunity to review and comment upon the Schedule 14D-9
before it is filed with the SEC. In addition, the Company agrees to provide
Parent, the Purchaser and their counsel with any comments, whether written or
oral, that the Company or its counsel may receive from time to time from the SEC
or its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments or other communications.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing, or computer file containing the names and
addresses of all recordholders of the Shares as of a recent date, and shall
furnish the Purchaser with such additional information (including, but not
limited to, updated lists of holders of the Shares and their addresses, mailing
labels and lists of security positions) and assistance, and cause its
representatives and advisors to provide such assistance, as the Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares. Subject to the requirements of applicable law
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Offer and the Merger, Parent
and the Purchaser shall hold in confidence the information contained in any of
such labels and lists and the additional information referred to in the
preceding sentence, will use such information only in connection with the Offer,
and, if this Agreement is terminated, will upon request of the Company deliver
or cause to be delivered to, the Company all copies of such information then in
its possession or the possession of its agents or representatives.
Section 1.3. Directors.
(a) Promptly upon the purchase of and payment for any Shares by Parent
or any of its subsidiaries which represents at least a majority of the
outstanding Shares, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors on such
Board (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the number of Shares so accepted for
payment bears to the total number of Shares then outstanding. In furtherance
thereof, the Company shall, upon request of the Purchaser, promptly increase the
size of its Board of Directors or exercise its best efforts to secure the
resignations of such number of directors, or both, as is necessary to enable
Parent's designees to be so elected to the Company's Board, and shall cause
Parent's designees to be so elected. At such time, the Company shall, if
requested by Parent, also cause persons designated by Parent to constitute at
least the same percentage (rounded up to the next whole number) as is on the
Company's Board of Directors of (i) each committee of the Company's Board of
Directors, (ii) each board of directors (or similar body) of each Subsidiary (as
defined in Section 3.1) of the Company and (iii) each committee (or similar
body) of each such board.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under Section 1.3(a), including mailing to
stockholders together with Schedule 14D-9 the information required by such
Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be
elected to the Company's Board of Directors. Parent or the Purchaser will supply
the Company and be solely responsible for any information with respect to either
of them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1. The provisions of this Section 1.3 are in addition
to and shall not limit any rights which the Purchaser, Parent or any of their
affiliates may have as a holder or beneficial owner of Shares as a matter of law
with respect to the election of directors or otherwise.
(c) In the event that Parent's designees are elected to the Company's
Board of Directors, until the Effective Time (as defined below), the Company's
Board shall have at least two directors who
3
<PAGE> 9
are directors on the date hereof (the "Independent Directors"), provided that,
in such event, if the number of Independent Directors shall be reduced below two
for any reason whatsoever, any remaining Independent Directors (or Independent
Director, if there be only one remaining) shall be entitled to designate persons
to fill such vacancies who shall be deemed to be Independent Directors for
purposes of this Agreement or, if no Independent Director then remains, the
other directors shall designate two persons to fill such vacancies who shall not
be stockholders, affiliates or associates of Parent or the Purchaser and such
persons shall be deemed to be Independent Directors for purposes of this
Agreement. Notwithstanding anything in this Agreement to the contrary, in the
event that Parent's designees are elected to the Company's Board, after the
acceptance for payment of Shares pursuant to the Offer and prior to the
Effective Time, the affirmative vote of a majority of the Independent Directors
shall be required to (a) amend or terminate this Agreement by the Company or (b)
exercise or waive any of the Company's rights, benefits or remedies hereunder.
Section 1.4. The Merger. Subject to the terms and conditions of this
Agreement, and in accordance with the relevant provisions of the Delaware
General Corporation Law ("DGCL"), at the Effective Time, the Company and the
Purchaser shall consummate a merger (the "Merger") pursuant to which (a) the
Purchaser shall be merged with and into the Company and the separate corporate
existence of the Purchaser shall thereupon cease, (b) the Company shall be the
successor or surviving corporation in the Merger (sometimes hereinafter referred
to as the "Surviving Corporation") and shall continue to be governed by the laws
of the State of Delaware, and (c) the separate corporate existence of the
Company with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger, except as set forth in this Section 1.4.
Pursuant to the Merger, (x) the Company's Amended and Restated Certificate of
Incorporation ("Certificate of Incorporation") shall be amended in its entirety
to read as the Certificate of the Purchaser, in effect immediately prior to the
Effective Time, except that Article FIRST thereof shall promptly be amended to
read as follows: "FIRST: The name of the corporation is American Medserve
Corporation" and, as so amended, shall be the Certificate of the Surviving
Corporation until thereafter amended as provided by law and such Certificate,
and (y) the By-Laws of the Purchaser (the "By-Laws"), as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation
until thereafter amended as provided by law, by such Certificate or by such
Bylaws. The Merger shall have the effects specified in the DGCL.
Section 1.5. Effective Time. Parent, the Purchaser and the Company will
cause a Certificate of Merger to be executed and filed on the Closing Date (as
defined in Section 1.6) (or on such other date as Parent and the Company may
agree) with the Secretary of State of Delaware (the "Secretary of State") as
provided in the DGCL. The Merger shall become effective on the date on which the
Certificate of Merger is duly filed with the Secretary of State or such time as
is agreed upon by the parties and specified in the Certificate of Merger, and
such time is hereinafter referred to as the "Effective Time".
Section 1.6. Closing. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m. on a date to be specified by the parties, which shall
be no later than the second business day after satisfaction or waiver of all of
the conditions set forth in Article VI hereof (the "Closing Date"), at the
offices of Dewey Ballantine, 1301 Avenue of the Americas, New York, New York
10019, unless another date or place is agreed to in writing by the parties
hereto.
Section 1.7. Directors and Officers of the Surviving Corporation. The
directors of the Purchaser and the officers of the Company at the Effective Time
shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the Certificate and the By-Laws.
4
<PAGE> 10
Section 1.8. Shareholders' Meeting.
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Special Meeting") as promptly as
practicable following the acceptance for payment and purchase of Shares
by the Purchaser pursuant to the Offer for the purpose of considering
and taking action upon the approval of the Merger and the adoption of
this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and (x)
obtain and furnish the information required to be included by the SEC
in the Proxy Statement (as hereinafter defined) and, after consultation
with Parent, to respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement, including any amendment or
supplement thereto (the "Proxy Statement") to be mailed to its
shareholders, provided that no amendment or supplement to the Proxy
Statement will be made by the Company without consultation with Parent
and its counsel and (y) use its best efforts to obtain the necessary
approvals of the Merger and this Agreement by its shareholders; and
(iii) include in the Proxy Statement the recommendation of the
Board that shareholders of the Company vote in favor of the approval of
the Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares then
owned by it, the Purchaser or any of its other subsidiaries and affiliates in
favor of the approval of the Merger and the approval and adoption of this
Agreement.
Section 1.9. Merger Without Meeting of Shareholders. Notwithstanding
Section 1.8 hereof, in the event that Parent, the Purchaser and any other
Subsidiaries of Parent shall acquire in the aggregate at least 90% of the
outstanding shares of each class of capital stock of the Company, pursuant to
the Offer or otherwise, the parties hereto shall, at the request of Parent and
subject to Article VI hereof, take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of shareholders of the Company, in accordance with Section 253
of the DGCL.
ARTICLE II.
CONVERSION OF SECURITIES
Section 2.1. Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or holders of common stock, par value $.01 per share, of the Purchaser
(the "Purchaser Common Stock"):
(a) The Purchaser Common Stock. Each issued and outstanding share of
the Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
5
<PAGE> 11
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All Shares
that are owned by the Company as treasury stock and any Shares owned by Parent,
the Purchaser or any other wholly owned Subsidiary of Parent shall be canceled
and retired and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(c) Exchange of Shares. Each issued and outstanding Share (other than
Shares to be canceled in accordance with Section 2.1(b) and any Shares which are
held by stockholders exercising appraisal rights pursuant to Section 262 of the
DGCL ("Dissenting Shareholders")) shall be converted into the right to receive
the Offer Price, payable to the holder thereof, without interest (the "Merger
Consideration"), upon surrender of the certificate formerly representing such
Share in the manner provided in Section 2.2. All such Shares, when so converted,
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
Shares shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration therefor upon the surrender of such certificate
in accordance with Section 2.2, without interest, or the right, if any, to
receive payment from the Surviving Corporation of the "fair value" of such
Shares as determined in accordance with Section 262 of the DGCL.
Section 2.2. Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as agent for the holders of the
Shares in connection with the Merger (the "Paying Agent") to receive in trust
from time to time, as necessary, the funds to which holders of the Shares shall
become entitled pursuant to Section 2.1(c). Such funds shall be invested by the
Paying Agent as directed by Parent or the Surviving Corporation.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record, as of the
Effective Time, of a certificate or certificates, which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates"), whose Shares
were converted pursuant to Section 2.1 into the right to receive the Merger
Consideration (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each Share formerly represented by such Certificate
and the Certificate so surrendered shall forthwith be canceled. No interest will
be paid or accrued on the cash payable upon the surrender of the Certificates.
If payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not applicable. Until surrendered as contemplated by this Section 2.2,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration in cash as
contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in the Shares. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration
6
<PAGE> 12
of transfers of the Shares on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership of the Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares, except as otherwise provided for herein or
by applicable law. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following six months
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(e) Lost, Stolen or Destroyed Certificates. In the event any
Certificate for Shares shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and, if required by Parent, the posting by such
Person of a bond in customary amount as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
pursuant to Section 2.2(b) upon due surrender of and deliverable in respect of
the Shares represented by such Certificate pursuant to this Agreement.
(f) Withholding Taxes. Parent and Purchaser shall be entitled to deduct
and withhold, or cause the Paying Agent to deduct and withhold, from the
consideration otherwise payable to a holder of Shares pursuant to the Offer or
the Merger any stock transfer taxes and such amounts as are required under the
Internal Revenue Code of 1986, as amended (the "Code"), or any applicable
provision of state, local or foreign tax law, as specified in the Offer
Documents. To the extent that amounts are so withheld by Parent or Purchaser,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares in respect of which such deduction
and withholding was made by Parent or Purchaser, in the circumstances described
in the Offer Documents.
Section 2.3. Appraisal Rights. Notwithstanding anything in this
Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Time and which are held by stockholders who did not vote
in favor of the Merger and comply with all of the relevant provisions of Section
262 of the DGCL (the "Dissenting Shares") shall not be converted into or be
exchangeable for the right to receive the Merger Consideration, unless and until
such holders shall have failed to perfect or shall have effectively withdrawn or
lost their rights to appraisal under the DGCL. If any Dissenting Stockholder
shall have failed to perfect or shall have effectively withdrawn or lost such
right, such holder's Shares shall thereupon be converted into and become
exchangeable for the right to receive, as of the Effective Time, the Merger
Consideration without any interest thereon. The Company shall give Parent (i)
prompt notice of any written demands for appraisal of any Shares, attempted
withdrawals of such demands, and any other instruments served pursuant to the
DGCL and received by the Company relating to stockholders' rights of appraisal
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the DGCL. Neither the Company nor the Surviving
Corporation shall, except with the prior written consent of Parent, voluntarily
make any payment with respect to, or settle or offer to settle, any such demand
for payment. If any Dissenting Shareholder shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, the Shares
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<PAGE> 13
held by such Dissenting Shareholder shall thereupon be treated as though such
Shares had been converted into the Merger Consideration pursuant to Section 2.1.
Section 2.4. Company Plans.
(a) On the expiration date of the Offer, immediately prior to the
acceptance for payment of Shares pursuant to the Offer, each outstanding
employee stock option to purchase Shares (a "Company Option") granted under any
stock option or compensation plan or arrangement of the Company or its
Subsidiaries (collectively, the "Option Plan"), shall be surrendered to the
Company and shall be forthwith canceled and the Company shall pay to each holder
of a Company Option, by check, an amount equal to (i) the product of the number
of the Shares which are issuable upon exercise of such Company Option,
multiplied by the Offer Price, less (ii) the aggregate exercise price of such
Company Option. Prior to the Closing, the Company shall use its best efforts to
take all actions (including, without limitation, soliciting any necessary
consents from the holders of the Company Options) required to effect the matters
set forth in this Section 2.4, including the surrender, cancellation and payment
in consideration for the Company Options described in this Section 2.4(a). The
Company shall withhold all income or other taxes as required under applicable
law prior to distribution of the cash amount received under this Section 2.4(a)
to the holders of Company Options.
(b) Except as may be otherwise agreed to by Parent or the Purchaser and
the Company, the Company's Option Plan shall terminate as of the Effective Time
and the provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any of its Subsidiaries shall be deleted as of the Effective Time and
no holder of Company Options or any participant in the Option Plan or any other
plans, programs or arrangements shall have any rights thereunder to acquire any
equity securities of the Company, the Surviving Corporation or any subsidiary
thereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the schedule attached to this Agreement
setting forth exceptions to the Company's representations and warranties set
forth herein (the "Company Disclosure Schedule"), the Company represents and
warrants to Parent and the Purchaser as set forth below. The Company Disclosure
Schedule will be arranged in sections corresponding to sections of this
Agreement to be modified by such disclosure schedule.
Section 3.1. Organization. (a) Each of the Company and its
Subsidiaries, all of which are listed in Section 3.1 of the Company Disclosure
Schedule, is a corporation, limited liability company or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. Complete and correct copies
of the Certificate of Incorporation and the By-Laws and all amendments thereof
to date, have been delivered to Parent. Each of the Company and its Subsidiaries
has all requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power, authority, and governmental
approvals would not, individually or in the aggregate, have a Company Material
Adverse Effect (as defined below). As used in this Agreement, the term
"Subsidiary" shall mean all corporations or other entities in which the Company
or the Parent, as the case may be, owns, directly or indirectly, a majority of
the issued and outstanding capital stock or similar interests or has the right
to elect a majority of the members of the Board of Directors or similar
governing body. As used in this Agreement, (i)
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<PAGE> 14
"Company Material Adverse Effect" shall mean any event, change or effect that
has, or is reasonably likely to have, a material adverse effect (A) on the
condition (financial or otherwise), business, assets, liabilities, results of
operations or cash flows of the Company and its Subsidiaries, taken as a whole
or (B) on the ability of the Company to perform its obligations under this
Agreement or to consummate the transactions contemplated by this Agreement, and
(ii) the phrase "to the Company's knowledge", or words of comparable import,
shall mean facts or circumstances within the personal knowledge, after due
inquiry, of any of Timothy L. Burfield, Charles R. Wallace and Michael B.
Freedman.
(b) The Company and each of its Subsidiaries is duly qualified
or licensed to do business and in good standing as a foreign corporation in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not individually or in the aggregate have a Company Material
Adverse Effect. Except as set forth in Section 3.1 of the Company Disclosure
Schedule, the Company does not own (i) any equity interest in any corporation or
other entity or (ii) marketable securities where the Company's equity interest
in any entity exceeds five percent of the outstanding equity of such entity on
the date hereof.
Section 3.2. Capitalization. (a) The authorized capital stock of the
Company consists of 30,000,000 Shares and 1,000,000 shares of preferred stock,
par value $.01 per share (the "Preferred Stock"). As of the date hereof, (i)
12,217,936 Shares are issued and outstanding, (ii) no Shares are issued and held
in the treasury of the Company, (iii) no shares of Preferred Stock are issued
and outstanding, and (iv) 1,310,790 Shares are reserved for issuance to
employees pursuant to the Option Plan, of which 517,117 Shares are subject to
outstanding, unexercised options. Section 3.2(a) of the Company Disclosure
Schedule sets forth a true and complete list of the holders of Company Options,
including such person's name, the number of options (vested, unvested and total)
held by such person and the exercise price for each such option. Since the date
hereof, the Company has not issued or granted additional options under the
Option Plan. All the outstanding shares of the Company's capital stock are, and
all Shares which may be issued pursuant to the exercise of outstanding Company
Options will be, when issued in accordance with the respective terms thereof,
duly authorized, validly issued, fully paid and non-assessable. Except as
disclosed in Section 3.2 of the Company Disclosure Schedule, there are no bonds,
debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) ("Voting Debt") of the Company
or any of its Subsidiaries issued and outstanding. Except as set forth above,
except as described in Section 3.2 of the Company Disclosure Schedule and except
for the transactions contemplated by this Agreement, as of the date hereof, (i)
there are no shares of capital stock of the Company authorized, issued or
outstanding, (ii) there are no outstanding options, warrants, calls, preemptive
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character, relating to the issued or unissued capital stock of the
Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment and
(iii) except as set forth in Section 3.2(a) of the Company Disclosure Schedule,
there are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or the
capital stock of the Company, or any Subsidiary or affiliate of the Company or
to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary or any other entity other than
loans to Subsidiaries in the ordinary course of business.
(b) All of the outstanding shares of capital stock of each of
the Subsidiaries are beneficially owned by the Company, directly or indirectly,
and all such shares have been validly issued
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<PAGE> 15
and are fully paid and nonassessable and are owned by either the Company or one
of its Subsidiaries free and clear of all liens, charges, claims or encumbrances
of whatever nature ("Encumbrances").
(c) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of the
Subsidiaries.
Section 3.3. Authorization; Validity of Agreement; Company Action. The
Company has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the Transactions. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of the
Transactions, have been duly authorized by its Board of Directors and, except
for obtaining the approval of its shareholders as contemplated by Section 1.8
hereof, no other corporate action on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the Transactions. This Agreement has been duly executed
and delivered by the Company and, assuming that this Agreement constitutes the
legal, valid and binding obligations of Parent and the Purchaser, constitutes
the legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as may be limited by any
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally or
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 3.4. Consents and Approvals; No Violations. Except for the
filings set forth in Section 3.4 of the Company Disclosure Schedule and the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), state securities or blue sky laws, and the DGCL, none of the execution,
delivery or performance of this Agreement by the Company, the consummation by
the Company of the Transactions or compliance by the Company with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the Certificate, the By-Laws or similar organizational documents of
the Company or any of its Subsidiaries, (ii) require any filing with, or permit,
authorization, consent or approval of, any court, arbitrator, tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity"), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
(the "Company Agreements") or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, excluding from the foregoing clauses (ii),
(iii) and (iv) such violations, breaches or defaults which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Section 3.4 of the Company Disclosure Schedule sets forth a list of all third
party consents and approvals required to be obtained in connection with this
Agreement under the Company Agreements prior to the consummation of the
transactions contemplated by this Agreement, except such third party consents
and approvals the failure of which to obtain would not have a Company Material
Adverse Effect.
Section 3.5. SEC Reports and Financial Statements. The Company has
timely filed with the SEC, and has heretofore made available to Parent, true and
complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it since November 13, 1996 and prior to the
date hereof, under the Exchange Act or the Securities Act of 1933, as amended
(the "Securities Act"), and the SEC's rules and regulations thereunder (as such
documents have been amended since the
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time of their filing, collectively, the "Company SEC Documents"). As of their
respective dates or, if amended prior to the date hereof, as of the date of the
last such amendment, the Company SEC Documents, including, without limitation,
any financial statements or schedules included therein (a) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading and (b) complied
in all material respects with the applicable requirements of the Exchange Act
and the Securities Act, as the case may be, and the applicable rules and
regulations of the SEC thereunder. None of the Company's Subsidiaries is
required to file any forms, reports or other documents with the SEC. The
consolidated financial statements of the Company included in the Company SEC
Documents (the "Financial Statements") have been prepared from, and are in
accordance with, the books and records of the Company and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
period involved (except in the case of unaudited statements, as permitted by
Form 10-Q under the Exchange Act and as may be otherwise indicated in the notes
thereto) and fairly present (subject, in the case of unaudited statements, to
normal recurring year-end adjustments and any other adjustments described
therein) the consolidated financial position and the consolidated results of
operations and cash flows (and changes in financial position, if any) of the
Company and its consolidated Subsidiaries as of the times and for the periods
referred to therein.
Section 3.6. Absence of Certain Changes. Except as disclosed in Section
3.6 of the Company Disclosure Schedule or in the Company SEC Documents filed
prior to the date hereof, since March 31, 1997, the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary and usual course
and there has not occurred any events or changes (including the incurrence of
any liabilities of any nature, whether or not accrued, contingent or otherwise)
having, individually or in the aggregate, a Company Material Adverse Effect and
the Company has not taken any action which would have been prohibited under
Section 5.1 hereof.
Section 3.7. No Undisclosed Liabilities. Except (a) as disclosed in the
Financial Statements and (b) for liabilities and obligations (i) incurred in the
ordinary course of business and consistent with past practice since December 31,
1996, or (ii) as otherwise disclosed in Section 3.7 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, absolute, contingent or
otherwise, whether due or to become due and whether required to be reflected on
a balance sheet under GAAP that have, or would be reasonably likely to have, a
Company Material Adverse Effect or that would be required by GAAP to be
reflected in, reserved against or otherwise described in a consolidated balance
sheet of the Company (including the notes thereto).
Section 3.8. Litigation. Except as set forth in Section 3.8 of the
Company Disclosure Schedule, there are no suits, claims, actions, proceedings,
including, without limitation, arbitration proceedings or alternative dispute
resolution proceedings, or investigations pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries by or before
any Governmental Entity that, either individually or in the aggregate, if
adversely determined, would be reasonably likely to have a Company Material
Adverse Effect.
Section 3.9. Employee Benefit Plans.
(a) For purposes of this Agreement, the term "Plans" shall include:
each deferred compensation and each incentive compensation, stock purchase,
stock option and other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical,
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surgical, hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or
other "pension" plan, fund or program (within the meaning of section 3(2) of
ERISA); each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed to
by the Company or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with the Company would be deemed a "single
employer" within the meaning of section 4001(b) of ERISA, or to which the
Company or an ERISA Affiliate is party, whether written or oral, for the benefit
of any employee or former employee of the Company or any Subsidiary (the
"Plans"). Each of the Plans that is subject to section 302 or Title IV of ERISA
or section 412 of the Code is hereinafter referred to in this Section 3.9 as a
"Title IV Plan." Section 3.9 of the Company Disclosure Schedule sets forth all
of the Plans. Neither the Company, any Subsidiary nor any ERISA Affiliate has
any commitment or formal plan, whether legally binding or not, to create any
additional employee benefit plan or modify or change any existing Plan that
would affect any employee or former employee of the Company or any Subsidiary.
(b) Except as disclosed in Section 3.9 of the Company Disclosure
Schedule, no liability under Title IV or section 302 of ERISA has been incurred
by the Company or any ERISA Affiliate that has not been satisfied in full, and
no condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such liability. No Plan is a Title IV Plan.
(c) Except as disclosed in Section 3.9 of the Company Disclosure
Schedule, neither the Company or any Subsidiary, any Plan, any trust created
thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which the Company or any Subsidiary, any Plan,
any such trust, or any trustee or administrator (as defined in Section 3(16)(A)
of ERISA) thereof, or any party in interest (as defined in ERISA Section 3(14))
or fiduciary with respect to any Plan or any such trust could be subject to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA or a
tax imposed pursuant to section 4975 or 4976 of the Code, which would be
material in amount.
(d) Except as disclosed in Section 3.9 of the Company Disclosure
Schedule, each Plan has been operated and administered in all material respects
in accordance with its terms and applicable law, including but not limited to
ERISA and the Code.
(e) Except as disclosed in Section 3.9 of the Company Disclosure
Schedule, each Plan intended to be "qualified" within the meaning of section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service with respect to the qualified status of such Plan under
the Code, including all amendments to the Code effected by the Tax Reform Act of
1986, and nothing has occurred since the issuance of such letter which could
reasonably be expected to cause the loss of the tax-qualified status of such
Plan and the related trust maintained thereunder. The Company has no Plans
intended to satisfy the requirements of Section 501(c)(9).
(f) Except as disclosed in Section 3.9 of the Company Disclosure
Schedule, no Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of the
Company or any Subsidiary for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits under any "pension plan," or (iii) benefits the full cost of
which is borne by the current or former employee (or his beneficiary) or (iv)
post-death exercise periods in effect under outstanding Company Options.
(g) Except as disclosed in Section 3.9 of the Company Disclosure
Schedule, or as set forth in Section 5.11 of this Agreement, the consummation of
the transactions contemplated by this Agreement
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will not, either alone or in combination with another event, (i) entitle any
current or former employee or officer of the Company or any ERISA Affiliate to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer.
(h) There are no pending, or to the knowledge of the Company,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits) which would have a material adverse
effect upon the Plans or a Company Material Adverse Effect.
Section 3.10. Tax Matters; Government Benefits.
(a) The Company and each of its Subsidiaries have duly filed all Tax
Returns (as hereinafter defined) that are required to be filed and have duly
paid or caused to be duly paid in full or made adequate provision in accordance
with GAAP (or there has been paid or provision has been made on their behalf)
for the payment of all Taxes (as hereinafter defined) shown due on such Tax
Returns and all other Taxes for which the Company or any of its Subsidiaries is
or might be liable. All such Tax Returns are correct and complete in all
material respects and accurately reflect all liability for Taxes for the periods
covered thereby. All Taxes owed and due by the Company and each of its
Subsidiaries for results of operations through December 31, 1996 (whether or not
shown on any Tax Return) have been paid or have been adequately reflected on the
Company's balance sheet as of December 31, 1996 included in the Financial
Statements (the "Balance Sheet"). Since December 31, 1996, the Company has not
incurred liability for any Taxes other than in the ordinary course of business.
Neither the Company nor any of its Subsidiaries has received notice of any claim
made by an authority in a jurisdiction where neither the Company nor any of its
Subsidiaries file Tax Returns that the Company is or may be subject to taxation
by that jurisdiction.
(b) The federal income Tax Returns of the Company and its Subsidiaries
have not been examined by the Internal Revenue Service (or the applicable
statutes of limitation for the assessment of federal income Taxes for such
periods have expired) for any period. Neither the Company nor any of its
Subsidiaries has waived any statute of limitations in any jurisdiction in
respect of Taxes or Tax Returns or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(c) Except as set forth on Section 3.10 of the Company Disclosure
Schedule, no federal, state, local or foreign audits, examinations or other
administrative proceedings have been commenced or, to the Company's knowledge,
are pending with regard to any Taxes or Tax Returns of the Company or of any of
its Subsidiaries. No written notification has been received by the Company or by
any of its Subsidiaries that such an audit, examination or other proceeding is
pending or threatened with respect to any Taxes due from or with respect to or
attributable to the Company or any of its Subsidiaries or any Tax Return filed
by or with respect to the Company or any of its Subsidiaries. To the Company's
knowledge, there is no dispute or claim concerning any Tax liability of the
Company or any of its Subsidiaries either claimed or raised by any taxing
authority.
(d) Neither the Company nor any of its Subsidiaries is a party to any
agreement, plan, contract or arrangement that could result, separately or in the
aggregate, in a payment of any "excess parachute payments" within the meaning of
Section 280G of the Code.
(e) Neither the Company nor any of its Subsidiaries has filed a consent
pursuant to Section 341(f) of the Code (or any predecessor provision) concerning
collapsible corporations, or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a "subsection (f) asset" (as such term is defined in
Section 341(f)(4) of the Code) owned by the Company or any of its Subsidiaries.
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(f) No taxing authority is asserting or, to the knowledge of the
Company, threatening to assert a claim against the Company or any of its
Subsidiaries under or as a result of Section 482 of the Code or any similar
provision of state, local or foreign law.
(g) Neither the Company nor any of its Subsidiaries is a party to any
material tax sharing, tax indemnity or other agreement or arrangement with any
entity not included in the Company's consolidated financial statements most
recently filed by the Company with the SEC.
(h) None of the Company or any of its Subsidiaries has been a member of
any affiliated group within the meaning of Section 1504(a) of the Code, or any
similar affiliated or consolidated group for tax purposes under state, local or
foreign law (other than a group the common parent of which is the Company), or
has any liability for Taxes of any person (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-E or any similar
provision of state, local or foreign law as a transferee or successor, by
contract or otherwise.
(i) No liens for Taxes exist with respect to any of the assets or
properties of any of the Company or its Subsidiaries, except for statutory liens
for Taxes not yet due or payable.
(j) Neither the Company nor any of its Subsidiaries is or has been a
United States real property holding company within the meaning of Section
897(c)(2) of the Code.
(k) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges, fees,
duties, levies, penalties or other assessments imposed by any federal,
state, local or foreign governmental authority, including, but not
limited to, income, gross receipts, excise, property, sales, gain, use,
license, custom duty, unemployment, capital stock, transfer, franchise,
payroll, withholding, social security, minimum estimated, and other
taxes, and shall include interest, penalties or additions attributable
thereto; and
(ii) "Tax Return" shall mean any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
Section 3.11. Intellectual Property.
(a) The Company and its Subsidiaries own or have valid rights to use
all items of Intellectual Property (as defined below) utilized in the conduct of
the business of the Company and its Subsidiaries as presently conducted or as
currently proposed to be conducted, free and clear of all Encumbrances (other
than Encumbrances which, individually or in the aggregate, are not expected to
have a Company Material Adverse Effect).
(b) To the best knowledge of the Company, the conduct of the Company's
and its Subsidiaries, business and the Intellectual Property owned or used by
the Company and its Subsidiaries, do not infringe any Intellectual Property
rights or any other proprietary right of any person other than infringements
which, individually or in the aggregate, are not expected to have a Company
Material Adverse Effect. The Company and its Subsidiaries have received no
notice of any allegations or threats that the Company's and its Subsidiaries,
use of any of the Intellectual Property infringes upon or is in conflict with
any Intellectual Property or proprietary rights of any third party other than
infringements or conflicts which individually or in the aggregate are not
expected to have a Company Material Adverse
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Effect. To the Company's knowledge, no person is infringing on or violating, in
any material respect, any of the Intellectual Property rights of others.
(c) As used in this Agreement, "Intellectual Property" means all of the
following: (i) U.S. and foreign registered, unregistered and pending trademarks,
trade dress, service marks, logos, trade names, corporate names, assumed names,
business names and logos and all registrations and applications to register the
same (the "Trademarks"); (ii) issued U.S. and foreign patents and pending patent
applications, patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extension thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention and like statutory rights
(the "Patents"); (iii) U.S. and foreign registered and unregistered copyrights
(including, but not limited to, those in computer software and databases) rights
of publicity and all registrations and applications to register the same (the
"Copyrights"); (iv) all categories of trade secrets as defined in the Uniform
Trade Secrets Act including, but not limited to, business information; (v) all
licenses and agreements pursuant to which the Company has acquired rights in or
to any Trademarks, Patents, Computer Software (as defined below), rights of
publicity or Copyrights, or licenses and agreements pursuant to which the
Company has licensed or transferred the right to use any of the foregoing
("Licenses"); and (vi) all computer software, data files, source and object
codes, user interfaces, manuals and other specifications and documentation and
all know-how relating thereto (collectively, "Computer Software").
Section 3.12. Employment Matters. Neither the Company nor any of its
Subsidiaries has experienced any strikes, collective labor grievances, other
collective bargaining disputes or Claims of unfair labor practices in the last
five years. To the Company's knowledge, there is no organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company and its Subsidiaries.
Section 3.13. Compliance with Laws.
(a) The Company and its Subsidiaries and, to the knowledge of the
Company and its Subsidiaries, all of their respective officers, directors,
employees, consultants or agents (collectively, the "Personnel") have complied
in all respects with all applicable statutes, regulations, rules, orders,
ordinances and other laws of the United States of America, all state, local and
foreign governments and other governmental bodies and authorities, and agencies
of any of the foregoing ("Governmental Authority") to which it is subject with
respect to healthcare regulatory matters (including, without limitation, The
Social Security Act, as amended, Sections 1128, 1128A and 1128B, 42 U.S.C.
Sections 1320a-7, 7(a) and 7(b) including Criminal Penalties Involving Medicare
or State Health Care Programs, commonly referred to as the "Federal
Anti-Kickback Statute" and The Social Security Act, as amended, Section 1877, 42
U.S.C. Section 1395nn (Prohibition Against Certain Referrals), commonly referred
to as the "Stark Statute", and all statutes and regulations related to the
possession, distribution, maintenance and documentation of controlled
substances) ("Healthcare Laws")), except to the extent noncompliance would not
have a Company Material Adverse Effect. The Company and its Subsidiaries have
maintained all records required to be maintained by the FDA, DEA and State Board
of Pharmacy and the Medicare and Medicaid programs as required by applicable
Healthcare Laws, except to the extent that the failure to do so would not have a
Company Material Adverse Effect. There are no presently existing circumstances
which would result or would be likely to result in violations of any such
Healthcare Laws, except to the extent such violations would not have a Company
Material Adverse Effect.
(b) Except with respect to Healthcare Laws, the Company and its
Subsidiaries are and, to the knowledge of the Company and its Subsidiaries, all
Personnel is, in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Authority (including
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without limitation, Environmental Laws (as such term is hereinafter defined in
Section 3.15) applicable to the business of the Company and its Subsidiaries),
except to the extent noncompliance would not have a Company Material Adverse
Effect. Except as set forth in Section 3.13 of the Company Disclosure Schedule,
neither the Company nor its Subsidiaries have received any notice or other
communication to the effect that, or otherwise been advised that, they are not
in compliance with any of such statutes, regulations and orders, ordinances,
other laws or undertakings, and the Company and its Subsidiaries have no reason
to anticipate that any presently existing circumstances are likely to result in
violations of any such regulations which could, in any one case or in the
aggregate, have a Company Material Adverse Effect.
(c) The Company and its Subsidiaries hold all permits necessary for the
lawful conduct of their business under and pursuant to all applicable statutes,
laws, ordinances, rules and regulations of all Federal, state, local and foreign
governmental bodies, agencies and subdivisions having, asserting or claiming
jurisdiction over it or any part of their operations, except to the extent that
the failure to do so would not have a Company Material Adverse Effect. The
Company and its Subsidiaries have correctly maintained in all respects all
records required to be maintained by the FDA, DEA and State Boards of Pharmacy
and pursuant to the requirements of the Medicare and Medicaid programs, except
to the extent that the failure to do so would not have a Company Material
Adverse Effect.
(d) The Company and its Subsidiaries are qualified for participation in
the Medicare and Medicaid programs. The Company and its Subsidiaries have timely
filed all claims or other reports required to be filed with respect to the
purchase of services by third-party payors, and all such claims or reports are
complete and accurate, except to the extent that the failure to timely file or
the failure of such claims or reports to be complete and accurate would not have
a Company Material Adverse Effect. The Company and its Subsidiaries have no
liability to any payor with respect thereto, except for liabilities incurred in
the ordinary course of business. There are no pending appeals, overpayment
determinations, adjustments, challenges, audit, litigation or notices of intent
to open Medicare or Medicaid claim determinations or other reports required to
be filed by the Company or its Subsidiaries. To the Company's knowledge, no
Personnel have been convicted of, or pled guilty or nolo contendere to any
Medicare or Medicaid program related offense or committed any offense which may
reasonably serve as the basis for suspension or exclusion from the Medicare and
Medicaid programs.
(e) There are no pharmaceutical or other products now being sold or
distributed by the Company or its Subsidiaries which, at the date hereof, would
require any approval of any governmental or administrative body, whether
federal, state, local or foreign, prior to commercial distribution of such
products, for which approval has not been obtained, except where the failure to
obtain such approval would not have a Company Material Adverse Effect. All
pharmaceutical or other products now being distributed by the Company or its
Subsidiaries and all products included in the inventories of the Company or its
Subsidiaries on the date hereof comply with applicable legal requirements of all
jurisdictions in which such pharmaceutical or other products are now being
distributed, except where the failure to so comply would not have a Company
Material Adverse Effect.
Section 3.14. Vote Required. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any class
or series of the Company's capital stock which may be necessary to approve this
Agreement or any of the Transactions.
Section 3.15. Environmental Laws.
(a) The Company and its Subsidiaries are in compliance with all
applicable Environmental Laws (as defined below) (which compliance includes,
without limitation, the possession by the Company and its Subsidiaries of all
permits and other governmental authorizations required under applicable
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Environmental Laws, and compliance with the terms and conditions thereof),
except where failure to be in compliance, either individually or in the
aggregate, would not have a Company Material Adverse Effect.
(b) There is no Environmental Claim (as defined below) pending or, to
the Company's knowledge, threatened against the Company or any of the
Subsidiaries or, to the Company's knowledge, against any person or entity whose
liability for any Environmental Claim the Company or any of its Subsidiaries has
or may have retained or assumed either contractually or by operation of law
except for such Environmental Claim which would not have, either individually or
in the aggregate, a Company Material Adverse Effect.
(c) There are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release or
presence of any Hazardous Material at any location, which would reasonably be
expected to form the basis of any Environmental Claim against the Company or any
of its Subsidiaries, or to the Company's knowledge, against any person or entity
whose liability for any Environmental Claim the Company or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law, except for such Environmental Claim which would not have,
either individually or in the aggregate, a Company Material Adverse Effect.
(d) The Company and its Subsidiaries have not, and to the Company's
knowledge, no other person has, generated, treated, placed, stored, deposited,
discharged, buried, dumped or disposed of Hazardous Materials at, on, beneath or
adjacent to any property currently or formerly owned, operated or leased by the
Company or any of its Subsidiaries, except which would not have, either
individually or in the aggregate, a Company Material Adverse Effect.
(e) Without in any way limiting the generality of the foregoing, none
of the properties owned, operated or leased by the Company or any of its
Subsidiaries contain any: underground storage tanks; asbestos; polychlorinated
biphenyls ("PCBs"); underground injection wells; radioactive materials; or
septic tanks or waste disposal pits in which any Hazardous Materials have been
discharged or disposed except which would not have, individually or in the
aggregate, a Company Material Adverse Effect.
(f) There are no environmental reports, assessments, audits or studies
relating to the Company or any of its Subsidiaries or to any property currently
or formerly owned, operated or leased by the Company or any of its Subsidiaries
(i) in the possession or control of the Company or any of its Subsidiaries, or
(ii) of which the Company otherwise has knowledge.
(g) For purposes of this Agreement, (i) "Environmental Laws" means all
federal, state, local and foreign laws, statutes, codes, ordinances, rules,
directives, orders, common law, judgments, decrees, consent or settlement
agreements, permits and other governmental authorizations, and regulations
relating to pollution or protection of human health or the environment,
including, without limitation, laws relating to releases or threatened releases
of Hazardous Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, release, disposal, transport or handling
of Hazardous Materials or recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials; (ii) "Environmental Claim" means
any claim, action, cause of action, proceeding, suit, investigation or written
notice by any person or entity alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising under or pursuant to any Environmental
Law; (iii) "Hazardous Materials" means all substances defined as Hazardous
Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency
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Plan, 40 C.F.R. Section 300.5, and any other substance (including, without
limitation, wastes, including medical waste) regulated under any Environmental
Law.
Section 3.16. Schedule 14D-9: Offer Documents and Proxy Statement. None
of the Schedule 14D-9, the Proxy Statement, nor any other document filed or to
be filed by or on behalf of the Company with the SEC or any other Governmental
Entity in connection with the transactions contemplated by this Agreement, nor
any information supplied by or on behalf of the Company specifically for
inclusion in the Offer Documents will, at the respective times filed with the
SEC or other Governmental Entity or first published, sent or given to
stockholders, as the case may be, or, in the case of the Proxy Statement, at the
date mailed to the Company Stockholders and at the time of the Special Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Schedule 14D-9 and the Proxy Statement will, when filed by the
Company with the SEC or other Governmental Entity, comply as to form in all
material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to the statements made in any
of the foregoing documents based on and in conformity with information supplied
by or on behalf of Parent or Purchaser or any of their respective affiliates
specifically for inclusion therein.
Section 3.17. Opinion of Financial Advisor. The Board of Directors of
the Company has received the opinion of Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") addressed to such Board, dated the date hereof, to the
effect that, as of such date, the $18.00 per Share to be received by the holders
of Shares pursuant to this Agreement is fair to such holders, a copy of which
opinion has been delivered to Parent and the Purchaser for information purposes
only. Each of Parent and Purchaser acknowledges and agrees that it may not, and
is not entitled to, rely on the opinion of DLJ delivered to the Board of
Directors of the Company. The Company will obtain the consent of DLJ to include
the opinion of DLJ in the Offering Documents.
Section 3.18. Brokers and Finders. No broker, finder or investment bank
has acted directly or indirectly for the Company, nor has the Company incurred
any obligation to pay any brokerage, finder's or other fee or commission in
connection with the transactions contemplated hereby, other than DLJ and William
Blair & Company, L.L.C., the fees and expenses of which have been previously
disclosed to Parent and which shall be borne by the Company.
Section 3.19. Certain Business Practices. None of the Company or any of
its Subsidiaries has made, or to the Company's knowledge, no Personnel or
representative of the Company or its Subsidiaries (in their capacities as such)
has made, directly or indirectly with respect to the business of the Company,
any bribes, kickbacks, or other illegal payments or illegal political
contributions, illegal payments from corporate funds to governmental officials
in their individual capacities, or illegal payments from corporate funds to
obtain or retain business either within the United States or abroad.
Section 3.20. Insurance. True and complete copies of all material
insurance policies maintained by the Company have been made available to the
Parent. Such policies provide coverage for the operations of the Company and its
Subsidiaries in amounts and covering such risks as are adequate in accordance
with customary industry practice to protect the assets and the business of the
Company and its Subsidiaries. Neither the Company nor any of its Subsidiaries
has received notice that any such policy is invalid or unenforceable or that
substantial capital improvements or other expenditures will have to be made in
order to continue such insurance and, so far as known to the Company and its
Subsidiaries, no such improvements or expenditures are required.
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Section 3.21. Product Warranties. Except as set forth in Section 3.21
of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has made any express warranties with respect to products sold or
distributed by the Company and its Subsidiaries (other than passing on
warranties made by the manufacturers thereof) and, to the best of the Company's
knowledge, no other warranties have been made by Personnel. The Company has no
knowledge of any presently existing circumstances that would constitute a valid
basis for any voluntary or governmental recall of any pharmaceutical or other
product sold or distributed by the Company.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE PURCHASER
Except as set forth in the schedule attached to this Agreement setting
forth exceptions to the Parent's and Purchaser's representations and warranties
set forth herein (the "Parent Disclosure Schedule"), the Parent and Purchaser
represent and warrant to the Company as set forth below. The Parent Disclosure
Schedule will be arranged in sections corresponding to sections of this
Agreement to be modified by such disclosure schedule.
Section 4.1. Organization. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has all requisite corporate or other power and authority and all
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority, and
governmental approvals would not have, individually or in the aggregate, a
Parent Material Adverse Effect. As used in this Agreement, "Parent Material
Adverse Effect," shall mean any event, change or effect that has, or is
reasonably likely to have, a material adverse effect (A) on the condition
(financial or otherwise), business, assets, liabilities, results of operations
or cash flows of Parent and its Subsidiaries, taken as a whole, or (B) on the
ability of Parent or the Purchaser to perform its obligations under this
Agreement or to consummate the transactions contemplated by this Agreement.
Section 4.2. Authorization; Validity of Agreement; Necessary Action.
Each of Parent and the Purchaser has all requisite corporate power and authority
to execute and deliver this Agreement and to consummate the Transactions. The
execution, delivery and performance by Parent and the Purchaser of this
Agreement and of the Transactions have been duly authorized by the Board of
Directors of Parent and the Purchaser and no other corporate action on the part
of Parent and the Purchaser is necessary to authorize this Agreement or the
Transactions. This Agreement has been duly executed and delivered by Parent and
the Purchaser, as the case may be, and, assuming that this Agreement constitutes
the legal, valid and binding obligation of the Company, constitutes the legal,
valid and binding obligation of each of Parent and the Purchaser, as the case
may be, enforceable against each of them in accordance with its respective
terms, except as may be limited by any bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 4.3. Consents and Approvals; No Violations. Except for the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the HSR Act,
state securities or blue sky laws, and the DGCL, none of the execution, delivery
or performance of this Agreement by Parent or the Purchaser, the consummation by
Parent or the Purchaser of the Transactions or compliance by Parent or the
Purchaser with any of the provisions
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hereof will (i) conflict with or result in any breach of any provision of the
respective certificate of incorporation or by-laws of Parent or Purchaser, (ii)
require any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both a default or give rise to
any right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Parent or the
Purchaser is a party or by which any of them or any of their respective
properties or assets may be bound, or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries or any of their respective properties or assets, excluding from the
foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults
which would not, individually or in the aggregate have a Parent Material Adverse
Effect.
Section 4.4. Offer Documents; Proxy Statement; Schedule 14D-9. Neither
the Offer Documents nor any other document filed or to be filed by or on behalf
of Parent or Purchaser with the SEC or any other Governmental Entity in
connection with the transactions contemplated by this Agreement nor any
information supplied by or on behalf of Parent or Purchaser specifically for
inclusion in the Schedule 14D-9 or Proxy Statement will, at the respective times
filed with the SEC or other Governmental Entity, or at any time thereafter when
the information included therein is required to be updated pursuant to
applicable law, or, in the case of the Proxy Statement, at the date mailed to
the Company's stockholders and at the time of the Special Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The
Offer Documents will, when filed by Parent or Purchaser with the SEC or other
Governmental Entity, comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, Parent and Purchaser make no
representation or warranty with respect to the statements made in the foregoing
documents based on and in conformity with information supplied by or on behalf
of the Company or any of its affiliates specifically for inclusion therein.
Section 4.5. Financing. At the closing of the Offer, and at the
Effective Time, Parent and Purchaser will have sufficient cash resources
available to finance the transactions contemplated hereby.
Section 4.6. Litigation. Except as set forth in Parent's Annual Report
on Form 10-K for the year ended December 31, 1996, there are no suits, claims,
actions, proceedings, including without limitation arbitration proceedings or
alternative dispute resolution proceedings, or investigations pending or, to the
knowledge of Parent, threatened against Parent or any of its Subsidiaries before
any Governmental Entity that, either individually or in the aggregate, would be
reasonably likely to have a material adverse effect on the ability of Parent or
the Purchaser to perform its obligations under this Agreement or to consummate
the transactions contemplated by this Agreement.
ARTICLE V.
COVENANTS
Section 5.1. Interim Operations of the Company. The Company covenants
and agrees that, except (i) as expressly contemplated by this Agreement, or (ii)
as agreed in writing by Parent, after the date hereof, and prior to the time the
directors of the Purchaser have been elected to, and shall constitute a majority
of, the Board of Directors of the Company pursuant to Section 1.3 (the
"Appointment Date"):
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(a) the business of the Company and its Subsidiaries shall be conducted
only in the ordinary and usual course of business and consistent with past
practice and, to the extent consistent therewith, each of the Company and its
Subsidiaries shall use its reasonable efforts to preserve its business
organizations and business organizations of its Subsidiaries intact and maintain
its existing relations with customers, suppliers, employees, creditors and
business partners;
(b) the Company will not, directly or indirectly, (i) except upon
exercise of employee stock options, pursuant to which up to 517,117 Shares may
be issued, outstanding on the date hereof, issue, sell, transfer or pledge or
agree to sell, transfer or pledge any treasury stock of the Company or any
capital stock of any of its Subsidiaries beneficially owned by it, (ii) amend
its Certificate of Incorporation or By-Laws or similar organizational documents;
or (iii) split, subdivide, combine or reclassify the outstanding Shares or
Preferred Stock or any outstanding capital stock of any of the Subsidiaries of
the Company;
(c) neither the Company nor any of its Subsidiaries shall: (i) declare,
set aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock other than dividends paid by
Subsidiaries of the Company to the Company or any of its wholly-owned
Subsidiaries in the ordinary course of business; (ii) issue, sell, pledge,
grant, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class of
the Company or its Subsidiaries, other than Shares reserved for issuance on the
date hereof pursuant to the exercise of Company Options outstanding on the date
hereof, pursuant to which up to 517,117 Shares may be issued; (iii) transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any assets other
than in the ordinary and usual course of business and consistent with past
practice; or (iv) redeem, purchase or otherwise acquire directly or indirectly
any of its capital stock;
(d) neither the Company nor any of its Subsidiaries shall: (i) grant
any increase in the compensation payable or to become payable by the Company or
any of its Subsidiaries to any of its executive officers or employees, enter
into any contract or other binding commitment in respect of any such increase
with any of its directors, officers or other employees or any director, officer
or other employee of its Subsidiaries, and not establish, adopt, enter into,
make any new grants or awards under or amend, any collective bargaining
agreement; (ii)(A) adopt any new, or (B) amend or otherwise increase, or
accelerate the payment or vesting of the amounts payable or to become payable
under any existing, bonus, incentive compensation, deferred compensation,
severance, profit sharing, stock option, stock purchase, insurance, pension,
retirement or other employee benefit plan, agreement or arrangement; or (iii)
enter into any employment or severance agreement with or, except in accordance
with the existing written policies of the Company, grant any severance or
termination pay to any officer, director or employee of the Company or any of
its Subsidiaries; provided, however, that (i) prior to consummation of the
Offer, the Company may enter into severance agreements with the individuals set
forth in Section 5.1(d) of the Company Disclosure Schedule (the "Designated
Employees") in the form as approved by the Company's Board of Directors, (ii)
the aggregate cost of payments and benefits provided to the Designated Employees
pursuant to the terms of such severance agreements (unless otherwise amended
with the written consent of, or at the written direction of, Parent or
Purchaser) shall not exceed $2,000,000 in the aggregate, and (iii) with respect
to the severance plan described in Section 3.4 of the Company Disclosure
Schedule that covers individuals other than the Designated Employees (the
"Nondesignated Employees"): (a) the implementation of such plan and the entering
into of agreements with Nondesignated Employees shall be subject to the prior
written consent of the Purchaser, which consent shall not be unreasonably
withheld (with reasonableness to be determined based upon Purchaser's reasonable
business objectives and consistent with Purchaser's past practice), and (b) the
aggregate cost of payments and benefits provided to the Nondesignated Employees
pursuant to the terms
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of such severance agreements (unless otherwise amended with the written consent
of, or at the written direction of, Parent or Purchaser) shall not exceed
$1,000,000 in the aggregate;
(e) neither the Company nor any of its Subsidiaries shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated, except in the ordinary course of business and consistent
with past practice;
(f) neither the Company nor any of its Subsidiaries shall enter into
any contracts or transactions relating to the purchase of assets that exceed
$1,000,000 in the aggregate;
(g) neither the Company nor any of its Subsidiaries shall change any of
the accounting methods used by it unless required by GAAP, neither the Company
nor any of its Subsidiaries shall make any material Tax election except in the
ordinary course of business consistent with past practice, change any material
Tax election already made, adopt any material Tax accounting method except in
the ordinary course of business consistent with past practice, change any
material Tax accounting method unless required by GAAP, enter into any closing
agreement, settle any Tax claim or assessment or consent to any Tax claim or
assessment or any waiver of the statute of limitations for any such claim or
assessment;
(h) neither the Company nor any of its Subsidiaries shall: (i) incur or
assume any long-term debt; (ii) except in the ordinary course of business and
consistent with past practice and in an aggregate amount not to exceed
$3,000,000, incur or assume any short-term indebtedness; (iii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person; (iv) make
any loans, advances or capital contributions to, or investment in, any other
person (other than to wholly-owned Subsidiaries of the Company); (v) enter into
any material commitment or transaction (including, but not limited to, any
borrowing, capital expenditure or purchase, sale or lease of assets); or (vi)
modify, amend or terminate any of its material contracts or waive, release or
assign any material rights;
(i) neither the Company nor any of its Subsidiaries shall settle or
compromise any claim, lawsuit, liability or obligation, and neither the Company
nor any of its Subsidiaries shall pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the-payment, discharge or satisfaction of
any such claims, liabilities or obligation, (x) to the extent reflected or
reserved against in, or contemplated by, the Financial Statements, (y) incurred
in the ordinary course of business and consistent with past practice or (z)
which are legally required to be paid, discharged or satisfied;
(j) neither the Company nor any of its Subsidiaries will take, or agree
to commit to take, any action that would make any representation or warranty of
the Company contained herein inaccurate in any respect at, or as of any time
prior to, the Effective Time;
(k) except as otherwise permitted by Section 5.6(b) hereof, neither the
Company nor any of its Subsidiaries will take any action with the intent of
causing any of the conditions to the Offer set forth in Annex A not to be
satisfied; and
(l) except as otherwise permitted by Section 5.6(b) hereof, neither the
Company nor any of its Subsidiaries will enter into an agreement, contract,
commitment or arrangement to do any of the foregoing, or to authorize,
recommend, propose or announce an intention to do any of the foregoing.
Section 5.2. Access; Confidentiality.
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(a) Upon reasonable notice, the Company shall (and shall cause each of
its Subsidiaries to) afford to the officers, employees, accountants, counsel,
financing sources and other representatives of Parent, access, during normal
business hours during the period prior to the Appointment Date, to all its
properties, employees, books, contracts, commitments and records and, during
such period, the Company shall (and shall cause each of its Subsidiaries to)
furnish promptly to the Parent (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal securities laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request. After the Appointment Date, the Company shall provide Parent and such
persons as Parent shall designate with all such information, at such time as
Parent shall request. The Company shall promptly, and in any event within seven
business days following the date of this Agreement, deliver to Parent true and
complete copies of all Plans not previously delivered to Parent and any
amendments thereto (or if the Plan is not a written Plan, a description
thereof), any related trust or other funding vehicle, any summary plan
description required under ERISA or the Code and the most recent determination
letter received from the Internal Revenue Service with respect to each Plan
intended to qualify under Section 401 of the Code.
(b) Unless otherwise required by law and until the Appointment Date,
Parent will hold any such information which is nonpublic in confidence in
accordance with the provisions of a letter agreement dated June 4, 1997 between
the Company and the Parent (the "Confidentiality Agreement").
Section 5.3. Proxy Statement. Unless the Merger is consummated as
contemplated in Section 1.9 hereof, the Company shall, as soon as reasonably
practicable after the consummation of the Offer, prepare a preliminary form of
the Proxy Statement (the "Preliminary Proxy Statement"). The Company shall (a)
file the Preliminary Proxy Statement with the SEC promptly after it has been
prepared in a form reasonably satisfactory to the Company and Parent and (b) use
commercially reasonable efforts to promptly prepare any amendments to the
Preliminary Proxy Statement required in response to comments of the SEC or its
staff or that the Company with the advice of counsel deems necessary or
advisable and to cause the Proxy Statement to be mailed to the Company's
stockholders as soon as reasonably practicable after the Preliminary Proxy
Statement, as so amended, is cleared by the SEC.
Section 5.4. Cooperation. Subject to the terms and conditions of this
Agreement and applicable law, each of the parties shall act in good faith and
use reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the Transactions as soon as practicable, including such actions
or things as any other party may reasonably request in order to cause any of the
conditions to such other party's obligation to consummate the Transactions to be
fully satisfied. Without limiting the foregoing, the parties shall (and shall
cause their respective subsidiaries, and use reasonable efforts to cause their
respective affiliates, directors, officers, employees, agents, attorneys,
accountants and representatives, to) consult and fully cooperate with and
provide assistance to each other in (a) the preparation and filing with the SEC
of the Offer Documents, the Schedule 14D-9, and the Preliminary Proxy Statement
and the Proxy Statement, and any necessary amendments or supplements thereto;
(b) seeking to have the Preliminary Proxy Statement cleared by the SEC as soon
as reasonably practicable after filing; (c) obtaining all necessary consents,
approvals, waivers, licenses, permits, authorizations, registrations,
qualifications, or other permissions or actions by, and giving all necessary
notices to and making all necessary filings with and applications and
submissions to, any Governmental Entity or other entity as soon as reasonably
practicable after filing; (d) seeking early termination of any waiting period
under the HSR Act; (e) providing all such information concerning such party, its
subsidiaries and its officers, directors, partners and affiliates and making all
applications and filings as may be necessary or reasonably requested in
connection with any of the foregoing; (f) in general, consummating and making
effective the Transactions; and (g) in the event and to the extent required,
amending this Agreement so that this
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Agreement and the Offer and the Merger comply with the DGCL. The parties shall
(and shall cause their respective affiliates, directors, officers, employees,
agents, attorneys, accountants and representatives to) use their reasonable
efforts to cause the lifting of any preliminary injunction or restraining order
or other similar order issued or entered by any court or other Governmental
Entity preventing or restricting consummation of the transactions contemplated
hereby in the manner provided for herein. Prior to making any application to or
filing with a Governmental Entity or other entity in connection with this
Agreement (other than filing under the HSR Act), each party shall provide the
other party with drafts thereof and afford the other party a reasonable
opportunity to comment on such drafts.
Section 5.5. State Takeover Statutes. The Company, Parent and Purchaser
will cooperate to take reasonable steps to (a) exempt the Offer and the Merger
from the requirements of any applicable state takeover law and (b) assist in any
challenge by any of the parties to the validity or applicability to the Offer or
the Merger of any state takeover law.
Section 5.6. No Solicitation. (a) Neither the Company nor any of its
Subsidiaries shall (and the Company shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any proposal or offer to acquire all or a
substantial part of the business and properties of the Company or any of its
Subsidiaries or any capital stock of the Company or any of its Subsidiaries,
whether by merger, tender offer, exchange offer, sale of assets or similar
transactions involving the Company or any Subsidiary, division or operating or
principal business unit of the Company (an "Acquisition Proposal"), except that
nothing contained in this Section 5.6 or any other provision hereof shall
prohibit the Company or the Company's Board from (i) taking and disclosing to
the Company's stockholders a position with respect to a tender or exchange offer
by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act, or (ii) making such disclosure to the Company's stockholders as,
in the good faith judgment of the Board, after receiving advice from outside
counsel, is required under applicable law, provided that the Company may not,
except as permitted by Section 5.6(b), withdraw or modify, or propose to
withdraw or modify, its position with respect to the Offer or the Merger or
approve or recommend, or propose to approve or recommend any Acquisition
Proposal, or enter into any agreement with respect to any Acquisition Proposal.
The Company will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. The Company also shall promptly request each person which has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company to return all confidential information
heretofore furnished to such person by or on behalf of the Company.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, the Company may furnish information concerning the
Company and its Subsidiaries to any corporation, partnership, person or other
entity or group pursuant to appropriate confidentiality agreements, and may
negotiate and participate in discussions and negotiations with such entity or
group concerning an Acquisition Proposal if (x) such entity or group has
submitted a bona fide written proposal to the Company relating to any such
transaction which the Board determines in good faith, after consulting with a
nationally recognized investment banking firm, represents a superior transaction
to the Offer and the Merger and (y) in the opinion of the Board of Directors of
the Company, only after receipt of advice from outside legal counsel to the
Company, the failure to provide such information or access or to engage in such
discussions or negotiations would reasonably be expected to cause the Board of
Directors to violate its fiduciary duties to the Company's shareholders under
applicable law (an Acquisition Proposal which satisfies clauses (x) and (y)
being referred to herein as a "Superior Proposal"). The Company will immediately
notify Parent of the existence of any proposal or inquiry received by the
Company, the
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identity of the party making such proposal or inquiry, and the terms (both
initial and modified) of any such proposal or inquiry (and will disclose any
written materials delivered in connection therewith) and the Company will keep
Parent reasonably informed of the status (including amendments or proposed
amendments) of any such proposal or inquiry. The Company will promptly provide
to Parent any material non-public information regarding the Company provided to
any other party which was not previously provided to Parent. At any time
following notification to Parent of the Company's intent to do so (which
notification shall include the identity of the bidder and the material terms and
conditions of the proposal) and if the Company has otherwise complied with the
terms of this Section 5.6(b), the Board of Directors may withdraw or modify its
approval or recommendation of the Offer and may enter into an agreement with
respect to a Superior Proposal, provided it shall (i) take no such action unless
it shall notify Parent promptly of its intention, and in no event shall such
notice be given less than two business days prior to the earlier of the public
announcement of such withdrawal or modification of its recommendation or the
Company's termination of this Agreement, and (ii) concurrently with entering
into such agreement pay or cause to be paid to Parent the Break-Up Amount (as
defined below) plus any amount payable at the time for reimbursement of expenses
pursuant to Section 8.1(b). If the Company shall have notified Parent of its
intent to enter into an agreement with respect to a Superior Proposal in
compliance with the preceding sentence and has otherwise complied with such
sentence, the Company may enter into an agreement with respect to such Superior
Proposal.
Section 5.7. Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
to remove any injunctions or other impediments or delays, legal or otherwise, to
achieve the satisfaction of the Minimum Condition and all conditions set forth
in Annex A and Article VI, and to consummate and make effective the Merger and
the other transactions contemplated by this Agreement as soon as practicable
hereafter. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of the Company, Parent and Purchaser shall use all
reasonable efforts to take, or cause to be taken, all such necessary actions.
Section 5.8. Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to Parent
and the Company. Thereafter, so long as this Agreement is in effect, neither the
Company, Parent nor any of their respective affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions without the prior consultation
of the other party, except as such party reasonably believes, after receiving
the advice of outside counsel, may be required by law or by any listing
agreement with a national securities exchange or trading market.
Section 5.9. Notification of Certain Matters. The Company shall give
prompt notice to Parent and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time and (ii) any material failure of the Company, Parent or the
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 5.9 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 5.10. Directors, and Officers' Insurance and Indemnification.
(a) For five years after the Effective Time, the Surviving Corporation (or any
successor to the Surviving Corporation) shall indemnify, defend and hold
harmless the present and former officers and directors of the Company and its
Subsidiaries, determined as of the Effective Time (each an "Indemnified Party")
against all losses,
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claims, damages, liabilities, costs, fees and expenses (including reasonable
fees and disbursements of counsel and judgments, fines, losses, claims,
liabilities and amounts paid in settlement (provided that any such settlement is
effected only upon receipt of the written consent of the Parent or the Surviving
Corporation which consent shall not unreasonably be withheld)) arising out of
actions or omissions occurring at or prior to the Effective Time to the full
extent required under applicable Delaware law, the terms of the Certificate of
Incorporation or the By-Laws, as in effect at the date hereof, and the terms of
any indemnification agreement entered into with the Company prior to the date
hereof and disclosed in Schedule 5.10 of the Company Disclosure Schedule;
provided that, in the event any claim or claims are asserted or made within such
five-year period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing officers, and directors' liability insurance ("D&O Insurance") for a
period of not less than three years after the Effective Time; provided, that the
Parent may substitute therefor policies of substantially equivalent coverage and
amounts containing terms no less favorable to such former directors or officers;
provided, further, if the existing D&O Insurance expires, is terminated or
canceled during such period, Parent or the Surviving Corporation will use all
reasonable efforts to obtain substantially similar D&O Insurance; provided,
further, however, that in no event shall Parent, the Surviving Corporation or
the Company be required to pay aggregate premiums for insurance under this
Section 5.10(b) in excess of 150% of the aggregate premiums paid by the Company
in 1996 on an annualized basis for such purpose (the "1996 Premium"); and
provided, further, that if the Parent or the Surviving Corporation is unable to
obtain the amount of insurance required by this Section 5.10(b) for such
aggregate premium, Parent or the Surviving Corporation shall obtain as much
insurance as can be obtained for an annual premium not in excess of 150% of the
1996 Premium.
(c) Any Indemnified Party wishing to claim indemnification under this
Section 5.10, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Surviving Corporation thereof, but the
failure to so notify shall not relieve the Surviving Corporation of any
liability or obligation it may have to such Indemnified Party except, and only
to the extent, that such failure prejudices the Surviving Corporation. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before, at or after the Effective Time), the Surviving Corporation shall
have the right to assume the defense thereof and the Surviving Corporation shall
not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if the Surviving Corporation
elects not to assume such defense or counsel reasonably satisfactory to Parent
for the Indemnified Parties advises that there are actual conflicts of interest
between the Surviving Corporation and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them, and the Surviving Corporation
shall pay all reasonable fees and expenses of such counsel.
ARTICLE VI.
CONDITIONS
Section 6.1. Conditions to Obligations of Each Party to Effect the
Merger. The respective obligation of each party hereto to effect the Merger
shall be subject to the satisfaction on or prior to the Effective Time of each
of the following conditions, any and all of which may be waived, in whole or in
part, by the Company, Parent or the Purchaser, as the case may be, to the extent
permitted by applicable law:
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(a) Shareholder Approval. This Agreement shall have been adopted and
the Merger shall have been approved by the requisite vote of the holders of the
Shares, if required by applicable law, in order to consummate the Merger.
(b) Statutes; Court Orders. No federal or state governmental or
regulatory body or court of competent jurisdiction shall have enacted, issued,
promulgated or enforced any statute, rule, regulation, executive order, decree,
judgment, preliminary or permanent injunction or other order that is in effect
and that prohibits, enjoins or otherwise restrains the consummation of the
Merger; provided however, that the parties shall use all commercially reasonable
efforts to cause any such decree, judgment, injunction or order to be vacated or
lifted.
(c) Purchase of Shares in Offer. Parent, the Purchaser or their
affiliates shall have purchased Shares pursuant to the Offer, except that this
condition shall not apply if Parent, the Purchaser or their affiliates shall
have failed to purchase Shares pursuant to the Offer in breach of their
obligations under this Agreement.
(d) HSR Approval. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
Section 6.2. Conditions Precedent to the Obligations of the Company.
The obligation of the Company to effect the Merger is also subject to the
satisfaction at or prior to the Effective Time of the following condition,
unless waived by the Company:
(a) Accuracy of Representations and Warranties. All representations and
warranties made by Parent and Purchaser herein shall be true and correct, unless
the inaccuracies (without giving effect to any materiality or material adverse
effect qualifications or materiality exceptions contained therein) under such
representations and warranties taking all the inaccuracies under all such
representations and warranties together in their entirety, do not, individually
or in the aggregate, result in a Parent Material Adverse Effect.
Section 6.3. Conditions Precedent to the Obligations of Parent and
Purchaser. The obligation of the Parent and Purchaser to effect the Merger is
also subject to the satisfaction at or prior to the Effective Time of the
following additional condition, unless waived by either of Parent or Purchaser.
(a) Accuracy of Representations and Warranties.. All representations
and warranties made by the Company herein shall be true and correct, unless the
inaccuracies (without giving effect to any materiality or material adverse
effect qualifications or materiality exceptions contained therein) under such
representations and warranties taking all the inaccuracies under all such
representations and warranties together in their entirety, do not, individually
or in the aggregate, result in a Company Material Adverse Effect.
ARTICLE VII.
TERMINATION
Section 7.1. Termination. This Agreement may be terminated and the
Transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after shareholder approval thereof:
(a) By the mutual written consent of Parent and the Company.
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(b) By either of the Company or Parent:
(i) if the Offer shall have expired without any Shares being
purchased therein; provided, however, that the right to terminate this
Agreement under this Section 7.1(b)(i) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of Parent or the
Purchaser, as the case may be, to purchase the Shares pursuant to the
Offer on or prior to such date;
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling
or other action the parties hereto shall use their reasonable efforts
to lift), which permanently restrains, enjoins or otherwise prohibits
the consummation of the Offer or the Merger and such order, decree,
ruling or other action shall have become final and non-appealable; or
(iii) if the Offer has not been consummated prior to October
5, 1997; provided, that the right to terminate this Agreement under
this Section 7.1(b)(iii) shall not be available to any party whose
misrepresentation in this Agreement or whose failure to perform any of
its covenants and agreements or to satisfy any obligation under this
Agreement has been the cause of, or resulted in, the failure of Parent
or the Purchaser, as the case may be, to purchase Shares pursuant to
the Offer on or prior to such date.
(c) By the Company:
(i) if Parent, the Purchaser or any of their affiliates shall
have failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer;
provided, that the Company may not terminate this Agreement pursuant to
this Section 7.1(c)(i) if the Company is at such time in breach of its
obligations under this Agreement such as to cause a Company Material
Adverse Effect;
(ii) in connection with entering into an agreement with
respect to a Superior Proposal in accordance with Section 5.6(b),
provided it has complied with all provisions thereof, including the
notice provisions therein, and that it makes simultaneous payment of
the Break-Up Amount as provided in Section 8.1(b); or
(iii) if Parent or the Purchaser shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which is not
cured, in all material respects, within 30 days after the giving of
written notice by the Company to Parent or the Purchaser, as
applicable.
(d) By Parent:
(i) if either Parent or the Purchaser is entitled to terminate
the Offer as a result of the occurrence of any event set forth in
paragraph (d) of Annex A hereto;
(ii) if the Offer is not commenced as provided in Section 1.1
as a result of actions or inaction by the Company that result in the
failure of a condition specified in Annex A hereto, or the Offer is
terminated or expires as a result of the failure of a condition
specified in Annex A hereto, unless such termination or expiration has
been caused by or resulted from the failure of Parent or Purchaser to
perform any covenants and agreements of Parent or Purchaser contained
in this Agreement; or
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(iii) if (A) the Company shall have breached in any respect
any of its representations or warranties contained in this Agreement,
unless the inaccuracies (without giving effect to any materiality or
material adverse effect qualifications or materiality exceptions
contained therein) under such representations and warranties taking all
the inaccuracies under all such representations and warranties together
in their entirety, do not, individually or in the aggregate, result in
a Company Material Adverse Effect or (B) the Company shall have
breached or failed to perform any obligation or to comply with any
agreement or covenant to be performed or complied with by it under the
Agreement, other than, any breach or failure which would not have,
either individually or in the aggregate, a Company Material Adverse
Effect (in each of cases (A) and (B), which breach or failure has not
been cured within thirty (30) days following receipt of written notice
thereof by Parent specifying in reasonable detail the basis of such
alleged breach or failure).
Section 7.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.1, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement shall forthwith become
null and void and of no further force or effect, and no party hereto (or any of
its affiliates, directors, officers, agents or representatives) shall have any
liability or obligation hereunder, except in any such case (a) as provided in
Sections 5.2(b) (Confidentiality), 5.8 (Publicity), 7.2 (Effect of Termination)
and 8.1 (Fees and Expenses), which shall survive any such termination and (b) to
the extent such termination results from the breach by such party of any of its
representations, warranties, covenants or agreements contained in this
Agreement, provided, however, that a party's damages for any such breach shall
be limited to such party's actual damages and neither party shall be entitled to
seek consequential or special damages for any such breach.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Fees and Expenses. (a) Except as contemplated by this
Agreement, including Section 8.1(b) hereof, all costs and expenses incurred in
connection with this Agreement and the consummation of the Transactions shall be
paid by the party incurring such expenses.
(b) If (x) the Company shall terminate this Agreement pursuant
to Section 7.1(c)(ii), (y) Parent shall terminate this Agreement pursuant to
Section 7.1(d)(i) hereof, or (z) either the Company or Parent terminates this
Agreement pursuant to Section 7.1(b)(i) and (1) prior thereto there shall have
been publicly announced another Acquisition Proposal, or (2) (i) the Company
shall have entered into a definitive agreement relating to an Acquisition
Proposal, or (ii) a business combination or other transaction contemplated by an
Acquisition Proposal shall have been consummated, in each of cases (i) and (ii)
prior to or within six months following such termination, then the Company
agrees that it will immediately thereafter pay to Parent, in same day funds, an
amount (the "Break-Up Amount") equal to $6,700,000.
Section 8.2. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the shareholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action taken
by their respective Boards of Directors (which in the case of the Company shall
include approvals as contemplated in Section 1.3(b)), at any time prior to the
Closing Date with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the stockholders of the
Company, no such amendment, modification or supplement shall reduce the amount
or change the form of the Merger Consideration.
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Section 8.3. Nonsurvival of Representations and Warranties. None of the
representations and warranties contained in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 8.4. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered, mailed or transmitted, and shall be effective upon receipt,
if delivered personally, telecopied (which is confirmed) or sent by an overnight
courier service, such as Federal Express, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or the Purchaser, to:
Omnicare, Inc.
2800 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45203
Attention: Mr. Joel F. Gemunder
President
Telephone Number: (513) 762-6666
Telecopy Number: (513) 762-6678
with a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: Morton A. Pierce
Telephone Number: (212) 259-8000
Telecopy Number: (212) 259-6333
(b) if to the Company, to:
American Medserve Corporation
184 Shuman Blvd.
Naperville, Illinois 60563
Attention: Mr. Timothy L. Burfield
President
Telephone Number: (630) 717-2904
Telecopy Number: (630) 717-4196
with a copy to:
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, Illinois 60610
Attention: Glenn W. Reed, Esq.
Telephone Number: (312) 245-8446
Telecopy Number: (312) 644-3381
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Section 8.5. Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". As used in this Agreement, the term "affiliates" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act..
Section 8.6. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be. considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 8.7. Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitute the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, and (b) except as
provided in Section 5.10 is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 8.8. Severability. Any term or provision of this Agreement that
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
Section 8.9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 8.10. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
content of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
Section 8.11. Waivers. At any time prior to the Effective Time, Parent
(for Parent and Purchaser), on the one hand, or the Company, on the other hand,
may, to the extent legally allowed, extend the time specified herein for the
performance of any of the obligations or other acts of the other, waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, or waive compliance by the other
with any of the agreements or covenants of such other party or parties (as the
case may be) contained herein. Any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of the other party or
parties to be bound thereby. No such extension or waiver shall constitute a
waiver of or estoppel with respect to, any subsequent or other breach or failure
to strictly comply with the provisions of this Agreement. The failure of any
party to insist on strict compliance with this Agreement or to assert any of its
rights or remedies hereunder or with respect hereto shall not constitute a
waiver of such rights or remedies.
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Section 8.12. Captions. The Table of Contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
OMNICARE, INC.
By /s/ Joel F. Gemunder
-------------------------------
Name: Joel F. Gemunder
Title: President
OMNICARE ACQUISITION CORP.
By /s/ Joel F. Gemunder
-------------------------------
Name: Joel F. Gemunder
Title: President
AMERICAN MEDSERVE CORPORATION
By /s/ Timothy L. Burfield
-------------------------------
Name: Timothy L. Burfield
Title: President
33
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ANNEX A
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the offer, and in
addition to (and not in limitation of) the Purchaser's rights to extend and
amend the Offer at any time in its sole discretion (subject to the provisions of
the Merger Agreement), the Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-l(c) under the Exchange Act (relating to the Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate or amend the Offer as to any Shares not then paid for, if (i) the
Minimum Condition has not been satisfied, (ii) if any applicable waiting period
for the Offer under the HSR Act has not expired, or (iii) at any time on or
after the date of the Merger Agreement and before the time of acceptance for
payment for any such Shares, any of the following events shall have occurred:
(a) there shall be threatened, instituted or pending any suit,
action or proceeding by or before any Governmental Entity against the Purchaser,
Parent, the Company or any Subsidiary of the Company (i) seeking to prohibit or
impose any material limitations on Parent's or the Purchaser's ownership or
operation (or that of any of their respective Subsidiaries or affiliates) of all
or a material portion of their or the Company's businesses or assets, or to
compel Parent or the Purchaser or their respective Subsidiaries and affiliates
to dispose of or hold separate any material portion of the business or assets of
the Company or Parent and their respective Subsidiaries, in each case taken as a
whole, (ii) challenging the acquisition by Parent or the Purchaser of any Shares
under the Offer, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or the performance of any of the other transactions
contemplated by the Agreement, or seeking to obtain from the Company, Parent or
the Purchaser any material damages, (iii) seeking to impose material limitations
on the ability of the Purchaser, or render the Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer and
the merger, (iv) seeking to impose material limitations on the ability of
Purchaser or Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
them on all matters properly presented to the Company's stockholders, or (v)
which otherwise is reasonably likely to have a Company Material Adverse Effect;
(b) there shall be any action taken by a Governmental Entity
or any statute, rule, regulation, judgment, administrative interpretation, order
or injunction enacted, entered, enforced, promulgated, or deemed applicable, to
the Company, Parent, Purchaser, the Offer or the Merger, or any other action
shall be taken by any Governmental Entity that is reasonably expected to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above;
(c) there shall have occurred any other event, change or
effect after the date of the Agreement which, either individually or in the
aggregate, would have, or be reasonably likely to have, a Company Material
Adverse Effect;
(d)(i) the Board of Directors of the Company or any committee
thereof shall have modified in a manner adverse to Parent or the Purchaser or
withdrawn its approval or recommendation of the Offer, the Merger or the
Agreement, or approved or recommended any Acquisition Proposal; (ii) the Company
shall have entered into any agreement with respect to any Superior Proposal in
accordance with Section 5.6(b) of the Agreement; or (iii) the Board of Directors
of the Company resolves to do any of the foregoing;
(e) the representations and warranties of the Company set
forth in the Agreement shall not be true and correct, in each case (i) as of the
date referred to in any representation or warranty which
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<PAGE> 40
addresses matters as of a particular date, or (ii) as to all other
representations and warranties, as of the date of the Agreement and as of the
scheduled expiration of the Offer, unless the inaccuracies (without giving
effect to any materiality or material adverse effect qualifications or
materiality exceptions contained therein) under such representations and
warranties, taking all the inaccuracies under all such representations and
warranties together in their entirety, do not, individually or in the aggregate,
result in a Company Material Adverse Effect;
(f) the Company shall have breached or failed to perform any
obligation or to comply with any agreement or covenant to be performed or
complied with by it under the Agreement other than any breach or failure which
would not have, either individually or in the aggregate, a Company Material
Adverse Effect (which breach or failure has not been cured within thirty (30)
days following receipt of written notice thereof by Parent specifying in
reasonable detail the basis of such alleged breach or failure);
(g) any person, entity or "group" (as such term is used in
Section 13(d)(3) of the Exchange Act) other than Parent or any of its affiliates
acquires beneficial ownership (as defined in Rule 13d-3 promulgated under the
Exchange Act), of at least 30% of the outstanding Shares of the Company;
(h) the Agreement shall have been terminated in accordance
with its terms; which, in the sole judgment of Parent or the Purchaser, in any
such case, and regardless of the circumstances (including any action or inaction
by Parent or the Purchaser) giving rise to such condition makes it inadvisable
to proceed with the Offer and/or with such acceptance for payment of or payment
for Shares; or
(i) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) the
declaration of any banking moratorium or any suspension of payments in respect
of banks or any limitation (whether or not mandatory) on the extension of credit
by lending institutions in the United States, (iii) the commencement of a war,
material armed hostilities or any other material international or national
calamity involving the United States, (iv) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof, or (v) any decline, measured from the date hereof, in the
Standard & Poor's 500 Index by an amount in excess of 25%.
The foregoing conditions are for the sole benefit of Parent
and the Purchaser, may be asserted or waived by Parent or the Purchaser
regardless of the circumstances giving rise to such condition (including any
action or inaction by Parent or the Purchaser not in violation of the Agreement)
and may be asserted or waived by Parent or the Purchaser in whole or in part at
any time and from time to time in the sole discretion of Parent or the
Purchaser, subject in each case to the terms of the Merger Agreement. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
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