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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
COMPSCRIPT, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.0001
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(Title of Class of Securities)
204680 10 2
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(CUSIP Number)
Cheryl D. Hodges
Omnicare, Inc.
2800 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45203
with copies to:
Morton A. Pierce
Richard D. Pritz
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
February 23, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4) check the following box [_].
NOTE: Six copies of this statement, including exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP NO. 204680 10 2
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
OMNICARE, INC.
31-1001351
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
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3 SEC USE ONLY (a) / /
(b) / /
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4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e). / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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NUMBER OF 7 SOLE VOTING POWER
0
SHARES ------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY 4,332,453(1)
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OWNED BY EACH 9 SOLE DISPOSITIVE POWER
0
REPORTING PERSON ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH 4,332,453(1)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,332,453(1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.8% (1).
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14 TYPE OF REPORTING PERSON
CO
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________________________
(1) See Items 4 and 5.
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ITEM 1. SECURITY AND ISSUER.
This Statement relates to the common stock, par value $0.0001 per
share (the "Shares"), of CompScript, Inc., a Florida corporation
("CompScript"). The address of the principal executive office of
CompScript is 1225 Broken Sound Parkway NW, Suite A, Boca Raton, FL
33487.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (c) and (f). This Schedule 13D is filed by Omnicare, Inc.,
a Delaware corporation ("Omnicare"). Omnicare is a leading independent
provider of pharmacy and related services to long-term care
institutions such as nursing homes, retirement centers and other
institutional health care facilities. Omnicare purchases, repackages
and dispenses pharmaceuticals, both prescription and non-prescription,
and provides computerized medical recordkeeping and third-party
billing for residents in such facilities. Omnicare also provides
consultant pharmacist services, including evaluating monthly patient
drug therapy, monitoring the control, distribution and administration
of drugs within the nursing facility and assisting in compliance with
state and federal regulations. In addition, Omnicare provides
ancillary services, such as infusion therapy, distributes medical
supplies and offers clinical care plan and financial software
information systems to its client nursing home facilities. Omnicare's
executive offices are located at 50 East RiverCenter Blvd. -- Suite
1530, Covington, Kentucky 41011, and its telephone number is (606)
655-1180.
Each executive officer and each director of Omnicare is a citizen
of the United States. The name, business address and present
principal occupation of each executive officer and director are set
forth in Annex I to this Schedule 13D which is incorporated herein by
reference.
(d) and (e). During the last five years neither Omnicare nor, to
the best of Omnicare's knowledge, any of its executive officers or
directors has been convicted in any criminal proceeding (excluding
traffic violations or similar misdemeanors) or has been a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which Omnicare or such person was or is
subject to judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or
state securities laws, or finding any violation with respect to such
laws, and which judgment, decree or final order was not subsequently
vacated.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As described in the response to Item 4, the Shares to which this
Schedule 13D relates have not been purchased by Omnicare. In
connection with, and as a condition to, Omnicare and CompScript
entering into an Agreement and Plan of Merger, dated as of February 23
,1998 (the "Merger Agreement"), (i) Brian A. Kahan, the Chairman of
the Board, Chief Executive Officer and President of CompScript and
beneficial owner of approximately 30.8% of the outstanding Shares (the
"Principal Shareholder"), has entered into a Voting Agreement, dated
as of February 23, 1998 (the "Voting Agreement"), and (ii) Omnicare
and CompScript have entered into a Stock Option Agreement, dated as of
February 23, 1998 (the "Stock Option Agreement").
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ITEM 4. PURPOSE OF TRANSACTION.
On February 23, 1998, CompScript and Omnicare entered into the
Merger Agreement which provides, among other things, that, upon the
terms and subject to conditions thereof, a wholly owned subsidiary of
Omnicare to be formed solely for purposes of effecting such merger
will merge with and into CompScript (the "Merger"). CompScript will
be the surviving corporation in the Merger.
In the Merger, each outstanding Share (other than shares held by
holders exercising dissenters' rights under applicable law) will be
converted into a fraction of a share of the common stock of Omnicare,
par value $1.00 per share ("Omnicare Common Stock"), equal to the
Conversion Ratio (as defined below), plus cash in lieu of receipt of
fractional Omnicare Common Stock.
The "Conversion Ratio" will be equal to the quotient obtained by
dividing (x) $4.50 by (y) the average of the closing prices per share
of the Omnicare Common Stock as reported on the NYSE Composite Tape on
each of the last ten trading days immediately preceding the fifth
trading day prior to the closing date of the Merger (the "Omni Market
Value"); PROVIDED, HOWEVER, that (i) if the Omni Market Value is less
than $29.325, the Omni Market Value shall be deemed to be $29.325 for
purposes of calculating the Conversion Ratio, and (ii) if the Omni
Market Value is greater than $39.675, then the Omni Market Value shall
be deemed to be $39.675 for purposes of calculating the Conversion
Ratio. Notwithstanding the foregoing, in the event the Omni Market
Value is less than $24.15 or more than $44.85, Omnicare and CompScript
will seek to renegotiate a new acceptable Conversion Ratio. In the
event that Omnicare and CompScript are unable to establish a mutually
acceptable Conversion Ratio within two business days after the closing
date of the Merger, then if the Omni Market Value is (i) less than
$24.15, CompScript shall have the right to terminate the Merger
Agreement or (ii) more than $44.85, Omnicare shall have the right to
terminate the Merger Agreement.
In connection with the execution of the Merger Agreement,
Omnicare and CompScript entered into the Stock Option Agreement under
which CompScript has granted Omnicare an option to purchase up to
2,800,000 newly issued Shares at $4.50 per Share if certain events
occur.
In addition, the Principal Shareholder has entered into the
Voting Agreement pursuant to which the Principal Shareholder has
agreed, subject to certain exceptions, to vote his Shares in favor of
adoption of the Merger Agreement and approval of the Merger, to vote
such Shares against any contrary transaction, to grant to Omnicare an
irrevocable proxy to vote such Shares for such purposes and not to
dispose of such Shares.
The purpose of the Stock Option Agreement and the Voting
Agreement is to facilitate the consummation of the transactions
contemplated by the Merger Agreement. The Stock Option Agreement and
the Voting Agreement may also make it more difficult and expensive for
CompScript to consummate a business combination with a party other
than Omnicare.
Upon consummation of the Merger, the Shares would cease to be
quoted on the Nasdaq and would become eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Exchange
Act of 1934.
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Except as contemplated by the Merger Agreement, the Stock Option
Agreement and the Voting Agreement or as otherwise set forth in this
Item 4, Omnicare has no present plans or proposals which relate to or
would result in any of the contingencies listed in subsections (a)
through (j) of Item 4 of Schedule 13D. The descriptions of the Merger
Agreement, the Voting Agreement and the Stock Option Agreement
contained in this Schedule 13D are qualified in their entirety by
reference to the full text of such agreements, which are filed as
exhibits hereto.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b) 4,332,453 Shares, representing approximately 30.8% of
the outstanding Shares, are subject to the Voting Agreement. As a
result of the provisions of the Voting Agreement, the Principal
Shareholder and Omnicare may be deemed to share voting and dispositive
power with respect to the Shares subject to the Voting Agreement.
Pursuant to the Stock Option Agreement, Omnicare would have the right
to acquire 2,800,000 Shares (representing approximately 19.9% of the
outstanding Shares and approximately 16.6% of the Shares outstanding
following the exercise of the option granted thereunder) under the
circumstances set forth therein. Calculations in this paragraph are
based on 14,072,063, the number of Shares outstanding as of February
23, 1998 as represented in the Merger Agreement by CompScript.
(c) Other than the Merger Agreement, the Stock Option Agreement
and the Voting Agreement and the transactions contemplated thereby,
there have been no transactions in the Shares by Omnicare, or, to the
best knowledge of Omnicare, by any of the directors or executive
officers of Omnicare, during the past 60 days.
(d) To the best knowledge of Omnicare, the right to receive and
the power to direct the receipt of dividends from, and the proceeds
from the sale of, the Shares subject to the Voting Agreement are held
by the Principal Shareholder.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Other than the Merger Agreement, Stock Option Agreement and
Voting Agreement and the transactions contemplated thereby, there are
no contracts, arrangements, understandings or relationships between
Omnicare and any other person, or, to the best knowledge of Omnicare,
among any of the directors and executive officers of Omnicare and any
other person, with respect to the Shares.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed as part of this Schedule 13D:
Exhibit 1 -- Agreement and Plan of Merger dated as of
February 23, 1998 between Omnicare and
CompScript.
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Exhibit 2 -- Stock Option Agreement dated as of
February 23, 1998 between Omnicare and
CompScript.
Exhibit 3 -- Voting Agreement dated as of February 23,
1998 between Brian A. Kahan and Omnicare.
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SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 4, 1998.
OMNICARE, INC.
By: /s/ Cheryl D. Hodges
---------------------------
Name: Cheryl D. Hodges
Title: Senior Vice President
and Secretary
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ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below are the name and present principal occupation of
each director and executive officer of Omnicare. Unless indicated otherwise,
the present principal occupation of each director and executive officer of
Omnicare is a position with Omnicare. The business address of each such
director and executive officer is c/o Omnicare, Inc., 50 East RiverCenter
Blvd., Suite 1530, Covington, Kentucky 41011. Directors are indicated by an
asterisk (*).
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NAME PRESENT PRINCIPAL OCCUPATION
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Edward L. Hutton* Chairman of Omnicare and Chairman and Chief
Executive Officer of Chemed Corporation
("Chemed"), Cincinnati, Ohio. Chemed is a
diversified public corporation with interests
in plumbing and drain cleaning services and
health care services.
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Joel F. Gemunder* President.
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Patrick E. Keefe* Executive Vice President-Operations.
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Timothy E. Bien Senior Vice President - Professional Services
and Purchasing.
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Mary Lou Fox* Senior Vice President-Marketing.
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David W. Froesel, Jr. Senior Vice President and Chief Financial
Officer.
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Cheryl D. Hodges* Senior Vice President and Secretary.
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Ronald K. Baur* Vice President.
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Kenneth W. Chesterman* Retired Executive Vice President and a
consultant to Omnicare.
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Charles H. Erhart, Jr.* Retired as President of W.R. Grace & Co.
("W.R. Grace"), Boca Raton, Florida. W.R.
Grace is an international specialty chemicals
and health care company. Director of Chemed.
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Thomas C. Hutton* Vice President and Director of Chemed.
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Sandra E. Laney* Senior Vice President, Chief Administrative
Officer and Director of Chemed.
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Andrea R. Lindell, DNSc, RN* Dean and Professor in the College of Nursing and
Health at the University of Cincinnati.
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Sheldon Margen, M.D.* Professor Emeritus in the School of Public
Health, University of California, Berkeley.
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Kevin J. McNamara* President and Director of Chemed.
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John M. Mount* President and Chief Executive Officer of Service
America Systems, Inc., a subsidiary of Chemed.
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D. Walter Robbins, Jr.* Retired Vice Chairman of W.R. Grace and
Director of Chemed.
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Exhibit 1
AGREEMENT AND PLAN OF MERGER
by and between
COMPSCRIPT, INC.
and
OMNICARE, INC.
Dated as of February 23, 1998
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 23, 1998 (the
"Agreement"), by and between COMPSCRIPT, INC., a Florida corporation ("CSI"
or the "Company"), and OMNICARE INC., a Delaware corporation ("Omni").
RECITALS
A. The Boards of Directors of CSI and Omni deem it advisable and
in the best interests of each corporation and its respective stockholders
that CSI and Omni combine in order to advance their long-term business
interests, all upon the terms and subject to the conditions of this Agreement.
B. It is intended that the combination of CSI and Omni be
effected by a Merger (as defined below) of a direct wholly owned subsidiary
of Omnicare to be formed solely for the purpose of effecting such merger
("SUB") with and into CSI with CSI surviving, which shall be recorded for
accounting purposes as a pooling-of-interests and shall be treated for
Federal income tax purposes as a reorganization described in Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"). CSI and SUB
are hereinafter sometimes collectively referred to as the "Constituent
Corporations."
C. Simultaneously with the execution of this Agreement, and as an
inducement to Omni to enter into this Agreement, (i) Omni and a stockholder
of CSI are entering into a Voting Agreement (the "Voting Agreement") pursuant
to which such stockholder has, among other things, agreed, upon the terms and
subject to the conditions thereof, to vote his CSI Shares (as defined below)
in favor of the Merger and (ii) Omni and CSI are entering into a Stock Option
Agreement (the "Stock Option Agreement") pursuant to which CSI has granted
Omni an option to purchase CSI Shares under certain circumstances.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. (a) In accordance with the provisions of
this Agreement and the Florida Business Corporation Act ("FBCA"), at the
Effective Time (as defined below), SUB shall be merged (the "Merger") with and
into CSI, and CSI shall be the surviving corporation (hereinafter sometimes
called the "Surviving Corporation") and shall continue its corporate existence
under the laws of the State of Florida. The name of the Surviving Corporation
shall be CompScript, Inc. At the Effective Time, the separate existence of
SUB shall cease.
(b) The Merger shall have the effects on CSI and SUB, as
Constituent Corporations of the Merger, provided for under the FBCA.
Section 1.2 Effective Time. The Merger shall become effective at
the time of filing of, or at such later time as is agreed to by the parties
and specified in, the articles of merger, in the form required by and
executed in accordance with the FBCA, with the Secretary of State of the
State of Florida in accordance with the provisions of Section 607.1105 of the
FBCA (the "Articles of Merger"). The date and time when the Merger shall
become effective is herein referred to as the
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"Effective Time."
Section 1.3 Articles of Incorporation and Bylaws of Surviving
Corporation. The Articles of Incorporation and Bylaws of SUB as in effect
immediately prior to the Effective Time shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation until thereafter
amended as provided by law.
Section 1.4 Directors and Officers of Surviving Corporation. (a)
The directors of SUB immediately prior to the Effective Time shall be the
directors of the Surviving Corporation and will hold office from and after
the Effective Time until their respective successors are duly elected or
appointed and qualify in the manner provided in the Articles of Incorporation
and Bylaws of the Surviving Corporation or as otherwise provided by law or
their earlier resignation or removal.
(b) The officers of CSI immediately prior to the Effective Time
shall be the officers of the Surviving Corporation and each will hold office
from and after the Effective Time until their respective successors are duly
appointed and qualify in the manner provided in the Bylaws of the Surviving
Corporation or as otherwise provided by law or their earlier resignation or
removal.
Section 1.5 Further Assurances. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that
any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of either of the Constituent
Corporations acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of each of the
Constituent Corporations or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
each of the Constituent Corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and
all right, title and interest in, to and under such rights, properties or
assets in the Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Effect on CSI Shares. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders
thereof:
(a) (x) Each share of CSI's common stock, $.0001 par value (the
"CSI Shares"), issued and outstanding immediately prior to the Effective Time
(except for shares referred to in Sections 2.1(b) and (d) hereof) shall be
converted into the right to receive a number of shares (the "Conversion
Ratio") of Common Stock, par value $1.00 per share, of Omni ("Omni Stock")
equal
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to $4.50 divided by the Omni Market Value, provided, however, that (i) if the
Omni Market Value is less than $29.325, the Omni Market Value shall be deemed
to be $29.325 for purposes of this Section 2.1(a)(x) and (ii) if the Omni
Market Value is more than $39.675, the Omni Market Value shall be deemed to
be $39.675 for purposes of this Section 2.1(a)(x).
(y) Notwithstanding the foregoing, in the event the Omni Market
Value is less than $24.15 or more than $44.85, Omni and CSI will seek to
renegotiate a new acceptable Conversion Ratio which will then replace the
Conversion Ratio provided for in this Section 2.1(a). In the event that Omni
and CSI are unable to establish a mutually acceptable Conversion Ratio within
two business days after the scheduled Closing Date (as defined below), then
if the Omni Market Value is (i) less than $24.15, CSI shall have the right to
terminate this Agreement or (ii) more than $44.85, Omni shall have the right
to terminate this Agreement. Any such termination shall be deemed a
termination by mutual consent in accordance with Section 10.1(a) hereof.
(z) For purposes of this Section 2.1(a), the term "Omni Market
Value" shall mean the average of the closing prices of the Omni Stock on the
New York Stock Exchange (the "NYSE") for the 10 trading days immediately
preceding the fifth trading day preceding the Closing Date. In the event of
any change in the CSI Shares or the Omni Stock by reason of any stock split,
readjustment, stock dividend, exchange or shares, reclassification,
recapitalization or similar event, the amounts set forth in clauses (x) and
(y) above shall be appropriately adjusted.
(b) Each CSI Share held by CSI as treasury stock or owned by any
Subsidiary (as defined below) of CSI shall be canceled.
(c) All CSI Shares shall be canceled and retired, and each
certificate representing any such CSI Shares (except for shares referred to
in Sections 2.1(b) and (d) hereof) shall thereafter (i) represent only the
right to receive the Omni Stock issuable in exchange for such CSI Shares upon
the surrender of such certificate in accordance with Section 2.4 (and any
cash payable in respect of fractional shares) and (ii) entitle the holder
thereof to receive dividends on such number of whole shares of Omni Stock
which such holder is entitled to receive in exchange for such certificates,
provided that dividends shall be paid to such holder, without interest, only
upon surrender of certificates in accordance with Section 2.4.
(d) Notwithstanding anything to the contrary in this Agreement,
any holder of CSI Shares who shall exercise the rights of a dissenting
stockholder pursuant to and strictly in accordance with the provisions of
Section 607.1302 of the FBCA shall be entitled to receive only the payment
therein provided for and shall not be entitled to receive Omni Stock. Such
payment shall be made directly by the Surviving Corporation from its own
funds.
Section 2.2 Effect on CSI Options. (a) CSI has taken all actions
as may be required to adjust the terms of all outstanding options to purchase
CSI shares (the "CSI Stock Options") granted under any plan or arrangement
providing for the grant of options to purchase CSI Shares to current or
former officers, directors, employees or consultants of CSI (the "CSI Stock
Option Plans"), whether vested or unvested, as necessary to provide that, at
the Effective Time, each CSI Stock Option outstanding immediately prior to
the Effective Time shall be amended and
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converted into an option to acquire, on the same terms and conditions as were
applicable under such CSI Stock Option, the number of shares of Omni Stock
(rounded up to the nearest whole share) determined by multiplying the number
of CSI Shares subject to such CSI Stock Option by the Conversion Ratio, at an
exercise price per share of Omni Stock equal to the price per share specified
in such CSI Stock Option divided by the Conversion Ratio; provided that such
exercise price shall be rounded up to the nearest whole cent. CSI shall
promptly make such other changes to the CSI Stock Option Plans as Omni and
CSI may agree as appropriate to give effect to the Merger.
(b) The adjustments provided herein with respect to any CSI Stock
Options that are "incentive stock options" as defined in Section 422 of the
Code shall be and are intended to be effected in a manner which is consistent
with Section 424 of the Code.
(c) Except as otherwise contemplated by this Section 2.2 and
except to the extent required under the respective terms of the CSI Stock
Options or other applicable agreements, all restrictions or limitations on
transfer and vesting with respect to CSI Stock Options awarded under the CSI
Stock Option Plans or any other plan, program or arrangement of CSI, to the
extent that such restrictions or limitations shall not have already lapsed,
shall remain in full force and effect with respect to such options after
giving effect to the Merger and the assumption by Omni as set forth above.
(d) Omni shall take such actions as are reasonably necessary for
the assumption of the CSI Stock Options, including the reservation, issuance
and listing of the Omni Stock as is necessary to effectuate the transactions
contemplated by this Section 2.2. The adjustments contemplated by this
Section 2.2 do not require the consent of any holder of CSI Stock Options.
Section 2.3 SUB Common Stock. Each share of common stock of SUB
issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder
thereof, be converted into one fully paid and nonassessable share of common
stock of the Surviving Corporation.
Section 2.4 Exchange Procedures. (a) Omni shall authorize a bank
or trust company to act as exchange agent hereunder (the "Exchange Agent")
for the purposes of exchanging certificates representing CSI Shares and
shares of Omni Stock. As promptly as practicable after the Effective Time,
Omni shall deposit with the Exchange Agent, in trust for the holders of
Certificates (as defined in Section 2.4(b) below), certificates representing
the shares of Omni Stock issuable pursuant to Section 2.1(a) in exchange for
CSI Shares (the "Omni Certificates").
(b) Promptly after the Effective Time, the Exchange Agent shall
mail or cause to be mailed to each record holder, as of the Effective Time,
of an outstanding certificate or certificates which immediately prior to the
Effective Time represented CSI Shares (the "Certificates"), a letter of
transmittal in customary and reasonable form (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon receipt of the Certificates by the Exchange Agent) and
instructions for use in effecting the surrender of the Certificates for
exchange therefor. Upon surrender to the Exchange Agent of a Certificate,
together
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with such letter of transmittal duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor that number of shares of
Omni Stock which such holder has the right to receive under Section 2.1(a)
(and any amount of cash payable in lieu of fractional shares), less the
amount of any withholding taxes which may be required thereon under any
provision of federal, state, local or foreign tax Law, and such Certificate
shall forthwith be canceled. If any shares of Omni Stock are to be issued to
a person other than the person in whose name the Certificate surrendered in
exchange therefor is registered, it shall be a condition of exchange that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such exchange shall pay any
transfer or other taxes required by reason of the exchange to a person other
than the registered holder of the Certificate surrendered or such person
shall establish to the satisfaction of the Surviving Corporation that such
tax has been paid or is not applicable.
(c) No dividends or other distributions with respect to the Omni
Stock constituting all or a portion of the consideration payable to the
holders of CSI Shares shall be paid to the holder of any unsurrendered
Certificate until such Certificate is surrendered as provided for in this
Section 2.4. Subject to the effect of applicable Laws (as defined in Section
4.4 below), following such surrender, there shall be paid, without interest,
to the record holder of the Omni Certificates (i) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time payable prior to or on the date of such surrender
with respect to such whole shares of Omni Stock, and not paid, and the amount
of cash payable in lieu of any fractional shares, less the amount of any
withholding taxes which may be required thereon under any provision of
federal, state, local or foreign tax Law, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time, but prior to the date of surrender and a payment date
subsequent to the date of surrender payable with respect to such whole shares
of Omni Stock, less the amount of any withholding taxes which may be required
thereon under any provision of federal, state, local or foreign tax Law.
Omni shall make available to the Exchange Agent cash for these purposes.
(d) Any portion of the Omni Stock made available to the Exchange
Agent pursuant to Section 2.4(a) that remains unclaimed by the holders of CSI
Shares twelve (12) months after the Effective Time shall be returned to Omni,
upon demand, and any such holder who has not exchanged his, her or its CSI
Shares for Omni Stock in accordance with this Section 2.4 prior to that time
shall thereafter look only to Omni for his, her or its claim for Omni Stock,
any cash in lieu of fractional shares and certain dividends or other
distributions. Neither Omni nor SUB shall be liable to any holder of CSI
Shares with respect to any Omni Stock (or cash in lieu of fractional shares)
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(e) If any Certificate 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 Omni, the
posting by such person of a bond in such reasonable amount as Omni may direct
as indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificate
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the consideration payable under Section 2.1(a) and, if applicable, any unpaid
dividends and distributions on shares of Omni Stock deliverable with respect
thereof and any cash in lieu of fractional shares, in each case pursuant to
this Agreement.
Section 2.5 Fractional Shares. Notwithstanding any other
provision of this Agreement, each holder of CSI Shares who upon surrender of
Certificates therefor would be entitled to receive a fraction of a share of
Omni Stock shall receive, in lieu of such fractional share of Omni Stock,
cash in an amount equal to such fraction multiplied by Omni Market Value,
less the amount of any withholding taxes which may be required thereon under
any provision of federal, state, local or foreign tax law.
Section 2.6 Transfers. From and after the Effective Time, there
shall be no transfers on the stock transfer books of CSI or the Surviving
Corporation of CSI Shares. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be canceled and exchanged
as provided in this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF OMNI
Omni represents and warrants to CSI as follows:
Section 3.1 Organization. Omni is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Omni will promptly cause SUB to be duly organized as a corporation
under the laws of the State of Florida and a wholly owned subsidiary of Omni.
Omni has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Omni is duly qualified or licensed and in good standing to do business in
each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualifications
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not, individually or in the
aggregate, have a material adverse effect on the business, operations,
assets, prospects, financial condition or results of operations of Omni and
its subsidiaries taken as a whole and would not prevent or delay the
consummation of the transactions contemplated hereby (an "Omni Material
Adverse Effect"). Omni has made available to CSI complete and accurate
copies of Omni's Certificate of Incorporation and Bylaws, each as currently
in effect.
Section 3.2 Capitalization. The authorized capital stock of Omni
consists of 110,000,000 shares of Omni Stock and 1,000,000 shares of
preferred stock ("Omni Preferred Stock"). As of December 31, 1997, there were
82,152,665 shares of Omni Stock issued and outstanding and no shares of Omni
Preferred Stock outstanding. All shares of Omni Stock to be issued at the
Effective Time shall be, when issued, duly authorized and validly issued,
fully paid, and non-assessable.
Section 3.3 Authority. Omni has full corporate power and authority
to execute and
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deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized
and approved by the Board of Directors of Omni and no other corporate
proceedings on the part of Omni are necessary to authorize this Agreement or
the consummation of the transactions contemplated hereby, provided that Omni
shall promptly cause SUB to be duly organized as a Florida corporation and a
wholly owned subsidiary of Omni. This Agreement has been duly and validly
executed and delivered by Omni and, assuming this Agreement constitutes a
legal, valid and binding agreement of CSI, constitutes a legal, valid and
binding agreement of Omni, enforceable against Omni in accordance with its
terms, except as the enforceability may be affected by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws effecting the
enforcement of creditors' rights generally and the possible unavailability of
certain equitable remedies, including the remedy of specific performance.
Section 3.4 No Violations; Consents and Approvals. (a) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby nor compliance by Omni or SUB with any of
the provisions hereof conflicts with, violates or results in any breach of
(i) any provision of the Certificate of Incorporation or Bylaws (or similar
organizational documents) of either of Omni or SUB, (ii) any contract,
agreement, instrument or understanding to which Omni or SUB is a party or by
which Omni or SUB is bound, or (iii) any judgment, decree, order, statute,
rule or regulation applicable to Omni or SUB, excluding from the foregoing
clauses (ii) and (iii) conflicts, violations or breaches which, individually
or in the aggregate, would not have an Omni Material Adverse Effect or
materially impair Omni's or SUB's ability to consummate the transactions
contemplated hereby or for which Omni or SUB have received or, prior to the
Merger, shall have received appropriate consents or waivers.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required by
Omni or SUB in connection with the execution and delivery of the Agreement or
the consummation by Omni or SUB of the transactions contemplated hereby,
except (i) in connection with the applicable requirements of the
Hart-Scott-Rodino Anti-trust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) in connection, or in compliance, with the provisions of the
Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act
of 1934 (the "Exchange Act"), (iii) the filing of the Articles of Merger with
the Secretary of State of the State of Florida, (iv) filings with, and
approval of, the NYSE in connection with obligations of Omni under Section
5.12, (v) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the corporation, takeover
or blue sky laws of various states and (vi) such other consents, orders,
authorizations, registrations, declarations and filings, including under any
pharmacy license, the failure of which to be obtained or made would,
individually or in the aggregate, have an Omni Material Adverse Effect, or
materially impair the ability of Omni or SUB to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
Section 3.5 SEC Documents; Omni Financial Statements. (a) Omni
has filed with the Securities and Exchange Commission ("SEC") all documents
required to be filed under the Securities Act and the Exchange Act since
December 31, 1996 (the "Omni SEC Documents"). As
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of their respective dates, the Omni SEC Documents complied in all material
respects with the requirements of the Securities Act and the Exchange Act, as
the case may be, and none of the Omni SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) As of their respective dates, the consolidated financial
statements of Omni included in the Omni SEC Documents were prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and present fairly the consolidated
financial position of Omni and its consolidated subsidiaries as at the dates
thereof and the consolidated results of their operations and statements of
cash-flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and to any other adjustments
described therein).
Section 3.6 Absence of Certain Changes. Except as disclosed in
filings with the SEC, there has not been any change in the financial
condition, results of operations or business of Omni and its subsidiaries,
taken as a whole, since September 30, 1997, except for changes which,
individually or in the aggregate, would not have an Omni Material Adverse
Effect.
Section 3.7 Proxy Statement/Prospectus, Registration Statement.
None of the information regarding Omni and SUB to be supplied by Omni and SUB
for inclusion or incorporation by reference in (i) the registration statement
on Form S-4 (as it may be amended or supplemented from time to time, the
"Registration Statement") relating to Omni Stock to be issued in connection
with the Merger or (ii) the proxy statement to be distributed in connection
with the stockholder meeting of CSI contemplated by Section 5.5 (as it may be
amended or supplemented from time to time, the "Proxy Statement" and together
with the prospectus to be included in the Registration Statement, the "Proxy
Statement/Prospectus") will, in the case of the Registration Statement, at
the time it becomes effective and at the Effective Time, and, in the case of
the Proxy Statement, at the time of its mailing to stockholders of CSI and at
the time of their stockholder 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 not misleading
in light of the circumstances when made. If at any time prior to the
Effective Time any event with respect to Omni shall occur which is required
to be described in the Proxy Statement/Prospectus or Registration Statement,
such event shall be so described, and an amendment or supplement shall be
promptly filed with the SEC and, as required by law, disseminated to the
stockholders of Omni and CSI. The Proxy Statement/Prospectus and the
Registration Statement will (with respect to Omni and SUB) comply in all
material respects with the provisions of the Securities Act and the Exchange
Act.
Section 3.8 Broker's Fees. Neither Omni nor SUB nor any of Omni's
other subsidiaries or affiliates has employed any broker, finder or financial
advisor or incurred any liability for any broker's fees, commissions, or
financial advisory or finder's fees in connection with any of the
transactions contemplated by this Agreement.
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Section 3.9 Pooling of Interests; Reorganization. Neither Omni
nor SUB has or, as of the Closing Date, will have (i) taken any action or
failed to take any action which action or failure would jeopardize the
treatment of the Merger as a pooling of interests for accounting purposes or
(ii) taken any action or failed to take any action which action or failure
would result in the failure of the Merger to qualify as a reorganization
within the meaning of Code Section 368(a). Omni has no knowledge of any fact
or circumstance that is reasonably likely to prevent the Merger from
qualifying as a pooling of interests for accounting purposes or a
reorganization within the meaning of Code Section 368(a).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CSI
CSI represents and warrants to Omni and SUB as follows:
Section 4.1 Organization. (a) Each of CSI and its subsidiaries
("Subsidiaries") is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation as
indicated on Schedule 4.1, and each has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of CSI and its Subsidiaries is duly
qualified or licensed and in good standing to do business 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 necessary, as
indicated on Schedule 4.1, except in such jurisdictions where the failure to
be so duly qualified or licensed and in good standing would not, individually
or in the aggregate, have a material adverse effect on the business,
operations, assets, prospects, financial condition or results of operations
of CSI and its Subsidiaries taken as a whole and would not prevent or delay
the consummation of the transactions contemplated hereby (a "CSI Material
Adverse Effect"). Set forth on Schedule 4.1 is an accurate and complete list
of all of the Subsidiaries.
(b) CSI previously has delivered to Omni accurate and complete
copies of the Articles of Incorporation and Bylaws (or similar organizational
documents) as currently in effect of CSI and each of the Subsidiaries.
Section 4.2 Capitalization. (a) The authorized capital stock of
CSI consists of 50,000,000 CSI Shares and 1,000,000 shares of preferred
stock, par value $.0001 per share ("CSI Preferred Stock"). As of the date
hereof, there are 14,072,063 CSI Shares issued and outstanding, no shares of
CSI Preferred Stock issued and outstanding and no CSI Shares or shares of CSI
Preferred Stock held in CSI's treasury or by any Subsidiary of CSI. As of
the date hereof, there were outstanding under the CSI Stock Option Plans, all
of which are listed on Schedule 4.2, CSI Stock Options entitling the holders
thereof to purchase, in the aggregate, up to 1,548,262 CSI Shares. Schedule
4.2 lists, as to each CSI Stock Option, the holder, date of grant, exercise
price and number of shares subject thereto. Except for the CSI Stock Option
Plans, there are not now, and at the Effective Time there will not be, any
existing options, warrants, calls, subscriptions, or other rights or other
agreements or commitments obligating CSI to issue, transfer or sell any
shares of capital stock of CSI or any other securities convertible into or
evidencing the right to subscribe for
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any such shares. All issued and outstanding CSI Shares are, and all CSI
Shares issued and outstanding at the Effective Time shall be, duly authorized
and validly issued, fully paid and non-assessable.
(b) The authorized capital stock of each Subsidiary as well as the
number of such shares issued and outstanding are set forth on Schedule 4.2.
All of the issued and outstanding shares of each Subsidiary have been duly
authorized and are validly issued, fully paid and nonassessable. Except as
set forth on Schedule 4.2, CSI holds of record and owns beneficially all of
the outstanding shares of the capital stock of each Subsidiary, free and
clear of any charges, liens, encumbrances or security interests and no shares
of the capital stock of any Subsidiary are held in treasury. There are not
now, and at the Effective Time there will not be, any existing options,
warrants, calls, subscriptions or other rights or other agreements or
commitments obligating CSI or any Subsidiary to issue, transfer or sell any
of the shares of capital stock of any Subsidiary or any other securities
convertible into or evidencing the right to subscribe for any such shares.
Except as set forth on Schedule 4.2(b) and except for interests in the
Subsidiaries, neither CSI nor any Subsidiary has any investment or interest
in any entity.
Section 4.3 Authority. CSI has full corporate power and authority
to execute and deliver this Agreement and the Stock Option Agreement and,
subject to the requisite approval of the Merger and the adoption of this
Agreement by CSI's stockholders, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the Stock Option
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by CSI's Board of Directors
and, except for (in the case of this Agreement) the requisite approval of the
Merger and the adoption of this Agreement by CSI's stockholders, no other
corporate proceedings on the part of CSI are necessary to authorize this
Agreement or the Stock Option Agreement or to consummate the transactions
contemplated hereby or thereby. CSI's Board of Directors has determined that
the transactions contemplated by this Agreement, including the Merger, and
the Stock Option Agreement are in the best interests of CSI and its
stockholders and, except as provided in Section 5.2 below, have determined to
recommend to such stockholders that they vote in favor of this Agreement and
the consummation of the transactions contemplated hereby, including the
Merger. Each of this Agreement and the Stock Option Agreement has been duly
and validly executed and delivered by CSI, and assuming this Agreement
constitutes a legal, valid and binding agreement of Omni, constitutes a
legal, valid and binding agreement of CSI, enforceable against CSI in
accordance with its terms, except as the enforceability may be affected by
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws effecting the enforcement of creditors' rights generally and the
possible unavailability of certain equitable remedies, including the remedy
of specific performance.
Section 4.4 No Violations; Consents and Approvals. (a) Neither
the execution and delivery of this Agreement or the Stock Option Agreement
nor the consummation of the transactions contemplated hereby or thereby nor
compliance by CSI with any of the provisions hereof or thereof, except as set
forth in Schedule 4.4, conflicts with, violates or results in any breach of
or default or triggers any payment or obligations under (or an event which,
with or without notice or the lapse of time would constitute a violation,
breach or default under) (i) any provision of
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the Articles of Incorporation or Bylaws (or similar organizational documents)
of CSI or any of its Subsidiaries, (ii) any contract, agreement, instrument
or understanding to which CSI or any Subsidiary is a party, or by which CSI,
any Subsidiary or any of their respective assets or properties is bound, or
(iii) any law, judgment, decree, order, statute, rule or regulation of any
jurisdiction or governmental authority (a "Law") applicable to CSI, any of
its Subsidiaries or any of their respective assets or properties, excluding
from the foregoing clauses (ii) and (iii) conflicts, violations or breaches
which, individually or in the aggregate, would not have a CSI Material
Adverse Effect or materially impair CSI's ability to consummate the
transactions contemplated hereby or for which CSI has received appropriate
consents or waivers.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required by
CSI in connection with the execution and delivery of this Agreement or the
Stock Option Agreement or the consummation by CSI of the transactions
contemplated hereby or thereby, except (i) in connection with the applicable
requirements of the HSR Act, (ii) in connection or in compliance, with the
Securities Act and the Exchange Act, (iii) the filing of the Articles of
Merger with the Secretary of State of the State of Florida, (iv) filing
with, and approval of, the NASDAQ with respect to the delisting of CSI
Shares, (v) such consents, approvals, orders, authorizations, registrations,
declaration and filings as may be required under the corporation, takeover or
blue sky laws of various states and (vi) as set forth in Schedule 4.4, such
other consents, orders, authorizations, registrations, declarations and
filings, the failure of which to be obtained or made would, individually or
in the aggregate, have a CSI Material Adverse Effect or materially impair
CSI's ability to consummate the transactions contemplated hereby.
Section 4.5 SEC Documents; CSI Financial Statements. (a) CSI has
filed with the SEC all documents required to be filed under the Securities
Act and the Exchange Act since April 26, 1996 (the "CSI SEC Documents"). As
of their respective dates, the CSI SEC Documents complied in all material
respects with the requirements of the Securities Act and the Exchange Act, as
the case may be, and none of the CSI SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) As of their respective dates, the consolidated financial
statements of CSI included in the CSI SEC Documents complied in all material
respects with then applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated therein or in the
notes thereto) and present fairly the consolidated financial position of CSI
and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and statements of cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
(c) Set forth as Schedule 4.5 are (i) consolidated audited balance
sheets of CSI and its Subsidiaries as of December 31, 1996 and (ii)
consolidated unaudited statements of income
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of CSI and its Subsidiaries for the three-month period ending, and balance
sheets as of, September 30, 1997. Each of the balance sheets set forth on
Schedule 4.5 are accurate and complete in all material respects, were
prepared in accordance with generally accepted accounting principles applied
on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and present fairly the consolidated
financial position of CSI and its consolidated Subsidiaries at the date
thereof and the consolidated results of their operations and statements of
cash flows for the period then ended (subject, in the case of interim
statements, to year-end audit adjustments of a normal, recurring type which
would not, in the aggregate, have a CSI Material Adverse Effect). The
balance sheet as of September 30, 1997 is sometimes referred to as the "CSI
Interim Balance Sheet."
(d) Neither CSI nor any of its Subsidiaries have any material
liability or material obligation of any kind (whether contingent or otherwise
and whether due or to become due) except (i) as set forth on Schedule 4.5,
(ii) as set forth on the CSI Interim Balance Sheet, or (iii) as incurred in
the ordinary course of business, consistent with past practice since the date
of the CSI Interim Balance Sheet.
(e) Schedule 4.5(e) sets forth, to CSI's knowledge, reasonable
best estimates of certain financial information for the mail order business
and pharmacy benefits management services businesses of CSI and its
Subsidiaries. The information set forth in such schedule was prepared on a
basis consistent with the other financial information described in Section
4.5(b) and fairly presents the information set forth therein.
Section 4.6 Absence of Certain Changes. Since the date of the CSI
Interim Balance Sheet, CSI and each of its Subsidiaries have been operated
only in the ordinary course, consistent with past practice, and there has not
been any adverse change, or any event, fact or circumstance which might
reasonably be expected to result in an adverse change, in either event that
would have a CSI Material Adverse Effect. Without limiting the generality of
the foregoing, except as set forth on Schedule 4.6, since September 30, 1997,
there has not been with respect to CSI or any Subsidiary any:
(a) sale or disposition of any material asset other than inventory
in the ordinary course;
(b) payment of any dividend, distribution or other payment to any
stockholder of CSI or to any relative of any such stockholder other than
payments of salary and expense reimbursements made in the ordinary course of
business, consistent with past practice, for employment services actually
rendered or expenses actually incurred;
(c) incurrence or commitment to incur any liability, individually
or in the aggregate, material to CSI and its Subsidiaries taken as a whole,
except such liabilities under CSI's existing credit facilities and
liabilities incurred in connection with the Merger;
(d) waiver, release, cancellation or compromise of any
indebtedness owed to CSI or claims or rights against others, exceeding
$100,000 in the aggregate;
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(e) any change in any accounting method, principal or practice
except as required or permitted by generally accepted accounting principles;
(f) unusual or novel method of transacting business engaged in by
CSI or any of its Subsidiaries or any change in CSI's accounting procedures
or practices or its financial or equity structure; or
(g) taking of any action contemplated by Section 5.1 hereof.
Section 4.7 Proxy Statement/Prospectus; Registration Statement.
None of the information regarding CSI to be supplied by CSI for inclusion or
incorporation by reference in the Registration Statement or the Proxy
Statement will, in the case of the Registration Statement, at the time it
becomes effective and at the Effective Time, and, in the case of the Proxy
Statement, at the time of its mailing to stockholders of CSI and at the time
of the stockholder 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 not misleading in light of the
circumstances when made. If at any time prior to the Effective Time any
event with respect to CSI shall occur which is required to be described in
the Proxy Statement or Registration Statement, such event shall be so
described, and an amendment or supplement shall be promptly filed with the
SEC and, as required by law, disseminated to the stockholders of Omni and
CSI. The Proxy Statement and the Registration Statement will (with respect
to CSI) comply in all material respects with the provisions of the Securities
Act and the Exchange Act.
Section 4.8 State Anti-takeover Statutes. The CSI Board of
Directors has approved this Agreement and the transactions contemplated
hereby and such approval constitutes approval of the Merger and the other
transactions contemplated hereby, including approval of the Voting Agreement
and the Stock Option Agreement, by the CSI Board of Directors as required by
the FBCA. No "business combination," "moratorium," "control share," "fair
price," "interested shareholder," "affiliated transaction" or other
anti-takeover statute or regulation (including Sections 607.0901 and 607.0902
of the FBCA) (i) prohibits or restricts CSI's ability to perform its
obligations under this Agreement or the Stock Option Agreement (or any
party's ability to perform its obligations under the Voting Agreement) or
either party's ability to consummate the Merger or the other transactions
contemplated hereby or thereby, or (ii) would have the effect of invalidating
or voiding this Agreement, the Voting Agreement or the Stock Option Agreement
or any provision hereof or thereof. CSI does not have a "shareholder rights
plan" or other arrangement of similar effect. CSI is subject to (and has not
opted out of) Section 607.0902 of the FBCA, which regulates "control-share
acquisitions."
Section 4.9 Broker's Fees. Except for the engagement of
NationsBanc Montgomery Securities LLC and Shulman & Associates by CSI,
neither CSI nor any of its Subsidiaries or affiliates or their respective
officers or directors has employed any broker, finder or financial advisor or
incurred any liability for any broker's fees, commissions, financial advisory
or finders' fees in connection with any of the transactions contemplated by
this Agreement. CSI has delivered to Omni true and complete copies of the
agreements evidencing such engagements and has fully disclosed to Omni the
fees payable to such entities.
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Section 4.10 Fairness Opinion. CSI has received the opinion of
NationsBanc Montgomery Securities LLC to the effect that as of the date
hereof the financial terms of the Merger are fair to CSI's stockholders from
a financial point of view. A copy of such fairness opinion has been or will
be delivered to Omni as soon as practicable after the date of this Agreement.
Section 4.11 Environmental Matters. Except as disclosed on
Schedule 4.11, which disclosed items could not, individually or in the
aggregate, reasonably be expected to have a CSI Material Adverse Effect:
(a) CSI and its Subsidiaries hold and are in material compliance with,
all Environmental Permits (as defined below), and CSI and its Subsidiaries
are, and CSI and its Subsidiaries (including any predecessors) have been, in
material compliance with all applicable Environmental Laws (as defined below).
(b) Neither CSI or its Subsidiaries have received any Environmental
Claim (as defined below), and neither CSI or its Subsidiaries are aware of
any threatened Environmental Claim against CSI or any of its Subsidiaries.
(c) There are no (i) underground storage tanks, (ii) polychlorinated
biphenyls, (iii) asbestos or asbestos-containing materials, (iv)
urea-formaldehyde insulation, (v) surface impoundments, (vi) landfills, or
(vii) Hazardous Materials (as defined below) present at any facility
currently owned, leased, operated or otherwise used or, to CSI's knowledge,
formerly owned, leased, operated or otherwise used, by CSI or any of its
Subsidiaries (including any predecessors) that could give rise to liability
of CSI or any of its Subsidiaries under any Environmental Laws which
liability could reasonably be expected to have a CSI Material Adverse Effect.
(d) No modification, revocation, reissuance, alteration, transfer, or
amendment of the Environmental Permits, or any review by, or approval of, any
third party of the Environmental Permits is required in connection with the
execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby or the continuation of the business of CSI
or its Subsidiaries following such consummation.
(e) Hazardous Materials have not been used, generated, transported,
treated, stored, disposed of, released or threatened to be released at, on,
from or under any of the properties or facilities currently owned, leased,
operated or otherwise used or, to CSI's knowledge, formerly owned, leased,
operated or otherwise used, including without limitation for receipt of the
CSI's wastes, by CSI or any of its Subsidiaries (including any predecessors),
in violation of or in a manner or to a location that could give rise to
liability under any Environmental Laws which liability could reasonably be
expected to have a CSI Material Adverse Effect.
(f) For purposes of this Section 4.11, the following terms shall have
the meanings given to them below:
(1) "Environmental Claim" means any written notice, claim, demand,
action, complaint,
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investigation or proceeding arising out of, relating to, based on or
resulting from (i) the presence, discharge, emission, release or threatened
release of any Hazardous Materials at any location, whether or not owned,
leased or operated by CSI or any of its Subsidiaries or (ii) circumstances
forming the basis of any violation or alleged violation of any Environmental
Law or Environmental Permit.
(2) "Environmental Permits" means all permits, licenses, registrations
and other governmental authorizations required for CSI and its Subsidiaries
and the operations of CSI's and its Subsidiaries' facilities and otherwise to
conduct the business of CSI and its Subsidiaries under Environmental Laws.
(3) "Environmental Laws" means all domestic and foreign federal, state
and local laws, statutes, rules, regulations, ordinances, orders, decrees and
common law relating in any manner to contamination, pollution or protection
of human health or the environment, including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act, the
Solid Waste Disposal Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Occupational Safety and Health Act, the Emergency
Planning and Community-Right-to-Know Act, the Safe Drinking Water Act, all as
amended, and similar state and local laws.
(4) "Hazardous Materials" means all hazardous or toxic substances,
wastes or chemicals, petroleum (including crude oil or any fraction thereof)
and petroleum products, asbestos and asbestos-containing materials,
pollutants, contaminants, substances and forces, including but not limited to
electromagnetic fields, regulated pursuant to, or that could reasonably be
expected to form the basis of liability under, any Environmental Law.
Section 4.12 Contracts. Schedule 4.12 sets forth a complete and
accurate list of:
(a) All contracts to which CSI or any Subsidiary is a party or by
which either is bound which (i) involve amounts in excess of $100,000, or
payments based on profits or sales, (ii) are not cancelable by CSI or such
Subsidiary upon less than 30 days' notice, or (iii) involve terms or
quantities exceeding normal commitments in the ordinary course of business.
(b) All contracts which involve amounts in excess of $100,000 and
pursuant to which CSI or any Subsidiary provides pharmaceuticals, medical
supplies, therapies, intravenous infusion services, or any other products,
services or therapies related to any of the foregoing.
(c) All contracts with wholesalers, distributors, dealers, sales
representatives, or cooperative associations to which CSI or any Subsidiary
is a party or by which either is bound and which involve amounts in excess of
$100,000.
(d) All contracts with any federal, state or local governmental
authorities, agencies or subdivisions to which CSI or any Subsidiary is a
party or by which either is bound and which involve amounts in excess of
$100,000.
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(e) All contracts for the past or present disposal of Hazardous
Materials or infectious waste or other materials to which CSI or any
Subsidiary is or was a party or by which either is or was bound.
(f) All employment, consulting, management, or agency contracts,
understandings or agreements (including any "severance" or "change in
control" plans, contracts, understandings or agreements) to which CSI or any
Subsidiary is a party or by which either is bound.
(g) All contracts containing an obligation of confidentiality with
respect to information furnished by CSI or any Subsidiary to a third party,
or received by either from a third party.
(h) All contracts limiting the freedom of CSI or any Subsidiary to
compete in any line of business, or with any person, or in any geographic
area or market.
(i) All contracts providing for the present or future lease
(whether as lessee or lessor), purchase or sale of any real property by CSI
or any Subsidiary and which involve amounts in excess of $100,000.
With respect to each contract set forth on Schedule 4.12, (i) each
is legal, valid, binding and enforceable against CSI or the applicable
Subsidiary, and to CSI's knowledge, against each other party thereto, and is
in full force and effect; (ii) each will continue to be legal, valid, binding
and enforceable against CSI or the applicable Subsidiary, and to CSI's
knowledge, against each other party thereto, and will continue to be in full
force and effect immediately following the Effective Time in accordance with
the terms thereof as in effect prior to the Effective Time; and (iii) neither
CSI nor the applicable Subsidiary, nor to CSI's knowledge, any other party,
is in breach or default, and no event has occurred which, with notice or
lapse of time, or both, would constitute a material breach or default or
permit termination, modification or acceleration under any such contract.
Neither CSI nor any Subsidiary has been party to any discussions or received
any correspondence concerning breach or termination of any of the foregoing
contracts and, to CSI's knowledge, there is no default under, or any
violation of, any of the foregoing contracts by any other party thereto. CSI
or the applicable Subsidiary has performed, in all material respects, all
obligations required to be performed by it to date and is not in default in
any material respect under any of the contracts, agreements, leases or other
documents to which it is a party. CSI has delivered or will cause to be
delivered to, or make available for review by, Omni copies of each such
contract listed on Schedule 4.12. Since the date of the CSI Interim Balance
Sheet, there has been no material modification or termination of any such
contract nor, to CSI's knowledge, is any such modification or termination
contemplated.
Section 4.13 Compliance With Laws. Except as set forth on
Schedule 4.13, CSI and each Subsidiary is not, and has not been, in violation
of any Law, including, without limitation, any Law pertaining to Medicare,
Medicaid, reimbursement, environmental protection, infectious or
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biomedical waste, occupational health or safety, or employment practices, the
violation of which has or can reasonably be expected to have a CSI Material
Adverse Effect.
Section 4.14 No Litigation. Except as set forth in the CSI SEC
Documents filed prior to the date of this Agreement or on Schedule 4.14,
there is no claim, litigation, investigation or proceeding by any person or
governmental authority pending or, to CSI's knowledge, threatened against CSI
or any Subsidiary. Except as set forth on Schedule 4.14, there are no
pending or, to CSI's knowledge, threatened controversies or disputes with, or
grievances or claims by, any employees or former employees of CSI, any
Subsidiary or any of their respective predecessors of any nature whatsoever,
including, without limitation, any controversies, disputes, grievances or
claims with respect to their employment, compensation, benefits or working
conditions, which, if adversely determined, would have a CSI Material Adverse
Effect.
Section 4.15 Inventories. The inventories reflected on the CSI
Interim Balance Sheet are sufficient to cover the immediate needs of CSI and
its Subsidiaries in the ordinary course of business as conducted by CSI and
its Subsidiaries prior to the execution hereof. All of the pharmaceuticals,
drugs and biologicals included in inventory are in date and are properly
labeled and packaged.
Section 4.16 Permits and Licenses. Schedule 4.16 lists all
permits, licenses, approvals or authorizations of any government authority
required to conduct the business of CSI and its Subsidiaries as currently
conducted the absence of which would have a CSI Material Adverse Effect (the
"Permits"). All such Permits have been legally obtained and maintained by
CSI and its Subsidiaries and are in full force and effect. CSI and its
Subsidiaries are duly licensed to provide pharmacy services in all states in
which they do business and are in substantial compliance with the terms of
such licenses. All such licenses to provide pharmacy services are included
in the Permits listed on Schedule 4.16.
Section 4.17 Employee Benefits. (a) All employee welfare benefit
plans as defined in Section 3(1) of the Employee Retirement Income Security
Act of 1974 ("ERISA"), employee pension benefit plans as defined in Section
3(2) of ERISA, and all other employee benefit programs or arrangements of any
type, written or unwritten maintained by CSI or to which CSI contributes are
listed on Schedule 4.17 and Schedule 4.17 separately sets forth any Plans
which CSI, or any affiliate or predecessor of CSI, maintained or contributed
to within the six years preceding the date hereof (collectively, the
"Plans"). CSI has delivered to Omni true and complete copies of each Plan.
(b) Except as disclosed on Schedule 4.17, the Plans comply, in all
material respects, with all applicable provisions of all Laws, including,
without limitation, the Code and ERISA, and have so complied during all prior
periods during which any such provisions were applicable. Without limiting
the foregoing, each of the Plans, and any related trust, intended to meet the
requirements for tax-favored treatment under the Code (including, without
limitation, Sections 401 and 501 and Subchapter B of the Chapter 1 of the
Code) meets and for all prior periods has met, such requirements in all
material respects.
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(c) Except as disclosed on Schedule 4.17, CSI and any other party
involved in the administration of any of the Plans (i) has complied in all
material respects with the provisions of ERISA, the Code and other Laws,
applicable to such party, whether as an employer, plan sponsor, plan
administrator, or fiduciary of any of the Plans or otherwise, (including
without limitation the provisions of ERISA and the Code concerning prohibited
transactions), and (ii) has administered the Plans in accordance with their
terms. CSI has made all contributions required of it by any Law (including,
without limitation, ERISA) or contract under any of the Plans and no unfunded
liability exists with respect to any of the Plans.
(d) Except as disclosed on Schedule 4.17, CSI has no
responsibility or liability, contingent or otherwise, with respect to any
Plans or any employee benefits other than under the Plans listed on Schedule
4.17. CSI has the right to amend or terminate, without the consent of any
other person, any of the Plans, except as prohibited by law and any
applicable collective bargaining agreement. Neither CSI, nor any affiliate
or predecessor of CSI, maintains or has ever maintained or been obligated to
contribute to (i) any defined benefit pension plan (as such term is defined
in Section 3(35) of ERISA), (ii) any multiemployer plan (as such term is
defined in Section 3(37) of ERISA), (iii) any severance plan or policy, or
(iv) any arrangement providing medical or other welfare benefits to retirees
or other former employees or their beneficiaries, except as required under
part 6 of Subtitle B of Title I of ERISA or Section 4980B(f) of the Code
(hereinafter collectively referred to as "COBRA").
(e) Except as disclosed on Schedule 4.17, there are no actions,
suits or claims pending (other than routine claims for benefits) or, to CSI's
knowledge, any actions, suits, or claims (other than routine claims for
benefits) which could reasonably be expected to be asserted, against any of
the Plans, or the assets thereof, or against CSI or any other party with
respect to any of the Plans.
Section 4.18 Taxes. (a) Except as set forth on Schedule 4.18,
each member of the Group (as defined below) has duly filed, or had CSI file
on its behalf (and with respect to Tax Returns (as defined below) due after
the date hereof and prior to the Closing Date will duly file or have CSI file
on its behalf), with the appropriate federal, state, local and foreign taxing
authorities all Tax Returns required to be filed by or with respect to each
member of the Group. All such Tax Returns were (and, as to Tax Returns not
filed as of the date hereof, will be) true, correct and complete in all
material respects as of the time of filing. CSI has included each Subsidiary
in its consolidated federal income Tax Returns for all periods ended on or
before December 31, 1996. CSI, with respect to the consolidated federal
income Tax Returns, and each member of the Group, with respect to any other
Tax Return, has paid (and until the Closing Date will pay) in full on a
timely basis all Taxes (as defined below) due with respect to such Tax
Returns and such Taxes that are otherwise due, except to the extent such Tax
is being contested in good faith through appropriate proceedings and for
which adequate reserves have been established on the CSI Interim Balance
Sheet. Except as set forth on Schedule 4.18, the balance for accrued Taxes on
the CSI Interim Balance Sheet for the payment of accrued but unpaid Taxes
through the date thereof is correct and the amount of the Group's and CSI's
liability for unpaid Taxes shall not exceed such
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balance for accrued but unpaid Taxes of the Group and CSI, respectively. The
balance of accrued Taxes on a consolidated and separate company basis have
been determined in accordance with generally accepted accounting principles,
applied on a consistent basis. All monies which each member of the Group was
required by Law to withhold from employees have been withheld (and until the
Closing Date will be withheld) and either timely paid to the proper
governmental authority or set aside in accounts for such purposes and accrued
on the books of the Group or member, as the case may be. CSI and each
Subsidiary has undertaken in good faith to appropriately classify all service
providers as either employees or independent contractors for all Tax purposes.
(b) Except as set forth on Schedule 4.18, neither CSI nor any
Subsidiary has ever been a member of an affiliated group filing consolidated
returns other than the Group of which CSI and the Subsidiaries were the only
members.
(c) Except as set forth on Schedule 4.18, (i) none of the members
of the Group has received any notice of a deficiency or assessment with
respect to Taxes of the Group or any member from any taxing authority which
has not been fully paid or finally settled, except to the extent any such
deficiency or assessment is being contested in good faith through appropriate
proceedings and for which adequate reserves have been established on the CSI
Interim Balance Sheet; (ii) there are no ongoing audits or examinations of
any Tax Return relating to the Group or any member thereof and no notice
(oral or written) of audit or examination of any such Tax Return has been
received by any member of the Group; (iii) neither CSI nor any member of the
Group has given nor has there been given on its behalf a waiver or extension
of any statute of limitations relating to the payment of Taxes for any year
in which CSI or any Subsidiary was a member of the Group; (iv) neither CSI
nor any of its Subsidiaries has ever been audited by the Internal Revenue
Service; and (v) no issue has been raised (either in writing or orally,
formally or informally) on audit or in any other proceeding (and is currently
pending) with respect to Taxes of the Group or any member thereof by any
taxing authority which, if resolved against the Group or any member, would
have a CSI Material Adverse Effect. CSI and each member of the Group has
disclosed on its federal income tax returns all positions taken therein that
could give rise to a substantial understatement penalty within the meaning of
Code Section 6662.
(d) Except as set forth on Schedule 4.18, neither CSI nor any
Subsidiary is (nor has either ever been) a party to any tax sharing agreement
and neither has assumed the liability of any other person under law or
contract. CSI and each Subsidiary shall, as of the Closing Date, terminate
all tax allocation or tax sharing agreements with respect to CSI or such
Subsidiary, and neither CSI nor any Subsidiary shall have any further
liability under any such agreements.
(e) Except as set forth on Schedule 4.18, neither CSI nor any
member of the Group (i) has filed a consent pursuant to Code Section 341(f)
nor agreed to have Code Section 341(f)(2) apply to any disposition of a
subsection (f) asset (as such term is defined in Code Section 341(f)) owned
by a member of the Group; (ii) has agreed, or is required, to make any
adjustment under Code Section 481(a) by reason of a change in accounting
method or otherwise that will affect the liability of the Group or any member
for Taxes; (iii) has made an election, or is required, to treat any asset of
the Group or any member as owned by another person pursuant to the provisions
of
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former Code Section 168(f)(8); (iv) is now, has ever been or on or before the
Closing Date will be a party to any agreement, contract, arrangement, or plan
(including, without limitation, the agreements contemplated by Section 5.14
hereof) that would result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Code Section 280G; (v)
has participated in an international boycott as defined in Code Section 999;
(vi) is now or has ever been a "foreign person" within the meaning of Code
Section 1445(b)(2); (vii) is now or has ever been a United States real
property holding corporation within the meaning of Code Section
897(c)(1)(A)(ii); or (viii) has made any of the foregoing elections or is
required to apply any of the foregoing rules under any comparable state or
local tax provision.
(f) No member of the Group is required to report or pay any Taxes
from any joint venture, partnership or other arrangement or contract that
could be treated as a partnership for federal income tax purposes.
(g) Neither CSI nor any of its Subsidiaries has distributed the
stock of any corporation in a transaction satisfying the requirements of Code
Section 355 since April 16, 1997.
(h) For purposes of this Section 4.18, the following terms shall
have the meaning given to them below:
(1) "Group" means, individually and collectively, (i) CSI, (ii)
the Subsidiaries, and (iii) any individual, trust, corporation,
partnership or any other entity as to which CSI is liable for Taxes
incurred by such individual or entity either as transferee, or pursuant
to Treasury Regulation 1.1502-6, or pursuant to any other Law.
(2) "Tax" means any of the Taxes, and "Taxes" means, with respect
to the Group, (i) all income taxes (including any tax on or based upon
net income, or gross income, or income as specially defined, or
earnings, or profits, or selected items of income, earnings, or profits)
and all gross receipts, estimated, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, environmental
(including taxes under Code Section 59A), alternative, add-on minimum,
custom duties, capital stock, social security (or similar),
unemployment, disability, or other taxes, fees, assessments, or charges
of any kind whatsoever, together with any interest, penalty, or addition
thereto, whether disputed or not, imposed by any taxing authority on the
Group or any member thereof, and (ii) any liability for payment of any
amount of the Tax described in the immediately preceding clause (i) as a
result of being a "transferee" (within the meaning of Code Section 6901
or any other applicable law) of another person or successor, by
contract, or otherwise, or a member of an affiliated, consolidated, or
combined group.
(3) "Tax Return" means any return, declaration, report, claim or
refund, or information return or statement or other document (including
any related or supporting information) filed or required to be filed
with any appropriate federal, state, local or foreign governmental
entity or authority (individually or collectively, "taxing authority")
or other
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authority in connection with the determination, assessment or collection
of any Tax paid or payable by the Group or the administration of any
Laws, regulations, or administrative requirements relating to any such
Tax.
Section 4.19 Customers. No nursing home or other facility or
institution served by CSI or any Subsidiary has, since September 30, 1997,
canceled or otherwise terminated, or to CSI's knowledge, made any threat to
cancel or otherwise terminate, its relationship with CSI or any Subsidiary.
Section 4.20 Absence of Certain Business Practices. Neither CSI,
nor any Subsidiary, nor any director, officer, employee or agent of the
foregoing, nor any other person acting on its behalf, directly or indirectly,
has to CSI's knowledge given or agreed to give any gift or similar benefit to
any customer, supplier, governmental employee or other person which (i) could
reasonably be expected to subject CSI or any Subsidiary to any damage or
penalty in any civil, criminal or governmental litigation or proceeding,
which damage or penalty may result in a CSI Material Adverse Effect, (ii) if
not given in the past, might have had a CSI Material Adverse Effect, or (iii)
if not continued in the future, might have a CSI Material Adverse Effect or
which might subject CSI or any Subsidiary to suit or penalty in any private
or governmental litigation or proceeding.
Section 4.21 Intellectual Property. Neither CSI nor any of its
Subsidiaries own or license for use any patents, trademarks, trade names,
service marks, mask works or copyrights, other than the common law trade
names listed on Schedule 4.21 and variations thereof. There has not been any
actual or alleged infringement or misuse by (i) any party of any of CSI's or
any Subsidiary's trade secrets, confidential information or other
intellectual property rights, to CSI's knowledge, and (ii) CSI or any
Subsidiary of any third party's trade secrets, confidential information or
other intellectual property rights.
Section 4.22 Pooling of Interests; Reorganization. Neither CSI
nor any of its Subsidiaries has or, as of the Closing Date, will have (i)
taken any action or failed to take any action which action or failure would
jeopardize the treatment of the Merger as a pooling of interest for
accounting purposes or (ii) taken any action or failed to take any action
which action or failure would result in the failure of the Merger to qualify
as a reorganization within the meaning of Code Section 368(a). Neither CSI
nor any Subsidiary has any knowledge of any fact or circumstance that is
reasonably likely to prevent the Merger from qualifying as a pooling of
interests for accounting purposes or a reorganization within the meaning of
Code Section 368(a).
Section 4.23 Insurance. CSI carries insurance covering it and its
Subsidiary's assets, business, equipment, properties, operations, employees,
officers and directors of the type and in amounts customarily carried by
persons conducting business similar to that of CSI and such Subsidiaries.
All such policies are in full force and effect and all premiums have been
paid to the extent they are due.
Section 4.24 Required Vote of CSI Stockholders. The affirmative
vote of the
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holders of a majority of the outstanding CSI Shares is required to approve
the Merger. No other vote of the stockholders of CSI is required by Law, the
Articles of Incorporation or Bylaws of CSI or otherwise in order for CSI to
consummate the Merger and the transactions contemplated hereby.
Section 4.25. Employment Matters. Neither CSI 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 CSI'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 CSI or its Subsidiaries.
Section 4.26. Certain Healthcare Legal Matters. (a) CSI and its
Subsidiaries and all of their respective officers, directors, employees,
consultants or agents (collectively, the "Personnel") have complied in all
material 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", the statute commonly
referred to as the "Federal False Claims Act" and all statutes and
regulations related to the possession, distribution, maintenance and
documentation of controlled substances) ("Healthcare Laws"). CSI 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. 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 CSI Material Adverse Effect.
(b) CSI 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 Governmental Authorities
having, asserting or claiming jurisdiction over it or any part of their
operations. CSI 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.
(c) CSI and its Subsidiaries are qualified for participation in the
Medicare and Medicaid programs. Neither CSI or any of its Subsidiaries have
received any notice indicating that such qualification may be terminated or
withdrawn and have no reason to believe that such qualification may be
terminated or withdrawn. CSI and its Subsidiaries have timely filed all
claims or other reports required to be filed with respect to the purchase of
products or services by third-party payors (including Medicare and Medicaid),
and all such claims or reports are complete and accurate in all material
respects except where the failure to file such claims and
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reports would not result in a CSI Material Adverse Effect. CSI 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 CSI or its
Subsidiaries. To CSI's knowledge, no Personnel have been convicted of, or
pled guilty or nolo contendere to any Medicare, Medicaid or any other federal
healthcare program related offense or committed any offense which may
reasonably serve as the basis for suspension or exclusion from the Medicare
and Medicaid programs.
(d) There are no pharmaceutical or other products now being sold or
distributed by CSI 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. All pharmaceutical or
other products now being distributed by CSI or its Subsidiaries and all
products included in the inventories of CSI 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.
Section 4.27. Product Warranties. Except as set forth in Schedule
4.27, neither CSI nor any of its Subsidiaries has made any express warranties
with respect to products sold or distributed by CSI and its Subsidiaries
(other than passing on warranties made by the manufacturers thereof) and, to
the best of CSI's knowledge, no other warranties have been made by Personnel.
CSI 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 CSI or any Subsidiary.
Section 4.28. Certain Business Practices. To CSI's knowledge, none of
CSI or any of its Subsidiaries has made, and, no Personnel or representative
of CSI or its Subsidiaries (in their capacities as such) has made, directly
or indirectly with respect to the business of CSI or its Subsidiaries, 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.
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Section 4.29 Customers. Schedule 4.29 contains a true and correct
summary of all skilled nursing homes and other facilities, including assisted
living or independent living, and the number of licensed beds in those
facilities which are provided products and services by CSI under contract and
are serviced by CSI or its Subsidiaries, and, except as set forth in Schedule
4.29, during the quarter ended December 31, 1997, not more than 5% of the
revenues of CSI during such period was attributable to patients serviced in a
single nursing home company or other company or, to the best knowledge of
CSI, any group of affiliated companies. Schedule 4.29 sets forth a complete
list of all nursing home companies (including affiliated companies) that own
or control more than 5% of the beds serviced by CSI and its Subsidiaries and
all nursing home companies, other companies and related groups or entities
from which CSI derives directly or indirectly more than 5% of its revenues.
Except as set forth on Schedule 4.29, neither CSI nor any Subsidiary has
received any notice that any party intends to cancel any of the contracts
listed on Schedule 4.29.
Section 4.30 Purchasing Contracts. No provision, including of any
contract, arrangement, understanding, law, rule, regulation or any other item
which may bind CSI or any of its Subsidiaries, prevents or will prevent CSI
and its Subsidiaries from using Omni purchasing contracts and arrangements
with wholesalers in the conduct of their business, including in lieu of any
existing purchasing contracts or arrangements with wholesalers.
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business of CSI. Except as contemplated by
this Agreement or as expressly agreed to in writing by Omni, during the
period from the date of this Agreement to the Effective Time, CSI and its
Subsidiaries will conduct their operations substantially as presently
operated and only in the ordinary course of business, consistent with past
practice and will use commercially reasonable efforts to preserve intact
their business organization, to keep available the services of their officers
and employees and to maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with it and
will take no action which would adversely affect its ability to consummate
the transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement, prior to the Effective Time neither CSI nor any of its
Subsidiaries will, without the prior written consent of Omni;
(a) amend its Articles of Incorporation or Bylaws (or similar
organizational documents);
(b) authorize for issuance, issue, sell, deliver, grant any
options for, or otherwise agree or commit to issue, sell or deliver any
shares of its capital stock or any other securities, other than pursuant to
and in accordance with the terms of the Stock Option Agreement and as set
forth in Schedule 5.1;
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(c) recapitalize, split, combine or reclassify any shares of its
capital stock; declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock; or purchase, redeem or otherwise acquire any shares of its
own capital stock or of any of its Subsidiaries;
(d) (i) create, incur, assume, maintain or permit to exist any
long-term debt or any short-term debt for borrowed money other than under
existing lines of credit, relating to purchase money security interests or
obligations as a lessee under leases recorded as capital leases, each as
incurred in the ordinary course of business; (ii) assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except its wholly owned
subsidiaries in the ordinary course of business and consistent with past
practices; or (iii) make any loans, advances or capital contributions to, or
investments in, any other person;
(e) (i) increase in any manner the rate of compensation of any of
its directors, officers or other employees, except in the ordinary course of
business and in accordance with its customary past practices or as otherwise
may be contractually required and disclosed on Schedule 5.1 attached hereto;
or (ii) pay or agree to pay any bonus, pension, retirement allowance,
severance or other employee benefit except as required under currently
existing Plans disclosed in Schedule 4.17;
(f) except as set forth on Schedule 5.1, sell or otherwise dispose
of, or encumber, or agree to sell or otherwise dispose of or encumber, any
assets (including securities of Subsidiaries) other than inventory in the
ordinary course of business;
(g) enter into any other agreement, commitment or contract, except
agreements, commitments or contracts for the purchase, sale or lease of goods
or services in the ordinary course of business consistent with past practice,
but in no event in excess of $25,000 in the aggregate;
(h) authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into any agreement in principle or
an agreement with respect to, any (i) plan of liquidation or dissolution,
(ii) acquisition of a material amount of assets or securities, (iii)
disposition of a material amount of assets or securities or (iv) material
change in its capitalization, or enter into a material contract or any
amendment or modification of any material contract or release or relinquish
any material contract right;
(i) engage in any unusual or novel method of transacting business,
change any accounting or Tax procedure or practice or its financial structure
or make any Tax Election;
(j) take any action the taking of which, or omit to take any
action the omission of which, would cause any of the representations and
warranties herein to fail to be true and correct in all respects as of the
date of such action or omission as though made at and as of the date of such
action or omission or which would frustrate any condition to the consummation
of the Merger; or
(k) commit or agree to do any of the foregoing.
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Section 5.2 No Solicitation. CSI agrees that, prior to the
Effective Time, except as provided below it shall not, and shall cause its
Subsidiaries and its and its Subsidiaries' directors, officers, employees,
agents or representatives (including, without limitation, any attorney,
financial advisor, investment banker or accountant) not to, directly or
indirectly, solicit, initiate, facilitate or encourage (including by way of
furnishing or disclosing information), or take any other action to
facilitate, any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to any Transaction Proposal (as defined
below), or enter into or maintain or continue discussions or negotiate with
any person or entity in furtherance of such inquiries or to obtain a
Transaction Proposal or agree to or endorse any Transaction Proposal or
authorize or permit any of its officers, directors or employees or any of its
Subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative retained by it or any of its Subsidiaries
to take any such action; provided, however, that nothing contained in this
Agreement shall prohibit the CSI Board of Directors from, (i) furnishing
information to or entering into discussions or negotiations with any person
or entity that makes an unsolicited written, bona fide Transaction Proposal
which such person or entity has such funds or commitments therefor and which
in the reasonable judgment of the CSI Board of Directors is reasonably
capable of consummation if, and only to the extent that (A) the CSI Board of
Directors, after consultation with its financial advisors and after
consultation with and based upon advice of independent legal counsel
determines in good faith that such action is necessary for the CSI Board of
Directors to comply with its fiduciary duties to stockholders under
applicable law and (B) prior to taking such action CSI receives from such
person or entity an executed confidentiality agreement containing reasonable
and customary terms and provisions, at a minimum, at least as favorable to
CSI as those terms and conditions contained in Section 5.3(b) below, or (ii)
withdrawing, modifying or changing its recommendation referred to in Section
4.3 if there exists a Transaction Proposal and the CSI Board of Directors,
after consultation with its financial advisors and after consultation with,
and based upon the advice of independent legal counsel, determines in good
faith that such action is necessary for the CSI Board of Directors to comply
with its fiduciary duties to stockholders under applicable law in connection
with such Transaction Proposal. CSI shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
other party with respect to any Transaction Proposal. CSI shall immediately
advise Omni, orally and in writing, of any inquiries or proposals relating to
any Transaction Proposal known to it (including any amendments or
modifications thereto), the material terms and conditions of such inquiry or
proposal, any written materials submitted in connection therewith and the
identity of the person or entity making such inquiry or proposal. CSI shall
give Omni at least one business day advance notice of any information to be
supplied to, any person or entity making such a proposal for a Transaction
Proposal with respect to CSI or any Subsidiary. CSI shall not enter into any
agreements (other than a confidentiality agreement, as set forth above) with
any person or entity making such inquiry or proposal. For purposes of this
Agreement, "Transaction Proposal" shall mean any of the following (other than
the transactions between CSI and SUB contemplated by this Agreement)
involving CSI or any of its Subsidiaries: (i) any merger, consolidation,
share exchange, recapitalization, business combination or other similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of twenty percent (20%) or more of the assets of CSI and
its Subsidiaries, taken as a whole, in a single transaction or series of
transactions or any issuance of securities of CSI or any Subsidiary; (iii)
any tender offer or exchange offer for, or the
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acquisition (or right to acquire) of "beneficial ownership" by any person,
"group" or entity (as such terms are defined under Section 13(d) of the
Securities Exchange Act of 1934), of twenty percent (20%) or more of the
outstanding shares of capital stock of CSI or the filing of a registration
statement under the Securities Act in connection therewith or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or
any agreement to engage in any of the foregoing.
Section 5.3 Access to Information. (a) From the date of this
Agreement until the Effective Time, CSI will provide to Omni, its lenders and
authorized representatives (including counsel, environmental and other
consultants, accountants and auditors) full access during reasonable hours to
all facilities, personnel and operations and to all books and records of CSI
and its Subsidiaries, will permit Omni to make such inspections as it may
reasonably require (including without limitation any air, water or soil
testing or sampling deemed necessary) and will cause its officers and those
of its Subsidiaries to furnish Omni with such financial and operating data
and other information with respect to its business and properties as Omni may
from time to time reasonably request.
(b) Omni will hold and will cause its representatives to hold in
confidence all documents and information furnished in connection with this
Agreement, other than documents or information (i) available to the public,
(ii) which are or become known by Omni from a source other than CSI or (iii)
required by law to be disclosed.
Section 5.4 Registration Statement and Proxy Statement. CSI shall
file with the SEC as soon as is reasonably practicable after the date hereof
the Proxy Statement. Such filing shall be made on a confidential basis unless
Omni shall request otherwise. Promptly following the clearance by the SEC of
the Proxy Statement, Omni shall file the Registration Statement with the SEC.
Omni and CSI shall use all commercially reasonable efforts to have the
Proxy Statement cleared, and Registration Statement declared effective, by
the SEC as promptly as practicable. Omni shall also use all commercially
reasonable efforts to take any action required to be taken under applicable
state blue sky or securities laws in connection with the issuance of the Omni
Stock. Omni and CSI shall promptly furnish to each other all information,
and take such other actions, as may reasonably be requested in connection
with any action by any of them in connection with the preceding sentence.
Section 5.5 Stockholder's Meeting. CSI shall call a meeting of its
stockholders to be held as promptly as practicable (and in no event more than
45 days after the Registration Statement is declared effective) for the
purpose of voting upon this Agreement and the Merger. CSI shall, through its
Board of Directors, recommend to its stockholders approval of such matters
and shall use all commercially reasonable efforts to hold such meeting as
soon as practicable after the date hereof. Subject to the provisions of
clause (ii) of Section 5.2 above, CSI shall use all commercially reasonable
efforts to solicit from its stockholders proxies in favor of such matters.
Without limiting the generality of the foregoing, in the event the Board of
Directors of CSI withdraws or modifies its recommendation, CSI nonetheless
shall cause the meeting of the stockholders to be convened and a vote taken
with respect to the Merger and the Board of Directors shall communicate to
CSI's
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stockholders its basis for such withdrawal or modification as contemplated by
Section 607.1103(2)(a) the FBCA.
Section 5.6 Reasonable Efforts; Other Actions. CSI, Omni and SUB
each shall use all commercially reasonable efforts promptly to take, or cause
to be taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate under applicable Law to consummate and make
effective the transactions contemplated by this Agreement as promptly as
practicable, including, without limitation, (i) the filing of Notification
and Report Forms under the HSR Act with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the
"Antitrust Division") and using their reasonable best efforts to respond as
promptly as practicable to all inquiries received from the FTC or the
Antitrust Division for additional information or documentation, (ii) the
taking of any actions required to qualify the Merger for pooling-of-interests
accounting treatment and as a reorganization within the meaning of Code
Section 368(a), and (iii) the obtaining of all necessary consents, approvals
or waivers under its material contracts.
Section 5.7 Public Announcements. Before issuing any press
release or otherwise making any public statements with respect to the Merger,
Omni, SUB and CSI will consult with each other as to its form and substance
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by law (it being agreed
that the parties hereto are entitled to disclose all requisite information
concerning the transaction and any filings required with the SEC or pursuant
to the HSR Act) or the rules and regulations of Nasdaq or the NYSE, as
applicable.
Section 5.8 Notification of Certain Matters. Each of CSI and Omni
shall give prompt notice to the other party of (i) any notice of, or other
communication relating to, a default or event which, with notice or lapse of
time or both, would become a default, received by it or any of its
subsidiaries subsequent to the date of this Agreement and prior to the
Effective Time, under any contract material to the financial condition,
properties, businesses or results of operations of CSI or Omni, as the case
may be, and their respective subsidiaries taken as a whole to which it or any
of its subsidiaries is a party or is subject, (ii) any notice or other
communication from any third party alleging that the consent of such third
party is or may be requited in connection with the transactions contemplated
by this Agreement, (iii) any material adverse change in their respective
financial condition, properties, businesses or results of operations or the
occurrence of any event which is reasonably likely to result in any such
change, or (iv) the occurrence or existence of any event which would, or
could with the passage of time or otherwise, make any representation or
warranty contained herein untrue; provided, however, that the delivery of
notice pursuant to this Section 5.8 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice. Each party
shall use all commercially reasonable efforts to prevent or promptly remedy
the same.
Section 5.9 Indemnification. Omni agrees that at all times after
the Effective Time, it shall cause the Surviving Corporation and its
subsidiaries to indemnify each person who is now, or has been at any time
prior to the date hereof, a director or officer of CSI or any of its
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Subsidiaries, or their respective successors or assigns (individually, an
"Indemnified Party" and collectively the "Indemnified Parties"), to the
fullest extent permitted by law, with respect to any claim, liability, loss,
damage, judgment, fine, penalty, amount paid in settlement or compromise,
costs or expense (including reasonable fees and expenses of legal counsel),
whenever asserted or claim, based in whole or in part on, or arising in whole
or in part out of, any facts or circumstances occurring at or prior to the
Effective Time whether commenced, asserted or claimed before or after the
Effective Time, to the fullest extent as would have been permitted in their
respective Articles or Certificate of Incorporation, as appropriate, or
Bylaws consistent with applicable law. Omni shall or shall cause the
Surviving Corporation to, maintain in effect for not less than three years
after the Effective Time, the current policies of directors and officers
liability insurance maintained by CSI and its Subsidiaries as of the date
hereof to the extent that it provides coverage for events occurring prior to
the Effective Time of the Merger (the "D&O Insurance") for all persons who
are directors and officers of CSI or any of its Subsidiaries on the date
hereof; provided that Omni or the Surviving Corporation, as applicable, shall
not be required to spend as an annual premium for such D&O Insurance an
amount in excess of 150% of the annual premium paid for D&O Insurance in
effect prior to the date hereof, which amount has previously been disclosed
to Omni, but provided Omni or the Surviving Corporation, as applicable, shall
nevertheless be obligated to provide such coverage as may be obtained for
such amount. Omni may substitute for such D&O Insurance, policies with
reputable and financially sound carriers having, except as provided in the
previous sentence, at least the same coverage and amounts thereof and
continuing terms and conditions with respect to facts and circumstances
occurring at or prior to the Effective Time. The rights under this Section
5.9 are in addition to the rights that any Indemnified Party may have under
the Articles of Incorporation, Bylaws or other similar organizational
documents of CSI or any Subsidiary or under applicable law. The rights under
this Section 5.9 shall survive the Merger and are expressly intended to
benefit each Indemnified Party.
Section 5.10 Expenses. Except as provided in Section 10.5 below,
Omni and SUB, on the one hand, and CSI, on the other hand, shall bear their
respective expenses incurred in connection with the Merger, including,
without limitation, the preparation, execution and performance of this
Agreement and the transactions contemplated hereby, including all fees and
expenses of its representatives, counsel and accountants, except that (i)
expenses incurred in printing, mailing and filing (including without
limitation, SEC filing fees) the Proxy Statement/Prospectus shall be shared
equally by CSI and Omni; and (ii) the filing fee payable in connection with
the parties' compliance with the HSR Act shall be borne solely by Omni.
Section 5.11 Affiliates. CSI shall deliver to Omni a letter
identifying all persons who, as of the date hereof, may be deemed to be
"affiliates" of CSI for purposes of Rule 145 under the Securities Act (the
"Affiliates") and shall advise Omni in writing of any persons who become
Affiliates prior to the Effective Time. CSI shall cause each person who is so
identified as an Affiliate to deliver to Omni, no later than the earlier of
the thirtieth (30th) day prior to the Effective Time or the date such person
becomes an Affiliate, a written agreement substantially in the form of
Exhibit A hereto.
Section 5.12 Stock Exchange Listings. Omni shall use its
commercially
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reasonable efforts to list on the NYSE, upon official notice, the Omni Stock
to be issued pursuant to the Merger.
Section 5.13 State Anti-takeover Laws. If any "fair price" or
"control share acquisition" statute or any other statute described in Section
4.8 hereof or other similar anti-takeover regulation shall become applicable
to the transactions contemplated hereby, Omni and CSI and their respective
Boards of Directors shall use their reasonable best efforts to grant such
approvals and to take such other actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and shall otherwise use their
reasonable best efforts to eliminate the effects of any such statute or
regulation on the transactions contemplated hereby.
Section 5.14 Voting Agreement and Consulting Agreements.
Simultaneously with the execution and delivery of this Agreement, Brian A.
Kahan is executing the Voting Agreement. CSI will use all commercially
reasonable efforts to cause the persons listed on Schedule 5.14 to enter into
consulting, employment and/or non-competition agreements containing the terms
set forth on Schedule 5.14 and otherwise reasonably acceptable to Omni.
Section 5.15 Combined Financial Results. Omni covenants and
agrees for the benefit of each Affiliate that, as promptly as practicable
following the Effective Time and in no event later than the earlier of (i)
ninety (90) days after the end of the calendar month in which the Effective
Time occurs, and (ii) one hundred twenty (120) days after the Effective Time,
Omni will publicly release the financial results of Omni and CSI for a thirty
(30) day period following the Effective Time.
Section 5.16 Satisfaction of Conditions. CSI agrees to use all
commercially reasonable efforts to cause each of the conditions set forth in
Article VII to Omni and SUB proceeding with the Closing to be satisfied on or
before the Closing Date. Omni and SUB agree to use their respective
commercially reasonable efforts to cause each of the conditions set forth in
Article VIII to CSI proceeding with the Closing to be satisfied on or before
the Closing Date.
Section 5.17 SUB. Promptly following the formation of SUB, the
parties will execute an amendment to this Agreement to make SUB a party
hereto.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF OMNI, SUB AND CSI
The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the closing of each of the
following conditions:
Section 6.1 Registration Statement. The Registration Statement
shall have become effective in accordance with the provisions of the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and remain in effect
and no proceeding to that effect shall have been commenced or threatened.
All necessary state
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securities or blue sky authorizations shall have been received.
Section 6.2 Stockholder Approval. The requisite vote of the
stockholders of CSI necessary to consummate the transactions contemplated by
this Agreement shall have been obtained.
Section 6.3 Consents and Approvals. All necessary consents and
approvals of any United States or any other governmental authority required
for the consummation of the transactions contemplated by this Agreement shall
have been obtained, and any waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated.
Section 6.4 Listings. The Omni Stock issued in the Merger shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
Section 6.5 Accounting Treatment. Each of Omni and CSI shall have
received letters from Ernst & Young, LLP and Omni's auditors, reasonably
satisfactory to each of them in all respects, that the Merger will qualify
for pooling-of-interests accounting treatment.
Section 6.7 Tax Matters. Omni shall have received an opinion of
Omni's counsel, in form and substance reasonably satisfactory to Omni, and
CSI shall have received an opinion of CSI's counsel, in form and substance
reasonably satisfactory to CSI, each dated as of the Closing Date, to the
effect that the Merger will constitute a reorganization within the meaning of
Code Section 368(a) and that Omni, SUB and CSI shall each be a party to that
reorganization within the meaning of Code Section 368(b). In rendering such
tax opinions, such counsel may require and rely upon reasonably requested
representations contained in certificates of Omni, CSI and SUB.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF OMNI AND SUB
The obligation of Omni and SUB to effect the Merger and to perform
under this Agreement is subject to the fulfillment on or before the Closing
Date of the following additional conditions, any one or more of which may be
waived, in writing, by Omni:
Section 7.1 Representations Accurate. The representations and
warranties of CSI contained herein shall be true and correct on the date of
this Agreement and at and on the Closing Date as though such representations
and warranties were made at and on such date, except for such untruths or
inaccuracies which would not (without regard for any materiality qualifiers
therein), individually or in the aggregate, have a CSI Material Adverse
Effect.
Section 7.2 Performance. CSI shall have complied, in all material
respects, with all agreements, obligations and conditions required by this
Agreement to be complied with by it on or prior to the Closing Date.
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Section 7.3 Officer's Certificate. Omni and SUB shall have
received a duly executed certificate signed by the President of CSI
certifying as to (i) compliance with the conditions set forth in Sections 7.1
and 7.2; (ii) the accuracy and completeness of the Bylaws of CSI and the
director and stockholder resolutions of CSI approving this Agreement, the
Merger and the transactions contemplated hereby; and (iii) the identity and
authority of the officers and other persons executing documents on behalf of
CSI.
Section 7.4 Certified Articles of Incorporation. Omni shall have
received a certificate of the Secretary of State of the State of Florida
certifying the Articles of Incorporation of CSI and all amendments thereof,
dated not more than ten (10) days prior to the Closing Date.
Section 7.5 Good Standing. Omni shall have received a certificate
of good standing, or its equivalent, dated no more than ten (10) days prior
to the Closing Date, from the state of incorporation of CSI and each
Subsidiary and each other state in which CSI and each Subsidiary are
qualified to do business as set forth on Schedule 4.1.
Section 7.6 Legal Action. No statute, rule, regulation, order,
injunction, writ or decree shall have been enacted, entered, ordered,
promulgated or enforced by any Governmental Authority which prohibits the
consummation of the Merger and no legal action shall be pending or threatened
which is reasonably likely to have a CSI Material Adverse Effect.
Section 7.7 Consents. Omni and SUB shall have received copies of
consents of all third parties (x) necessary for CSI to execute, deliver and
perform this Agreement and consummate the Merger and (y) where failure to
obtain such consents in the aggregate would have a CSI Material Adverse
Effect.
Section 7.8 Dissenting Shares. On the Closing Date, the aggregate
number of CSI Shares with respect to which the holders shall be dissenting
shareholders entitled to relief under Section 607.1302 of the FBCA shall not
exceed ten percent (10%) of all outstanding CSI Shares.
Section 7.9 Material Adverse Change. There shall have been no
material adverse change in the business, operations, assets, prospects,
financial condition or results of operations of CSI and its Subsidiaries
taken as a whole.
Section 7.10 Agreements with Affiliates . Omni and SUB shall have
received from each person who is an Affiliate under Section 5.11 an executed
copy of the written agreement referred to in Section 5.11 and such agreements
shall be in full force and effect and there shall be no breach, or in
existence any facts which with passage of time or otherwise could constitute
a breach, thereof.
Section 7.11 Articles of Merger. CSI shall have delivered to Omni
the Articles of Merger as executed by duly authorized officers of CSI.
Section 7.12 Employment, Consulting and Non-Competition
Agreements. Each person set forth in Schedule 5.14 shall have entered into a
valid and binding employment,
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consulting or non-competition agreement containing the terms set forth in
Schedule 5.14 and otherwise on terms reasonably satisfactory to Omni.
Section 7.13 FIRPTA Certificate. If requested by Omni, CSI shall
have provided Omni with a certified statement, pursuant to Section
1.1445-2(c)(3) of the Treasury Regulations, that it is not, and has not been,
within the last five years, a "United States real property holding
corporation."
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF CSI
The obligations of CSI to effect the Merger and to perform under
this Agreement is subject to the fulfillment on or before the Closing Date of
the following additional conditions, any one or more of which may be waived,
in writing, by CSI:
Section 8.1 Representations Accurate. The representations and
warranties of Omni and SUB contained herein shall be true and correct on the
date of this Agreement and at and on the Closing Date as though such
representations and warranties were made at and on such date, except for such
untruths or inaccuracies which would not (without regard for any materiality
qualifiers therein), individually or in the aggregate, have an Omni Material
Adverse Effect.
Section 8.2 Performance. Omni and SUB shall have complied, in all
material respects, with all agreements, obligations and conditions required
by this Agreement to be complied with by them on or prior to the Closing Date.
Section 8.3 Compliance Certificate. CSI shall have received a
certificate signed by an officer of each of Omni and SUB certifying as to (i)
compliance with the conditions set forth in Sections 8.1 and 8.2; (ii) the
accuracy and completeness of the Bylaws of SUB and, as applicable, the
director and stockholder resolutions adopted of Omni and SUB approving this
Agreement, the Merger and the transactions contemplated hereby; and (iii) the
identity and authority of the officers and other persons executing documents
on behalf of Omni and SUB.
Section 8.4 Legal Action. No statute, rule, regulation, order,
injunction, writ or decree shall have been enacted, entered, ordered,
promulgated or enforced by any governmental entity which prohibits the
consummation of the Merger and no legal action shall be pending or threatened
which is reasonably likely to have an Omni Material Adverse Effect.
Section 8.5 Material Adverse Change. There shall have been no
material adverse change in the business, operations, assets, prospects,
financial condition or results of operations of Omni and its subsidiaries
taken as a whole.
Section 8.6 Articles of Merger. SUB shall have delivered to CSI
the Articles of Merger, executed by duly authorized officers of SUB.
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ARTICLE IX
CLOSING
Section 9.1 Time And Place. Upon the terms and subject to the
conditions hereof, the closing of the Merger (the "Closing") shall take place
at the offices of Atlas, Pearlman, Trop & Borkson, P.A., as soon as
practicable, but in no event later than 10:00 a.m., local time, on the first
business day after the date on which each of the conditions set forth in
Articles VI, VII and VIII (other than those conditions that by their nature
are to be satisfied at the Closing, but subject to such conditions) have been
satisfied or waived, in writing, by the party or parties entitled to the
benefit of such conditions; or at such other place, at such other time, or on
such other date as Omni, SUB and CSI may, in writing, mutually agree. The
date on which the Closing actually occurs is herein referred to as the
"Closing Date."
Section 9.2 Filings at the Closing. Upon the terms and subject to the
conditions hereof, CSI, Omni and SUB shall cause to be executed and filed at
the Closing the Articles of Merger and shall cause the Articles of Merger to
be recorded in accordance with the applicable provisions of the FBCA and
shall take any and all other lawful actions and do any and all other lawful
things necessary to cause the Merger to become effective.
ARTICLE X
TERMINATION AND ABANDONMENT
Section 10.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval by the
stockholders of CSI or Omni:
(a) by mutual consent of Omni and CSI;
(b) by either Omni or CSI, if any court of competent jurisdiction
in the United States or other governmental body in the United States shall
have issued an order (other than a temporary restraining order), decree or
ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Merger, and such order, decree, ruling or other action shall
have become final and nonappealable; or
(c) by either Omni or CSI, if the stockholder approval of the
stockholders of CSI is not obtained at a meeting of stockholders duly called
and held therefor.
(d) by either Omni or CSI if the Merger shall not have been
consummated by January 15, 1999, provided that a party in material breach of
this Agreement may not terminate this Agreement pursuant to this Section
10.1(d).
Section 10.2 Termination by Omni. This Agreement may be
terminated and the Merger may be abandoned, at any time prior to the
Effective Time, before or after the approval of the stockholders of CSI, by
Omni if (a) CSI shall have failed to comply in any material respect with
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any of the covenants or agreements contained in this Agreement to be complied
with by CSI at or prior to such date of termination, (b) there exists a
breach of any representation or warranty of CSI contained in this Agreement
such that the closing condition set forth in Section 7.1 would not be
satisfied, provided, however, that, with respect to either (a) or (b), if
such failure or breach is capable of being cured prior to the Effective Time,
such failure or breach shall not have been cured within fifteen (15) days of
delivery to CSI of written notice of such failure or breach, or (c) the Board
of Directors of CSI shall withdraw, modify or change its recommendation of
this Agreement or the Merger in a manner adverse to Omni or shall have failed
to reaffirm its recommendation within five business days of Omni's request
that it do so or shall have recommended or issued a neutral recommendation
(or taken no position) with respect to any proposal in respect of a
Transaction Proposal (as defined in Section 5.2 above).
Section 10.3 Termination by CSI. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time,
before or after the approval by the stockholders of Omni or CSI, by CSI, if
(a) Omni or SUB shall have failed to comply in any material respect with any
of the covenants or agreements contained in this Agreement to be complied
with by Omni or SUB at or prior to such date of termination, (b) there exists
a breach of any representation or warranty of Omni or SUB contained in this
Agreement such that the closing condition set forth in Section 8.1 would not
be satisfied, provided, however, that, with respect to either (a) or (b), if
such failure or breach is capable of being cured prior to the Effective Time,
such failure or breach shall not have been cured within fifteen (15) days of
delivery to Omni or Sub of written notice of such failure or breach, or (c)
prior to the CSI stockholder meeting, if the CSI Board of Directors, in the
exercise of its good faith judgment as to fiduciary duties to its
stockholders imposed by law, based upon the advice of outside counsel,
determines that such termination is required in order to execute an agreement
providing for the implementation of the transactions contemplated by a
Transaction Proposal, provided, however, that (i) the Company shall have
complied with the provisions of Section 5.2 hereof, including providing
notice of the terms of the Transaction Proposal and (ii) at least ten
business days shall have elapsed after the Company has notified Omni of the
final terms of such Transaction Proposal. No termination of this Agreement
by the Company shall be effective unless and until the Company has paid Omni
any amounts owed by it pursuant to Section 10.5.
Section 10.4 Procedure for Termination. In the event of
termination and abandonment of the Merger by Omni or CSI pursuant to this
Article X, written notice thereof shall forthwith be given to the other.
Section 10.5 Effect of Termination and Abandonment. (a) In the
event of termination of this Agreement and abandonment of the Merger pursuant
to this Article X, no party hereto (or any of its directors of officers)
shall have any liability or further obligation to any other party to this
Agreement, except as provided in this Section 10.5 and in Sections 5.3(b) and
5.10 hereof, and except as provided in the Stock Option Agreement. Nothing in
this Section 10.5(a) shall relieve any party from liability for willful
breach of this Agreement.
(b) In the event that this Agreement is terminated by either party
pursuant to (w)
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Section 10.1(c) following the making of a Transaction Proposal, (x) Section
10.2(a) or (c) or (y) Section 10.3(c), then CSI shall pay Omni a fee of $3.2
million. Any monies owed by CSI to Omni in accordance with the preceding
sentence shall be payable by wire transfer of same day funds either on the
date contemplated in the last sentence of Section 10.3 if applicable or,
otherwise, within two business days after such amount becomes due.
In the event that this Agreement is terminated by Omni pursuant to
Section 10.2(b), then CSI shall reimburse Omni for its reasonable
out-of-pocket expenses incurred in connection with this Agreement and the
transactions contemplated hereby.
In the event that this Agreement is terminated by CSI pursuant to
Section 10.3(a) or (b), then Omni shall reimburse CSI for its reasonable
out-of-pocket expenses incurred in connection with this Agreement and the
transactions contemplated hereby.
CSI acknowledges that the agreements contained in this Section 10.5(b)
are an integral part of the transactions contemplated in this Agreement, and
that, without these agreements, Omni would not enter into this Agreement;
accordingly, if CSI fails to promptly pay the amount due pursuant to this
Section 10.5(b), and, in order to obtain such payment, Omni commences a suit
which results in a judgment against CSI for the fee set forth in this Section
10.5(b), CSI shall pay to Omni its costs and expenses (including attorneys'
fees) in connection with such suit, together with interest on the amount of
the fee at the rate of 12% per annum from the date such fee was required to
be paid.
ARTICLE XI
SURVIVABILITY
Section 11.1 Survival of Representations and Warranties. The
representations and warranties of CSI contained herein or in any certificate
or other document delivered prior to Closing shall not survive the Closing.
The representations and warranties of Omni and SUB contained herein or in any
certificate or other document delivered prior to Closing shall not survive
the Closing.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Notices. All notices shall be in writing delivered
as follows:
(a) If to Omni or SUB, to:
Omnicare, Inc.
2800 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45203
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Attention: Cheryl D. Hodges
Telecopy: 513-762-6678
With a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attn: Morton A. Pierce and Richard D. Pritz
Telecopy: 212-259-6333
(b) If to CSI, to:
CompScript, Inc.
1225 Broken Sound Parkway, N.W.
Boca Raton, Florida 33487
Attn: Brian A. Kahan, President
Telecopy: 561-994-6104
With a copy to:
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Ft. Lauderdale, Florida 33301
Attn: Joel D. Mayersohn, Esq.
Telecopy: 954-766-7800
or to such other address as may have been designated in a prior notice
pursuant to this Section. Notices shall be deemed to be effectively served
and delivered upon receipt.
Section 12.2 Binding Effect. Except as may be otherwise provided
herein, this Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights or obligations hereunder shall
be assigned by any of the parties hereto without the prior written consent of
the other parties. Except as otherwise specifically provided in this
Agreement, nothing in this Agreement is intended or will be construed to
confer on any person other than the parties hereto any rights or benefits
hereunder.
Section 12.3 Headings. The headings in this Agreement are
intended solely for convenience of reference and will be given no effect in
the construction or interpretation of this Agreement.
Section 12.4 Exhibits and Schedules. The Exhibits and Schedules
referred to in this Agreement will be deemed to be a part of this Agreement.
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Section 12.5 Counterparts. This Agreement may be executed in
multiple counterparts, each of which will be deemed an original, and all of
which together will constitute one and the same document.
Section 12.6 Governing Law. This Agreement will be governed by
and construed under Delaware law, without regard to conflict of laws
principles thereof, except that matters relating to the validity and effects
of the Merger and the fiduciary obligations of the directors of CSI shall be
governed by the applicable provisions of the FBCA.
Section 12.7 Waivers. Compliance with the provisions of this
Agreement may be waived only by a written instrument specifically referring
to this Agreement and signed by the party waiving compliance. No course of
dealing, nor any failure or delay in exercising any right, will be construed
as a waiver, and no single or partial exercise of a right will preclude any
other or further exercise of that or any other right.
Section 12.8 Pronouns. The use of a particular pronoun herein
will not be restrictive as to gender or number but will be interpreted in all
cases as the context may require.
Section 12.9 Time Periods. Any action required hereunder to be
taken within a certain number of days will be taken within that number of
calendar days; provided, however, that if the last day for taking such action
falls on a weekend or a holiday, the period during which such action may be
taken will be automatically extended to the next business day.
Section 12.10 Modification. No supplement, modification or
amendment of this Agreement will be binding unless made in a written
instrument that is signed by all of the parties hereto and that specifically
refers to this Agreement.
Section 12.11 Entire Agreement. This Agreement and the agreements
and documents referred to in this Agreement or delivered hereunder are the
exclusive statement of the agreement among the parties concerning the subject
matter hereof. All negotiations among the parties are merged into this
Agreement, and there are no representations, warranties, covenants,
understandings, or agreements, oral or otherwise, in relation thereto among
the parties other than those incorporated herein and to be delivered
hereunder.
Section 12.12 Severability. If any one or more of the provisions
of this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality or enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by
applicable law, each party waives any provision of law which renders any
provision of this Agreement invalid, illegal or unenforceable in any respect.
Section 12.13 Interpretation. As used herein, a subsidiary of an
entity shall mean any corporation or other organization, whether incorporated
or unincorporated, of which such entity directly or indirectly owns or
controls at least a majority of the securities or other interests
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having by their terms ordinary voting power to elect a majority of the board
of directors or others performing similar functions with respect to such
corporation or other organization, or any organization of which such entity
is a general partner. As used in this Agreement, "includes," "including" or
words of similar import shall be deemed to be followed by "without
limitation." The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed by their respective duly authorized officers as of the date
first above written.
COMPSCRIPT, INC.
By: /s/ Brian A. Kahan
-------------------------------
Name: Brian A. Kahan
Title: Chief Executive Officer
OMNICARE, INC.
By: /s/ Joel F. Gemunder
-------------------------------
Name: Joel F. Gemunder
Title: President
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Exhibit 2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of February 23, 1998 (the
"Agreement"), between OMNICARE, INC., a Delaware corporation ("Grantee"), and
COMPSCRIPT, INC., a Florida corporation ("Grantor").
WHEREAS, Grantee and Grantor are entering into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which
provides, among other things, for the merger of Grantor with and into a wholly
owned subsidiary of Grantee (the "Merger");
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Grantee has requested that Grantor grant to Grantee an
option to purchase up to 2,800,000 (the "Option Number") shares of Common
Stock, par value $.0001 per share, of Grantor (the "Common Stock"), upon the
terms and subject to the conditions hereof; and
WHEREAS, in order to induce Grantee to enter into the Merger
Agreement, Grantor is willing to grant Grantee the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as
follows:
1. The Option; Exercise; Adjustments; Payment of Spread.
(a) Subject to the other terms and conditions set forth herein,
Grantor hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to the Option Number shares of Common Stock (the "Shares") at a
cash purchase price equal to $4.50 per share (the "Purchase Price"). The
Option may be exercised by Grantee, in whole or in part, at any time, or from
time to time, following the occurrence of one of the events set forth in
Section 2(c) hereof, and prior to the termination of the Option in accordance
with the terms of this Agreement.
(b) In the event Grantee wishes to exercise the Option, Grantee
shall send a written notice to Grantor (the "Stock Exercise Notice")
specifying a date (subject to the HSR Act, as defined below) not later than 10
business days and not earlier than three business days following the date such
notice is given for the closing of such purchase. In the event of any change
in the number of issued and outstanding shares of Common Stock by reason of
any stock dividend, stock split, split-up, recapitalization, merger or other
change in the corporate or capital structure of Grantor, the number of Shares
subject to this Option and the purchase price per Share shall be appropriately
adjusted to restore Grantee to its rights hereunder, including its right to
purchase Shares representing 19.9% of the capital stock of Grantor entitled to
vote generally for the election of the directors of Grantor which is issued
and outstanding immediately prior to the exercise of the Option at an
aggregate purchase price equal to the Purchase Price multiplied by the Option
Number.
<PAGE>
(c) If at any time the Option is then exercisable pursuant to the
terms of Section 1(a) hereof, Grantee may elect, in lieu of exercising the
Option to purchase Shares provided in Section 1(a) hereof, to send a written
notice to Grantor (the "Cash Exercise Notice") specifying a date not later
than 20 business days and not earlier than 10 business days following the date
such notice is given on which date Grantor shall pay to Grantee an amount in
cash equal to the Spread (as hereinafter defined) multiplied by all or such
portion of the Shares subject to the Option as Grantee shall specify. As used
herein "Spread" shall mean the excess, if any, over the Purchase Price of the
higher of (x) if applicable, the highest price per share of Common Stock
(including any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid or proposed to be paid by any person pursuant to one of the
transactions enumerated in Section 2(c) hereof (the "Alternative Purchase
Price") or (y) the average of the closing prices (or the average of the
closing bid and asked prices if closing prices are unavailable) of the shares
of Common Stock as reported on Nasdaq on the last trading day immediately
prior to the date of the Cash Exercise Notice (the "Closing Price"). If the
Alternative Purchase Price includes any property other than cash, the
Alternative Purchase Price shall be the sum of (i) the fixed cash amount, if
any, included in the Alternative Purchase Price plus (ii) the fair market
value of such other property. If such other property consists of securities
with an existing public trading market, the average of the closing prices (or
the average of the closing bid and asked prices if closing prices are
unavailable) for such securities in their principal public trading market on
the five trading days ending five days prior to the date of the Cash Exercise
Notice shall be deemed to equal the fair market value of such property. If
such other property consists of something other than cash or securities with
an existing public trading market and, as of the payment date for the Spread,
agreement on the value of such other property has not been reached, the
Alternative Purchase Price shall be deemed to equal the Closing Price. Upon
exercise of its right to receive cash pursuant to this Section 1(c), the
obligations of Grantor to deliver Shares pursuant to Section 3 shall be
terminated with respect to such number of Shares for which Grantee shall have
elected to be paid the Spread. Notwithstanding the foregoing, the Spread
shall not be payable unless and until (i) the Board of Directors of the
Company shall have recommended a transaction contemplated by Section 2(c)
hereof ("Another Transaction") or shall have failed to reject (including by
taking no position with respect to) Another Transaction, (ii) the Company
shall have entered into an agreement in respect of Another Transaction, (iii)
an event set forth in Section 2(c)(vi) shall have occurred, (iv) the Company
shall have materially breached its covenants herein or in the Merger Agreement
or (v) Another Transaction shall have been consummated.
2. Conditions to Delivery of Shares. The Grantor's obligation to
deliver Shares upon exercise of the Option is subject only to the conditions
that:
(a) No preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in
the United States prohibiting the delivery of the Shares shall be
in effect; and
(b) Any applicable waiting periods under the Hart-Scott-Rodino
Antitrust
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Improvements Act of 1976 (the "HSR Act") shall have expired or
been terminated; and
(c)(i) any person (other than Grantee or any of its
subsidiaries) shall have commenced (as such term is defined in
Rule 14d-2 under the Securities Exchange Act of 1934 (the
"Exchange Act")) a tender offer, or shall have filed a
registration statement under the Securities Act of 1933 (the
"Securities Act") with respect to an exchange offer, to purchase
any shares of Common Stock such that, upon consummation of such
offer, such person or a "group" (as such term is defined under
the Exchange Act) of which such person is a member shall have
acquired beneficial ownership (as such term is defined in Rule
13d-3 of the Exchange Act), or the right to acquire beneficial
ownership, of 15 percent or more of the then outstanding Common
Stock; (ii) any person (other than Grantee or any of its
subsidiaries) shall have publicly announced or delivered to
Grantor a proposal, or disclosed publicly or to Grantor an
intention to make a proposal, to purchase 15% or more of the
assets or any equity securities of, or to engage in a merger,
reorganization, tender offer, share exchange, consolidation or
similar transaction involving the Grantor or any of its
subsidiaries (an "Acquisition Transaction"); (iii) Grantor or any
of its subsidiaries shall have authorized, recommended, proposed
or publicly announced an intention to authorize, recommend or
propose, or entered into, an agreement, including without
limitation, an agreement in principle, with any person (other
than Grantee or any of its subsidiaries) to effect or provide for
an Acquisition Transition; (iv) any person shall solicit proxies
or consents or announce a bona fide intention to solicit proxies
or consents from Grantor's stockholders (x) relating to directors,
(y) in opposition to the Merger, the Merger Agreement or any
related transactions or (z) relating to an Acquisition Transaction
(other than solicitations of stockholders seeking approval of the
Merger, the Merger Agreement or any related transactions); (v)
any person shall have made a Transaction Proposal (as defined in
the Merger Agreement); or (vi) any person (other than Grantee or
any of its subsidiaries) shall have acquired beneficial ownership
(as such term is defined in Rule 13d-3 under the Exchange Act) or
the right to acquire beneficial ownership of, or any "group" (as
such term is defined under the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire
beneficial ownership of, shares of Common Stock (other than trust
account shares) aggregating 15 percent or more of the then
outstanding Common Stock. As used in this Agreement, "person"
shall have the meaning specified in Sections 3(a)(9) and 13(d)(3)
of the Exchange Act.
3. The Closing. (a) Any closing hereunder shall take place on the
date specified by Grantee in its Stock Exercise Notice or Cash Exercise
Notice, as the case may be, at 9:00 a.m., local time, at the offices of Dewey
Ballantine LLP, 1301 Avenue of the Americas, New York, New York, or, if the
conditions set forth in Section 2(a) or (b) have not then been satisfied, on
the second business day following the satisfaction of such conditions, or at
such other time and place as the parties hereto may agree (the "Closing
Date"). On the Closing Date, (i) in the event of a closing pursuant to Section
1(b) hereof,
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Grantor will deliver to Grantee a certificate or certificates, representing
the Shares in the denominations designated by Grantee in its Stock Exercise
Notice and Grantee will purchase such Shares from Grantor at the price per
Share equal to the Purchase Price or (ii) in the event of a closing pursuant
to Section 1(c) hereof, Grantor will deliver to Grantee cash in an amount
determined pursuant to Section 1(c) hereof. Any payment made by Grantee to
Grantor, or by Grantor to Grantee, pursuant to this Agreement shall be made by
certified or official bank check or by wire transfer of immediately available
funds to a bank designated by the party receiving such funds.
(b) The certificates representing the Shares shall bear an
appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act.
4. Representations and Warranties of Grantor. The Grantor
represents and warrants to Grantee that (a) Grantor is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Florida and has the requisite corporate power and authority to enter into
and perform this Agreement; (b) the execution and delivery of this Agreement
by Grantor and the consummation by it of the transactions contemplated hereby
have been duly authorized by the Board of Directors of Grantor and this
Agreement has been duly executed and delivered by a duly authorized officer of
Grantor and constitutes a valid and binding obligation of Grantor, enforceable
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles;
(c) Grantor has taken all necessary corporate action to authorize and reserve
the Shares issuable upon exercise of the Option and the Shares, when issued
and delivered by Grantor upon exercise of the Option and paid for by Grantee
as contemplated hereby, will be duly authorized, validly issued, fully paid
and non-assessable and free of preemptive rights; (d) except as otherwise
required by the HSR Act, the execution and delivery of this Agreement by
Grantor and the consummation by it of the transactions contemplated hereby do
not require the consent, waiver, approval or authorization of or any filing
with any person or public authority and will not violate, result in a breach
of or the acceleration of any obligation under, or constitute a default under,
any provision of Grantor's charter or by-laws, or any material indenture,
mortgage, lien, lease, agreement, contract, instrument, order, law, rule,
regulation, judgment, ordinance, or decree, or restriction by which Grantor or
any of its subsidiaries or any of their respective properties or assets is
bound; (e) Grantor (i) will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by
any other voluntary act, avoid or seek to avoid the observance or performance
of any of the covenants, stipulations or conditions to be observed or
performed hereunder by Grantor and (ii) will promptly take all action provided
herein to protects the rights of Grantee against dilution as set forth in
Section 1(b) hereof and (f) no "fair price", "moratorium", "control share
acquisition," "interested shareholder" or other form of antitakeover statute
or regulation, including without limitation, Sections 607.0901 or 607.0902 of
the Florida Business Corporation Act, or similar provision contained in the
charter or by-laws of Grantor, is or shall be applicable to the acquisition of
Shares pursuant to this Agreement.
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5. Representations and Warranties of Grantee. The Grantee
represents and warrants to Grantor that (a) the execution and delivery of this
Agreement by Grantee and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Grantee and this Agreement has been duly executed and
delivered by a duly authorized officer of Grantee and constitutes a valid and
binding obligation of Grantee; and (b) Grantee is acquiring the Option and, if
and when it exercises the Option, will be acquiring the Shares issuable upon
the exercise thereof for its own account and not with a view to distribution
or resale in any manner which would be in violation of the Securities Act.
6. Listing of Shares; Filings; Governmental Consents. Grantor will
promptly file an application to list the Shares on Nasdaq and will use its
reasonable best efforts to obtain approval of such listing and to effect all
necessary filings by Grantor under the HSR Act; provided, however, that if
Grantor is unable to effect such listing on Nasdaq by the Closing Date,
Grantor will nevertheless be obligated to deliver the Shares upon the Closing
Date. Each of the parties hereto will use its reasonable best efforts to
obtain consents of all third parties and governmental authorities, if any,
necessary to the consummation of the transactions contemplated.
7. Sale of Shares. At any time prior to the first anniversary of
the termination of the Merger Agreement in accordance with its terms (the
"Merger Termination Date"), Grantee shall have the right to sell (the "Sale
Right") to Grantor all, but not less than all, of the Shares at the greater of
(i) the Purchase Price, or (ii) the average of the last sales prices for
shares of Common Stock on the five trading days ending five days prior to the
date Grantee gives written notice of its intention to exercise the Sale Right.
If Grantee does not exercise the Sale Right prior to the first anniversary of
the Merger Termination Date, the Sale Right terminates. In the event Grantee
wishes to exercise the Sale Right, Grantee shall send a written notice to
Grantor specifying a date not later than 20 business days and not earlier than
10 business days following the date such notice is given for the closing of
such sale. The Sale Right will not be available if the Merger Agreement is
terminated pursuant to Section 10.1 (other than Section 10.1(c) thereof) or
Section 10.2(b), 10.3(a) or (b) thereof.
8. Registration Rights. (a) In the event that Grantee shall desire
to sell any of the Shares, Grantor will cooperate with Grantee and any
underwriters in registering such Shares for resale, including, without
limitation, promptly filing a registration statement which complies with the
requirements of applicable federal and state securities laws, and entering
into an underwriting agreement with such underwriters upon such terms and
conditions as are customarily contained in underwriting agreements with
respect to secondary distributions; provided that Grantor shall not be
required to have declared effective more than two registration statements
hereunder and shall be entitled to delay the filing or effectiveness of any
registration statement for up to 60 days if the offering would, in the
judgment of the Board of Directors of Grantor, require premature disclosure of
any material corporate development or material transaction involving Grantor
or interfere with any previously planned securities offering by the Company.
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(b) If the Common Stock is registered pursuant to the provisions
of this Section 8, Grantor agrees (i) to furnish copies of the registration
statement and the prospectus relating to the Shares covered thereby in such
numbers as Grantee may from time to time reasonably request and (ii) if any
event shall occur as a result of which it becomes necessary to amend or
supplement any registration statement or prospectus, to prepare and file under
the applicable securities laws such amendments and supplements as may be
necessary to keep available for at least 45 days a prospectus covering the
Common Stock meeting the requirements of such securities laws, and to furnish
Grantee such numbers of copies of the registration statement and prospectus as
amended or supplemented as may reasonably be requested. The Grantor shall bear
the cost of the registration, including, but not limited to, all registration
and filing fees, printing expenses, and fees and disbursements of counsel and
accountants for Grantor, except that Grantee shall pay the fees and
disbursements of its counsel, and the underwriting fees and selling
commissions applicable to the shares of Common Stock sold by Grantee. The
Grantor shall indemnify and hold harmless (i) Grantee, its affiliates and its
officers and directors and (ii) each underwriter and each person who controls
any underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934 (collectively, the "Underwriters") ((i) and (ii) being
referred to as "Indemnified Parties") against any losses, claims, damages,
liabilities or expenses, to which the Indemnified Parties may become subject,
insofar as such losses, claims, damages, liabilities (or actions in respect
thereof) and expenses arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained or incorporated by
reference in any registration statement filed pursuant to this paragraph, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that Grantor will not be
liable in any such case to the extent that any such loss, liability, claim,
damage or expense arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any such
documents in reliance upon and in conformity with written information
furnished to Grantor by the Indemnified Parties expressly for use or
incorporation by reference therein.
(c) The Grantee and the Underwriters shall indemnify and hold
harmless Grantor, its affiliates and its officers and directors against any
losses, claims, damages, liabilities or expenses to which Grantor, its
affiliates and its officers and directors may become subject, insofar as such
losses, claims, damages, liabilities (or actions in respect thereof) and
expenses arise out of or are based upon any untrue statement of any material
fact contained or incorporated by reference in any registration statement
filed pursuant to this paragraph, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to Grantor by
Grantee or the Underwriters, as applicable, specifically for use or
incorporation by reference therein.
9. Expenses. Each party hereto shall pay its own expenses incurred
in connection
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with this Agreement, except as otherwise specifically provided herein.
10. Specific Performance. The Grantor acknowledges that if Grantor
fails to perform any of its obligations under this Agreement immediate and
irreparable harm or injury would be caused to Grantee for which money damages
would not be an adequate remedy. In such event, Grantor agrees that Grantee
shall have the right, in addition to any other rights it may have, to specific
performance of this Agreement.
11. Notice. All notices, requests, demands and other
communications hereunder shall be in writing deemed to have been duly given
upon receipt by the person at the address set forth below, or such other
address as may be designated in writing hereafter, in the same manner, by such
person:
If to Grantee:
Omnicare, Inc.
2800 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45203
Attention: Cheryl D. Hodges
Telecopy: 513-762-6678
With a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attn: Morton A. Pierce and Richard D. Pritz
Telecopy: (212) 259-6333
If to Grantor:
CompScript, Inc.
1225 Broken Sound Parkway, N.W.
Boca Raton, Florida 33487
Attn: Brian A. Kahan, President
Telecopy: 561-994-6104
With a copy to:
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Ft. Lauderdale, Florida 33301
Attn: Joel D. Mayersohn
Telecopy: 954-766-7800
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12. Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns; provided, however, that such successor in interest or
as signs shall agree to be bound by the provisions of this Agreement. Nothing
in this Agreement, express or implied, is intended to confer upon any person
other than Grantor or Grantee, or their successors or assigns, any rights or
remedies under or by reason of this Agreement.
13. Entire Agreement; Amendments. This Agreement, together with
the Merger Agreement and the other documents referred to therein, contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but may be changed
only by an agreement in writing signed by the party against whom any waiver,
change, amendment, modification or discharge may be sought.
14. Assignment. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent
of the other party hereto, except that Grantee may assign its rights and
obligations hereunder to any of its direct or indirect wholly owned
subsidiaries, but no such transfer shall relieve Grantee of its obligations
hereunder if such transferee does not perform such obligations.
15. Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (regardless of
the laws that might other wise govern under applicable Delaware principles of
conflicts of law).
THE GRANTOR AGREES THAT, IN CONNECTION WITH ANY LEGAL SUIT OR
PROCEEDING ARISING WITH RESPECT TO THIS AGREEMENT, IT SHALL SUBMIT TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE
AND AGREES TO VENUE IN SUCH COURTS. THE GRANTOR HEREBY APPOINTS THE SECRETARY
OF THE GRANTOR AS ITS AGENT FOR SERVICE OF PROCESS FOR PURPOSES OF THE
FOREGOING SENTENCE ONLY.
18. Termination. The right to exercise the Option granted pursuant
to this Agreement shall terminate at the earlier of (i) the Effective Time (as
defined in the Merger Agreement); (ii) 90 days after the Merger Termination
Date (the date referred to in this clause (ii) being hereinafter referred to
as the "Option Termination Date"), unless the Merger Agreement was terminated
pursuant to Sections 10.3(a) or (b) or, if no Takeover Proposal was made,
Sections 10.1 or 10.2(b) thereof and, (iii) 12 months after
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the date hereof; provided that, if the Option cannot be exercised or the
Shares cannot be delivered to Grantee upon such exercise because the
conditions set forth in Section 2(a) or (b) hereof have not yet been
satisfied, the Option Termination Date shall be extended until thirty days
after such impediment to exercise or delivery has been removed.
All representations and warranties contained in this Agreement
shall survive delivery of and payment for the Shares.
19. Profit Limitation. (a) Notwithstanding any other provision of
this Agreement, in no event shall Grantee's Total Profit (as hereinafter
defined) exceed $3.3 million and, if it otherwise would exceed such amount,
Grantee, at its sole election, shall either (a) deliver to Grantor for
cancellation Shares previously purchased by Grantee, (b) pay cash or other
consideration to Grantor or (c) undertake any combination thereof, so that
Grantee's Total Profit shall not exceed $3.3 million after taking into account
the foregoing actions.
Notwithstanding any other provision of this Agreement, this Option
may not be exercised for a number of Shares as would, as of the date of the
Stock Exercise Notice, result in a Notional Total Profit (as defined below) of
more than $3.3 million and, if exercise of the Option otherwise would exceed
such amount, Grantee, at its discretion, may increase the Purchase Price for
that number of Shares set forth in the Stock Exercise Notice so that the
Notional Total Profit shall not exceed $3.3 million; provided, that nothing in
this sentence shall restrict any exercise of the Option permitted hereby on
any subsequent date at the Purchase Price set forth in Section 1(a) hereof.
As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount of cash received by
Grantee pursuant to Section 10.5 of the Merger Agreement and Section 1(c)
hereof, (ii) (x) the amount received by Grantee pursuant to Grantor's
repurchase of Shares pursuant to Section 7 hereof, less (y) Grantee's purchase
price for such Shares, and (iii) (x) the net cash amounts received by Grantee
pursuant to the sale of Shares (or any other securities into which such Shares
are converted or exchanged) to any unaffiliated party, less (y) Grantee's
purchase price for such Shares.
As used herein, the term "Notional Total Profit" with respect to
any number of Shares as to which Grantee may propose to exercise this Option
shall be the Total Profit determined as of the date of the Stock Exercise
Notice assuming that this Option were exercised on such date for such number
of Shares and assuming that such Shares, together with all other Shares held
by Grantee and its affiliates as of such date, were sold for cash at the
closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
20. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
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21. Public Announcement. The Grantee will consult with Grantor and
Grantor will consult with Grantee before issuing any press release with
respect to the initial announcement of this Agreement, the Option or the
transactions contemplated hereby and neither party shall issue any such press
release prior to such consultation except as may be required by law or the
applicable rules and regulations of Nasdaq or the NYSE.
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IN WITNESS WHEREOF, Grantee and Grantor have caused this Agreement
to be duly executed and delivered on the day and year first above written.
OMNICARE, INC.
By: /s/ Joel F. Gemunder
-------------------------
Name: Joel F. Gemunder
Title: President
COMPSCRIPT, INC.
By: /s/ Brian A. Kahan
-------------------------
Name: Brian A. Kahan
Title: Chief Executive Officer
<PAGE>
Exhibit 3
VOTING AGREEMENT
VOTING AGREEMENT, dated as of February 23, 1998, between Brian A. Kahan
(the "Shareholder") and Omnicare, Inc., a Delaware corporation ("Omni").
A. The Shareholder is the record and beneficial owner of 4,332,453
issued and outstanding shares (together with any shares acquired after the
date hereof, the "Shares") of common stock, $.0001 par value, of CompScript,
Inc., a Florida corporation ("CSI" or the "Company"), which Shares represent
approximately 31% of the currently issued and outstanding shares of CSI's
common stock.
B. In order to induce Omni to enter into the Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), by and between
CSI and Omni, Omni has requested that the Shareholder enter into this
Agreement with respect to the Shares.
C. Unless otherwise defined herein, all capitalized terms used in this
Agreement shall have the meanings given to them in the Merger Agreement.
For good and valuable consideration, the adequacy and receipt of which
are hereby acknowledged, and in order to induce Omni to enter into the Merger
Agreement, Omni and the Shareholder hereby agree as follows:
1. Covenants.
(a) At any meeting of shareholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval (including
by written consent) with respect to the Merger and the Merger Agreement is
sought, the Shareholder shall, including by initiating a written consent
solicitation if requested by Omni, vote (or cause to be voted) the
Shareholder's Shares in favor of the Merger, the adoption by the Company of
the Merger Agreement and the approval of the other transactions contemplated
by the Merger Agreement.
(b) At any meeting of shareholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Shareholder's vote,
consent or other approval is sought, the Shareholder shall vote (or cause to
be voted) such Shareholder's Shares against (i) any merger agreement or
merger (other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization, recapitalization,
dissolution, liquidation or winding up of or by the Company or its
Subsidiaries or any other Transaction Proposal (as defined in the Merger
Agreement) (collectively, "Alternative Transactions") or (ii) any amendment
of the Company's Amended and Restated Articles of Incorporation or by-laws or
other proposal or transaction involving the Company or any of its
subsidiaries, which amendment or other proposal or transaction would in any
manner impede, frustrate, prevent or nullify, the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement (collectively, "Frustrating Transactions").
<PAGE>
(c) The Shareholder shall not, (i) sell, transfer, pledge, assign or
otherwise dispose of, or enter into any contract, option or other arrangement
(including any profit sharing arrangement) or understanding with respect to
the sale, transfer, pledge, assignment or other disposition of, the Shares to
any person other than Omni or Omni's designee, (ii) enter into any voting
arrangement, whether by proxy, voting agreement, voting trust,
power-of-attorney or otherwise, with respect to the Shares or (iii) take any
other action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated
hereby.
2. Grant of Irrevocable Proxy Coupled with an Interest; Appointment of
Proxy.
(a) The Shareholder hereby irrevocably grants to and appoints any
individual who shall hereafter be designated by Omni, and each of them, such
Shareholder's proxy and attorney-in-fact (with full power of substitution),
for and in the name, place and stead of such Shareholder, to vote such
Shareholder's Shares, or grant a consent or approval in respect of such
Shares, at any meeting of shareholders of the Company or at any adjournment
thereof or in any other circumstances upon which their vote, consent or other
approval is sought, (i) in favor of the Merger, the adoption by the Company
of the Merger Agreement and the approval of the other transactions
contemplated by the Merger Agreement and (ii) against any Alternative
Transaction or Frustrating Transaction.
(b) The Shareholder represents that any proxies heretofore given in
respect of such Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) THE SHAREHOLDER HEREBY AFFIRMS THAT THE PROXY SET FORTH IN THIS
SECTION 2 IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL SUCH TIME AS
THIS AGREEMENT TERMINATES IN ACCORDANCE WITH ITS TERMS. The Shareholder
hereby further affirms that the irrevocable proxy is given in connection with
the execution of the Merger Agreement, and that such irrevocable proxy is
given to secure the performance of the duties of such Shareholder under this
Agreement. Such Shareholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such
irrevocable proxy is executed and intended to be irrevocable in accordance
with the provisions of Section 607.0722 of the FBCA.
3. Representations and Warranties of the Shareholder. The Shareholder
hereby represents and warrants to Omni as follows:
(a) Authorization. The Shareholder has the legal capacity to execute,
deliver and perform this Agreement. This Agreement constitutes a valid and
binding obligation of the Shareholder enforceable against him in accordance
with its terms. If the Shareholder is married and the Shares constitute
community property under applicable law, this Agreement has been duly
authorized, executed and delivered by, and constitutes the valid and binding
agreement of, the Shareholder's spouse enforceable against such spouse in
accordance with its terms.
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(b) No Conflict. The execution, delivery and performance by the
Shareholder of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) result in any breach or violation
of or be in conflict with or constitute a default under term of any law or
agreement or arrangement to which the Shareholder is a party or by which the
Shareholder is bound, (ii) require any filing with or authorization by any
governmental entity or (iii) require any consent or other action by any
person under, constitute a default under, or give rise to any right of
termination, cancellation or acceleration or to a loss of any benefit to
which the Shareholder is entitled under any provision of any agreement or
other instrument binding on the Shareholder.
(c) Ownership of Shares. The Shareholder is the record and beneficial
owner of the Shares free and clear of any and all liens, pledges,
restrictions, charges or other adverse claims of any kind or nature. The
Shareholder has the sole voting power, sole power of disposition, sole power
of conversion, sole power to demand appraisal rights and sole power to agree
to all the matters set forth in this Agreement, in each case with respect to
all of the Shares with no limitations, qualifications or restrictions on such
rights, subject to applicable securities laws and the terms of this
Agreement. None of the Shares are subject to any voting trust or other
agreement or arrangement with respect to the voting of such Shares. The
Shareholder's Shares and the certificates representing such Shares are now,
and at all times during the term hereof will be, held by the Shareholder, or
by a nominee or custodian for the benefit of the Shareholder. The Shareholder
owns of record or beneficially no shares of CSI Common Stock other than such
Shareholder's Shares.
(d) Merger Agreement. The Shareholder understands and acknowledges
that Omni is entering into the Merger Agreement in reliance upon the
Shareholder's execution and delivery of this Agreement.
4. Board Approval. The Board of Directors of the Company has, to the
extent required by applicable law, duly and validly authorized and approved
by all necessary corporate action, this Agreement, the Merger Agreement and
the transactions contemplated hereby and thereby, so that by the execution
and delivery hereof no restrictive provision of any "fair price,"
"moratorium," "control-share acquisition," "interested shareholders" or other
similar anti-takeover statute or regulation (including, without limitation,
Sections 607.0901 and 607.0902 of the FBCA) or restrictive provision of any
applicable anti-takeover provision in the Articles of Incorporation or
by-laws of the Company is, or will be, applicable to the Company, Omni, the
Shares, the Merger or any other transaction contemplated by this Agreement.
5. Miscellaneous.
(a) Notices. All notices shall be in writing and shall be given as
follows:
if to the Shareholder to:
Brian A. Kahan
CompScript, Inc.
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1225 Broken Sound Parkway, N.W.
Boca Raton, Florida 33487
Telecopy: 561-994-6104
with a copy to:
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
Telecopy: 954-766-7800
Attention: Joel D. Mayersohn, Esq.
if to Omni to:
Omnicare, Inc.
2800 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45203
Attention: Cheryl D. Hodges
Telecopy: 513-762-6678
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Telecopy: 212-259-6333
Attention: Morton A. Pierce, Esq.
Richard D. Pritz, Esq.
or to such other address as may have been designated in a prior notice
pursuant to this Section. Notices shall be deemed effectively served
and delivered upon receipt.
(b) Binding Effect. This Agreement will be binding upon and inure to
the benefit of the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights or
obligations hereunder shall be assigned by the Shareholder without the prior
written consent of Omni. Except as otherwise specifically provided in this
Agreement, nothing in this Agreement is intended or will be construed to
confer on any person other than the parties hereto any rights or benefits
hereunder.
(c) Governing Law. This Agreement will be governed by and construed
under Florida law, without regard to conflict of laws principles thereof.
(d) Waivers. Compliance with the provisions of this Agreement may be
waived only by a written instrument specifically referring to this Agreement
and signed by the party waiving compliance. No course of dealing, nor any
failure or delay in exercising
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any right, will be construed as a waiver, and no single or partial exercise
of a right will preclude any other or further exercise of that or any other
right.
(e) Modification. No supplement, modification or amendment of this
Agreement will be binding unless made in a written instrument that is signed
by all the parties hereto and that specifically refers to this Agreement.
(f) Entire Agreement. This Agreement and the Merger Agreement are the
exclusive statement of the agreement among the parties hereto concerning the
subject matter hereof.
(g) Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality or enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by
applicable law, each party waives any provision of law which renders any
provision of this Agreement invalid, illegal or unenforceable in any respect.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, all 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, it being understood that
all parties need not sign the same counterpart.
(i) Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in a court of the United States.
This being in addition to any other remedy to which they are entitled at law
or in equity. In addition, each of the parties hereto waives any right to
trial by jury with respect to any claim or proceeding related to or arising
out of this Agreement or any of the transactions contemplated hereby.
(j) Further Assurances. Omni and the Shareholder will execute and
deliver, or cause to be executed and delivered, all further documents and
instruments and use their reasonable best efforts to take, or cause to be
taken, all actions necessary, proper or advisable under applicable Law to
consummate and make effective the transactions contemplated by this Agreement
and to vest the power to vote the Shareholder's Shares as contemplated by
Sections 1 and 2 .
(k) Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the earliest to occur of (i)
consummation of the Merger, (ii) the termination of the Merger Agreement in
accordance with its terms, unless prior to such termination a person or
entity shall have made a Transaction Proposal and (iii) one year from the
date hereof. Sections 1(b) and 2(a)(ii) shall terminate on the earlier of (x)
the date computed in accordance with the preceding sentence and (y) six
months after the termination of the Merger Agreement in accordance with its
terms. Nothing in this Section 5(k) shall relieve the Shareholder from
liability for breach of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
OMNICARE, INC.
-----------------------------------
By: /s/ Joel F. Gemunder
Name: Joel F. Gemunder
Title: President
/s/ Brian A. Kahan
-----------------------------------
Brian A. Kahan, the Shareholder
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