SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Filed pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
August 27, 1996 (August 23, 1996)
(Date of Report (Date of earliest event reported))
ADVANCED MEDICAL, INC.
(Exact name of registrant as specified in charter)
Delaware
(State or other jurisdiction of incorporation)
33-26398
(Commission File Number)
13-3492624
(IRS Employer Identification No.)
9775 Businesspark Avenue
San Diego, CA 92131
(Address of principal executive officers)
(619) 566-0426
(Registrant's telephone number, including area code)
Exhibit Index is on Page
ITEM 5. Other Events
On August 23, 1996, IMED Corporation, a wholly owned
subsidiary of the Registrant ("IMED"), IMED Merger Sub, Inc., a
wholly owned subsidiary of IMED ("Merger Sub"), IVAC Holdings, Inc.
("Holding Co."), IVAC Medical Systems, Inc., a wholly-owned
subsidiary of Holding Co. ("Operating Co.) and certain stockholders
of Holding Co. ("Participating Stockholders") entered into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to
which Merger Sub shall be merged with and into Holding Co. and
Holding Co. will be the surviving corporation of such merger and
thereby become a wholly owned subsidiary of IMED (the "Merger").
The Merger Agreement is filed as Exhibit 2 to this Form 8-K and is
incorporated herein by reference.
In addition, the Registrant and Mr. Picower executed a
letter agreement (the "Letter Agreement") which describes among
other things, the terms on which Mr. Picower may provide certain
financing ("Financing") to the Registrant in connection with the
Merger. The Letter Agreement is filed as Exhibit 10 to this Form
8-K and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not Applicable
(b) Not Applicable
(c) Exhibits.
Exhibit 1 Press Release dated August 26, 1996.
Exhibit 2 Agreement and Plan of Merger dated August
23, 1996 by and among IMED Corporation,
IMED Merger Sub, Inc., IVAC Holdings,
Inc., IVAC Medical Systems, Inc. and the
Participating Stockholders.
Exhibit 10 Letter Agreement by and between Advanced
Medical, Inc. and Jeffry M. Picower
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
ADVANCED MEDICAL, INC.
(Registrant)
Date: August 26, 1996 By: /s/ Joseph W. Kuhn
Joseph W. Kuhn
President
EXHIBIT INDEX
Exhibit Number Material to be Filed as Exhibits Page Number
Exhibit 1 Press Release dated
August 26, 1996.
Exhibit 2 Agreement and Plan of
Merger dated August 23,
1996 by and among IMED
Corporation, IMED Merger
Sub, Inc., IVAC Holdings,
Inc., IVAC Medical Systems,
Inc. and the Participating
Stockholders.
Exhibit 10 Letter Agreement by and
between Advanced Medical,
Inc. and Jeffry M. Picower.
ADVANCED MEDICAL, INC.
9775 Businesspark Avenue
San Diego, CA 92131
(619) 566-9000
TRADED: ASE: AMA
AT THE COMPANIES:
Bill Mercer
IVAC President and CEO
(619) 458-7551
Joe Kuhn
Advanced Medical President
(619) 566-0192
Tim Kent
Investor Contact
Investor Relations Contact
(619) 693-0709
Virginia Rybski
Trade Contact
Stoorza Zeigaus & Metzger
(619) 236-1332 x244
Linda Tush
Business Contact
Ketchum Public
(310) 444-1308
After 8/26: (310) 442-0599
FOR IMMEDIATE RELEASE
August 26, 1996
ADVANCED MEDICAL, INC. TO PURCHASE IVAC MEDICAL SYSTEMSTM
IVAC to Merge Operations With IMED Corporation
SAN DIEGO, CALIFORNIA, AUGUST 26, 1996 -- Advanced Medical, Inc. (ASE:
AMA) and privately held IVAC Medical Systems, Inc. (IVAC) today jointly
announced an agreement for Advanced Medical to purchase IVAC. Under the
terms of the agreement, IVAC and Advanced Medical's wholly-owned
subsidiary, IMED Corporation (IMED), will merge into a new company,
creating one of the global leaders in intravenous infusion therapy
products.
The cash transaction is valued at approximately $400 million. Based
on 1995 operating results, the combined revenues were $353 million.
Completion of the acquisition, which has been approved by the respective
Board of Directors of both companies, is subject to regulatory approval
and is expected to be completed by the first quarter of 1997.
Advanced Medical expects a one-time charge against earnings in order
to complete the merger of the two companies. The addition of IVAC is
expected to contribute to financial results in the full second quarter of
1997.
William J. Mercer, IVAC President and Chief Executive Officer (CEO),
will become the President and CEO of Advanced Medical, Inc., as well as
the new company. Mercer led the transition of IVAC to a stand-alone
company from Eli Lilly and Company and was previously Senior Vice
President at Mallinckrodt Group, Inc. Joseph W. Kuhn, IMED President led
the turnaround of Advanced Medical and will become the Executive Vice
President and Chief Financial Officer of the new company. Kuhn joined
Advanced Medical in 1989 as Corporate Controller and was previously a
senior manager at Price Waterhouse LLP.
We are extremely enthusiastic about the global potential for the
combined companies, and the potential to build an exciting growth company
in drug delivery systems," Mercer said. "The strong brand identity of
both companies, coupled with a well-developed global distribution system,
will provide greater worldwide access for new products in the research and
development pipeline," Mercer added. This combination of two great names
in infusion therapy will mean new opportunities for our employees, and
will benefit our shareholders by accelerating strategies to profitably
grow the business into a world-class healthcare company.
IMED reported net income of $1.7 million, $0.06 per fully-diluted
common share on $53.9 million in revenue in the first half of 1996.
Advanced Medical's pre-tax income was $4.1 million. Excluding the effect
of a non-recurring restructuring charge of $17.4 million, IVAC reported
net income of $4.2 million on net sales of $112.8 million for the six
months ended June 30, 1996. IVAC's pre-tax income was $5 million. EBITDA
for the first half of 1996 was $11.5 million for Advanced Medical and
$20.6 million for IVAC, respectively.
Kuhn said, The synergies created by the newly formed entity, as well
as the broader product offering, will provide customers with increased
value and the company with increased access in the managed care
environment. We believe the combination of IVAC and IMED will create a
range of technologies that is unparalleled in the industry, improving
patient care across the entire continuum of care.
The transaction will add to both companies' historical leadership in
infusion therapy and technology-based drug delivery devices. In 1968,
IVAC introduced the world's first infusion therapy monitoring device. A
year later, IVAC improved its system with the addition of an IV pump which
regulated the flow of liquids through positive pressure. IMED introduced
the world's first volumetric infusion pump in 1974. Infusion pumps
control and regulate the amount of intravenous fluid being administered to
a patient.
Since our founding in San Diego over two decades ago, both
organizations have helped millions of patients around the world in the
healing process," Mercer said. "We are pleased that the new company will
continue to operate in San Diego as one of the world's largest suppliers
of quality infusion products and services
Advanced Medical, Inc., through its IMED subsidiary, is one of the
largest developers and manufacturers of intravenous infusion pumps and
proprietary disposable products in the United States, and has sales in 38
foreign countries.
IVAC's worldwide corporate headquarters, R&D facilities, and
manufacturing facilities are located in San Diego, with additional
manufacturing facilities in Creedmoor, NC; Hampshire, England; and Tijuana
Mexico. Founded in 1968, IVAC is a leading provider of infusion systems
and related technologies to the healthcare industry. The company's
principal line of business is the design, manufacture and marketing of
intravenous infusion therapy products, vital signs instruments and related
disposables. IVAC's products are distributed in over 120 countries
worldwide. IVAC Medical Systems was purchased from Eli Lilly & Company on
December 31, 1994 by DLJ Merchant Banking Partners, LP, River Medical,
Inc. and other entities and investors.
The companies note that the above forward-looking statements are
subject to change based on factors including, but not limited to, changes
in the market and competition. Additional information on potential
factors that could affect the companies' financial results are included in
Advanced Medical's annual report and IVAC Medical Systems' Annual Report,
both on Form 10-K as filed with the Securities and Exchange Commission.
For more information about IVAC, please consult the World Wide Web
server at the following URL: http://www.ivac.com/~ivac.
AGREEMENT AND PLAN OF MERGER
By and Among
The Participating Stockholders
IMED Corporation
IMED Merger Sub, Inc.
IVAC Holdings, Inc. and
IVAC Medical Systems, Inc.
<PAGE>
TABLE OF CONTENTS
Page
BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
THE MERGER . . . . . . . . . . . . 1
1.1. The Merger. . . . . . . . . . . . . . . . . . . . . 1
1.2. Effective Time of the Merger. . . . . . . . . . . . 2
1.3. The Closing . . . . . . . . . . . . . . . . . . . . 2
1.4. Certificate of Incorporation. . . . . . . . . . . . 2
1.5. By-Laws . . . . . . . . . . . . . . . . . . . . . . 2
1.6. Directors and Officers. . . . . . . . . . . . . . . 3
1.7. Conversion of Shares. . . . . . . . . . . . . . . . 3
1.8. Total Consideration . . . . . . . . . . . . . . . . 4
1.9. Dissenters' Rights. . . . . . . . . . . . . . . . . 7
1.10. Surrender and Payment . . . . . . . . . . . 8
1.11. Taking Necessary Action; Further Action . . 9
ARTICLE II
REPRESENTATIONS AND WARRANTIES
CONCERNING PARTICIPATING STOCKHOLDERS . . . . . 9
2.1. Ownership of the Participating Stockholder's
Stock . . . . . . . . . . . . . . . . . . . . . . . 10
2.2. Authority of Participating Stockholder. . . . . . . 10
2.3. Prohibitions. . . . . . . . . . . . . . . . . . . . 10
2.4. Consents and Approvals of Governmental
Authorities . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY . . . . . . . . . 11
3.1. Description and Lists . . . . . . . . . . . . . . . 11
3.2. Corporate Organization; Authority . . . . . . . . . 14
3.3. Capitalization. . . . . . . . . . . . . . . . . . . 15
3.4. Subsidiaries. . . . . . . . . . . . . . . . . . . . 16
3.5. No Violation. . . . . . . . . . . . . . . . . . . . 16
3.6. Consents and Approvals of Governmental
Authorities . . . . . . . . . . . . . . . . . . . . 16
3.7. Financial Statements of the Operating Co. . . . . . 17
3.8. Contractual Arrangements with Stockholders,
Officers or Employees . . . . . . . . . . . . . . . 19
3.9. Absence of Certain Changes. . . . . . . . . . . . . 19
3.10. Title to Property; Leases; Encumbrances . . 20
3.11. Patents, Trademarks, Trade Names. . . . . . 22
3.12. Litigation; Compliance with Laws. . . . . . 22
3.13. Environmental Matters . . . . . . . . . . . 23
3.14. Tax Matters . . . . . . . . . . . . . . . . 26
3.15. Benefit Plans . . . . . . . . . . . . . . . 30
3.16. Labor Matters . . . . . . . . . . . . . . . 33
3.17. Purchase and Sale Commitments . . . . . . . 33
3.18. Insurance . . . . . . . . . . . . . . . . . 33
<PAGE>
3.19. Contracts . . . . . . . . . . . . . . . . . 34
3.20. Finders and Investment Bankers. . . . . . . 34
3.21. Licenses, Permits and Authorizations. . . . 34
3.22. Products. . . . . . . . . . . . . . . . . . 35
3.23. Entire Business . . . . . . . . . . . . . . 35
3.24. Distribution Agreements . . . . . . . . . . 35
3.25. Regulatory Matters. . . . . . . . . . . . . 35
3.26. Disclosure. . . . . . . . . . . . . . . . . 37
3.27. Products. . . . . . . . . . . . . . . . . . 37
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND IMED MERGER SUB. . . . . . . . . . 37
4.1. Organization; Etc.. . . . . . . . . . . . . . . . . 38
4.2. Authorization; Etc. . . . . . . . . . . . . . . . . 38
4.3. No Violation. . . . . . . . . . . . . . . . . . . . 38
4.4. Consents and Approvals of Governmental
Authorities . . . . . . . . . . . . . . . . . . . . 38
4.5. Finders and Investment Bankers. . . . . . . . . . . 39
4.6. Financing . . . . . . . . . . . . . . . . . . . . . 39
4.7. Litigation. . . . . . . . . . . . . . . . . . . . . 39
ARTICLE V
CONDUCT OF BUSINESS PENDING CLOSING. . . . . . 39
5.1. Conduct of Business . . . . . . . . . . . . . . . . 39
ARTICLE VI
ADDITIONAL AGREEMENTS . . . . . . . . . 41
6.1. Advice of Change. . . . . . . . . . . . . . . . . . 41
6.2. Access to Properties and Records; Confidentiality . 42
6.3. Books and Records . . . . . . . . . . . . . . . . . 43
6.4. Financing . . . . . . . . . . . . . . . . . . . . . 44
6.5. Consents and Approvals. . . . . . . . . . . . . . . 44
6.6. Cooperation Regarding Benefit Plans . . . . . . . . 45
6.7. Satisfaction of Closing Conditions. . . . . . . . . 45
6.8. Tax Covenants . . . . . . . . . . . . . . . . . . . 45
6.9. Other Offers. . . . . . . . . . . . . . . . . . . . 46
6.10. Implied Warranties. . . . . . . . . . . . . 47
6.11. Additional Instruments; Further
Assurances. . . . . . . . . . . . . . . . . . . . . 47
6.12. Antitrust Notification. . . . . . . . . . . 47
6.13. River Medical . . . . . . . . . . . . . . . 47
6.14. Payment of Indebtedness . . . . . . . . . . 48
6.15. Senior Notes. . . . . . . . . . . . . . . . 49
6.16. Overseas Cash.. . . . . . . . . . . . . . . 50
6.17. Welmed/Siemens/Eli Lilly. . . . . . . . . . 50
6.18. Real Estate Matters . . . . . . . . . . . . 51
6.19. Notice to Stockholders. . . . . . . . . . . 51
6.20. Covered Period. . . . . . . . . . . . . . . 52
6.21. Benefits. . . . . . . . . . . . . . . . . . 52
<PAGE>
6.22. Cash Flow Statements. . . . . . . . . . . . 52
6.23. Recall. . . . . . . . . . . . . . . . . . . 53
6.24. Option Cancellation Agreement . . . . . . . 53
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF EACH PARTY. . . . . 54
7.1. No Action or Proceeding . . . . . . . . . . . . . . 54
7.2. Compliance with Law . . . . . . . . . . . . . . . . 54
7.3. Hart-Scott-Rodino Requirements. . . . . . . . . . . 54
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS . . . . . 54
8.1. Representations and Warranties. . . . . . . . . . . 54
8.2. Absence of Certain Changes. . . . . . . . . . . . . 55
8.3. Performance . . . . . . . . . . . . . . . . . . . . 55
8.4. Authority . . . . . . . . . . . . . . . . . . . . . 55
8.5. Opinion of Counsel. . . . . . . . . . . . . . . . . 55
8.6. Approvals and Filings . . . . . . . . . . . . . . . 55
8.7. FIRPTA Certificates . . . . . . . . . . . . . . . . 56
8.8. Certificates. . . . . . . . . . . . . . . . . . . . 56
8.9. Financings. . . . . . . . . . . . . . . . . . . . . 56
8.10. Resignation . . . . . . . . . . . . . . . . 56
8.11. Maximum Indebtedness. . . . . . . . . . . . 56
8.12. Signature Authority . . . . . . . . . . . . 57
8.13. Waiver of Rights. . . . . . . . . . . . . . 57
8.14. [Reserved]. . . . . . . . . . . . . . . . . 57
8.15. Special Statement . . . . . . . . . . . . . 57
8.16. Stockholders Agreements . . . . . . . . . . 57
8.17. Indebtedness. . . . . . . . . . . . . . . . 57
8.18. Audited Financial Statements. . . . . . . . 57
8.19. Certificate of Incorporation. . . . . . . . 57
8.20. Conversion. . . . . . . . . . . . . . . . . 57
8.21. Tender Offer. . . . . . . . . . . . . . . . 58
8.22. Subsidiary Shares . . . . . . . . . . . . . 58
ARTICLE IX
CONDITIONS TO PARTICIPATING STOCKHOLDERS' OBLIGATIONS . 58
9.1. Representations and Warranties. . . . . . . . . . . 58
9.2. Performance . . . . . . . . . . . . . . . . . . . . 58
9.3. Authority . . . . . . . . . . . . . . . . . . . . . 59
9.4. Opinion of Purchaser's Counsel. . . . . . . . . . . 59
9.5. Approvals and Filings . . . . . . . . . . . . . . . 59
9.6. Certificates. . . . . . . . . . . . . . . . . . . . 59
9.7. Consideration . . . . . . . . . . . . . . . . . . . 59
<PAGE>
ARTICLE X
TERMINATION. . . . . . . . . . . . 59
10.1. Termination . . . . . . . . . . . . . . . . 59
10.2. Effect of Termination . . . . . . . . . . . 61
10.3. "Sellers Representative". . . . . . . . . . 62
ARTICLE XI
NATURE AND SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION, ETC. . . . . . 62
11.1. Survival of Representations, Warranties,
Etc.. . . . . . . . . . . . . . . . . . . . . . . . 62
11.2. Participating Stockholders' Agreement to
Indemnify . . . . . . . . . . . . . . . . . . . . . 62
11.3. Purchaser's Agreement to Indemnify. . . . . 63
11.4. Third Party Claims. . . . . . . . . . . . . 64
11.5. Effect of Taxes and Insurance . . . . . . . 65
11.6. Purchase Price Adjustment . . . . . . . . . 65
11.7. Interest. . . . . . . . . . . . . . . . . . 66
ARTICLE XII
MISCELLANEOUS PROVISIONS. . . . . . . . . 66
12.1. Representations/Covenants of the Holding
Co., the Operating Co. and Participating
Stockholders. . . . . . . . . . . . . . . . . . . . 66
12.2. Amendment and Modification. . . . . . . . . 66
12.3. Waiver. . . . . . . . . . . . . . . . . . . 66
12.4. Notices . . . . . . . . . . . . . . . . . . 66
12.5. Binding Nature; Assignment. . . . . . . . . 68
12.6. Governing Law; Submission to Jurisdiction . 68
12.7. Public Announcements. . . . . . . . . . . . 69
12.8. Expenses. . . . . . . . . . . . . . . . . . 69
12.9. Counterparts. . . . . . . . . . . . . . . . 69
12.10. Headings. . . . . . . . . . . . . . . . . . 69
12.11. Entire Agreement. . . . . . . . . . . . . . 69
12.12. Remedies Exclusive. . . . . . . . . . . . . 69
12.13. Purchaser Waiver. . . . . . . . . . . . . . 70
12.14. Disclosure Schedules. . . . . . . . . . . . 70
12.15. Drafting Convention . . . . . . . . . . . . 70
12.16. Arbitration . . . . . . . . . . . . . . . . 70
ARTICLE XIII
GLOSSARY. . . . . . . . . . . . . 71
<PAGE>
<PAGE>
LIST OF SCHEDULES
2.1 Stockholder Agreements
2.3 Prohibitions Regarding Participating Stockholders
3.1(a) Real Property
(b) Intangible Property
(c) Agreements
(d) Employees and Compensation Arrangements
(e) Debt (Including Security Agreements and Mortgages)
(f) Banks
(g) Capital Expenditures
(h) Major Customers and Suppliers
(i) Certificate of Incorporation and By-Laws
(j) Claims
(k) Power of Attorney
(l) Insurance
(m) Warranties
(n) Approvals
(o) Distribution Agreements
(p) Signature Products
3.2 Jurisdiction of Qualification for Holding Co./Operating
Co.
3.3 List of Holders and Holdings of Holding Co. Stock;
Authorized, Issued and Outstanding Stock, Voting
Agreements, Options, Warrants, Etc.
3.4 Subsidiaries, Jurisdiction of Organization and
Qualification
3.5 Violations, Accelerations, Consents
3.6 Consents and Approvals
3.7 Financial Statements, Additional Liabilities
3.7A Signature
3.7B Welmed
3.8 Contractual Arrangements with Stockholders, Officers,
Directors or Employees
3.9 Certain Changes
3.10 Title Exceptions
3.10(d) Condition and Maintenance of Assets on Property
3.11 Patent and Trademark Rights; Confidentiality Agreements
3.12 Litigation; Compliance with Laws
<PAGE>
3.13 Environmental Matters
3.14(c) Actions, Investigations or Audits Regarding Taxes, Tax
Deficiencies or Outstanding Taxes
3.14(d) Unpaid Taxes Being Contested or Not Yet Due and Payable
3.14(e) Consolidated, Combined or Unitary Income Tax Return
3.14(i) Participating Stockholders who are Foreign Persons
under Section 1445 of the Internal Revenue Code of
1986, as amended
3.14(k) Tax Elections for Federal Income Tax Purposes
3.14(n) Exchanges for which the Gain Realized was not
Recognized
3.14(p) Tax Sharing Agreements or Arrangements
3.14(q) Liabilities and Adjusted Basis
3.14(r) Returns
3.14(s) Liability
3.14(t) 338 Elections
3.14(u) Tax Obligations or Liabilities to the Participating
Stockholders
3.15(a) Employee Benefit Plans; Contracts, Arrangements, or
Policies Entered Into With or On Behalf of the
Employees
3.15(c) Qualification of Employee Benefit Plans; Suits or
Proceedings Regarding Employee Benefit Plans
3.15(h) Contracts or Agreements Which could Require Payments
Not Deductible Pursuant to Section 5000(b)(1) of the
Code
3.15(j) Bonus or Similar Benefits Payable to Employee as a
Result of the Transactions Covered By This Agreement
3.17 Purchase and Sale Commitments
3.19 Contracts
3.20 Finders and Investment Bankers
3.21 Regulatory Approvals
3.22 Products
3.25 Regulatory Matters
<PAGE>
5.1 Permitted Activities Pending Closing
6.17 Welmed/Siemens/Eli Lilly Agreements
6.21 Severance
8.6 Approval and Filings
8.13 Waiver of Rights
9.5 Approvals and Filings (Conditions to Obligations)
LIST OF EXHIBITS
1 Certificate of Merger
2 Opinion of Davis Polk & Wardwell
3 Release and Waiver
4 Amendment to the Restated Certificate of Incorporation
of IVAC Holdings, Inc.
5 Opinion of Gordon Altman Butowsky Weitzen Shalov & Wein
6 Option Cancellation Agreement (Mercer)
7 Option Cancellation Agreement (Sancoff/Henry)
8 Option Cancellation Agreement (Other/Non-River)
9 Option Cancellation Agreement (Other River)
<PAGE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is
made and entered into this 23 day of August, 1996, by and among
each person named on the signature page hereof under the caption
"Participating Stockholders" (each a "Participating Stockholder"
and collectively, "Participating Stockholders"), IVAC Holdings,
Inc., a Delaware corporation (the "Holding Co."), IVAC Medical
Systems, Inc., a Delaware corporation (the "Operating Co."), IMED
Corporation, a Delaware corporation ("Purchaser") and IMED Merger
Sub, Inc., a Delaware corporation that is a wholly owned subsidiary
of IMED ("IMED Merger Sub"). Unless otherwise defined herein, each
capitalized term used herein shall have the meaning attributed to
it in the Glossary.
BACKGROUND
The Company is engaged in the business of designing,
manufacturing and marketing IV infusion therapy instruments (pumps
and controllers) and proprietary and related disposable
administration sets (tubing and plastic pump interfaces) and
accessories used to control the flow of solutions, drugs and
nutritionals into a patient's circulatory system and vital signs
measurement instruments and related disposables and accessories
(together with the other businesses and activities of the Company,
the "Business"). The Participating Stockholders, the Purchaser and
IMED Merger Sub desire to merge IMED Merger Sub with and into the
Holding Co. upon the terms and subject to the conditions set forth
herein. The Board of Directors of the Holding Co. has approved a
merger of IMED Merger Sub with and into the Holding Co. upon the
terms and subject to the conditions set forth in this Agreement,
and has directed that this Agreement be submitted to its
stockholders for adoption and the holders of in excess of 95% of
the combined voting power of the Stock (as defined herein) issued
and outstanding as of the date of this Agreement have approved the
Merger (as defined in Section 1.1 hereof) upon the terms and
subject to the conditions set forth in this Agreement pursuant to
written stockholder consents.
NOW, THEREFORE, in consideration of the premises and of
the mutual representations, warranties, agreements and covenants
hereinafter set forth, the parties hereto, desiring to be legally
bound, hereby agree as follows:
ARTICLE I
THE MERGER
1.1. THE MERGER. At the Effective Time (as defined in
Section 1.2) and subject to the terms and conditions contained
herein, IMED Merger Sub shall be merged with and into the Holding
Co. (the "Merger") (IMED Merger Sub and the Holding Co. are
sometimes referred to herein as the "Constituent Corporations"), in
accordance with the DGCL, and the separate existence of IMED Merger
Sub shall thereupon cease, and the Holding Co. shall be the
<PAGE>
surviving corporation of the Merger (the "Surviving Corporation").
At and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a
public as well as of a private nature, and be subject to all the
restrictions, disabilities and duties of the Constituent
Corporations; and all and singular rights, privileges, powers and
franchises of each of the Constituent Corporations, and all
property, real, personal and mixed, and all debts due to either of
the Constituent Corporations on whatever account, as well as for
stock subscriptions and all other things in action or belonging to
each of the Constituent Corporations, shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers
and franchises, and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation
as they were of the Constituent Corporations; and the title to any
real estate vested by deed or otherwise, in either of the
Constituent Corporations, shall not revert or be in any way
impaired; but all rights of creditors and all liens upon any
property of either of the Constituent Corporations shall be
preserved unimpaired; and all debts, liabilities and duties of the
Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as
if said debts and liabilities had been incurred by it.
1.2. EFFECTIVE TIME OF THE MERGER. Subject to the
provisions of this Agreement, a certificate of merger in
substantially the form attached hereto as Exhibit 1 (the
"Certificate of Merger") shall be duly prepared, executed and
acknowledged by the Surviving Corporation and thereafter delivered
to the Secretary of State of the State of Delaware in advance of
the Closing Date, for filing as provided in the DGCL,
simultaneously with the Closing. The Merger shall become effective
upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware (the "Effective Time" and the date
on which the Effective Time occurs is referred to herein as the
"Effective Date").
1.3. THE CLOSING. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices
of Gordon Altman Butowsky Weitzen Shalov & Wein, 114 West 47th
Street, New York, New York 10036 or such other place as the parties
may agree, promptly following the satisfaction of the conditions
specified in Articles VII, VIII and IX hereof. The date of the
Closing is referred to herein as the "Closing Date".
1.4. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Surviving Corporation shall be the certificate
set forth on Attachment I to the Certificate of Merger, until duly
amended in accordance with the terms thereof and the DGCL.
<PAGE>
1.5. BY-LAWS. The By-Laws of IMED Merger Sub, as in
effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Corporation, until duly amended in
accordance with the terms thereof, of the certificate of
incorporation of the Surviving Corporation and of the DGCL.
1.6. DIRECTORS AND OFFICERS. The directors and officers
of IMED Merger Sub at the Effective Time shall, from and after the
Effective Time, be the directors and officers of the Surviving
Corporation, together with such other individuals as shall be named
by the Purchaser, until the successors of all such persons shall
have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the
Surviving Corporation's certificate of incorporation and by-laws.
1.7. CONVERSION OF SHARES.
(a) At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any shares of the
stock of the Holding Co. or of any of the capital stock of IMED
Merger Sub, each share of the capital stock of IMED Merger Sub
which is issued and outstanding immediately prior to the Effective
Time shall be converted into and become one fully paid and non-
assessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
(b) At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any shares of the
stock of the Holding Co. or of any of the capital stock of IMED
Merger Sub, each share of the Holding Co.'s capital stock which is
issued and outstanding immediately prior to the Effective Time,
except those held by stockholders who validly perfect appraisal
rights under the DGCL, shall be converted into the right to receive
the Per Share Merger Consideration (as defined below) all such
amounts, in the aggregate, the "Merger Consideration" (provided
that in no event shall the sum of the Merger Consideration, the
aggregate Per Share Merger Consideration that would have been
received by stockholders who validly perfect appraisal rights under
the DGCL had such stockholders not perfected such rights and the
Total Option Cancellation Amount (including appropriate withholding
taxes), exceed the Purchase Price).
(c) Each option outstanding prior to the Effective Time
(each, an "Outstanding Option," collectively, the "Outstanding
Options" and each, to the extent it is vested immediately prior to
the Effective Time, an "Option" and collectively, the "Options")
under the IVAC Holdings, Inc. 1995 Stock Option/Stock Issuance
Plan, the IVAC Holdings, Inc. 1996 Key Contributor Stock Option
Plan, and the assumed River Medical, Inc. stock option plan (the
"Stock Option Plans"), the holder of which has entered into an
option cancellation agreement substantially in the form of Exhibit
6, 7, 8 or 9 hereto, as applicable (collectively, the "Option
Cancellation Agreement") shall be canceled in accordance with the
terms of such Option Cancellation Agreement on the first business
day after the Effective Time (the "First Business Day") for the
right to receive on the First Business Day from the Surviving
Corporation pursuant to the Option Cancellation Agreement an amount
of cash (subject to reduction for any applicable withholding Taxes)
set forth therein. On the business day immediately preceding the
Effective Time, the Sellers Representative shall deliver to the
Purchaser a schedule setting forth each holder of Options that has
entered into an Option Cancellation Agreement as well as a
<PAGE>
certificate, signed by the Sellers Representative, setting forth
(x) the aggregate amount (the "Total Option Cancellation Amount")
payable by the Surviving Corporation pursuant to the Option
Cancellation Agreement without reduction for applicable withholding
Taxes and (y) the aggregate applicable withholding Taxes payable
with respect thereto.
1.8. TOTAL CONSIDERATION.
(a) For purposes of this Agreement the following terms
shall have the meanings set forth below:
"Purchase Price" shall mean an amount of cash in dollars
equal to (i) the sum of (A) $390 million and (B) Total Cash, less
(ii) the sum of (A) Total Debt; (B) any premium, prepayment penalty
and costs for defeasance, paid (or to be paid) in connection with
the purchase and defeasance of the Senior Notes, as contemplated in
Section 6.15 hereof, to the extent such items are, in the
aggregate, in excess of $1 million; (C) any premium or prepayment
penalty paid (or to be paid) in connection with the satisfaction of
the Total Debt (other than the Senior Notes) pursuant to Section
6.14 hereof; (D) all Expenses not paid at or prior to the Closing;
(E) any cash required to be paid with respect to cancellation of
fractional shares in connection with the conversion of Class B
Common Stock into Class A Common Stock pursuant to the terms of the
certificate of incorporation, as amended, of the Holding Co.; and
(F) the Compensating Adjustment.
"Per Share Merger Consideration" shall mean an amount of
cash in dollars (rounded to the nearest $0.00001) determined by
dividing (i) an amount equal to the sum of (A) the Purchase Price,
and (B) the Aggregate Employee Option Exercise Price, by (ii) an
amount equal to the sum of (A) the number of shares of Class A
Common Stock outstanding immediately prior to the Effective Time
(which number shall include all such shares to be issued as a
result of the conversion of Class B Common Stock to Class A Common
Stock in accordance with the terms of the certificate of
incorporation of the Holding Co.) and (B) the aggregate number of
shares of Stock subject to the Options immediately prior to the
Effective Time (provided, that for purposes of this definition,
such exercise price and the number of shares subject to an Option
shall, with respect to any Option exercisable for Class B Common
Stock, be determined as if the Option were exercisable for that
number of shares of Class A Common Stock into which the Class B
Common Stock to be acquired thereunder, would be converted pursuant
to the Certificate of Incorporation of the Holding Co. had such
Option been exercised prior to the Merger).
"Aggregate Employee Option Exercise Price" shall mean,
with respect to those Options the holders of which have entered
into an Option Cancellation Agreement, an amount equal to the sum
of the exercise price under each such Option immediately prior to
the Effective Time, multiplied by the respective number of shares
of Stock subject to each such Option.
<PAGE>
"Expenses" shall mean all costs and expenses of the
Company, in connection with or as a result of the transactions
contemplated herein, including, without limitation, all fees and
disbursements of Messrs. Davis Polk & Wardwell; Brobeck, Phleger &
Harrison; DLJ and its Affiliates and Price Waterhouse, but shall
not include amounts paid under the Company's currently existing
employee compensation and bonus plans, severance plans or retention
plans as described on Schedule 3.15, on account of the transactions
contemplated herein.
"Total Cash" shall mean all cash and cash equivalents of
the Company as of the Closing Date (determined prior to the
application of cash pursuant to the first paragraph of Section 6.14
and Section 6.15 hereof) (exclusive of: (i) any amounts paid by the
Purchaser pursuant to Section 1.10; (ii) all proceeds of financings
contemplated in Section 4.6; and (iii) all proceeds of the
subordinated debt financing contemplated in Section 6.4 hereof)
determined in accordance with generally accepted accounting
principles applied in a manner consistent with those utilized in
preparing the Financial Statements (as defined herein).
"Total Debt", as applied to the Company, shall mean any
and all indebtedness of the Company outstanding at the Effective
Time (and prior to the payment thereof pursuant to Section 6.14 and
6.15 hereof) (together with all interest accrued thereon through
the Closing Date): (i) in respect of borrowed money (whether or not
the recourse of the lender is to the whole of the assets of the
Company or only to a portion thereof); (ii) evidenced by bonds,
notes, debentures or similar instruments, or representing the
balance deferred and unpaid of the purchase price of any property
that constitutes debt in accordance with GAAP; (iii) reflecting any
obligation of the Company to pay future rentals with respect to any
property which obligation would be required to be capitalized in
accordance with GAAP; (iv) any right in respect of the Company
which is convertible into any such obligation; and (v) all such
obligations of third parties which the Company has directly or
indirectly incurred, assumed, guaranteed or otherwise become liable
for. The term "Total Debt" shall include, without limitation, any
obligation outstanding at the Effective Time under or with respect
to: (i) the Siemens Obligation; (ii) the Notes Obligation; (iii)
the Revolver Obligation; (iv) the DLJ Debt; (v) the Capital Lease
Agreement between River and Lease Management Services, Inc., dated
July 27, 1993; and (vi) all amounts payable after the Closing Date,
in excess of $100,000 in the aggregate, pursuant to any agreement
entered into by the Company in connection with any action, suit,
proceeding or investigation, whether pending or threatened.
(b) Reserved
(c) On the Closing Date, the Holding Co. will deliver to
the Purchaser a Certificate (the "Total Cash Certificate"), signed
by the Sellers Representative, setting forth the Total Cash and
appropriate information indicating the calculation thereof.
(d) Within thirty (30) days after the Closing Date,
Purchaser shall cause to be prepared a statement (the "Preliminary
<PAGE>
Statement") which Purchaser believes fairly presents the Total
Cash. When completed, the Preliminary Statement shall within such
thirty (30) day period be delivered to the Sellers Representative
for review, together with all material work papers, calculations
and other records or information used to prepare the Preliminary
Statement.
(e) If the Sellers Representative does not dispute any
matter relating to the Preliminary Statement or its preparation,
the Preliminary Statement shall for all purposes under this
Agreement be deemed to set forth the Total Cash. If the Sellers
Representative disagrees that such Preliminary Statement fairly
presents the Total Cash, it shall so notify Purchaser in writing
within thirty (30) days following receipt thereof by the Sellers
Representative and the parties will use all reasonable efforts to
resolve any such disputes. If any such dispute cannot promptly be
resolved (but in any event within thirty (30) days after submission
of the written objections of the Sellers Representative), the
parties agree that they will submit the matter to Coopers & Lybrand
or, if such firm shall decline to act or is not, at the time of
such submission, independent of Participating Stockholders and
Purchaser, to another independent accounting firm of international
reputation mutually acceptable to Purchaser and Participating
Stockholders (either Coopers & Lybrand or such other accounting
firm being referred to herein as the "Accounting Firm"). The
resolution of the dispute by the Accounting Firm will be conclusive
and binding upon the parties hereto, notwithstanding any later
allegation or determination of error, mistake or miscalculation,
whether willful or negligent, by any person, in connection with the
determination made by the Accounting Firm. The fees and expenses
of the Accounting Firm will be paid one-half by Purchaser and one-
half by the Sellers Representative. The Preliminary Statement and
the information set forth thereon, as finally determined pursuant
to this subsection (e) is hereinafter referred to as the "Final
Statement."
(f) If the Total Cash as set forth on the Final
Statement is greater than the Total Cash as set forth on the Total
Cash Certificate, then Purchaser shall pay over to the Sellers
Representative (for payment to the stockholders and option holders
of the Holding Co., as appropriate) the amount by which the Total
Cash on the Final Statement exceeds the Total Cash set forth on the
Total Cash Certificate.
(g) If the Total Cash as set forth on the Final
Statement is less than the Total Cash as set forth on the Total
Cash Certificate, then the Participating Stockholders shall be
jointly and severally obligated to pay over to the Purchaser an
amount equal to the amount by which the Total Cash on the Total
Cash Certificate exceeds the Total Cash set forth on the Final
Statement.
(h) The determinations made in accordance with the
provisions of subsection (e) above shall be final and binding on
each of Purchaser and Participating Stockholders. Any payment
required to be made under subsections (f) or (g) above, as the case
<PAGE>
may be, shall be made within five (5) business days of the
determination thereof (the "Due Date"), without setoff, for any
other matter, by wire transfer to an account designated by the
person entitled to receive such payment and shall, in addition to
such amounts, include interests on the amount required to be paid
calculated from the Closing Date through the Due Date at a rate of
10% per annum. Any payment to be made pursuant to subsections (f)
or (g) above and this subsection (h), as the case may be, which is
not made on the Due Date shall bear interest at the rate of fifteen
(15%) per annum from the Due Date until the date paid.
(i) The Participating Stockholders covenant and agree
that all shares of capital stock of the Holding Co., and all Rights
(as defined below) with respect thereto shall be and be deemed to
be canceled effective at the Effective Time (except as otherwise
contemplated in any Option Cancellation Agreement).
1.9. DISSENTERS' RIGHTS. Notwithstanding anything to the
contrary herein, shares of Stock which are held by stockholders who
shall have effectively dissented from the Merger and perfected
their appraisal rights in accordance with the provisions of Section
262 of the DGCL (the "Dissenting Shares"), shall not be converted
into or be exchangeable for the right to receive the Merger
Consideration, but the holders thereof shall be entitled to payment
from the Surviving Corporation of the appraised value of such
shares in accordance with the provisions of Section 262 of the
DGCL. Shares of Stock held by a stockholder who fails to perfect
his appraisal rights in accordance with the provisions of Section
262 of the DGCL or who withdraws or loses his right to appraisal
shall be treated as if it had been converted as of the Effective
Time into a right to receive the Per Share Merger Consideration.
The Company shall give Purchaser: (i) prompt notice of any written
demand for appraisal, withdrawals of demands for appraisal and any
other instrument in respect thereof received by the Holding Co.;
and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demands for appraisal. The Holding Co.
will not voluntarily make any payment with respect to any demands
for appraisal and will not, except with the prior written consent
of Purchaser, settle or offer to settle any such demand. The
Participating Stockholders, jointly and severally, shall pay the
cost and expenses (for purposes of this sentence, "costs and
expenses" shall not be deemed to include the amount any Dissenting
Shares would have been entitled to receive pursuant to Section 1.7
of this Agreement) of the Company and the Purchaser and its
Affiliates arising from or relating to any appraisal proceeding,
including, without limitation, all fees and disbursements of
counsel, investment bankers and financial advisors; provided that
the Participating Stockholders shall have the exclusive right to
conduct and control the defense of any claims relating to such
appraisal proceedings, including any agreement or settlement in
respect thereof. In the event that, as a result of any appraisal
proceeding, or agreement or settlement in respect of any appraisal
rights, any person is entitled to receive an amount greater than
the amounts it would have been entitled to receive pursuant to
Section 1.7 hereof, the Participating Stockholders, jointly and
severally shall immediately pay over to the Surviving Corporation
<PAGE>
such excess amount, without setoff for any other matter, for
payment to such person.
1.10. SURRENDER AND PAYMENT. (a) At the Effective
Time, Purchaser will make available to the Holding Co. for the
purpose of exchanging certificates representing shares of Stock for
the Merger Consideration, as needed, the Merger Consideration to be
paid in respect of such shares of Stock in respect of which
appraisal rights have not been perfected. As soon as practicable
after the Effective Time, each holder of a certificate or
certificates which immediately prior to the Effective Time
represented outstanding shares of Stock (the "Certificates") shall,
upon surrender to the Holding Co. of such Certificate or
Certificates and acceptance thereof by the Holding Co., be entitled
to an amount of cash (rounded to the nearest $0.01) into which the
aggregate number of shares of Stock previously represented by such
Certificate or Certificates surrendered shall have been converted
pursuant to Section 1.7(b) of this Agreement. The Holding Co.
shall accept such Certificates upon compliance with such reasonable
terms and conditions as the Holding Co. may impose to effect an
orderly exchange thereof in accordance with normal exchange
practices. The Holding Co. shall deliver all funds which each
holder of shares of Stock is entitled to receive pursuant to this
Section 1.10 within one business day following such holder's
surrender of such holder's Certificates.
(b) Each holder of shares of Stock will be entitled to
receive the Per Share Merger Consideration payable in respect of
such shares (without interest thereon). After the Effective Time,
each such certificate, instrument and agreement shall, until so
surrendered, represent for all purposes only the right to receive
such Per Share Merger Consideration.
(c) At the Effective Time, the Purchaser shall pay to
the Holding Co. an amount equal to the Total Option Cancellation
Amount, net in each case of withholding Taxes, if any, which
amounts shall be paid by the Surviving Corporation to the persons
entitled to receive such amounts pursuant to Section 1.7(c).
(d) After the Effective Time, there shall be no further
registration of transfers of shares of the Stock outstanding prior
to the Effective Time. If, after the Effective Time, certificates
representing shares of the Stock are presented to the Surviving
Corporation, they shall be canceled and exchanged for the
consideration provided for, and in accordance with the procedures
set forth, in this Article I.
(e) Any portion of the Merger Consideration made
available to the Holding Co. that remains unclaimed by the holders
of shares of Stock one year after the Effective Time shall remain
with the Surviving Corporation, and any such holder who has not
exchanged his shares of Stock for the Per Share Merger
Consideration in accordance with this Article I prior to that time
shall thereafter look only to the Surviving Corporation for payment
of the Per Share Merger Consideration in respect of his shares, and
the Surviving Corporation shall be obligated to pay such Per Share
<PAGE>
Merger Consideration, but such holder shall have no greater right
against the Surviving Corporation than may be accorded to general
creditors under applicable law. Notwithstanding the foregoing, the
Surviving Corporation shall not be liable to any holder of shares
of Stock for any amount paid to a public official pursuant to
applicable abandoned property laws. Any portion of the funds
remaining unclaimed by holders of shares of Stock as of a date
which is immediately prior to such time as such portion would
otherwise escheat to or become property of any governmental entity
shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation free and clear of any claim
or interest of any person previously entitled thereto.
(f) Any portion of the funds deposited by Purchaser with
the Holding Co. which represents Merger Consideration with respect
to Dissenting Shares shall remain with the Surviving Corporation.
1.11. TAKING NECESSARY ACTION; FURTHER ACTION.
Purchaser, IMED Merger Sub and the Participating Stockholders,
respectively, shall take all such action as may be necessary or
appropriate in order to effectuate the Merger as promptly as
possible. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right,
title and possession to all assets, property, rights, privileges,
powers and franchises of either of the Constituent Corporations,
the officers and directors of such corporations are fully
authorized in the name of their corporation or otherwise to take,
and shall take, all such action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
CONCERNING PARTICIPATING STOCKHOLDERS
Each Participating Stockholder, the Holding Co. and the
Operating Co. hereby severally, but not jointly, represent and
warrant as follows:
2.1. OWNERSHIP OF THE PARTICIPATING STOCKHOLDER'S STOCK.
Each Participating Stockholder is the owner, beneficially and of
record, of the shares of stock of the Holding Co. set forth
opposite its name on Schedule 3.3 hereof and there exists no
pledge, lien, security interest, encumbrance, claim or equity of
any kind with respect to such shares of Participating Stockholder's
Stock. Immediately prior to the Effective Time, all of the shares
of Class B Common Stock of the Holding Co. held by any person
specified on Schedule 3.3 will have been automatically converted,
pursuant to the Certificate of Incorporation of the Holding Co.,
into shares of Class A Common Stock of the Holding Co. No
Participating Stockholder is a party to any stockholders agreement,
voting trust or other voting or similar agreement with respect to
the Stock except as set forth on Schedule 2.1. This Agreement, the
Merger and the transactions contemplated herein have been approved
<PAGE>
by the vote of at least 95% of the combined voting power of the
stockholders and by the unanimous vote of the board of directors of
the Holding Co. Upon consummation of the Merger in accordance with
the terms hereof, Purchaser will be the sole holder of the capital
stock of the Surviving Corporation, free and clear of all liens,
claims and encumbrances, and no person previously owning any
capital stock in the Holding Co., or any Rights with respect
thereto, will, thereafter own or have any right to acquire, any of
the capital stock of the Surviving Corporation or any Rights with
respect thereto (in each case other than solely as a result of
actions taken by the Purchaser).
2.2. AUTHORITY OF PARTICIPATING STOCKHOLDER. Each
Participating Stockholder has the full right, capacity, power and
authority to enter into this Agreement and the Documents executed
and delivered by it and to consummate the transactions contemplated
hereby and thereby. Each Participating Stockholder has taken all
actions required to authorize the execution and delivery of this
Agreement and the Documents executed and delivered by each
Participating Stockholder, the performance of the obligations of
such Participating Stockholder hereunder and thereunder and the
consummation by such Participating Stockholder of the transactions
contemplated hereby and thereby. No other proceedings on the part
of a Participating Stockholder are necessary to authorize the
execution and delivery of this Agreement or the Documents by such
Participating Stockholder or the performance by such Participating
Stockholder of its obligations hereunder or thereunder. This
Agreement and the Documents executed and delivered by it have been
duly executed and delivered by each Participating Stockholder and
constitute valid and binding obligations enforceable against each
Participating Stockholder in accordance with their terms (provided
that no representation or warranty is provided hereunder as to the
validly binding nature or enforceability of the penultimate
sentence of Section 12.12 hereof).
2.3. PROHIBITIONS. Except as set forth in Schedule 2.3
hereto, neither the execution and delivery of this Agreement or any
of the Documents executed and delivered by any Participating
Stockholder, the performance by each Participating Stockholder of
its obligations hereunder and thereunder, nor the consummation of
the transactions contemplated hereby or thereby will: (i) violate
any provisions of the Certificate of Incorporation, By-Laws or
similar governing documents of any Participating Stockholder; (ii)
with or without the giving of notice or the passage of time, or
both, violate, or be in conflict with, or constitute a default
under, or cause or permit the termination or the acceleration of
the maturity of, any debt or obligation of any Participating
Stockholder or require the payment of any pre-payment or other
penalty; (iii) require notice to or the consent of any person,
including, without limitation, any party to any agreement,
commitment, lease, license or other arrangement, including, without
limitation, any right of first refusal or similar right, to which
any Participating Stockholder is a party, or by which it or its
properties is bound or subject; (iv) result in the creation or
imposition of any security interest, lien, or other encumbrance
upon any property or assets of any Participating Stockholder under
<PAGE>
any agreement or commitment to which it is a party, or by which it
or its properties is bound or subject; or (v) violate any statute
or law or any judgment, decree, order, regulation or rule of any
court or governmental authority to which Participating Stockholder
or its properties is bound or subject.
2.4. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES.
No consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority is
required to be made or obtained by any Participating Stockholder in
connection with the execution or delivery by a Participating
Stockholder of this Agreement or the Documents executed and
delivered by it, the performance by a Participating Stockholder of
his or its obligations hereunder or thereunder or the consummation
by any Participating Stockholder of the transactions contemplated
hereby or thereby, other than pursuant to the HSR Act (as defined
in Section 6.12 hereof) and as required by the Federal Acquisition
Regulations incidental to change of name agreements or novations of
existing contracts with the United States government as identified
in Schedule 3.1(c) hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
The Holding Co. and the Operating Co. hereby jointly and
severally represent and warrant to Purchaser as follows:
3.1. DESCRIPTION AND LISTS. Schedules 3.1(a) through
3.1(p) hereto contain the following information and all such
information is true, correct and complete:
(a) Schedule 3.1(a) sets forth: (i) a list of all
interests in real property owned, leased, subleased or otherwise
used or claimed by the Company, stating the location of such
property; and (ii) a list of the expiration dates of and periodic
rental payments with respect to, all such leased real property;
(b) Schedule 3.1(b) sets forth a list of all Intangible
Property (as hereinafter defined in Section 3.11 hereof) including
all United States and foreign patents and patent applications,
invention disclosures, trademarks, trade names, service marks and
copyrights (including any registration or applications for
registration of any of the foregoing) or any similar type of
proprietary intellectual right used by the Company or in which the
Company has an interest, indicating any applications,
registrations, or filings associated therewith and indicating
whether such Intangible Property is owned or licensed and also
stating the expiration dates of the patent or license underlying
such Intangible Property;
(c) Schedule 3.1(c) sets forth (except as may be listed
on any other Schedule to this Agreement): (i) a list of each lease
agreement to which the Company is a party with respect to personal
<PAGE>
property which provides for a period of performance which extends
beyond twenty-four (24) months from the date of this Agreement or
involves any obligation to make payments or right to obtain
receipts, after the date of this Agreement, in each case in excess
of $250,000; (ii) a list of each contract, agreement, commitment or
understanding to which the Company is a party or to which the
Company or its properties are or may be bound or subject, relating
to any merger, reorganization, bankruptcy proceeding, business
acquisition, transaction or transactions for the acquisition of all
or any substantial portion of the stock, securities, assets or
business of any person or involving the assumption of the liability
of any person; (iii) a list of each contract, agreement, commitment
or understanding, in each case to which the Company is a party or
to which it or the properties of the Company may be bound or
subject, which provide for a period of performance which extends
beyond December 31, 1997 or involves any obligation to make
payments or right to obtain receipts, after the date of this
Agreement, in each case in excess of $250,000; and (iv) a list of
all contracts, agreements, commitments or understandings not listed
in any other Schedule, that is material to the Business or involves
any of the following, in each case, to which the Company is a party
or to which the Company or its properties are or may be bound or
subject: (w) any partnership, joint venture or other similar
agreement or arrangement; (x) any agreement relating to the Total
Debt; (y) any agreement that limits the freedom of the Company to
compete in any line of business or with any person or in any area
or to own, operate, sell, transfer, pledge or otherwise dispose of
or encumber any assets or which would so limit the freedom of the
Purchaser or its Affiliates after the Closing or the Combination
(as defined below); or (z) any agreement currently in effect (or
which may hereafter result in or require any performance,
obligation, duty or payment) with or for the benefit of any
Participating Stockholder or any Affiliate of any Participating
Stockholder (other than the Company) or with or for the benefit of
Eli Lilly or its Affiliates.
(d) Schedule 3.1(d) sets forth a list of: (i) the job
title, current annual salary rates and required bonuses of all
present officers, employees and agents of the Company having an
annual compensation in excess of $150,000 per year (including
commissions, benefits and bonuses); and (ii) all employment or
compensation agreements with each officer and employee of the
Company (including all severance, "stay-put" and similar agreements
and all agreements which result in the creation or occurrence of
any right, duty or obligation based upon, or as a result of, any
change of control of the Company or its assets);
(e) Schedule 3.1(e) sets forth a list of each agreement,
indenture, contract, agreement, commitment, mortgage or other
instrument regarding money borrowed or obligations guaranteed by
the Company or any letter of credit issued at the request or on
behalf of the Company;
(f) Schedule 3.1(f) sets forth: (i) the name of every
bank in which the Company has an account or safe deposit box; (ii)
the identifying numbers of all such accounts and safe deposit
<PAGE>
boxes; and (iii) the names of all persons having power to borrow,
discount debt obligations, cash or draw checks or otherwise act on
behalf of the Company in any dealings with such banks;
(g) Schedule 3.1(g) sets forth a list of each of the
Company's approved capital expenditure projects (including without
limitation, each construction project) involving in excess of
$200,000 including: (i) projects which have been commenced but are
not yet completed; (ii) projects which have not been commenced and
(iii) projects which have been completed in respect of which
payment has been made, within the past twelve (12) months. For the
period from December 31, 1995 through June 30, 1996 the aggregate
amount expended for capital expenditure projects has been
approximately $11 million;
(h) Schedule 3.1(h) sets forth an alphabetical list of
the ten largest disposables customers (based on annual sales but
without disclosing such sales) and the ten largest suppliers to the
Company, for the year ended December 31, 1995;
(i) Schedule 3.1(i) hereto sets forth copies of the
Certificate of Incorporation and By-Laws of the Company (or other
appropriate constitutional document in its jurisdiction of
organization), each as amended;
(j) Schedule 3.1(j) sets forth a list of all claims for
products liability or personal injury due to, resulting from or
associated with, any product manufactured or supplied in connection
with the Business, now pending against the Company or which have
been pending against the Company or any of its predecessors, at any
time during the past three (3) years;
(k) Schedule 3.1(k) sets forth a list of the names of
all persons holding powers of attorney from the Company or
authorized to act as agents for the Company;
(l) Schedule 3.1(l) sets forth a list of all policies of
fire, liability, title, products liability and other forms of
insurance held by the Company and all binders of insurance and all
programs of self insurance which relate to the Company, together
with a list and brief description of all claims of the Company
which have been submitted to any insurer but have not been finally
disposed of;
(m) Schedule 3.1(m) sets forth the forms of the
Company's product warranties that are currently applicable to
products sold by the Company or in respect of which the Company is
obligated;
(n) Schedule 3.1(n) sets forth a list of all Approvals
(as defined in Section 3.21 hereof) (provided that, with respect to
matters related to Environmental Laws the same may be listed on
Schedule 3.13);
<PAGE>
(o) Schedule 3.1(o) sets forth a list of all agreements,
contracts or understandings related to the distribution of any
products or services by the Company; and
(p) Schedule 3.1(p) sets forth a list of each contract
to which the Company is obligated to supply or service any of the
Signature Products (as defined herein) (including all warranties
with respect thereto).
The Company has made available to the Purchaser true,
correct and complete copies of all documents, contracts,
instruments and agreements which are referred to in Schedules
3.1(a) through 3.1(p) and all amendments, modifications,
supplements or renewals with respect thereto.
3.2. CORPORATE ORGANIZATION; AUTHORITY.
(a) Each of the Holding Co. and the Operating Co. is
duly organized, validly existing and in good standing under the
laws of the State of Delaware and each person included in the
Company (other than the Holding Co. and the Operating Co.) is duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization as specified on Schedule 3.4
hereof. The Company has full corporate power and all lawful
authority to own, lease and operate its properties and to carry on
its Business as such business is now being conducted. Each of the
Holding Co. and the Operating Co. is duly qualified or licensed to
do business as a foreign corporation and is in good standing in
each jurisdiction set forth on Schedule 3.2 hereto and each person
included in the Company (other than the Holding Co. and the
Operating Co.) is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction
set forth opposite its name on Schedule 3.4 hereto (together with
the jurisdiction in which each such person is organized, the
"Disclosed Jurisdictions") and such listed jurisdictions constitute
all those in which its ownership of property or the conduct of its
business requires such qualification.
(b) The Holding Co. and the Operating Co. have full
corporate power and authority to enter into this Agreement and the
Documents executed and delivered by the Holding Co. and the
Operating Co. and to consummate the transactions contemplated
hereby and thereby. The Board of Directors and stockholders of the
Holding Co. and the Operating Co. have taken all actions required
to authorize the execution and delivery of this Agreement and the
Documents executed and delivered by the Holding Co. and the
Operating Co., the performance of the obligations of the Holding
Co. and the Operating Co. hereunder and thereunder and the
consummation by the Holding Co. and the Operating Co. of the
transactions contemplated hereby and thereby, including, without
limitation, the Merger (which has been approved by the vote of at
least 95% of the combined voting power of the stockholders and the
unanimous vote of the board of directors, of the Holding Co.). No
other corporate proceedings on the part of the Holding Co. or the
Operating Co. are necessary to authorize the execution and delivery
of this Agreement or the Documents executed and delivered by the
<PAGE>
Holding Co. and the Operating Co. or the performance by the Holding
Co. or the Operating Co. of their respective obligations hereunder
or thereunder, including, without limitation, the Merger. This
Agreement is and each Document executed and delivered by the
Holding Co. and the Operating Co. will be a valid and binding
agreement of the Holding Co. and the Operating Co., enforceable
against the Holding Co. and the Operating Co. in accordance with
its terms (provided that no representation or warranty is provided
hereunder as to the validly binding nature or enforceability of the
penultimate sentence of Section 12.12 hereof)
3.3. CAPITALIZATION. The authorized capital stock of the
Holding Co. consists of 60 million shares and 20 million shares of
Class A Common Stock and Class B Common Stock, respectively, of
which 20,008,877 shares and 19,654,744 shares are issued and
outstanding, all of which are validly issued, fully paid (except
with respect to a promissory note in the amount of $6,000) and non-
assessable and not subject to preemptive rights. As of the date
hereof: (x) 3,208,567 shares of Class A Common Stock and 345,256
shares of Class B Common Stock are reserved for issuance pursuant
to options granted and outstanding under the Benefit Plans; and (y)
no shares of the Company is capital stock are held by the Holding
Co. in its treasury or by its wholly owned Subsidiaries. Set forth
on Schedule 3.3 is a true and complete list of the names and last
known addresses of the record holders of each outstanding share of
the Stock and the number of shares of Stock held by such record
holders. Set forth on Schedule 3.3 hereto is a true and complete
list of all Rights with respect to the capital stock of the Holding
Co., including, without limitation, all options granted pursuant to
any of the Benefit Plans which are outstanding, the number of
shares of Stock for which such options are exercisable, the option
exercise price and the identity and the last known address of the
optionee. The Stock listed on Schedule 3.3 constitutes all of the
issued and outstanding securities of the Holding Co. Schedule 3.3
hereto lists the authorized, the issued and the outstanding capital
stock of the Company (all of the outstanding shares of which are
owned by the Company). All shares of the Subsidiary Stock are
validly issued, fully paid and non-assessable. Except as set forth
in Schedule 3.3 hereto, there are no agreements or understandings
with respect to the voting of the Stock or the Subsidiary Stock.
There are no existing Rights relating to the authorized Stock or
the Subsidiary Stock or any other security of the Company except as
set forth in Schedule 3.3 hereto. There are no shares of Stock
held in the treasury of the Holding Co. or Operating Co.
3.4. SUBSIDIARIES. Except as set forth on Schedules 3.2
and 3.4 (which schedule sets forth the names and jurisdiction of
organization and qualification of each such person) neither the
Holding Co. nor the Operating Co. has, or has any right or
obligation to acquire, any subsidiary or any interest, direct or
indirect in any person or business. The Operating Co. is the
direct or indirect beneficial owner of 100% of the Subsidiary Stock
or other interests in each person (other than the Holding Co. and
the Operating Co.) included within the Company and all Rights of,
or in respect of the securities of, any such person.
<PAGE>
3.5. NO VIOLATION. Except as set forth in Schedule 3.5
hereto, neither: (a) the Merger; (b) the Combination; (c) the
payment of the Total Debt as contemplated herein; (d) the execution
and delivery of this Agreement or any of the Documents executed and
delivered by the Holding Co. or the Operating Co.; (e) the
performance by the Holding Co. or the Operating Co. of its
obligations hereunder and thereunder; nor (f) the consummation of
the transactions contemplated hereby or thereby will: (i) violate
any provisions of the Certificate of Incorporation or By-Laws of
the Company; (ii) with or without the giving of notice or the
passage of time, or both, violate, or be in conflict with, or
constitute a default under, or cause or permit the termination or
the acceleration of the maturity of, any debt, contract, agreement,
instrument or obligation of the Company or require the payment of
any pre-payment or other penalty with respect to, or otherwise
result in the creation or occurrence of any right, duty or
obligation based upon or as a result of any change of control of
the Company or its assets, under any debt, contract, agreement,
instrument or obligation except as set forth in Section 2.4; (iii)
require notice to or the consent of any party to any agreement or
commitment, including without limitation, any lease or license, to
which the Company is a party, or by which it or its properties is
bound or subject or permit any such party to renegotiate, receive
a refund with respect to, modify or otherwise change any agreement
or commitment except as set forth in Section 2.4; (iv) result in
the creation or imposition of any security interest, lien, or other
encumbrance upon any property or assets of the Company under any
agreement or commitment to which it is a party, or by which it or
its properties is bound or subject; or (v) violate any statute or
law or any judgment, decree, order, regulation or rule of any court
or governmental authority to which the Company or its properties is
bound or subject.
3.6. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES.
Except as set forth on Schedule 3.6, no consent, approval or
authorization of, or declaration, filing or registration with, any
governmental or regulatory authority is required to be made or
obtained by the Company in connection with the execution or
delivery by the Holding Co. or the Operating Co. of this Agreement
or any of the Documents executed and delivered by the Holding Co.
or the Operating Co., the performance by the Holding Co. or the
Operating Co. of its obligations hereunder or thereunder, the
consummation of the transactions contemplated hereby or thereby, or
the Combination, other than pursuant to the HSR Act and the filing
of the Certificate of Merger and as required by the Federal
Acquisition Regulations incidental to change of name agreements or
novations of existing contracts with the United States government
as identified in Schedule 3.1(c) hereto.
3.7. FINANCIAL STATEMENTS OF THE OPERATING CO. The
Operating Co. has delivered to Purchaser accurate and complete
copies of: (i) the Operating Co.'s audited consolidated balance
sheet as of December 31, 1994 and 1995 (such balance sheet as of
December 31, 1995 ("Balance Sheet Date") being referred to herein
as the "Balance Sheet") and the related consolidated statements of
operations, cash flows and shareholders equity position for the
<PAGE>
years ended December 31, 1993, 1994 and 1995, and the notes
thereto, in each case examined by and accompanied by reports
thereon by Price Waterhouse LLP, independent accountants or Ernst
& Young LLP with respect to the year ended December 31, 1993; and
(ii) the unaudited balance sheets of the Company at March 31, 1996
and June 30, 1996 and the related statements of operations, cash
flows and shareholders equity position for the periods then ended.
The Operating Co. has delivered to Purchaser accurate and complete
copies of: (x) the Holding Co.'s audited consolidated balance
sheet as of December 31, 1995 and the related consolidated
statements of operations, cash flows and shareholders' equity
position for the year ended December 31, 1995, and the notes
thereto, in each case examined by and accompanied by a report
thereon by Price Waterhouse LLP, independent accountants; and (y)
the unaudited balance sheet of the Holding Co. at March 31, 1996
and June 30, 1996 and the related statements of operations, cash
flows and shareholders' equity position for the three month and six
month periods then ended (the statements referred to in clauses
(i), (ii), (x) and (y) above, together with all notes thereto are
referred to collectively as the "Financial Statements"). The
unaudited consolidated financial statements of the Operating Co.
and the Holding Co. for the three month period ended March 31, 1996
and the six month period ended June 30, 1996 referred to in clauses
(ii) and (y) above have been prepared in accordance with GAAP for
interim financial statements and include all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation of the financial position, results of operations and
cash flows for the period presented. The Financial Statements
referred to in clauses (i) and (x) above present fairly the
financial position of the Operating Co. and the Holding Co.,
respectively, at the dates thereof and the results of its
operations, cash flows and the changes in shareholders' equity of
the Operating Co. and the Holding Co., respectively, as of the
respective dates and for the respective periods indicated, in
accordance with GAAP applied on a consistent basis. Attached to
Schedule 3.7 is a special purpose balance sheet (the "Special
Purpose Balance Sheet (1995)") (absent footnotes), prepared in
accordance with GAAP, setting forth the financial position of the
Holding Co. as of December 31, 1995 and a statement of its
operations (the "Special Purpose Statement of Operations (1995)")
prepared in accordance with GAAP for the year ended December 31,
1995, in each case as if River was not, at such time or during such
period, part of the Company and the same fairly presents the
financial position and operations of the Holding Co. as of such
date and for such period as if such event had taken place.
Attached to Schedule 3.7 is a special purpose balance sheet of the
Holding Co. (the "Special Purpose Balance Sheet (1996)") (absent
footnotes), prepared in accordance with GAAP setting forth the
financial position of the Company as of June 30, 1996 and a special
purpose statement of operations of the Holding Co. (the "Special
Purpose Statement of Operations (1996)") prepared in accordance
with GAAP (absent footnotes), setting forth the operations of the
Holding Co. for the six month period ended June 30, 1996, in each
case as if River was not, at such time or during such period, part
of the Company and the same fairly presents the financial position
and the operations of the Holding Co. as of such date and for such
<PAGE>
period, as if such event had taken place. True and complete copies
with all documents described in this Section 3.7 are attached to
Schedule 3.7.
There are no liabilities of the Company or the Business
of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances which would reasonably
be expected to result in such a liability, other than:
(i) liabilities provided for on the Balance Sheet or
disclosed in the notes thereto;
(ii) liabilities incurred since the Balance Sheet Date in
the ordinary course of business; and
(iii) liabilities disclosed on Schedule 3.7, Schedule 3.7A
and Schedule 3.7B.
The Company has estimated that the amount set forth on
Part I of Schedule 3.7A is the amount necessary to complete the
Signature Recall and to pay all appeasement payments which the
Company is currently obligated to pay to customers with respect to
the Signature Product and that the amount set forth on Part II of
Schedule 3.7A is the amount necessary to make any other payments or
satisfy any other concessions granted to customers with respect to
the Signature Product after the date of the sale or lease thereof
(collectively, the "Signature Recall Obligations"). Such amounts
are adequate to satisfy the Signature Recall Obligations.
The Company has estimated that the amount set forth on
Part I of Schedule 3.7B is the amount necessary to complete the
Welmed Safety Alert and to pay all appeasement payments, if any,
which the Company is currently obligated to pay to customers with
respect to the Welmed Product and that the amount set forth on Part
II of Schedule 3.7B is the amount necessary to make any payment or
satisfy any concession granted to customers with respect to the
Welmed Product after the date of the sale or lease thereof
(collectively, the "Welmed Safety Alert Obligations"). Such
amounts are adequate to satisfy the Welmed Safety Alert
Obligations.
3.8. CONTRACTUAL ARRANGEMENTS WITH STOCKHOLDERS, OFFICERS
OR EMPLOYEES. Except as set forth in Schedule 3.8, the Company
does not, directly or indirectly, have any contractual arrangement
with or commitment or obligation to or from any of its
stockholders, officers, directors or employees or with Eli Lilly,
except as disclosed in Schedules 3.1(c) and 3.1(d) hereto. Without
limiting the generality of the foregoing, except as set forth in
Schedule 3.8, no stockholder, officer, director or employee of the
Company or of Eli Lilly (other than the Company) is, directly or
indirectly, a joint investor or co-venturer with, or owner, lessor,
lessee, licensor or licensee of any property, real or personal,
tangible or intangible, owned or used, by the Company and no such
person is, directly or indirectly, a lender to or debtor of the
Company.
<PAGE>
3.9. ABSENCE OF CERTAIN CHANGES. Except as set forth in
Schedule 3.9 hereto, since the Balance Sheet Date, the Company has
conducted the Business in the ordinary course and in a manner
consistent with past practice and there has not been any change or
any event, occurrence, development or fact that alone or in the
aggregate has had, or would reasonably be expected to have, a
Material Adverse Effect (as defined hereinafter) other than as set
forth in Schedule 3.9. For purposes of this Agreement, the term
"Material Adverse Effect" shall mean a material adverse effect on
the condition (financial or otherwise), results of operations,
business, or assets of the Company or the Business taken as a whole
(other than as a result of changes in general economic or political
conditions generally or in general economic or political conditions
applicable to the health care industry generally). In addition,
and without limiting the foregoing, except as set forth on Schedule
3.9, and except as contemplated by this Agreement, the Company has
not done any of the following since the Balance Sheet Date:
(i) amended its Certificate of Incorporation or By-Laws;
(ii) declared or paid any dividend or made any other
distributions to its stockholders;
(iii) redeemed or otherwise acquired any Stock or issued
any capital stock or any Right, or amended any term of any
Stock;
(iv) adopted or amended any Benefit Plans (as hereinafter
defined) or collective bargaining agreement that would
increase materially the expense of maintaining such Benefit
Plans or collectively bargained agreement;
(v) made or granted to any executive officer, director
or employee any increase in compensation or benefits, except
as may be required under existing agreements, or in the
ordinary course of business consistent with past practice or
granted or otherwise become obligated to pay (whether on the
occurrence of any future event or otherwise) any severance or
termination pay to any officer, director or employee of the
Company;
(vi) incurred or assumed any liabilities, obligations or
indebtedness for borrowed money or guaranteed any such
liabilities, obligations or indebtedness;
(vii) permitted, allowed or suffered any of its assets to
be subject to any Encumbrance, other than Permitted Liens (as
such terms are defined below);
(viii) paid, loaned or advanced any amount to, or sold,
transferred or leased any of its assets to, or entered into
any agreement or arrangement with any Participating
Stockholder or any Affiliates thereof (other than the
Company);
<PAGE>
(ix) made any change in any accounting practice or policy
(other than those changes occurring after the date hereof as
required by GAAP);
(x) acquired or agreed to acquire by merging or
consolidating with, or by purchasing a substantial portion of
the assets of, or by any other manner, any business or any
corporation, partnership, association or other business
organization or division thereof;
(xi) sold, leased, or otherwise transferred or disposed
of, or agreed to sell, lease or otherwise dispose of, any of
its assets (or group of related assets) (other than inventory
or raw materials sold or otherwise disposed of in the ordinary
course of business in a manner consistent with past practice)
for: (A) a sales price in excess of $250,000 in any
particular transaction; or (B) in the aggregate, in an amount
in excess of approximately $3 million through June 30, 1996;
(xii) suffered any condemnation, damage, destruction or
loss (by destruction, theft or otherwise) of or to any of the
Company's assets or properties of a nature that would
interfere with the ordinary conduct of the Company's business
or that involves in excess of $250,000 in the aggregate
(whether or not covered by insurance); or
(xiii) agreed to any of the foregoing.
3.10. TITLE TO PROPERTY; LEASES; ENCUMBRANCES.
(a) TITLE TO PROPERTY. Except as set forth on Schedule
3.10, the Company has good and valid title to all assets (other
than real property or interests in real property) reflected on the
Balance Sheet or thereafter acquired, except for those since sold
or otherwise transferred or disposed of in the ordinary course of
business consistent with past practice, in each case free and clear
of all mortgages, deeds of trust, liens, claims, pledges, leases,
subleases, rights of occupancy, covenants, conditional limitations,
security interests, encumbrances, easements, judgments or
imperfections of title of any nature whatsoever ("Encumbrances")
except Permitted Liens (as hereinafter defined).
(b) TITLE TO REAL PROPERTY Item 1 on Schedule 3.1(a)
under the caption "Real Property Owned" sets forth a complete list
as of the date of this Agreement of all real property and interests
in real property owned in fee by the Company (the "Owned Real
Property"), and the items on Schedule 3.1(a) under the caption
"Real Property Leased" constitutes a complete list of all real
property and interests in real property leased by the Company (the
"Leased Real Property"). Except as set forth on Schedule 3.10, the
Company has good and valid title to the Owned Real Property and
valid leasehold interest in the Leased Real Property, free and
clear of all Encumbrances except Permitted Liens.
(c) STATUS OF LEASES. All leases of real property or
personal property disclosed in any Schedule to this Agreement or
<PAGE>
required to be disclosed pursuant to this Section are valid,
binding and enforceable in accordance with their respective terms,
and neither the Company nor any other party thereto is in default
or breach in any respect under the terms of any such lease, nor has
any event or circumstance occurred that, with notice or lapse of
time or both, would constitute any event of default thereunder.
(d) ASSETS. Except as set forth on Schedule 3.10(d),
the plants, buildings, structures and equipment of the Company are
substantially free of defects, are in good operating condition and
repair and have been reasonably maintained consistent with
standards generally followed in the industry (giving due account to
the age and length of use of same, ordinary wear and tear
excepted), are substantially suitable for their present uses and,
in the case of plants, buildings and other structures (including,
without limitation, the roofs thereof), are structurally sound.
(e) PERMITTED LIENS. As used in this Agreement
"Permitted Liens" shall mean (i) any Encumbrances disclosed on the
Balance Sheet or on Schedule 3.10; (ii) liens for Taxes which are
not yet due and payable or which are being contested by the Company
in good faith and, with respect to which have adequately been
provided for by the Company on its financial statements (whether or
not required to be disclosed under GAAP), (iii) liens incurred in
the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social
security benefits; (iv) mechanics', carriers', workmen's,
repairmen's or other like liens arising out of or incurred in the
ordinary course of business; (v) liens arising under original
purchase price conditional sales contracts and equipment leases
with third parties entered into in the ordinary course of business;
(vi) liens created by or existing from any litigation or legal
proceeding that is being contested by the Company and (vii) (with
respect to real property and interests therein) easements
(including, without limitation, reciprocal easement agreements and
utility agreements), zoning requirements, rights of way, covenants,
consents, agreements, reservations, encroachments, variances and
other similar restrictions, charges or encumbrances (whether or not
recorded) that do not, individually or in the aggregate, impair the
continued use and operation of the assets to which they relate in
the business of the Company as presently conducted, and (viii)
extensions, renewals or replacements of any lien for money borrowed
by the Company, provided that the amount of the obligations secured
thereby is not increased and that any such extension, renewal or
replacement is limited to the property originally encumbered
thereby.
3.11. PATENTS, TRADEMARKS, TRADE NAMES. Except as
set forth in Schedule 3.11 hereto: (i) the Company is the sole
owner of or has the full, exclusive right to use, for the life of
the proprietary right, all patents, trademarks, service marks,
trade names (whether registered or unregistered), copyrights and
confidential information and has the non-exclusive right to use any
non-confidential information (including, without limitation, know-
how, processes and technology) used in or necessary for the conduct
of the Business as heretofore conducted (the "Intangible
<PAGE>
Property"); and (ii) the use of such Intangible Property by the
Company, and the conduct of the Business, does not infringe on the
rights of any other person and neither any Participating
Stockholder nor the Company has received any notice of any conflict
between the asserted rights of others with respect to such
Intangible Property owned or licensed by the Company. Except as
set forth on Schedule 3.11, the Company has not, since December 31,
1994, been a defendant in any action, suit, investigation or
proceeding relating to, or otherwise been notified of, any alleged
claim of infringement by the Company of any patents, trademarks,
intellectual property, service marks or copyrights of others, and
neither any Participating Stockholder nor the Company has any
knowledge of any other claim or infringement by the Company, and
there exists no continuing infringement by any other person of any
Intangible Property. Except as set forth on Schedule 3.11, the
Company has not entered into any agreement to indemnify any other
person against any charge of infringement of any patent, trademark,
intellectual property, service mark or copyright. None of the
material processes and formulae, research and development results
and other know-how relating to the Business, the value of which to
the Company is contingent upon maintenance of the confidentiality
thereof, has been disclosed to any person other than employees,
representatives and agents of the Company, all of whom are bound by
written confidentiality agreements listed on Schedule 3.11 hereof.
3.12. LITIGATION; COMPLIANCE WITH LAWS.
(a) Except as set forth in Schedule 3.12 hereto, there
is no action, suit, proceeding or investigation pending or, to the
knowledge of any Participating Stockholder or the Company,
threatened, against or involving the Company or its assets (whether
or not covered by insurance) (except for matters relating to
Environmental Law). There exists no basis for the commencement of
any action, proceeding or investigation against the Company.
Except as set forth on Schedule 3.12, there is no outstanding
judgment, order, writ, injunction or decree against the Company or
related to its assets (including, without limitation, any
Intangible Property).
(b) There is no action, suit, investigation or
proceeding pending against, or to the knowledge of any
Participating Stockholder or the Company threatened against or
affecting, the Company before any court or arbitrator or any
governmental body, agency or official which in any manner
challenges or seeks to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement.
(c) Except as set forth on Schedule 3.12 (or, with
respect to matters related to Environmental Law, Schedule 3.13),
the Company has complied and is in compliance with all applicable
laws, statutes, rules, regulations, ordinances, orders, judgments
and decrees, local, federal, state, domestic or foreign (including,
without limitation, applicable insurance requirements, requirements
of any Board of Fire Underwriters or similar body, building,
zoning, occupational safety and health, pension, fair employment,
equal opportunity, safety, health, procurement, reimbursement,
<PAGE>
consumer protection or similar laws, rules, regulations and
ordinances). No notice has been received by the Company or any
Participating Stockholder, and neither the Company nor
Participating Stockholder has knowledge of any notice being given,
with respect to any violation of any such legal requirements.
There is no action or proceeding by the U.S. Food and Drug
Administration (the "FDA"), the Health Care Financing Agency or
other agency or part of the U.S. Department of Health & Human
Services or any other governmental body, including, but not limited
to, recall procedures, pending or, to any Participating
Stockholder's or the Company's knowledge, threatened against any
Participating Stockholder or the Company relating to the safety or
efficacy of or use or charges for any of its products developed or
sold in connection with the Business.
3.13. ENVIRONMENTAL MATTERS. Except as set forth in
Schedule 3.13 hereto:
(a) No litigation, suits, claims, proceedings or
investigations or private or governmental enforcement actions or
orders are pending, or, to any Participating Stockholder's or the
Company's knowledge, threatened against any Participating
Stockholder, the Company or any of their respective Affiliates with
respect to any Hazardous Material (as hereinafter defined) or
applicable Environmental Law (as hereinafter defined) (in the case
of Participating Stockholder and its Affiliates other than the
Company and its subsidiaries, solely with respect to the Business).
<PAGE>
(b) Neither any Participating Stockholder, the Company,
nor any of their respective Affiliates has received any written
notice, notification, demand, request for information, complaint or
order from any governmental authority or other person with respect
to any: (i) claims or potential violations by the Company or any of
their respective Affiliates of (or liability under) any
Environmental Law; (ii) alleged failure by the Company or its
Affiliates to have any environmental permit; (iii) Regulated
Environmental Activity (as hereinafter defined) engaged in by the
Company or its Affiliates; or (iv) Release (as hereinafter defined)
of Hazardous Material at any property now or previously owned,
leased or operated by the Company or its Affiliates (in the case of
any Participating Stockholder and its Affiliates other than the
Company and its subsidiaries, solely with respect to the Business).
(c) Other than activity in compliance with all
applicable Environmental Laws the Company has not engaged in any
Regulated Environmental Activity.
(d) No polychlorinated biphenyls, radioactive material,
urea formaldehyde, lead, asbestos, asbestos-contained material or
underground or above ground storage tank (active or abandoned) is
or, has been present at any property now or previously owned,
leased or operated by the Company or any of its Affiliates (in the
case of any Participating Stockholder and its Affiliates other than
the Company and its subsidiaries, solely with respect to the
Business).
(e) No Hazardous Material has been Released (as
hereinafter defined) (and no notification of such Release has been
filed or made) or is present (whether or not in a reportable or
threshold planning quantity) at, on or under any property now or
previously owned, leased, or operated by Participating
Stockholders, the Company or any of their respective Affiliates (in
the case of any Participating Stockholder and its Affiliates other
than the Company and its subsidiaries, solely with receipt to the
Business).
(f) No property now or previously owned, leased or
operated by the Company or any of its Affiliates, nor any property
to which the Company or any of its Affiliates has, directly or
indirectly, transported or arranged for the transportation of any
Hazardous Material (in the case of any Participating Stockholder
and its Affiliates other than the Company and its subsidiaries,
solely with respect to the Business), that is listed or, to the
Company's knowledge, proposed for listing, on the National
Priorities List promulgated pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), or CERCLIS (as defined in CERCLA) or on any similar
federal, state or foreign list of sites requiring investigation or
clean-up.
(g) There are no liens under Environmental Laws on any
of the real property or other assets owned, leased or operated by
the Company or any of its Affiliates (in the case of any
Participating Stockholder and its Affiliates, solely with respect
to the Business), no government actions have been taken or are, to
the Company's knowledge, in process which could subject any of such
properties or assets to such liens and neither Participating
Stockholder, the Company nor any of their respective Affiliates (in
the case of Participating Stockholder and its Affiliates other than
the Company and its subsidiaries, solely with respect to the
Business) would be required to place any notice or restriction
related to Hazardous Materials at any property owned by any of them
in any deed to such property.
(h) There are no environmental permits required for the
operation of the Business that are nontransferable or require
consent, notification or other action to remain in full force and
effect following the consummation of the transactions contemplated
hereby including, without limitation, the Combination.
(i) There has been no environmental investigation,
study, audit, test, review or other analysis conducted in relation
to the current or prior business of the Company or any of its
Affiliates (in the case of any Participating Stockholder and its
Affiliates other than the Company and its subsidiaries, solely with
respect to the Business), or any property or facility now or
previously owned or leased by any Participating Stockholder, the
Company or any of their respective Affiliates (in the case of any
Participating Stockholder and its Affiliates other than the Company
and its subsidiaries, solely with respect to the Business), other
than those listed on Schedule 3.13 hereof, copies of which have
been delivered to Purchaser.
<PAGE>
(j) For purposes of this Section 3.13, the terms
"Company" and "Affiliate" shall include any entity which is, in
whole or in part, a predecessor of the Company or any of
Affiliates.
"Environmental Law" means any and all federal, state,
local and foreign statutes, laws, rules, regulations, judicial
decision, ordinances, judgments and permits relating to the
environment, the effect of the environment on human health, or
Hazardous Materials;
"Hazardous Material" means any material, substance,
waste, pollutant or other matter that is defined as a hazardous
material, hazardous substance, hazardous waste, toxic material,
toxic substance or other term having a similar meaning under
applicable law or is otherwise subject to regulation, elimination,
abatement, removal, remediation or clean-up under applicable law.
"Regulated Environmental Activity" means any emission
generation, treatment, storage, recycling, discharge,
transportation or disposal of any Hazardous Material.
"Release" means any discharge, emission or release,
including, but not limited to, a Release as defined in CERCLA at 42
U.S.C. Section 9601(22). The term "Released" has a corresponding
meaning.
3.14. TAX MATTERS.
(a) The following terms, as used herein, have the
following meanings throughout this Agreement:
"Affiliated Group" means any affiliated group within the
meaning of Section 1504 of the Code (or any similar group defined
under a similar provision of state, local or foreign law).
"Code" means the Internal Revenue Code of 1986, as
amended.
"Tax Lien" or "Tax Liens" means any mortgage, pledge,
lien, encumbrance, charge, or other security interest for Taxes,
other than a lien of the type described in Section 3.10(e)(ii).
"Tax" or "Taxes" means any United States Federal, state,
local or foreign tax, levy, imposition, deduction, charge,
withholding, premium, custom, duty or other governmental fee or
like assessment or charge of any kind whatsoever including (without
limitation) net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, license, withholding on amounts paid
to or by the Company, payroll, employment, excise, severance, stamp
and stamp duty reserve, capital stock, occupation, property,
environmental or windfall profit tax, or customs duty registration,
together with any interest, penalty, addition to tax or additional
amount, whether disputed or not, imposed by any governmental
<PAGE>
authority (a "Taxing Authority") responsible for the imposition of
any such tax on the Company.
"Tax Return" or "Tax Returns" means any United States
Federal, state, local and foreign return, declaration, report,
claim for refund, or information return or statement relating to
Taxes, including all schedules and attachments thereto, and
including any amendment thereof.
"Tax Sharing Agreements" means all existing Tax sharing
agreements or arrangements (whether or not written) binding the
Company.
(b) Holding Co. is the common parent of an Affiliated
Group of corporations which includes Operating Co. and all other
direct and indirect subsidiaries of Holding Co. ("Consolidated
Subsidiaries") which are eligible to be included in a consolidated
return with Holding Co., and with respect to which Holding Co.
files consolidated United States Federal income Tax Returns. All
Tax Returns that were or will be required to be filed by, or with
respect to, the Company on or before the Closing Date have been or
will be filed on a timely basis in accordance with the laws,
regulations and administrative requirements of the appropriate
Taxing Authority. All such Tax Returns that have been filed were,
when filed, and continue to be, true, correct and complete. All
such Tax Returns that are filed after the date hereof through the
Closing Date will be true, correct and complete when filed. In
addition, all documents which are required to be stamped and which
are in the possession of the Company or by virtue of which the
Company has any right have been duly stamped.
(c) Except as set forth on Schedule 3.14(c) there is no
action, dispute, suit, proceeding, investigation, assessment, audit
or claim now pending against, or with respect to, the Company in
respect of any Tax nor is any action, dispute, suit, procedure,
investigation, assessment, audit or claim for additional Tax
expected by any Participating Stockholder, the Company or any of
their respective Affiliates to be asserted by any Taxing Authority.
Except as provided on Schedule 3.14(c), no Taxing Authority has
proposed any adjustment with respect to any action, dispute, suit,
proceeding, investigation, assessment, audit or claim described on
Schedule 3.14(c) pursuant to the preceding sentence. All
deficiencies proposed (plus any interest, penalties and additions
to Tax that were or are proposed to be assessed thereon, if any)
with respect to the Company have been paid or, as described in
Schedule 3.14(c), are being contested in good faith by appropriate
proceedings. Except as set forth in Schedule 3.14(c), there are no
outstanding waivers or extensions of any statute of limitations
relating to either the filing of any Tax Return or the payment of
any Tax for which the Company may be liable and no Taxing Authority
has either formally or informally requested such a waiver or
extension.
(d) All Taxes due and payable on or before the Closing
Date that are either (i) required to be shown on any Tax Return
filed by, or with respect to, the Company or (ii) which were not
<PAGE>
required to be shown on any Tax Return but which were or will be
required to be paid by or with respect to the Company, have been or
will be timely paid on or before the Closing Date, except such
Taxes, if any, as are set forth on Schedule 3.14(d), that are being
contested in good faith. All Taxes that the Company was or will be
required by law to withhold or collect have been (in the case of
those that were already required to be withheld or collected) or
will be duly withheld or collected and, to the extent required,
have been (in the case of those that were already required to be
paid) or will be paid to the appropriate Taxing Authority. There
are no Tax Liens, and will be no Tax Liens on the Closing Date,
with respect to Taxes upon any of the properties or assets, real or
personal, tangible or intangible, of the Company. Except as
provided on Schedule 3.14(d), any liability of the Company for
Taxes not yet due and payable and for Taxes being contested by the
Company in good faith has adequately been provided for by the
Company on its Financial Statements (whether or not required to be
disclosed under GAAP).
(e) Except as set forth on Schedule 3.14(e), the Company
has never been included in a consolidated, combined or unitary
income Tax Return.
(f) No consent to the application of Section 341(f)(2)
of the Code has been filed with respect to any property or assets
held or acquired (or to be acquired) by the Company.
(g) No property owned by the Company is property that
Purchaser or the Company will be required to treat as being owned
by another person pursuant to the provisions of Section 168(f)(8)
of the Internal Revenue Code of 1954, as amended and in effect
immediately before the enactment of the Tax Reform Act of 1986, or
is "tax-exempt use property" within the meaning of Section
168(h)(1) of the Code.
(h) The Company is not subject to an adjustment under
Section 481 of the Code or has been required by, or has requested
or received the permission of, any Taxing Authority to change its
method of accounting.
(i) Except as set forth on Schedule 3.14(i), the
Participating Stockholders are not foreign persons within the
meaning of Section 1445 of the Code.
(j) The Company is not and has not been a United States
real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(k) Except as disclosed on Schedule 3.14(k), the Company
does not have in effect any tax elections for Federal income tax
purposes under Sections 108, 168, 338, 441, 471, 1017, 1033 or 4977
of the Code.
(l) There is no contract, agreement, plan or arrangement
covering any Person that, individually or collectively,
<PAGE>
could give rise to the payment of any amount that would not be
deductible by Purchaser or the Company by reason of Sections 162(m)
or 280G of the Code or as excessive or unreasonable compensation.
(m) The Company is not a party (other than as an
investor) to any industrial development bond.
(n) Except as provided on Schedule 3.14(n), during the
previous two years the Company has not engaged in any exchange
under which the gain realized on such exchange was not recognized
due to Section 1031 of the Code.
(o) No claim has ever been made by any Taxing Authority
in any jurisdiction in which no Tax Return is filed by, or with
respect to, the Company that the Company may be subject to taxation
by that jurisdiction.
(p) Except as set forth on Schedule 3.14(p) the Company
is not and has never been a party to any tax sharing or similar
agreement or arrangement.
(q) Schedule 3.14(q) hereto sets forth, as of January 1,
1996, for United States Federal, state, local and foreign income
tax purposes the Participating Stockholders and the Company's good
faith determination, based on the best data available to them, of
the liabilities of the Company, and the adjusted basis (or, where
applicable, the excess loss account) of (i) the assets of the
Company and (ii) the shares of stock of any person referred to in
Section 3.4 (and any schedule provided pursuant thereto). Schedule
3.14(q) hereto sets forth, as of January 1, 1996, for United States
Federal income Tax purposes, and where applicable, for state, local
and foreign income Tax purposes the Participating Stockholders' and
the Company's good faith determination, based on the best data
available to them, of the net operating losses, capital losses and
credits, including any carryovers thereof, of the Company. Except
as described on Schedule 3.14(q) and except as a result of the
transactions contemplated by the Agreement, the Company does not
have any net operating loss carryover, capital loss carryover or
credit carryover which (i) in the case of a net operating loss
carryover, is subject to restriction under Section 382 of the Code
(or any similar provision under state, local or foreign law), (ii)
in the case of a net capital loss carryover and credit carryover,
is subject to restriction under Section 383 of the Code (or any
similar provision under state, local or foreign law), or (iii) in
the case of either a net operating loss carryover, capital loss
carryover or credit carryover, arose in a separate return
limitation year.
(r) The Participating Stockholders have provided or
caused the Company to provide Purchaser with copies of: (i) all
Tax Returns of the Company and all pro forma income Tax Returns of
the Company set forth on Schedule 3.14(r) hereto; (ii) any notices,
protests, or closing agreements relating to issues arising, or
potentially arising, in any audit, litigation or similar proceeding
with respect to the liability for Taxes of the Company; (iii) any
elections or disclosure of any controversial positions filed by or
<PAGE>
on behalf of the Company with any Taxing Authority (whether or not
filed with any Tax Return); (iv) any letter rulings, determination
letters or similar documents issued by any Taxing Authority with
respect to the Company; and (v) any tax sharing agreement or
similar agreement to which the Company is or has been a party.
(s) Except as set forth on Schedule 3.14(s), the Company
does not have any liability (whether contingent or otherwise) for
Taxes of any other Person (i) under Treasury Regulations Section
1.1502-6 (or any successor provision thereto or any similar
provision under state, local or foreign law); (ii) as a successor
or transferee or (iii) by contract (whether written or unwritten).
(t) Operating Co. was acquired from Lilly in a
"qualified stock purchase" as defined in Section 338 of the Code
and the Treasury Regulations promulgated thereunder and in
connection with such acquisition, an election under Section
338(h)(10) of the Code and the Treasury Regulations promulgated
thereunder as well as corresponding elections under state, local or
foreign law, were made and such elections are valid and effective.
Schedule 3.14(t) sets forth the elections corresponding to Section
338(h)(10) of the Code that were made, or treated as having been
made under applicable law, with respect to the acquisition
described in the previous sentence for purposes of state, local and
foreign law.
(u) Except as set forth on Schedule 3.14(u), the Company
has no obligation or liability, fixed or unfixed, contingent or
otherwise, attributable to the Section 338 Election Tax Liability
(as defined in the Stock Purchase Agreement dated as of November
21, 1994 between Eli Lilly & Company and River Acquisition
Corporation, DLJ Merchant Banking Partners, L.P., DLJ International
Partners, C.V., DLJ Offshore Partners, C.V., DLJ Merchant Banking
Funding, Inc. and River Medical, Inc.) (the "1994 Stock Purchase
Agreement").
(v) Each United Kingdom ("UK") resident Company is
registered for the purposes of the Value Added Tax Act 1994 ("VATA
1994") and has made, given, obtained and kept full, complete,
correct and up to date records, invoices and other documents
appropriate or required for those purposes and is not in arrears
with any payments or returns due. In addition, no UK resident
Company is under any obligation to make any future payment which
will be prevented from being deductible for corporation tax
purposes by reason of any statutory provision other than Section
74(f) Income and Corporation Taxes Act 1988 (Capital).
(w) The Company has no gains or losses that have been
deferred under the United States federal consolidated return
regulations, and no losses that have been deferred under Section
267 of the Code. In addition, no UK resident Company has acquired
any asset from any other company which was, at the time of the
acquisition, a member of the same group of companies as that UK
resident Company for the purposes of any Tax within the last six
<PAGE>
years.
(x) No UK resident Company is a party to any transaction
or arrangement under which it may be required to pay for any asset
or any services or facilities of any kind an amount which is
different than the market value of that asset, services or
facilities or will receive any payment for an asset or any services
or facilities of any kind that it has supplied or provided or is
liable to supply or provide which is less than the market value of
that asset or services.
3.15. BENEFIT PLANS.
(a) Schedule 3.15(a) contains a list and brief
description of all "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA), employment, consulting,
severance or similar contracts, arrangements or policies and each
plan or arrangement (whether or not written) providing for
severance benefits, insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, sick
leave, cafeteria or flexible spending, dependent care, supplemental
unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights, post-retirement benefits or other forms
of incentive compensation or benefits, social security and other
employee fringe benefit plans, domestic and foreign, entered into
or maintained (or required to be maintained under any governmental
law or regulation), or contributed to, by the Company for the
benefit of its respective employees or former employees (in the
aggregate the "Employees"), or with respect to which the Company
has, or may have, any liability (all of the foregoing being herein
called "Benefit Plans").
(b) The Company has furnished Purchaser copies of all
such Benefit Plans (and, if applicable, related trust agreements
and insurance contracts) and all amendments thereto and written
interpretations thereof together with, where applicable, (i) a
summary plan description, (ii) the most recent annual report
prepared in connection with any such Benefit Plan (Form 5500
including, if applicable, Schedule B thereto), (iii) the most
recent IRS Form 990, (iv) the most recent actuarial valuation
report prepared in connection with any such Benefit Plan, and (v)
the premium expenses and claims experience for each Benefit Plan
which is a welfare benefit plan for the period from January 1, 1995
to the last day of the month preceding the date hereof.
(c) Except as set forth in Schedule 3.15(c) each Benefit
Plan that is intended to be qualified under Section 401(a) of the
Code (as hereinafter defined) has been so qualified during the
period from its adoption to date and has been determined by the
Internal Revenue Service to be so qualified and no event has
occurred since the date of such determination that would adversely
affect such qualification; each trust created under any such
Benefit Plan is exempt from tax under Section 501(a) of the Code
and has been so exempt during the period from creation to date.
The Participating Stockholder has provided Purchaser with the most
<PAGE>
recent determination letters of the Internal Revenue Service
relating to each such Benefit Plan. Each Benefit Plan outside of
the United States which is intended to be tax qualified has
received all relevant approvals or exemptions in the jurisdiction
in which it is maintained. Each Benefit Plan is and has been in
compliance, in form and operation, with all applicable laws and has
been administered in all respects in accordance with its terms and
ERISA, the Code or any other applicable statute, order or
governmental rule or regulation. There are no investigations by
any governmental authority, termination proceedings or other claims
(except claims for benefits payable in the normal operation of the
Benefit Plans), suits or proceedings pending or to the knowledge of
any Participating Stockholder or the Company, threatened against or
involving any Benefit Plan or asserting any rights or claims to
benefits under any Benefit Plan that could give rise to any
liability on the part of the Company. No "prohibited transaction",
as defined in Section 406 of ERISA or Section 4975 of the Code, has
occurred with respect to any Benefit Plan which is covered by Title
I of ERISA, excluding transactions effected pursuant to a statutory
or administrative exemption.
(d) The Company does not currently maintain, sponsor, or
contribute to (nor is it required to contribute to) any "defined
benefit plan" as defined in Section 3(35) of ERISA, any
"multiemployer plan" as defined in Section 3(37) of ERISA or any
"multiple employer plan" within the meaning of Sections 4063 or
4064 of ERISA. With respect to any "employee benefit plan" (as
defined in Section 3(3) of ERISA), or any similar plan maintained
outside of the United States, whether or not terminated, currently
or formerly maintained or contributed to by the Company or any
entity which was at any time treated as a single employer,
determined under Section 414(b), (c), (m) or (o) of the Code, with
the Company, no liability currently exists and no event has
occurred and no condition exists, which could subject the Company,
or Purchaser directly or indirectly (through an indemnification
agreement or otherwise) to any liability, including, without
limitation, any liability under Title IV of ERISA or Section 412,
4971, 4975 or 4980B of the Code. Neither the Participating
Stockholders nor the Company has engaged in, or is a successor or
parent corporation to an entity that has engaged in, a transaction
described in Section 4069 of ERISA.
(e) With respect to the Benefit Plans, individually and
in the aggregate, there are no funded benefit obligations for which
contributions are due and have not been made or for which
contributions have not been properly accrued as required by GAAP,
and there are no unfunded benefit obligations which have not been
(i) accounted for by reserves (if required by GAAP) or (ii) if
required (and to the extent required, if any), properly disclosed
in accordance with GAAP, in the consolidated financial statements
of the Company.
(f) Neither the Company, nor any of its affiliates nor
any Participating Stockholder has any current or projected
liability in respect of post-employment or post-retirement welfare
<PAGE>
benefits for Employees or other persons, except as required to
avoid excise tax under Section 4980B of the Code.
(g) Neither any Participating Stockholder nor the
Company nor any trustee, administrator or other fiduciary of any
Benefit Plan has engaged in any transaction or acted or failed to
act in a manner which could subject the Company to any liability
for breach of fiduciary duty under any applicable governmental law
or regulation.
(h) Except as set forth on Schedule 3.15(h), there is no
contract, agreement, plan or arrangement, covering any Employee
that, individually or collectively, could give rise to the payment
of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code.
(i) No tax under Section 4980B of the Code has been
incurred in respect of any Benefit Plan that is a group health
plan, as defined in Section 5000(b)(1) of the Code.
(j) Except as set forth on Schedule 3.15(j) or as
provided in Section 6.21 hereof, no Employee will become entitled
to any bonus, retirement, severance, job security or similar
benefit or any enhanced benefit of such type as a result of the
transactions contemplated hereby.
(k) From and after the Closing Date, if and to the
extent the Company or any of its Affiliates assumes or succeeds to
any obligation under any Benefit Plan, the Company or its
Affiliates will get the full benefit of any funds, accruals or
reserves in connection therewith.
3.16. LABOR MATTERS. Except as set forth on
Schedule 3.12, since December 31, 1994, the Company has not
experienced any labor disputes or any work stoppages due to labor
disagreements and there is no such dispute or work stoppage
threatened against the Company. No employee of the Company is
represented by any union or collective bargaining agent and to the
best knowledge of Participating Stockholders and the Company, there
has been no union organizational effort in respect of any employees
of the Company since December 31, 1994. There are no pending or,
to the best knowledge of Participating Stockholder's and the
Company, threatened, lawsuits, administrative proceedings, reviews,
or investigations by any person or Governmental Entity against the
Company with respect to any violation or alleged violation of any
applicable federal, state or local laws, rules or regulations (i)
prohibiting discrimination on any basis, including, without
limitation, on the basis of race, color, religion, sex, disability,
national origin or age, or (ii) relating to employment or labor,
including, without limitation, those related to immigration, wages,
hours or plant closing.
3.17. PURCHASE AND SALE COMMITMENTS. Except as
provided on Schedule 3.17, none of the customers or suppliers
listed in Schedule 3.1(h) has given any written notification that
any such
<PAGE>
person will cease to continue its relationship with the Company or
will substantially reduce the extent of such relationship.
3.18. INSURANCE. The Company has furnished to the
Purchaser on Schedule 3.1(l) a list of, and true and complete
copies of, all currently effective insurance policies relating to
the Business. Such policies or insurance (or other policies
providing substantially similar insurance coverage) have been in
effect since December 30, 1994 and remain in full force and effect.
All premiums payable under all such policies and bonds have been
paid timely and the Company has otherwise complied fully with the
terms and conditions of all such policies and bonds. Neither the
Company nor any Participating Stockholder has received any notice
of any claims by the Company against any policies of insurance
owned by the Company, as to which any insurer is denying liability
or defending under any reservation of rights clause. The Company
has not received any notice of cancellation, non-renewal or
termination in respect of any of the insurance policies listed on
Schedule 3.1(l) hereto.
3.19. CONTRACTS. Except as set forth on Schedule
3.19 hereto, all of the contracts, agreements, indentures,
instruments, plans, leases, policies and licenses (collectively,
"Contracts") to which the Company is a party or by which it or any
of its properties or assets may be bound or subject, are legal,
valid and binding obligations of the Company and the other parties
thereto, enforceable in accordance with their terms, are in full
force and effect, and: (i) neither the Company nor, to the
knowledge of any Participating Stockholder or the Company, any
other party thereto is in default or breach under the terms of any
such contract, nor, has any event or circumstance occurred that,
with notice or lapse of time or both, would constitute an event of
default thereunder; and (ii) there is no claimed or purported or
alleged breach or default of any obligation to be performed on the
part of the Company thereunder or of any other party thereto.
3.20. FINDERS AND INVESTMENT BANKERS. Except for
any fee paid by the Company to DLJ or any of its Affiliates prior
to Closing as set forth on Schedule 3.20 hereof, neither
Participating Stockholders nor the Company nor any of their
Affiliates have employed any broker, finder, investment banker or
financial advisor as to whom Purchaser or the Company has or
hereafter may have, an obligation to pay monies, or incurred any
liability for any brokerage fees or commissions or for any
finders', investment banking or financial advisory fees for which
the Purchaser or the Company may be responsible, in connection with
the transactions contemplated hereby.
3.21. LICENSES, PERMITS AND AUTHORIZATIONS. The
Company has obtained all approvals, authorizations, consents,
clearances, licenses, franchises, orders or other permits of all
governmental or regulatory agencies, whether federal, state, local
or foreign (collectively, the "Approvals") necessary to the
operation of its Business as presently conducted including, without
limitation, the construction, alteration, operation, use or
occupancy of the Owned Real Property or any part thereof, the
Leased Real Property or the
<PAGE>
premises demised thereunder, or any improvements thereon. Such
Approvals are in full force and effect and in good standing. The
Company is not in default under any Approval and there exists no
basis for the termination, suspension or revocation of any of such
Approvals. Except as set forth on Schedule 3.21 hereof and as
required by the Federal Acquisition Regulations incidental to
change of name agreements or novations of existing contracts with
the United States government as identified in Schedule 3.1(c)
hereto, the consummation of the transactions contemplated hereby
will not constitute a transfer or assignment of any such Approval
nor will such consummation require any filing or registration with
or notice to any governmental authority and all such Approvals
shall remain in full force and effect to the benefit of the Company
following the Closing and the Combination.
3.22. PRODUCTS. Except as set forth on Schedule
3.22, each of the products produced or sold by the Company in
connection with the Business: (i) is, and at all times up to and
including the sale thereof has been, in compliance in all material
respects with all applicable federal, state, local and foreign laws
and regulations; and (ii) is, and at all relevant times has been,
fit for the ordinary purposes for which it is intended to be used
and conforms in all material respects to any promises or
affirmations of fact made on the container or label for such
product or in connection with its sale. There is no design or
manufacturing defect with respect to any of such products. The
Company has not received written notice of any product warranty
claims other than such claims as do not exceed, in the aggregate,
the applicable reserve therefor reflected on the Balance Sheet.
Warranty reserves are established and reflected on the Financial
Statements to insure that the estimated costs of providing warranty
services or upgrades, improvements and extended service pursuant to
contractual obligations are recognized in the period in which the
sale of products is recorded.
3.23. ENTIRE BUSINESS. No portion of the Business
of the Company is conducted by any Participating Stockholder or any
Affiliate thereof (other than the Company) and all of the assets,
rights and Approvals necessary for the conduct of the Business as
presently conducted are owned, leased or licensed by the Company.
3.24. DISTRIBUTION AGREEMENTS. The Company is not
a party to any agreement, contract or understanding which,
following the Merger or the Combination, would require Purchaser or
any of its Affiliates to distribute any products or services (other
than the products or services currently sold or offered by the
Company) through any person, including, without limitation, any
distributor or dealer.
3.25. REGULATORY MATTERS. Except as set forth on
Schedule 3.25, the Company, and the products sold by the Company,
are in compliance with all current and otherwise applicable
statutes, rules, regulations, standards, guides or orders
administered or issued by the FDA and all other federal, foreign,
state or local agencies or governmental bodies (except for
environmental agencies or bodies) having regulatory authority over
<PAGE>
the products of the Company (except with respect to Environmental
Matters) and the Business.
Except as set forth on Schedule 3.25 hereto, since
January 1, 1993 none of the following communications have been
given with respect to the Company or the Business and no facts
exist which furnish any reasonable basis for, any Notice of Adverse
Findings, Warning Letters, Section 305 notices, subpoena, an
Unacceptable Determination under a GWQAP or other similar
communication by any United States or foreign governmental body or
agency, and there have been no recalls, field notifications, alerts
or seizures requested or threatened relating to the products sold
by the Company.
The Company has delivered to Purchaser a copy of all
premarket approval ("PMA") and premarket notification ("510(k)")
clearance or concurrence letters received from the FDA and provided
Purchaser with access to all related documents and information,
including device master files and post-market studies. The 510(k)
or PMA for each of the products of the Company is in compliance in
all material respects with the applicable federal, state and local
statutes, rules, regulations, standards, guides or orders
administered or promulgated by the FDA and state or local
jurisdictions and all preclinical and clinical studies have been
conducted with recognized good clinical and good laboratory
practices in all material respects. Schedule 3.25 hereto contains
a complete list of all of the Company's products not marketed under
an approved PMA or 510(k).
The Company has delivered to Purchaser for each clinical
investigational use of a device conducted by or on behalf of the
Company since July 1, 1993 a copy of each claimed investigational
device exemptions ("IDE") filed with or approved by FDA, by or on
behalf of the Company, and not otherwise encompassed within the
preceding two paragraphs, and provided Purchaser with access to all
related documents and information. All such IDEs are in compliance
in all material respects with the applicable federal, state and
local statutes, rules, regulations, standards, guides or orders
administered or promulgated by the FDA or state or local
jurisdiction, including but not limited to those pertaining to
informed consent. Schedule 3.25 hereto contains a complete list of
all of the Company's clinical investigations not conducted under an
IDE.
Except as set forth in Schedule 3.25, neither any
Participating Stockholder, the Company, nor their respective
Affiliates are aware of any facts which are reasonably likely to
cause (i) the denial, withdrawal, recall or suspension of any
product sold or intended to be sold by the Company, or (ii) a
change in the marketing classification or labeling of any such
products, or (iii) a termination or suspension of marketing of any
such products.
Schedule 3.25 hereto contains an accurate and complete
list of (i) all products manufactured, marketed or sold by the
Company or in connection with the Business which have been recalled
<PAGE>
or subject to a field notification (whether voluntarily or
otherwise) since January 1, 1993; and (ii) all proceedings
occurring on or after January 1, 1993 (whether completed or
pending) seeking recall, suspension or seizure of any product sold
or proposed to be sold by the Company or in connection with the
Business.
The Company has made available to Purchaser in a manner
so as to provide Purchaser an opportunity to review all FDA
inspection reports (Forms 483s), the Company's Responses to such
Form 483s and the FDA Establishment Inspection Reports for all FDA
inspections of the Company's facilities since January 1, 1993. The
Company has also furnished Purchaser with access to all internal
inspection reports (as required by 21 C.F.R Section 820.20) conducted by
the Company since January 1, 1993, as well as the written procedure
for such audits. Schedule 3.25 hereto contains an accurate and
complete list of all such Forms 483s, Responses and FDA Established
Inspection Reports.
The Company has made available to Purchaser in a manner
so as to provide Purchaser an opportunity to review copies of all
Medical Device Reports (as required by 21 C.F.R. Section 820.198) filed by
the Company, and maintained by such person (as required by 21
C.F.R. Section 820.198) as well as copies of all related documents and a
copy of the Company's corporate policy for filing such reports.
Schedule 3.25 hereto contains a complete list of all written
product complaints received by the Company since June 1, 1994.
The Company has made available to Purchaser in a manner
so as to provide Purchaser an opportunity to review copies of all
labels and the label history for all of the Company's products in
the Company's possession.
The Company has made available to Purchaser in a manner
so as to provide Purchaser an opportunity to review copies of all
regulatory approvals obtained from any foreign regulatory agencies
related to the products distributed and sold by the Company.
3.26. DISCLOSURE. No representation or warranty of
any Participating Stockholder, the Holding Co. or the Operating Co.
contained in this Agreement, any of the Documents executed and
delivered by any Participating Stockholder, the Holding Co., the
Operating Co. or the Sellers Representative or in any statement or
certificate furnished or to be furnished to Purchaser pursuant
hereto or thereto in connection with the transactions contemplated
hereby or thereby contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact
necessary to make the statements made herein or therein, in the
light of the circumstances in which they were made, not misleading.
3.27. PRODUCTS. The Signature Product as it
currently exists constitutes a highly featured, large volume i.v.
infusion system available for commercial use, capable of being
manufactured in commercial quantities, and conforming to the
directions for use thereof, subject to the problems customarily
associated with a product in the state of release of the Signature
Product. There is
<PAGE>
no need (but for the currently contemplated Signature Recall) to
retrofit such product. There is no plan (but for the currently
contemplated Signature Recall) to retrofit such product.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND IMED MERGER SUB
Each of Purchaser and IMED Merger Sub hereby jointly and
severally represents and warrants to the Participating Stockholders
as follows:
4.1. ORGANIZATION; ETC. Each of Purchaser and IMED
Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
4.2. AUTHORIZATION; ETC. The Purchaser and IMED Merger
Sub have full corporate power and authority to enter into this
Agreement and the Documents executed and delivered by the Purchaser
and IMED Merger Sub and to carry out the transactions contemplated
hereby and thereby. The Purchaser and IMED Merger Sub have taken
all action required to authorize the execution and delivery of this
Agreement and the other Documents executed and delivered by
Purchaser and the IMED Merger Sub, the performance of the
obligations of Purchaser and the IMED Merger Sub hereunder and
thereunder and the consummation by Purchaser and the IMED Merger
Sub of the transactions contemplated hereby and thereby including,
without limitation, the Merger. No other corporate proceedings on
the part of Purchaser or the IMED Merger Sub are necessary to
authorize the execution and delivery by Purchaser and the IMED
Merger Sub of this Agreement or the Documents executed and
delivered by Purchaser and the IMED Merger Sub or the performance
by Purchaser or the IMED Merger Sub of its obligations hereunder or
thereunder including, without limitation, the Merger. This
Agreement and each Document executed and delivered by Purchaser and
the IMED Merger Sub are valid and binding agreements of Purchaser
and the IMED Merger Sub, enforceable against each in accordance
with their terms.
4.3. NO VIOLATION. Neither the execution and delivery of
this Agreement or the other Documents executed and delivered by
Purchaser and the IMED Merger Sub nor the consummation of the
transactions contemplated hereby or thereby will violate any
provisions of the Certificate of Incorporation or By-Laws of
Purchaser or the IMED Merger Sub, or violate, or be in conflict
with, or allow the termination, or constitute a default under, or
cause the acceleration of the maturity of, any debt or obligation
pursuant to any agreement or commitment to which Purchaser or the
IMED Merger Sub is a party or by which it is bound, or violate any
statute, any law or any judgment, decree, order, regulation or rule
of any court or governmental authority to which Purchaser or the
IMED Merger Sub is subject.
<PAGE>
4.4. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES.
No consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority is
required to be made or obtained by Purchaser and the IMED Merger
Sub in connection with the execution, delivery and performance of
this Agreement or the Documents executed and delivered by Purchaser
or the IMED Merger Sub or the consummation by Purchaser or IMED
Merger Sub of the transactions contemplated hereby and thereby,
other than pursuant to the HSR Act and as required by the Federal
Acquisition Regulations incidental to change of name agreements or
novations of existing contracts with the United States government
as identified in Schedule 3.1(c) hereto.
4.5. FINDERS AND INVESTMENT BANKERS. Neither Purchaser,
the IMED Merger Sub nor any of their respective Affiliates have
employed any broker, finder, investment banker or financial advisor
as to whom any Participating Stockholder has or hereafter may have,
an obligation to pay monies, or incurred any liability for any
brokerage fees or commission or for any finders', investment
banking or financial advisory fees for which any Participating
Stockholder may be responsible, in connection with the transactions
contemplated hereby.
4.6. FINANCING. Purchaser has received and furnished
copies to Sellers Representative of commitment letters (the
"Commitment Letters") from (i) Bankers Trust Company ("BTCo") and
Banque Paribas ("Paribas" and, together with BTCo, the "Banks"),
pursuant to which the Banks have committed, subject to the terms
and conditions thereof, to enter into a credit agreement with
Purchaser and a syndicate of banks, which the Banks intend to form
and for which the Banks will act as agent and to provide financing
(ii) Jeffry M. Picower or an affiliate thereof, pursuant to which
an affiliate of Mr. Picower has committed, subject to the terms and
conditions stated therein, to contribute to Advanced Medical, the
parent of Purchaser, equity capital to be utilized for, among other
things, the transactions contemplated herein; and (iii) pursuant to
which Advanced Medical has committed, subject to the terms and
conditions therein, to provide a portion of the financing for the
Merger. The aggregate proceeds of such financing will be in an
amount sufficient to complete the Merger.
4.7. LITIGATION. There is no action, suit, investigation
or proceeding pending against, or to the knowledge of Purchaser or
the IMED Merger Sub threatened against or affecting, Purchaser or
the IMED Merger Sub before any court or arbitrator or any
governmental body, agency or official which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay
the transactions contemplated by this Agreement.
ARTICLE V
CONDUCT OF BUSINESS PENDING CLOSING
5.1. CONDUCT OF BUSINESS. Except as set forth in
Schedule 5.1 or as otherwise contemplated by this Agreement and the
<PAGE>
Schedules hereto, from the date of this Agreement to the Closing
Date, Participating Stockholders shall and shall cause the Company
to, and the Company shall, conduct its operations in the ordinary
and usual course of business consistent with past practice, and in
connection therewith the Company shall use commercial best efforts
(provided that "commercial best efforts" shall not be deemed to
require payment of money in excess of amounts which would be
commercially reasonable under the circumstances) to preserve the
Business and the business organization of the Company intact, keep
available the services of the Company's officers and employees and
maintain satisfactory relationships with suppliers, customers and
others having business relationships with the Company (and in
connection therewith will pay payables and collect receivables in
the ordinary course consistent with past practice). Except as set
forth in Schedule 5.1 or as otherwise contemplated in this
Agreement and the Schedules hereto, the Company will not do any of
the following, without the prior written consent of Purchaser, to
be given through the chairman of the board of the Purchaser or his
designee (which will not be unreasonably withheld or delayed,
taking into consideration the business needs of the Company and the
Purchaser and applicable regulatory considerations):
(i) amend its Certificate of Incorporation or By-Laws;
(ii) declare or pay any dividend or make any other
distributions to its shareholders (except as contemplated in
Section 6.13 hereof);
(iii) redeem or otherwise acquire, issue or sell any Stock
or issue any capital stock or any Right or amend any material
term of, any Stock or Right;
(iv) adopt, enter into, terminate or amend any Benefit
Plan or collective bargaining agreement that would increase
the expense of maintaining any Benefit Plans or collectively
bargained agreement;
(v) make or grant to any executive officer, director or
employee any increase in compensation or benefits, except as
may be required under existing agreements, or in the ordinary
course of business consistent with past practice or grant,
agree or otherwise become obligated to pay (whether on the
occurrence of any future event or otherwise) any severance or
termination pay to any officer, director or employee of the
Company;
(vi) incur or assume any liabilities, obligations or
indebtedness for borrowed money or guarantee any such
liabilities, obligations or indebtedness of third parties,
other than under its existing revolving credit facility;
(vii) permit, allow or suffer any of its assets to be
subject to any Encumbrance, other than Permitted Liens;
(viii) pay, loan or advance any amount to, or sell,
transfer or lease any of its assets to, or enter into any
<PAGE>
agreement or arrangement with any Participating Stockholder or
any Affiliate thereof;
(ix) make any change in any accounting practice or policy
other than as required in accordance with GAAP;
(x) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of
the assets of, or by any other manner, any business or any
corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or
agree to acquire any assets (other than inventory and raw
materials acquired in the ordinary course of business
consistent with past practice) having an aggregate purchase
price in excess of $1 million;
(xi) sell, lease or otherwise dispose of, or agree to
sell, lease or otherwise dispose of, any assets (other than
inventory or raw materials sold or otherwise disposed of in
the ordinary course of business in a manner consistent with
past practice) for an aggregate sales price (together with all
such assets disposed of after June 30, 1996) in excess of $1
million;
(xii) enter into any amendment of, cancellation of, or
sublease with respect to, any of the Leases;
(xiii) acquire any additional real property or interest
therein (by lease or otherwise) or exercise any option
contained in any of the Leases to purchase any real property
or interest therein;
(xiv) engage in or enter into any commitment with respect
to any: (A) upgrade or modification (other than minor changes)
of its MIS systems; or (B) product sterilization systems or
facilities;
(xv) enter into any agreement, contract or understanding
which, following the Merger or the Combination, would require
Purchaser to distribute any products or services (other than
the products or services currently being sold or offered by
the Company) through any person, including, without
limitation, any distributor or dealer; or
(xvi) agree to any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. ADVICE OF CHANGE. (a) Participating Stockholders,
the Holding Co. and the Operating Co. will use reasonable business
efforts to promptly advise Purchaser in writing, upon obtaining
knowledge, of: (i) any event which occurred on or prior to the
date of execution of this Agreement that is not disclosed herein
<PAGE>
and any event which occurs after the date of this Agreement, in
each case that would, under this Agreement or any Schedule or
Document delivered pursuant hereto, have been required to be
disclosed on the date of execution of this Agreement by any
Participating Stockholder, the Holding Co. or the Operating Co.;
and (ii) any change in the business, operations, properties, assets
or financial condition of the Company, if, in the case of both (i)
and (ii), the same has had or would reasonably be expected to have,
a Material Adverse Effect.
(b) Each of the Participating Stockholders and the
Company shall promptly notify Purchaser and Purchaser shall
promptly notify the Sellers Representative and the Company of (i)
any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
transaction contemplated by this Agreement; (ii) any notice or
other communication from any governmental or regulatory agency or
authority in connection with the transactions contemplated by this
Agreement; and (iii) any actions, suits, claims, investigations or
proceedings commenced or, to its knowledge threatened against,
relating to or involving or otherwise affecting the Participating
Stockholders, the Company or the Purchaser, as the case may be,
that, if pending on the date of this Agreement, would have been
required to have been disclosed under this Agreement or that relate
to the consummation of the transactions contemplated by this
Agreement.
6.2. ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY.
(a) Between the date hereof and the Closing Date, the
Company will give authorized representatives of Purchaser during
normal business hours, in such a manner as not to unduly disrupt
normal business activities, reasonable access to any and all
premises, properties, contracts, books, records, tax returns and
affairs of the Business (including, without limitation, access to
properties in order to conduct environmental audits and reviews)
and will cause its officers to furnish any and all financial,
technical and operating data and other information pertaining to
the Business, as Purchaser shall from time to time reasonably
require in connection with the transactions contemplated hereby,
other than such data or information which the Company reasonably
determines to be competitive or marketing information that should
not be disclosed to a competitor.
(b) From the date hereof through the Closing Date,
Purchaser will hold in confidence all information obtained as a
result of such access or previously furnished by any Participating
Stockholder or the Company and will use such information only for
the purpose of considering the transactions contemplated hereby.
If such transactions are not consummated as contemplated herein,
Purchaser and its Affiliates will, and will use their best efforts
to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy
or deliver to the Holding Co., upon request, all documents and
other materials, and all copies thereof, obtained by Purchaser or
its Affiliates or on their behalf from Participating Stockholders
<PAGE>
or the Company in connection with this Agreement that are subject
to such confidence. Such obligation of confidentiality shall not
extend to any information that can be shown to have been: (i)
previously known on a nonconfidential basis by the Purchaser; (ii)
in the public domain through no fault of the Purchaser or (iii)
later lawfully acquired by the Purchaser from sources other than
the Company or the Participating Stockholders. It being agreed
that it is impossible to measure in money the damages which will
accrue by reason of a breach by Purchaser of this Section 6.2(b),
this Section may be specifically enforced and Purchaser hereby
waives the claim or defense therein that any other party has an
adequate remedy at law.
(c) From and after the Closing Date, except as otherwise
required by applicable law, rule, regulation or legal process, each
Participating Stockholder shall, and shall cause its Affiliates to,
hold in confidence all information pertaining to the Company and
the Business; provided, however, that such obligation of
confidentiality shall not extend to any information that can be
shown to have been: (i) previously known on a nonconfidential
basis by such Participating Stockholder; (ii) in the public domain
through no fault of such Participating Stockholder; or (iii) later
lawfully acquired by such Participating Stockholder from sources
other than the Company. It being agreed that it is impossible to
measure in money the damages which will accrue by reason of a
breach by Participating Stockholder of this Section 6.2(c), this
Section may be specifically enforced and each Participating
Stockholder hereby waives the claim or defense therein that any
other party has an adequate remedy at law.
6.3. BOOKS AND RECORDS. On the Closing Date each
Participating Stockholder shall deliver and shall cause to be
delivered, to Purchaser, all of the books and records of the
Company not then in the possession of the Company. Purchaser
agrees to preserve all records delivered by any Participating
Stockholder or the Company to Purchaser pursuant to this Agreement
or in the possession of Purchaser in the same manner in which it
maintains its own books and records under its then current document
maintenance programs. Purchaser shall give 30 days' notice to the
Sellers Representative to permit any Participating Stockholder, at
its expense, to examine, duplicate or take possession of such
records prior to any destruction thereof by Purchaser. Notice
having been given, at the end of such 30-day period, if the Sellers
Representatives shall not have requested any such records or copies
thereof, Purchaser may dispose of, alter or destroy any such
records at any time. During the period such records are so
required to be preserved and kept, duly authorized representatives
of the Participating Stockholders shall, on reasonable prior
notice, have access thereto during normal business hours to
examine, inspect and copy such records. Purchaser and each
Participating Stockholder shall provide each other with reasonable
access to any records or information relevant to any return, audit
or examination by any Taxing Authority, or judicial or
administrative proceeding or determination relating to liability
for Taxes (including refunds) as are in its possession or subject
to its control pursuant to this Section 6.3.
<PAGE>
6.4. FINANCING. The Participating Stockholders and the
Company shall use commercial best efforts (provided that
"commercial best efforts" shall not be deemed to require payment of
money in excess of amounts which would be commercially reasonable
under the circumstances) in taking such actions as may be
reasonably requested by Purchaser in order to permit Purchaser to
obtain any financing in connection with the transactions
contemplated hereby (which action shall include, without
limitation, making senior executive personnel of the Company
available to engage in presentations (including, "road shows") to
potential lenders and purchasers of debt securities). If, in
connection with any such action taken by the Company as a result of
a specific request by the Purchaser, the Company incurs any out-of-
pocket cost or expense to any third party, then the Purchaser shall
reimburse the Company promptly following demand in respect thereof.
Purchaser will use commercial best efforts (provided that
"commercial best efforts" shall not be deemed to require payment of
money in excess of amounts which would be commercially reasonable
under the circumstances) to complete such financing if the
conditions to the obligations of Purchaser set forth in Article VII
and VIII hereof are satisfied. In connection therewith, Purchaser
shall commence the preparation of appropriate offering
documentation with respect to any subordinated debt to be obtained
by Purchaser in order to provide a portion of the financing
required hereunder, in an effort to be in a position to commence
the offering with respect to such indebtedness with reasonable
promptness following the satisfaction of the closing condition set
forth in Section 7.3 hereof.
6.5. CONSENTS AND APPROVALS. The Participating
Stockholders will use their commercial best efforts (provided that
"commercial best efforts" shall not be deemed to require payment of
money in excess of amounts which would be commercially reasonable
under the circumstances) to obtain the necessary approvals,
consents and releases of other persons which may be required to
consummate the transactions contemplated by this Agreement.
Purchaser will cooperate with the Participating Stockholders in
order to assist them in satisfying their obligations under the
preceding sentence, but Purchaser shall not be required to make or
be responsible for any payment made in order to obtain any such
approval, consent or release. Purchaser agrees to accept through
name changes or novations, all of the U.S. government contracts
listed in Schedule 3.1(c) hereto and to accept, in work
authorization or similar orders under said contracts as may be
properly authorized by the U.S. government, contract clauses as set
forth in prime contracts and any subcontracts which require flow-
down provisions, for the supply of products or services to the U.S.
government to the extent that (i) the Purchaser is a subcontractor
or a prime contractor, (ii) such prime contract clauses are
required by statute or the Federal Acquisition Regulations ("FAR")
and agency FAR supplements and other government acquisition
regulations (including any certificates required thereunder) to be
flowed down to subcontractors thereunder and (iii) Purchaser's
acceptance of such prime contract clauses is necessary for the
negotiation of and compliance with those prime contracts directly
by the Purchaser. The Purchaser further agrees to support price
<PAGE>
analysis of Purchaser's prices and will cooperate in furnishing
information, data and records reasonably necessary in connection
with the above matters.
6.6. COOPERATION REGARDING BENEFIT PLANS. The Company
shall cooperate with Purchaser and its advisers in preparing,
filing, and diligently pursuing any and all filings, applications,
or notifications that may be necessary or advisable with respect to
any of the Benefit Plans in connection with the transactions
contemplated by this Agreement.
6.7. SATISFACTION OF CLOSING CONDITIONS. Subject to the
terms and conditions of this Agreement, each party shall use all
commercially reasonable efforts to take, or cause to be taken, all
actions necessary to consummate the transactions contemplated by
this Agreement in a manner that will provide to each party hereto
the full benefits of the transaction contemplated herein in all
respects. The parties shall cooperate with one another (a) in
determining whether any action by or in respect of, or filing with,
any governmental authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to
any contracts and (b) subject to the terms and conditions of this
Agreement, in taking such actions or making any such filings,
furnishing information required in connection therewith and seeking
to obtain in a timely fashion any such actions, consents approvals
or waivers. Each Participating Stockholder, the Holding Co. and
the Operating Co. shall use commercially reasonable efforts, to
cause all of the conditions to the obligations of Purchaser set
forth in Article VIII hereof to be satisfied. Purchaser shall use
its commercially reasonable efforts to cause all of the conditions
to the obligations of Participating Stockholders set forth in
Article IX hereof to be satisfied.
6.8. TAX COVENANTS. (a) The Company shall prepare and
timely file, or cause to be prepared and timely filed, with the
appropriate Taxing Authority all Tax Returns relating to the
Company or the Business and required to be filed on or prior to the
Closing Date and shall timely pay all Taxes either (i) required to
be shown on any such Tax Returns, or (ii) which are not required to
be shown on such Tax Returns but which will be required to be paid
by or with respect to the Company on or prior to the Closing Date.
(b) All transfer, documentary, sales, use, registration
and other such Taxes (including, but not limited to, all applicable
real estate transfer or gains taxes), any penalties, interest and
additions to Tax, and fees incurred in connection with this
Agreement and the transactions contemplated hereby (including any
Taxes due as a result of the Merger) shall be borne by the
Participating Stockholders. All withholding taxes with respect to
amounts to be received by the stockholders of the Holding Co. shall
be borne by the stockholders of the Holding Co. The Participating
Stockholders and Purchaser shall cooperate in the timely making of
all filings, returns, reports and forms as may be required in
connection therewith.
(c) [Reserved]
<PAGE>
(d) The Participating Stockholders will provide such
cooperation and information as the Purchaser or the Company
reasonably may request in: (i) filing any Tax Return, amended
return or claim for refund, (ii) determining a liability for Taxes
or a right to a refund of Taxes or (iii) conducting any audit or
other proceeding in respect of Taxes of the Company and the
Participating Stockholders shall be reimbursed by Purchaser for all
reasonable out-of-pocket expenses in connection therewith.
(e) Without the prior written consent of Purchaser, the
Company shall not, on or prior to the Closing Date, make or change
any Tax election, adopt or change any method of Tax accounting,
file any amended return, enter into any closing agreement, settle
any Tax claim or assessment, surrender any right to claim a Tax
refund, consent to any extension or waiver of the limitations
period applicable to any Tax claim or assessment, if any such
action would have the effect of increasing the post-Closing Tax
liability of the Company. The Purchaser will take no action (other
than any action contemplated under this Agreement) without the
consent of the Company and the Participating Stockholders which
would increase the Company's federal income tax liability or reduce
any Tax Assets for tax periods beginning after 1994 and ending on
or before the end of the Closing Date.
(f) All Tax Sharing Agreements shall be terminated as of
the Closing Date and, after the Closing Date, the Company shall not
be bound thereby or have any liability thereunder.
(g) At least 10 days prior to the Closing Date, the
Participating Stockholders shall have provided or shall have caused
the Company to have provided Purchaser with copies of all Tax
Returns of the Company required to be filed during the period
beginning on the date hereof and ending 15 days prior to the
Closing Date.
6.9. OTHER OFFERS. From the date hereof until the
termination of this Agreement, the Holding Co. the Operating Co.
and each Participating Stockholder will not (and will cause their
respective Affiliates not to): (i) take any action to solicit, or
respond to, any offer from any person with respect to any
Acquisition Proposal (as hereinafter defined); or (ii) engage in
negotiations or discussions with, or disclose any non-public
information relating to the Holding Co., the Operating Co. or its
business or afford access to the properties, books or records of
the Holding Co., or the Operating Co. to, any person with respect
to an Acquisition Proposal. "Acquisition Proposal" means any
proposal for a merger or other business combination to which the
Holding Co., the Operating Co. or the Company (or any person
controlling such person) is or would be a party, or involving the
acquisition of any substantial interest in, or a substantial
portion of the assets of, the Holding Co., the Operating Co. or the
Company (or any person controlling such person), other than the
transaction with Purchaser contemplated by this Agreement. Each
Participating Stockholder, the Holding Co., and the Operating Co.
shall promptly notify Purchaser if it receives any inquiry from any
person with respect to an Acquisition Proposal, which notice shall
<PAGE>
contain the name of the person involved and the nature of the
Acquisition Proposal.
6.10. IMPLIED WARRANTIES. Except as expressly
provided in this Agreement, the Participating Stockholders have not
made and are not making any representation or warranty whatsoever
to Purchaser or IMED Merger Sub. Without limiting the foregoing,
Purchaser acknowledges that Purchaser, together with its advisors,
has made its own investigation of the Business and is not relying
on any implied warranties (whether of merchantability of fitness
for a particular purpose or otherwise), or upon any representation
or warranty whatsoever as to the prospects (financial or
otherwise), or the viability or likelihood of success, of the
Business as conducted after the Closing Date, except for any
representation or warranty expressly provided in this Agreement.
6.11. ADDITIONAL INSTRUMENTS; FURTHER ASSURANCES.
At and after the Closing, at the request of Purchaser or the
Company, each Participating Stockholder shall, or shall cause its
Affiliates to, execute, acknowledge and deliver to Purchaser or the
Company, as the case may be, without further consideration, all
such further assignments, conveyances, endorsements, deeds, powers
of attorney, consents and other documents and take such other
action as Purchaser or the Company, as the case may be, may
reasonably request to consummate the transactions contemplated by
this Agreement and as required by the Federal Acquisition
Regulations incidental to change of name agreements or novations of
existing contracts with the United States government.
6.12. ANTITRUST NOTIFICATION. Each Participating
Stockholder, the Holding Co., the Operating Co. and Purchaser will,
as promptly as practicable following the date hereof, file with the
Federal Trade Commission and the Department of Justice the
notification and report form required for the transactions
contemplated hereby and any supplemental information which may be
reasonably requested in connection therewith pursuant to the Hart-
Scott-Rodino Anti-Trust Improvements Act of 1976, as amended, and
the rule and regulations adopted thereunder (the "HSR Act").
6.13. RIVER MEDICAL. Each Participating Stockholder
hereby represents and warrants to Purchaser and the Company that
River Medical, Inc., a Delaware corporation ("River") is a wholly
owned subsidiary of the Operating Co. Prior to the Closing, the
Participating Stockholders may cause the Company or River to
dispose of all or any portion of the assets (but not of the stock)
of River. The Participating Stockholders agree that any such
dispositions shall not be made by dividend and may be made only
pursuant to written agreements that expressly provide that any
obligation or liability resulting from, relating to or based upon
such transaction, shall be recourse only to River and that the
Company and its Affiliates (other than River) shall have no duty in
respect thereof. Immediately prior to the Closing, the
Participating Stockholders will cause all the foregoing
transactions (except for the Sublease (as defined below)) to be
completed pursuant to documentation in form and substance
reasonably acceptable to the Purchaser. In the event that the
<PAGE>
Sublease is not completed prior to the Closing, the Participating
Stockholders may continue to negotiate the same but any such
Sublease shall be in form and substance reasonably acceptable to
the Purchaser.
Each Participating Stockholder hereby represents,
warrants, covenants and agrees with and to Purchaser and the
Company that any disposition completed as permitted in this Section
6.13 prior to the periods reflected in such statements, would not
have resulted in any effect on the Special Statements (1995) or the
Special Statements (1996).
The Participating Stockholders have informed the
Purchaser that the Operating Co. has terminated and ceased ongoing
business operations of River as of July 25, 1996 and is in the
process of liquidating certain assets and discharging certain
liabilities of River (the "Liquidation") except for the SmartDose
technology, related patents and customized equipment (collectively,
the "SmartDose Technology") which the Operating Co. may sell or
otherwise dispose of (the "Technology Disposition").
Notwithstanding any other provision hereof (but subject to the
terms of this Section 6.13), prior to the Closing the Participating
Stockholders and the Company shall have the right to continue any
efforts with respect to the Liquidation and the Technology
Disposition, and shall have full right and authority to control all
aspects of the Liquidation and Technology Disposition, including
(without limitation) the: (a) sublease of the River facility
located at 7737 Kenemar Court, San Diego, California (the
"Sublease") and (b) the sale of equipment and other tangible
personal property. From and after the Closing, Purchaser and IMED
Merger Sub agree to, and agree to cause the Company to, comply with
the Cooley Letter (as defined herein) and all related obligations
and agreements and to provide reasonable, limited assistance in
connection with the Liquidation and Technology Disposition (the
"Wind-Up Activities") provided, however, that the Participating
Stockholders shall reimburse the Purchaser, IMED Merger Sub and/or
the Company for any out-of-pocket expenses to third parties
incurred after the Closing with respect to such Wind-Up Activities.
The Purchaser agrees that from and after the Closing Date, River
will be operated by the Purchaser solely for the purpose of winding
down its business. The parties acknowledge that any Loss that
might otherwise be included in the River Medical Liabilities with
respect to any payment of rent under or in respect of the lease of
the River facility located at 7737 Kenemar Court, San Diego,
California will be reduced by rents paid under the Sublease.
6.14. PAYMENT OF INDEBTEDNESS. At the Closing the
Participating Stockholders will arrange for the Total Debt (other
than the Siemens Obligation and the Senior Notes (which Senior
Notes will be satisfied as contemplated in Section 6.15 hereof)) to
be paid in full so that, immediately following the Closing: (i)
the only remaining indebtedness of the Company of the type that
would constitute Total Debt of the Company will be: (a) the
Royalty (as defined below); (b) indebtedness arising in respect of
the financing contemplated in Section 8.9 hereof; and (c) the
Senior Notes (which will be discharged as contemplated in Section
<PAGE>
6.15 hereof); and (ii) at the Closing the Purchaser shall have
received: (a) the return of all promissory notes and similar
instruments evidencing any such Total Debt; (b) written evidence,
satisfactory to the Purchaser in its reasonable discretion (and
executed by the holder thereof), that the holder of any Total Debt
to whom any such payment was made acknowledges that such payment is
in full and complete satisfaction of all indebtedness owing by the
Company to such person; and (c) appropriate documentation in
recordable form evidencing the release of all associated liens and
security interests, including, without limitation, the deed of
trust encumbering the Owned Real Property. In discharging any such
indebtedness the Participating Stockholders may, upon prior written
notice to the Purchaser by the Sellers Representative, apply the
Total Cash and the proceeds of the financing contemplated in
Section 8.9 hereof (up to an aggregate (together with amounts to be
paid pursuant to Section 6.15) of $382 million) thereto, but the
same may not be used to satisfy the obligations of the
Participating Stockholders under the following paragraph, except to
the extent that all such amounts so utilized will reduce Total Cash
for purposes of determining the Purchase Price.
On or prior to the Closing Date the Participating
Stockholders, jointly and severally, will: (i) cause the Company to
discharge the Eli Lilly Obligation (and any amounts used for such
payments will reduce Total Cash); or (ii) will enter into such
agreements and make escrow arrangements (and any amounts used for
such purpose will reduce Total Cash) as are necessary to
acknowledge the obligation of the Participating Stockholders to
make such payments and to fully secure such payments, in form and
substance reasonably acceptable to Purchaser.
6.15. SENIOR NOTES. The Participating Stockholders
will arrange for the Senior Notes to be purchased in a transaction
(the "Notes Transaction") that will occur immediately following the
Effective Time. The Notes Transaction will be conducted through a
combined consent solicitation and tender offer (collectively, the
"Tender Offer") made in compliance with applicable law and any
agreements to which the Company is a party, pursuant to
documentation reasonably satisfactory to the Purchaser and the
Operating Co. That documentation will include a consent (the
"Consent") to the amendment of the indenture governing the Senior
Notes so as to permit the Merger and the Combination and all other
transactions contemplated herein and any other related matters
necessary in connection therewith. It shall be a condition of the
Tender Offer that the Merger shall have occurred and that the
Consent shall have been obtained from all necessary persons in a
manner so that it will be effective to constitute an amendment of
the indenture. The Consent will provide that it will terminate in
the event that the Tender Offer is not consummated promptly
following the Effective Time. The bidder in the Tender Offer will
be the Operating Co. (except as otherwise contemplated herein).
The documents implementing the Tender Offer will provide
that the bidder thereunder has the right to assign its right to
purchase the Senior Notes under the Tender Offer (and all other
rights under all associated documents) to any person designated by
<PAGE>
the Operating Co. Upon notice to the Operating Co. prior to the
Effective Time, the Purchaser may designate the Purchaser, Advanced
Medical or any of its subsidiaries to complete such purchase and
the Operating Co. will assign all such rights to such designee (who
will assume all related obligations) pursuant to documentation
reasonably satisfactory to the Operating Co. and the Purchaser.
The Operating Co. will provide notice to the Purchaser at
least seven (7) business days prior to the commencement of the
Tender Offer. The Purchaser may (by notice to the Operating Co.
prior to the commencement of the Tender Offer), in its discretion,
elect to act as the bidder in the Tender Offer. In such event, the
Operating Co. and the Purchaser shall cooperate with one another to
complete the Tender Offer as contemplated herein and otherwise take
such actions as are contemplated herein with respect to a Tender
Offer or are reasonably necessary in connection therewith.
In the event and to the extent that any Senior Notes are
not properly tendered in the Tender Offer and subject to purchase
thereunder immediately following the Effective Time in accordance
with the provisions of the offering documents and applicable law,
the Participating Stockholders will arrange for such Senior Notes
to be defeased immediately following the Effective Time in a manner
in compliance with applicable law and any agreements to which the
Company is a party, pursuant to documentation reasonably
satisfactory to the Purchaser and the Operating Co.
Immediately prior to the Effective Time, for the purpose
of determining the "Purchase Price", the Purchaser and the Sellers
Representative will review the results of the Tender Offer and
agree upon those amounts contemplated in clause (ii)(B) of the
definition of "Purchase Price" in Section 1.8 hereof with respect
thereto and with respect to any defeasance thereof.
6.16. OVERSEAS CASH. The Operating Co. covenants
and agrees that on the Closing Date the total cash and cash
equivalents of all non-United States persons included in the
definition of the "Company" will not exceed an amount equivalent to
approximately U.S. $5 million.
6.17. WELMED/SIEMENS/ELI LILLY. The Participating
Stockholders, jointly and severally, hereby represent, warrant,
covenant and agree that:
(a) Except as set forth on Part I(a) of Schedule 6.17
hereof, the Company is not a party to any agreement with Welmed
Limited and its Affiliates. Except as set forth on Part I(b) of
Schedule 6.17, the Company has no further duty, obligation or
liability (vested or unvested, contingent or fixed, actual or
potential, known or unknown), for any purchase price, adjustment to
purchase price, contingent purchase payment, earnout, benchmark
payment, bonus, overachievement, royalty, or similar arrangement
whether under Section 3 of agreement number 1 set forth in Part
I(a) of Schedule 6.17 or otherwise, to Welmed Limited or any of its
Affiliates, or any other person in respect thereof. On or prior to
the Closing Date the Participating Stockholders, jointly and
<PAGE>
severally, will cause the Company to discharge all amounts referred
to on Part I(b) of Schedule 6.17 or will enter into such agreements
and make escrow arrangements as are necessary to acknowledge the
obligation of the Participating Stockholders to make such payments
and to fully secure such payments, in form and substance reasonably
acceptable to Purchaser.
(b) Except as set forth on Part II of Schedule 6.17
hereof, the Company is not a party to any agreement with Siemens
Corporation ("Siemens"), Siemens Infusion Systems, Ltd. ("SIS") or
their respective Affiliates. Except for the obligation set forth
in Section 2.02(a)(v) (the "Royalty") of agreement number 1 listed
on Schedule 6.17 hereof, the Company has no further obligation or
liability (vested or unvested, contingent or fixed, actual or
potential, known or unknown), for any purchase price, adjustment to
purchase price, contingent purchase payment, earnout, benchmark
payment, bonus, overachievement, royalty, or similar arrangement to
Siemens, SIS or their respective Affiliates, or any other person in
respect thereof. As of the date hereof, all amounts due and
payable through the date hereof in respect of the Royalty have been
paid in full and through the Closing Date all amounts due and
payable in respect of the Royalty will be paid in full;
(c) Except as set forth on Part III of Schedule 6.17
hereof, the Company is not a party to any agreement with Eli Lilly
or its Affiliates. Except for those included in the Eli Lilly
Obligation, the Company has no further obligation for any purchase
price, adjustment to purchase price, contingent purchase payment,
earnout, benchmark payment, bonus, overachievement, royalty or
similar arrangement, whether under Article 2 of agreement number 6
set forth on Part III of Section 6.17 or otherwise to Eli Lilly or
its Affiliates, or any other person in respect thereof. Except for
obligations included in the Eli Lilly Obligation: (i) pursuant to
Section 10.03 of the 1994 Stock Purchase Agreement; and (ii) under
the cash collection agreements set forth as agreement numbers 16
and 17 on Schedule 6.17 hereof, the Company has no further
obligation or liability (vested or unvested, contingent or fixed,
actual or potential, known or unknown) under such agreements.
6.18. REAL ESTATE MATTERS. The Company will, and
the Participating Stockholders will cause the Company to, use
reasonable commercial efforts, at the request of the Purchaser, to
obtain estoppel certificates and non-disturbance agreements with
respect to all of the real property leased by the Company.
6.19. NOTICE TO STOCKHOLDERS. Promptly (and in no
event later than five (5) business days following the date hereof)
the Holding Co. shall provide to the stockholders of the Holding
Co. (in accordance with the terms of its governing documents and
the provisions of applicable law) the notices required and
contemplated under Sections 228(d) and 262(d)(2) of the DGCL with
respect to the approval of the Merger by the written consent of
stockholders of the Holding Co. A copy of such notice shall be
delivered to Purchaser pursuant to Section 12.4 of this Merger
Agreement.
<PAGE>
6.20. COVERED PERIOD. The Participating
Stockholders covenant and agree that the Company, for all taxable
years commencing on or after January 1, 1996 and ending on or
before the Closing Date, will not have aggregate amounts due in
respect of the alternative minimum tax under Section 55 of the
Code, in excess of approximately $350,000.
6.21. BENEFITS. At or prior to the Effective Time,
the Operating Co. will adopt a severance plan for its employees in
accordance with Schedule 6.21 and will adopt such other employee
retention and similar programs as are mutually agreed by the
Purchaser and the Operating Co.
6.22. CASH FLOW STATEMENTS. Prior to the expiration
of forty-five (45) days following the date hereof, the Holding Co.
will deliver, and the Participating Stockholders will cause the
Holding Co. to deliver, to the Purchaser, a special purpose
statement of cash flows prepared in accordance with GAAP (absent
footnotes) setting forth the cash flows of the Holding Co. for the
year ended December 31, 1995 (the "Special Purpose Statement of
Cash Flows (1995)") and for the six month period ended June 30,
1996 (the "Special Purpose Statement of Cash Flows (1996)"), in
each case as if River was not part of the Company during such
periods. The Holding Co., the Operating Co. and the Participating
Stockholders hereby represent and warrant that the Special Purpose
Statement of Cash Flows (1995) and Special Purpose Statement of
Cash Flows (1996) will fairly present the cash flows of the Company
for such periods as if such event had taken place and will be
consistent: (i) in the case of the Special Purpose Statement of
Cash Flows (1995), with the Special Purpose Balance Sheet (1995)
and the Special Purpose Statement of Operations (1995), and (ii) in
the case of the Special Purpose Statement of Cash Flows (1996),
with the Special Purpose Balance Sheet (1996) and the Special
Purpose Statement of Operations. The Special Purpose Statement of
Cash Flows (1995), together with the Special Purpose Balance Sheet
(1995) and Special Purpose Statement of Operations (1995), are
referred to herein as the "Special Statements (1995)." The Special
Purpose Statement of Cash Flows (1996), together with the Special
Purpose Balance Sheet (1996) and the Special Purpose Statement of
Operations (1996), are referred to herein as the "Special
Statements (1996)"). The Special Purpose Statement of Cash Flows
(1995) and the Special Purpose Statement of Cash Flows (1996) will
be deemed to have been delivered on the date hereof with the same
effect as if they had been delivered on such date.
6.23. RECALL. Through the Closing Date the Company
shall, and the Participating Stockholders will cause the Company
to, use commercial best efforts (provided that "commercial best
efforts" shall not be deemed to require payment of money in excess
of amounts which would be commercially reasonable under the
circumstances) to complete the Signature Recall as promptly as
practicable and, in connection therewith, will: (i) pay all
amounts which the Company has agreed, or prior to the Closing Date
does agree, to pay to customers as appeasement payments with
respect to the Signature Product as promptly as practicable; (ii)
pay all other amounts necessary to complete the Signature Recall in
<PAGE>
the ordinary course of business; and (iii) satisfy all other
obligations with respect to the Signature Product as agreed to by
the Company in the ordinary course of business.
Through the Closing Date the Company shall, and the
Participating Stockholders will cause the Company to, use
commercial best efforts (provided that "commercial best efforts"
shall not be deemed to require payment of money in excess of
amounts which would be commercially reasonable under the
circumstances) to complete the Welmed Safety Alert as promptly as
practicable and, in connection therewith, will: (i) pay all
amounts which the Company has agreed, or prior to the Closing Date
does agree, to pay to customers as appeasement payments with
respect to the Welmed Product as promptly as practicable; and (ii)
pay all other amounts necessary to complete the Welmed Safety Alert
in the ordinary course of business; and (iii) satisfy all other
obligations with respect to the Welmed Product as agreed to by the
Company in the ordinary course of business.
6.24. OPTION CANCELLATION AGREEMENT. The
Participating Stockholders and the Company shall use commercial
best efforts (provided that "commercial best efforts" shall not be
deemed to require payment of money in excess of amounts which would
be commercially reasonable under the circumstances) to obtain from
all holders of Outstanding Options executed Option Cancellation
Agreements (in the form of Exhibit 8 or 9 hereof, as appropriate)
which will be delivered to Purchaser or IMED Merger Sub prior to
the Closing Date. The Participating Stockholders and the Company
agree not to enter into any agreement to provide any holder of
Outstanding Options an alternative to either: (i) the Option
Cancellation Agreement; or (ii) exercise of the Options in
accordance with their terms as of the date hereof. The
Participating Stockholders represent, warrant, covenant and agree
that, as of the date hereof, Mr. William J. Mercer has executed and
delivered to the Company an Option Cancellation Agreement in the
form of Exhibit 6 hereto and Mr. Gregory E. Sancoff and Mr. Albert
Henry have executed and delivered to the Company an Option
Cancellation Agreement in the form of Exhibit 7 hereto, in each
case with respect to all Outstanding Options beneficially owned by
such persons.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF EACH PARTY
The obligations of each party to consummate the
transactions contemplated hereby shall be subject to the
fulfillment, at or prior to the Closing Date, of the following
conditions:
7.1. NO ACTION OR PROCEEDING. No claim, action, suit or
other proceeding shall be pending or threatened by any public
authority or private person before any court, agency or
administrative body which in the opinion of counsel to either
Purchaser or any Participating Stockholder creates a substantial
<PAGE>
likelihood that the consummation of this Agreement or, the Merger
or the transactions contemplated hereby will be restrained,
enjoined or otherwise prevented or that any damages will be
recovered or other relief obtained as a result of the transactions
contemplated hereby or as a result of any agreement entered into in
connection with, or as a condition precedent to, the consummation
of the transactions contemplated hereby.
7.2. COMPLIANCE WITH LAW. No provision of any applicable
law and no judgment, injunction, order or decree shall prohibit the
Closing.
7.3. HART-SCOTT-RODINO REQUIREMENTS. The waiting periods
(as such may be extended by the governmental agencies involved)
applicable to the consummation of the transactions contemplated
hereby under the provisions of the HSR Act, and the rules
thereunder shall have expired or have been terminated by the
appropriate governmental agency.
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser and IMED Merger Sub to
consummate the Merger and the transactions contemplated by this
Agreement and the Documents shall be subject to the satisfaction,
on or before the Closing, of each of the following conditions:
8.1. REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by any or all of the Participating
Stockholders, the Holding Co. and/or the Operating Co. in this
Agreement (including all Exhibits and Schedules hereto) and in the
Documents executed and delivered by any Participating Stockholder,
the Holding Co. or the Operating Co., shall be true and correct on
the date hereof and on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date,
except that any such representations or warranties made with
reference to a specified date shall have been true on and with
reference to such date and except for breaches of any such
representations or warranties that do not have, and could not
reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
8.2. ABSENCE OF CERTAIN CHANGES. The representations and
warranties made by the Holding Co. and the Operating Co. in the
first sentence of Section 3.9 of this Agreement shall be true and
correct in all respects on the date hereof and on and as of the
Closing Date with the same force and effect as though made on and
as of the Closing Date.
8.3. PERFORMANCE. With respect to agreements, covenants,
obligations and conditions required to be performed or complied
with by any or all of the Participating Stockholders, the Holding
Co. and/or the Operating Co. on or prior to the Closing Date, the
Participating Stockholders, the Holding Co. and the
<PAGE>
Operating Co. shall have performed in all material respects (except
that any thereof which, by the terms thereof, are qualified so as
to require material performance or compliance must be performed and
complied with as written), each such agreement, covenant,
obligation and condition.
8.4. AUTHORITY. All action required to be taken by, or
on the part of, each Participating Stockholder and the Holding Co.
to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby (including, without limitation, the Merger) shall have been
duly and validly taken by each Participating Stockholder, the Board
of Directors or other appropriate body of any Participating
Stockholder and the Board of Directors and stockholders of the
Holding Co.
8.5. OPINION OF COUNSEL. Purchaser shall have been
furnished with an opinion of counsel, dated the Closing Date in
form attached hereto as Exhibit 2.
8.6. APPROVALS AND FILINGS. All approvals, consents,
authorizations, permits, licenses and approvals from, and all
declarations, filings and registrations with, third parties and
government agencies set forth on: (i) Part I of Schedule 8.6
hereof, shall have been obtained or made, shall be in full force
and effect and shall be reasonably satisfactory in form and
substance to the Purchaser and its counsel (both with respect to
the Merger and the Combination); and (ii) Part II of Schedule 8.6
shall have been obtained or made, shall be in full force and effect
and shall be reasonably satisfactory in form and substance to the
Purchaser and its counsel (both with respect to the Merger and the
Combination) (except to the extent that the failure to receive the
same, individually or in the aggregate, will not result in a
Material Adverse Effect), or if such failure would have a Material
Adverse Effect, the Purchaser shall have received an indemnity (in
a form and substance reasonably satisfactory to the Purchaser) from
the Participating Stockholders, jointly and severally, with respect
to all of the same not obtained.
8.7. FIRPTA CERTIFICATES. The Company shall have
delivered to Purchaser, at least 5 days prior to the Closing Date,
an affidavit by Holding Co., dated not more than 20 days prior to
the Closing Date, certifying, under penalty of perjury, that
Holding Co. is not and has not been a United States real property
holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code, and that, as of the Closing Date, interests in Holding
Co. are not United States real property interests (within the
meaning of Section 897(c)(1) of the Code). The aforementioned
affidavit shall be in the form and meet the requirements prescribed
by the Code and the applicable Treasury Regulations (and shall be
acceptable to the Purchaser).
8.8. CERTIFICATES. The Participating Stockholders, the
Holding Co., and the Operating Co. shall have furnished to
Purchaser in connection with the transaction contemplated herein,
<PAGE>
such certificates to evidence compliance with the conditions set
forth in this Agreement as may be reasonably requested by
Purchaser, including, without limitation, a certificate of William
J. Mercer (in his capacity as President and Chief Executive
Officer) (or if he is unavailable, another person reasonably
acceptable to Purchaser) and other appropriate officers of any
Participating Stockholder, the Holding Co., and the Operating Co.
stating that the conditions set forth in Sections 8.1, 8.2, 8.3 and
8.4 have been satisfied, and certifying as to: (i) the due
authorization and approval of this Agreement and the Documents
executed and delivered by such Participating Stockholder, the
Holding Co. or the Operating Co.; (ii) copies of the Company's
governing documents, by-laws and resolutions and (iii) the
incumbency and specimen signature of the officer executing the
Agreement and the Documents to be executed by each Participating
Stockholder and the Holding Co., and a certification by another
officer of such Participating Stockholder and the Holding Co., as
the case may be, as the incumbency and specimen signature of the
person executing such certificate.
8.9. FINANCINGS. Purchaser shall have obtained all debt
financing contemplated in the Commitment Letters, together with the
subordinated indebtedness contemplated in Section 6.4 hereof.
8.10. RESIGNATION. Participating Stockholders shall
have delivered to Purchaser, in form and substance reasonably
satisfactory to Purchaser and its counsel, resignations of the
following members of the board of directors of the Company: Samuel
Collela, Karl Wyss, Reid Perper, and Thompson Dean, and
terminations with respect to all powers of attorney and agency
relationships specified by Purchaser prior to the Closing, in each
case effective as of the Closing Date and resignations of members
of the board of directors of each entity listed on Schedule 3.4 as
requested by the Purchaser.
8.11. MAXIMUM INDEBTEDNESS. The Total Debt shall
not exceed $380 million.
8.12. SIGNATURE AUTHORITY. The Company shall have
taken all action satisfactory to Purchaser to cause the termination
of the power of Mr. Gregory E. Sancoff and such other persons as
shall be requested by the Purchaser in writing, to borrow, discount
debt obligations, cash or draw checks or otherwise act on behalf of
the Operating Co. with respect to the bank accounts listed on
Schedule 3.1(f).
8.13. WAIVER OF RIGHTS. At the Closing, each
stockholder and holder of Options of the Holding Co. listed on
Schedule 8.13, and each of the members of the board of directors of
the Company listed on Schedule 8.13 and each Affiliate of DLJ that
is a party to any agreement with the Company, shall, on behalf of
itself and its Affiliates, waive and release any and all rights
(including any right to indemnity) and claims they may have against
the Company, whether asserted or unasserted, fixed or contingent,
known or unknown, arising out of or related to their status as
stockholders of the Company or otherwise and terminate all of their
agreements
<PAGE>
with the Company, by providing to Purchaser a release in the form
of Exhibit 3 hereto and shall deliver to Purchaser the originals of
all instruments evidencing any such indebtedness or obligation.
8.14. [Reserved].
8.15. SPECIAL STATEMENT. The Participating
Stockholders shall have satisfied their obligation under Section
6.22 hereof.
8.16. STOCKHOLDERS AGREEMENTS. Each stockholders
agreement, voting trust, voting agreement or other similar
agreement between any stockholder of the Holding Co. and the
Company (including, without limitation, those listed on Schedule
2.1 hereof) shall have been terminated.
8.17. INDEBTEDNESS. The Participating Stockholders
shall have satisfied their obligations in Section 6.14 hereof.
8.18. AUDITED FINANCIAL STATEMENTS. The Company
shall have furnished to the Purchaser a copy of audited financial
statements (including a balance sheet, statement of operations and
statement of cash flow) of the Holding Co. for the period ended
December 31, 1995, prepared in accordance with GAAP and prepared as
if River was not a part of the Company during 1995, which will be
consistent with the Special Statements (1995).
8.19. CERTIFICATE OF INCORPORATION. The certificate
of incorporation of the Holding Co. shall have been amended
pursuant to the amendment attached hereto as Exhibit 4 hereof.
8.20. CONVERSION. All of the requirements set forth
in Article Four, clauses (f) and (g) of the Amended and Restated
Certificate of Incorporation of the Holding Co. shall have been
completed prior to the Effective Time and, immediately prior to the
Effective Time, all outstanding shares of the Class B Common Stock
of the Holding Co. shall have been converted into shares of Class
A Common Stock of the Holding Co. and the Sellers Representative
shall have provided to the Purchaser a certificate: (i) confirming
the foregoing; and (ii) certifying (a) that an Equity Liquidation
Event (as defined therein) has occurred; (b) the amount of the
Common Equity Valuation (as defined therein); and (c) the number of
shares of Class B Common Stock so converted and the number of
shares of Class A Common Stock into which they have been converted
and the names of the stockholders thereof.
8.21. TENDER OFFER. The obligations with the
Participating Stockholders and the Company under Section 6.15
hereof shall have been satisfied, and the Purchaser shall be
reasonably satisfied that the Tender Offer can be completed (and
any defeasance contemplated in Section 6.15 accomplished) in
accordance with the terms thereof and of Section 6.15, immediately
following the Effective Time, solely by the payment of the amounts
contemplated in the Tender Offer.
8.22. SUBSIDIARY SHARES. Purchaser shall have
received the original stock certificates representing all of the
issued and
<PAGE>
outstanding shares of all entities included in the Company other
than those issued by the Holding Co., and the same shall be free
and clear of all Encumbrances.
ARTICLE IX
CONDITIONS TO PARTICIPATING STOCKHOLDERS' OBLIGATIONS
The obligations of each Participating Stockholder and the
Holding Co. to consummate the Merger and the transactions
contemplated by this Agreement and the other Documents shall be
subject to the satisfaction, at or before the Closing, of each of
the following conditions:
9.1. REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by Purchaser and/or IMED Merger Sub in this
Agreement (including all exhibits and schedules hereto), and in the
Documents executed and delivered by the Purchaser or the IMED
Merger Sub shall be true and correct, on the date hereof and on and
as of the Closing Date with the same force and effect as though
made on and as of the Closing Date, except that any such
representation or warranty made with reference to a specified date
shall have been true on and with reference to such date and except
for any breaches of any such representations or warranties that do
not have and could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
9.2. PERFORMANCE. With respect to agreements, covenants,
obligations and conditions required to be performed or complied
with by Purchaser and/or IMED Merger Sub on or prior to the Closing
Date, Purchaser and IMED Merger Sub shall have performed in the
aggregate, in all material respects (except that any thereof which,
by the terms thereof, are qualified so as to require material
performance or compliance must be performed and complied with as
written), each such agreement, covenant, obligation and condition.
9.3. AUTHORITY. All action required to be taken by, or
on the part of, the Purchaser and IMED Merger Sub to authorize the
execution, delivery and performance of this Agreement by Purchaser
and IMED Merger Sub and the consummation of the transactions
contemplated hereby (including, without limitation, the Merger)
shall have been duly and validly taken by the Purchaser and IMED
Merger Sub.
9.4. OPINION OF PURCHASER'S COUNSEL. The Sellers
Representative shall have been furnished with an opinion or
opinions of counsel, dated the Closing Date in the form of Exhibit
5 hereto.
9.5. APPROVALS AND FILINGS. All Approvals, consents,
authorizations and approvals from, and all declarations, filings
and registrations with, third parties and government agencies,
specified on Schedule 9.5 hereto shall have been obtained or made,
<PAGE>
shall be in full force and effect and shall be satisfactory in form
and substance to the Participating Stockholders and their counsel.
9.6. CERTIFICATES. Purchaser shall have furnished such
certificates of its officers and others to evidence compliance with
the conditions set forth in this Agreement, as may be reasonably
requested by the Sellers Representative including, without
limitation, certificates of the secretary of Purchaser stating that
the conditions set forth in Sections 9.1, 9.2 and 9.3 have been
satisfied and including appropriate certification of By-Laws,
articles of incorporation, corporate resolutions and incumbency.
9.7. CONSIDERATION. The Purchaser shall have deposited
with the Holding Co. the Merger Consideration and (net of
applicable withholding Taxes, if any) the Total Option Cancellation
Amount.
ARTICLE X
TERMINATION
10.1. TERMINATION. This Agreement may be terminated
at any time prior to the Closing Date as follows and in no other
manner:
1. by mutual consent of the Board of Directors of
Purchaser and the Sellers Representative.
2. by the Sellers Representative by written notice to
the Purchaser, if: (A) any condition to the obligation of the
Participating Stockholders and the Holding Co. to close
contained in Articles VII or IX hereof has not been satisfied
by January 31, 1997 (the "End Date") (unless such failure is
the result of any Participating Stockholder's, the Holding
Co.'s or the Operating Co.'s breach of any of its
representations, warranties, covenants or agreements contained
herein); or (B) if by the End Date, the conditions to the
obligations of Purchaser and IMED Merger Sub to close
contained in Articles VII and VIII hereof (except for those
which have not been satisfied as a result of a breach by
Purchaser of any of its representations, warranties, covenants
or agreements contained herein) have been satisfied (or have
been waived) and each Participating Stockholder and the
Holding Co. is ready, willing and able to engage in the
Closing but Purchaser and IMED Merger Sub fail to engage in
the Closing.
3. by the Purchaser or IMED Merger Sub by written
notice to the Sellers Representative, if: (A) any condition
to its obligation to close contained in Article VII or VIII
hereof have not been satisfied by the End Date (unless such
failure is the result of the Purchaser's breach of any of its
representations, warranties, covenants or agreements contained
herein); or (B) if by the End Date, the conditions to the
obligations of each Participating Stockholder and the Holding
<PAGE>
Co. to close contained in Articles VII and IX hereof (except
for those which have not been satisfied as a result of a
breach by any Participating Stockholder, the Holding Co. or
the Operating Co. of any of its representations, warranties,
covenants or agreements contained herein) have been satisfied
(or have been waived) and Purchaser and IMED Merger Sub are
ready, willing and able to engage in the Closing but any
Participating Stockholder or the Holding Co. fails to engage
in the Closing.
4. by the Purchaser by written notice to the Sellers
Representative delivered on or prior to the expiration of
seven (7) business days following the expiration of sixty (60)
days following the date hereof, in the event of the occurrence
of any change or changes in general economic or political
conditions generally or in general economic or political
conditions applicable to the health care industry generally,
that results in a Material Adverse Effect.
5. by the Purchaser by written notice to the Sellers
Representative delivered on or prior to the expiration of
seven (7) business days following the expiration of sixty (60)
days following the date hereof, in the event that the
Purchaser determines, in its reasonable discretion, that
matters arising under any Environmental Laws, or with respect
to any Hazardous Material, Regulated Environmental Activity or
Release, which relates to the Company, will have or are likely
to have, a Material Adverse Effect.
6. by the Sellers Representative, by written notice to
the Purchaser, if there is an occurrence not constituting a
breach of any representation, warranty, covenant or agreement
by any Participating Stockholder, the Holding Co. or the
Operating Co. and, as a result of such occurrence, it is
highly unlikely that the Closing will occur.
7. by the Purchaser, by written notice to the Sellers
Representative, if there is an occurrence not constituting a
breach of any representation, warranty, covenant or agreement
by the Purchaser or the Merger Sub and, as a result of such
occurrence it is highly unlikely that the Closing will occur.
10.2. EFFECT OF TERMINATION. (a) If termination of
this Agreement shall result from:
(i) the willful failure of any of the Participating
Stockholders, the Holding Co. or the Operating Co. to
fulfill a condition to the performance of the obligations
of the Purchaser or IMED Merger Sub;
(ii) willful failure of any of the Participating
Stockholders, the Holding Co. or the Operating Co. to
perform a covenant or agreement of this Agreement; or
(iii) willful breach by any of the Participating
Stockholders, the Holding Co. or the Operating Co. of any
<PAGE>
representation or warranty contained herein which,
individually or in the aggregate, had or would reasonably
be expected to have, a Material Adverse Effect,
each of the Participating Stockholders, Holding Co. and Operating
Co. shall, jointly and severally, be fully liable for any and all
damage, loss, liability and expense (including without limitation
reasonable expenses of investigation, reasonable attorneys' fees
and fees and expenses incurred in connection with obtaining
financing or commitments thereto and all financial advisory and
accounting fees) incurred or suffered by the Purchaser and its
Affiliates as a result of such failure or breach.
(b) If termination of this Agreement shall result from:
(i) the willful failure of the Purchaser to fulfill
a condition to the performance of the obligations of the
Participating Stockholders, Holding Co. or Operating Co.;
(ii) willful failure of the Purchaser to perform a
covenant or agreement of this Agreement; or
(iii) the willful breach by the Purchaser of any
representation or warranty which, individually or in the
aggregate, had or would reasonably be expected to have,
a Material Adverse Effect,
the Purchaser shall be fully liable for any and all damage, loss,
liability and expense (including without limitation reasonable
expenses of investigation and reasonable attorneys' fees and
financial advisory and accounting fees) incurred or suffered by the
Participating Stockholders, Holding Co. or Operating Co. as a
result of such failure or breach.
The provisions of Section 6.2(b) and 12.8 shall survive
any termination hereof pursuant to this Article X.
10.3. "SELLERS REPRESENTATIVE" shall mean DLJ or any
successor thereof.
ARTICLE XI
NATURE AND SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION, ETC.
11.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC.
All representations and warranties of the parties set forth in this
Agreement shall terminate immediately upon the Closing and shall be
of no further force and effect, provided that the representations
and warranties made by any of the Participating Stockholders, the
Operating Co. and the Holding Co. contained in Sections 2.1, 2.2,
3.2(b), 3.3, 3.20 and 6.17 and the representations and warranties
made by the Purchaser or IMED Merger Sub in 4.1, 4.2 and 4.5 shall
survive indefinitely (or if indefinite survival is not permitted by
law, then for the maximum period permitted by applicable law). All
<PAGE>
such representations and warranties shall be deemed to have been
given and made on the date hereof and as of the Closing Date.
Except as set forth herein, all of the covenants, agreements and
obligations of the parties hereto, hereunder and under any of the
Documents, shall survive the Closing indefinitely (or if indefinite
survival is not permitted by law, then for the maximum period
permitted by applicable law).
11.2. PARTICIPATING STOCKHOLDERS' AGREEMENT TO
INDEMNIFY. The Participating Stockholders, jointly and severally,
shall fully defend, indemnify and hold harmless Purchaser and IMED
Merger Sub and, effective from and after the Closing without
duplication, the Purchaser and IMED Merger Sub and the Company and
their respective Affiliates and their respective officers,
directors, employees and agents, against and in respect of any and
all liabilities, losses, damages, deficiencies, Taxes or expenses
(including, without limitations, the reasonable expenses of
investigation and reasonable fees and expenses of counsel)
("Losses") resulting from, arising out of, or in connection with:
(i) any misrepresentation or breach of warranty made (or deemed to
have been made pursuant to Section 12.1) by any Participating
Stockholder in Sections 2.1, 2.2, 3.2(b), 3.3, 3.20 or 6.17 of this
Agreement, (ii) any breach by any Participating Stockholder of any
covenant or agreement made (or deemed to have been made pursuant to
Section 12.1) under this Agreement or in any Document executed and
delivered by any Participating Stockholder, (iii) any River Medical
Liabilities (as defined below), and (iv) any and all actions,
suits, proceedings, claims, demands, assessments, judgements, costs
and expenses incident to any of the foregoing. The foregoing
notwithstanding, the Participating Stockholders shall have no
obligation to provide indemnity under this Section 11.2 with
respect to any breach of the obligations set forth in Section 5.1
hereof until all Losses with respect thereto exceed $300,000 (the
"Minimum Amount"), provided however that in the event that such
Losses do exceed the Minimum Amount, the obligations of the
Participating Stockholders to provide indemnification hereunder
shall thereafter include all Losses resulting from any such breach,
including, without limitation, those included in the Minimum
Amount. "River Medical Liabilities" means any and all liabilities
or Losses (which, for this purpose shall include appropriate
allocations of operating costs and overhead) of, relating to or
imposed upon the Company, Purchaser, IMED Merger Sub or any of
their respective Affiliates, as the case may be, whether vested or
unvested, contingent or fixed, actual or potential, known or
unknown to the extent relating to River or any of the activities or
business, plans or policies thereof, including, without limitation,
any such liability or Loss relating to or arising in respect of the
assumed River Medical, Inc. stock option plan, any lease of real
property by River, all obligations under the letter agreement (the
"Cooley Letter") dated June 20, 1996, among River and Cooley
Godward Castro Huddleson & Tatum (attorneys for Hillenbrand
Industries, Inc., Block Medical, Inc., Lonnie Smith and W. August
Hillenbrand) and certain other persons named therein, or any breach
of any representation, warranty, covenant or agreement set forth in
Section 6.13 hereof or relating to or resulting from any
transaction or event contemplated or engaged in pursuant to Section
6.13 hereof or any actions taken
<PAGE>
or not taken, by the Company with respect to River, its operations
or business including, without limitation, all obligations to
employees or former employees (including those whose activities for
the Company were required by or were dedicated substantially to,
the activities relating to the conduct of the business or
activities of River) in respect of any compensation, severance,
COBRA obligation or Benefit Plans or otherwise.
11.3. PURCHASER'S AGREEMENT TO INDEMNIFY. Purchaser
shall fully defend, indemnify and hold harmless each Participating
Stockholder, its officers, directors, employees and agents, against
and in respect of (A) any Losses resulting from (i) any
misrepresentation or breach of warranty by Purchaser in Sections
4.1, 4.2 and 4.5 of this Agreement, (ii) any breach by Purchaser of
any covenant or agreement made in this Agreement or in any Document
executed and delivered by Purchaser or IMED Merger Sub and (iii)
the ownership and operation of the Business (exclusive of any River
Medical Liabilities) (but not including any such Loss to the extent
such Loss arises out of, in whole or in part, any matter which
constitutes a misrepresentation or breach or warranty of any
Participating Stockholder made in this Agreement), and (B) any
Losses resulting from any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses
incident to any of the foregoing.
11.4. THIRD PARTY CLAIMS. Promptly after the
receipt by any party hereto of notice of any claim, action, suit or
proceeding of any third party which is subject to indemnification
hereunder, such party (the "Indemnified Party") shall give written
notice of such claim to the party obligated to provide
indemnification hereunder (there "Indemnifying Party"), stating the
nature and basis of such claim and the amount thereof, to the
extent known. Failure of the Indemnified Party to give such notice
shall not relieve the Indemnifying Party from any liability which
it may have on account of this indemnification or otherwise, except
to the extent that the Indemnifying Party is materially prejudiced
thereby (except that the Indemnifying Party shall not be liable for
any expense incurred during the period in which the Indemnified
Party failed to give such notice). So long as the Indemnifying
Party provides assurances, reasonably acceptable to the Indemnified
Party, that the Indemnifying Party is capable of satisfying all
Losses that may arise in respect of any matter, the Indemnifying
Party shall be entitled to elect to participate in the defense of
and, if it so chooses, to assume the defense of such claim, action,
suit or proceeding with counsel selected by the Indemnifying Party
and reasonably satisfactory to the Indemnified Party. Upon any
such election by the Indemnifying Party to assume the defense of
such claim, action, suit or proceeding, the Indemnifying Party
shall not be liable for any legal or other expenses subsequently
incurred, by the Indemnified Party in connection with the defense,
thereof, provided that the Indemnified Party may, at its option
participate in such defense and employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Party. The
Indemnifying Party shall be liable for the fees and expenses of
counsel employed by the Indemnified Party for any period in which
the Indemnifying Party has not assumed the defense thereof (other
<PAGE>
than during any period in which the Indemnified Party failed to
give the notice provided above). The parties shall use
commercially reasonable efforts to minimize Losses from claims by
third parties and shall act in good faith in responding to
defending against, settling or otherwise dealing with such claims,
notwithstanding any dispute as to liability as between the parties
under this Article XI. The parties shall also cooperate in any
such defense, give each other full access to all information
relevant thereto and make employees and other representatives
available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
Whether or not the Indemnifying Party shall have assumed the
defense, the Indemnifying Party shall not be obligated to indemnify
the other party hereunder for any settlement entered into without
the Indemnifying Party's prior written consent, which consent shall
not be unreasonably withheld or delayed. The Indemnifying Party
shall not settle any claim without the prior written consent of the
Indemnified Party, which consent shall not unreasonably withheld or
delayed.
11.5. EFFECT OF TAXES AND INSURANCE. The amount of
any Losses for which indemnification is provided under this Article
XI shall be reduced to take account of any net Tax benefit realized
and shall be increased to take account of any net Tax detriment
realized arising from the incurrence or payment of any such Losses
or from the receipt of any such indemnification payment and shall
be reduced by the insurance proceeds received and any other amount,
if any, recovered from third parties by the Indemnified Party (or
its affiliated entities) with respect to any Losses. The
Indemnified Party shall be obligated to use all commercially
reasonable efforts to prosecute diligently and in good faith claims
under any applicable insurance policies (including, without
limitation, any applicable insurance policies maintained by the
Company) and against other third parties who may be responsible for
Losses prior to collecting indemnification for such Losses under
this Article XI; provided, however, that if the Indemnified Party
has not received payment from an insurer or other third party
within one year after it has given such insurer or other third
party written notice of such claim, (or, if the Indemnified Party
shall have received notice that it will receive no such payment,
immediately after the receipt of such notice) the Indemnified Party
shall be entitled to collect indemnification in respect of such
claim to the extent that it is otherwise entitled to payment under
this Article XI; provided, however, that with respect to any River
Medical Liabilities the Participating Stockholders shall be
required to make all indemnity payments upon demand and the
Purchaser will pay over to the Sellers Representative all amounts
collected as contemplated above in respect of such matter to the
extent all such applicable indemnification payments, in respect of
such matter, have been made. If any Indemnified Party (or its
affiliated entities) shall have received any payment pursuant to
this Article XI with respect to any Loss and shall subsequently
have received insurance proceeds or other amounts with respect to
such Loss, then such Indemnified Party (or its affiliated entities)
shall promptly pay over to the Indemnifying Party the amount so
recovered (after deducting the amount of the expenses incurred by
<PAGE>
it in procuring such recovery), but not in excess of the amount
previously so paid by the Indemnifying Party.
11.6. PURCHASE PRICE ADJUSTMENT. Any amount paid by
Participating Stockholders or Purchaser to the other pursuant to
this Article XI will be treated for Tax purposes as an adjustment
to the aggregate Merger Consideration unless a Final Determination
(as defined below) causes any such amount not to constitute an
adjustment to the aggregate Merger Consideration for any Tax
purpose. In the event of such a Final Determination, Purchaser or
the Participating Stockholders, as the case may be, shall pay an
additional amount that reflects the hypothetical Tax consequences
of the receipt or accrual of such payment, using the maximum
statutory rate (or rates, in the case of an item that affects more
than one Tax) applicable to the recipient of such payment for the
relevant year. "Final Determination" shall mean with respect to
Federal Taxes, a "determination" as defined in Section 1313(a) of
the Code or execution of an Internal Revenue Service Form 870AD
and, with respect to the Taxes other than Federal Taxes, any final
determination of liability in respect of a Tax that, under
applicable law, is not subject to further appeal, review or
modification through proceedings or otherwise (including the
expiration of a statute of limitations or a period for the filing
of claims for refunds, amended returns or appeals from adverse
determinations.)
11.7. INTEREST. All payments required to be made
under this Article XI shall include interest at the rate of 1.5%
per month (or the maximum rate permitted by law) from the date of
demand through the date of payment.
11.8. NOL.
(a) At the time the Company files its United States
federal income tax return for the taxable year ending on the
Closing Date, the Company shall prepare a statement (the "Initial
Statement") setting forth its reasonable good faith determination
of the regular net operating loss or any carry forward thereof for
United States federal income tax purposes that was generated in
taxable years beginning after December 31, 1994 and that has not
been absorbed by the Company in any taxable year ending on or prior
to the Closing Date (the "Actual NOL"). When completed, the
Initial Statement shall be delivered to the Sellers Representative
for review, together with all material work papers, calculations
and other records or information used to prepare the Initial
Statement. For purposes of computing the Actual NOL, the Total
Option Cancellation Amount and the amount described in clause
(ii)(A) of the definition of "Premium Shortfall" shall not be
included.
(b) If the Sellers Representative does not dispute
any matter relating to the Initial Statement or its preparation,
the Initial Statement shall for all purposes under this Agreement
be deemed to set forth the Actual NOL. If the Sellers
Representative disagrees that such Initial Statement fairly
presents the Actual NOL, it shall so notify Purchaser in writing
<PAGE>
within thirty (30) days following receipt thereof by the Sellers
Representative and the parties will use all reasonable efforts to
resolve any such disputes. If any such dispute cannot promptly be
resolved (but in any event within thirty (30) days after submission
of the written objections of the Sellers Representative), the
parties agree that they will submit the matter to Coopers & Lybrand
or, if such firm shall decline to act or is not, at the time of
such submission, independent of Participating Stockholders and
Purchaser, to another independent accounting firm of international
reputation mutually acceptable to Purchaser and Participating
Stockholders (either Coopers & Lybrand or such other accounting
firm being referred to herein as the "Accounting Firm"). The
resolution of the dispute by the Accounting Firm will be conclusive
and binding upon the parties hereto, notwithstanding any later
allegation or determination of error, mistake or miscalculation,
whether willful or negligent, by any person, in connection with the
determination made by the Accounting Firm. The fees and expenses
of the Accounting Firm will be paid one-half by Purchaser and one-
half by the Sellers Representative. The Initial Statement and the
information thereon, as finally determined pursuant to this
subsection (b), is hereinafter referred to as the "NOL Statement."
(c) If the Actual NOL, as set forth on the NOL Statement,
is less than the Target NOL, the Participating Stockholders,
jointly and severally will pay to the Company an amount equal to
40% of the excess of the Target NOL over the Actual NOL.
(d) The determinations made in accordance with the
provisions of subsection (b) above shall be final and binding on
each of Purchaser and Participating Stockholders. Any payment
required to be made under subsection (c) above shall be made within
five (5) business days of the determination thereof without setoff,
for any other matter, by wire transfer to an account designated by
the person entitled to receive such payment.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. REPRESENTATIONS/COVENANTS OF THE HOLDING CO.,
THE OPERATING CO. AND PARTICIPATING STOCKHOLDERS. If the Closing
occurs, all representations and warranties (to the extent the same
survive the Closing as contemplated in Section 11.1 hereof) and all
covenants and agreements of any of the Holding Co., the Operating
Co., the Company or any or all Participating Stockholders made
pursuant to this Agreement and the Documents executed and delivered
by any such persons shall be deemed to be representations and
warranties, covenants and agreements solely of each Participating
Stockholder (and not of the Holding Co., the Operating Co. or the
Company) for all purposes hereunder, including, without limitation,
Article XI hereof and the Participating Stockholders (and each of
them) will be jointly and severally liable and responsible, in
accordance with the terms of this Agreement, for any breach
thereof.
<PAGE>
12.2. AMENDMENT AND MODIFICATION. This Agreement
may be amended, modified or supplemented only by written agreement
of Purchaser and all Participating Stockholders.
12.3. WAIVER. Any breach of any obligation,
covenant, agreement or condition contained herein shall be deemed
waived by the non-breaching party, only by a writing, setting forth
with particularity the breach being waived and the scope of the
waiver, but such waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other breach. No
waiver shall be implied from any conduct or action of the non-
breaching party. No failure by any party in exercising any right,
power or privilege hereunder or under the Documents and no course
of dealing by any party shall operate as a waiver and any right,
power or privilege hereunder or under any Document nor shall any
single or partial exercise thereof or the exercise of any other
right, power or privilege.
12.4. NOTICES. All notices, requests, demands and
other communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given when delivered:
(a) If to the Participating Stockholders or the Holding
Co. or the Operating Co., to:
IVAC Holdings, Inc.
c/o DLJ Merchant Banking, Inc.
277 Park Avenue
New York, New York 10172
Attention: Thompson Dean
Facsimile No.: 212-892-7552
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: John Bick, Esq.
Facsimile No.: 212-450-4800
and
IVAC Medical Systems, Inc.
10221 Wateridge Circle
San Diego, CA 92121-2733
Attention: Jay de Groot, Esq.
Facsimile No.: 619-458-6156
or to such other person or address as the Sellers Representative
shall furnish Purchaser in writing.
<PAGE>
(b) If to Purchaser or IMED Merger Sub, to:
IMED Corporation
9775 Businesspark Avenue
San Diego, CA 92131
Attention: President
(619) 599-9000 (Telephone)
(619) 271-9010 (Telecopy)
with copies to:
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
Attention: Keith L. Schaitkin, Esq.
(212) 626-0838 (Telephone)
(212) 626-0799 (Telecopy)
or to such other address or telecopy number and with such other
copies as such party may hereafter specify for the purpose of
notice to the other party. Each such notice, request, demand or
other communication shall be effective (i) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified
in this Section and evidence of receipt is received or (ii) if
given by any other means, upon delivery or refusal of delivery at
the address specified in this Section.
12.5. BINDING NATURE; ASSIGNMENT. This Agreement
and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the
parties hereto without prior written consent of the other parties;
provided, however, that the rights of Purchaser hereunder may be
assigned to: (i) any lender or financing institution as security
for a loan or loans; (ii) any person that acquires all or
substantially all of the assets or business of the Purchaser, by
purchase, merger, consolidation or otherwise; or (iii) in
connection with the Combination. The foregoing notwithstanding,
prior to the Closing Date, Purchaser and IMED Merger Sub may assign
their rights hereunder to Advanced Medical or a direct or indirect
wholly owned subsidiary of Advanced Medical or any partnership in
which Advanced Medical, and/or one or more of its direct or
indirect wholly owned subsidiaries are the only partners (each an
"Assignee"), so long as Advanced Medical unconditionally guarantees
the obligation of such Assignee for all obligations of the
Purchaser and IMED Merger Sub under this Agreement. Such
assignment shall be made pursuant to documentation in form and
substance reasonably acceptable to the Sellers Representative which
documents shall include, without limitation, an assumption by the
Assignee of all of the obligations of Purchaser hereunder. In the
event of any such assignment and assumption, all rights and
obligations of the Purchaser shall be deemed to be the rights and
obligations of the Assignee and the Purchaser shall have no further
liability, rights or obligations hereunder.
<PAGE>
12.6. GOVERNING LAW; SUBMISSION TO JURISDICTION.
This Agreement and the legal relations among the parties hereto
shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and performed
therein. Subject to the terms and provisions of Section 12.16
hereof, each party hereto hereby irrevocably: (i) in any legal
proceeding brought in connection with this Agreement or any of the
Documents or the transactions contemplated hereby or thereby,
submits to the nonexclusive in personam jurisdiction of (A) the
United States District Court for the Southern District of New York
or (B) in the event that the Purchaser, the Holding Co. or the
Operating Co. is a defendant in any legal proceeding in which it
seeks to join any Participating Stockholder as a third party
defendant, then, any state or United States court in which such
proceeding has properly been brought, and consents to suit therein;
(ii) waives any objection that it may now or hereafter have to the
venue of such proceeding in any such court or that such proceeding
was brought in an inconvenient court; (iii) designates the Sellers
Representative (in the case of the Holding Co., the Operating Co.
and the Participating Stockholders) or Gordon Altman Butowsky
Weitzen Shalov & Wein (in the case of Purchaser) as agent to
receive service of any and all process and documents on their
behalf in any legal proceeding in the State of New York; and (iv)
agrees that nothing herein shall affect any parties right to effect
service of process in any manner permitted by law, and that the
Purchaser and the Company shall have the right to bring any legal
proceedings (including a proceeding for enforcement of a judgment
entered by any of the aforementioned courts) against any party in
any other court or jurisdiction in accordance with applicable law.
12.7. PUBLIC ANNOUNCEMENTS. The Participating
Stockholders, the Holding Co., the Operating Co. and Purchaser
agree that press releases and other announcements with respect to
the transactions contemplated hereby shall be subject to mutual
agreement; provided, however, that either party may make such
announcements as, in the opinion of its counsel, such party is
required to make pursuant to applicable law or the requirements of
a stock exchange or other applicable self-regulatory organization,
but in such event such party shall, to the extent practicable, give
the other party reasonable prior notice and an opportunity to
comment on the proposed announcement.
12.8. EXPENSES. All costs and expenses incurred in
connection with this Agreement and the Document shall be paid by
the party incurring such cost or expense provided, however, that
the Participating Stockholders shall be jointly and severally
obligated to pay all out-of-pocket expenses including, without
limitation, legal expenses and accounting expenses incurred by or
on behalf of the Company in connection with this Agreement and the
transactions contemplated hereby and any amounts payable to DLJ or
its Affiliates (except to the extent the same are paid at or prior
to the Closing and therefore reduce Total Cash).
12.9. COUNTERPARTS. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be
<PAGE>
deemed an original, but all of which together shall constitute one
and the same instrument.
12.10. HEADINGS. The headings contained in this
Agreement are inserted for convenience only and shall not
constitute a part hereof.
12.11. ENTIRE AGREEMENT. This Agreement, together
with the Schedules and Exhibits hereto, the Documents and the
letter agreement dated March 20, 1996 between the Company and
Advanced Medical constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, schedules,
understandings, documents (including, without limitation,
information provided or made available by any party to any other
party), negotiations and discussions, whether oral or written, of
the parties hereto.
12.12. REMEDIES EXCLUSIVE. Prior to the Closing, the
rights, remedies and obligations of the parties hereto under this
Agreement and the Documents set forth in Article X hereof shall be
deemed to be exclusive of all other rights, remedies and
obligations under this Agreement and the Documents that would
otherwise be available to the parties hereto. After the Closing,
the rights, remedies and obligations under this Agreement and the
Documents of the parties hereto set forth in Article XI hereof
shall be deemed to be exclusive of all other rights, remedies and
obligations under this Agreement and the Documents that would
otherwise be available to the parties hereto. Notwithstanding the
foregoing, the parties agree that the Business is unique and that
remedies at law may be inadequate, and accordingly, Purchaser, in
addition to other remedies it may have, shall have the right to
enforce the obligation of the Participating Stockholders and the
Holding Co. to consummate the Merger and engage in the transactions
contemplated herein, by an action or actions for specific
performance, injunction or other appropriate equitable remedies.
The foregoing shall in no event limit or restrict the liability or
obligation of any party hereto in respect of any claim based upon
fraud.
12.13. PURCHASER WAIVER. Except as specifically set
forth in this Agreement, Purchaser hereby waives, and shall cause
each of its Affiliates to waive all rights for contribution or
other similar rights of recovery with respect to any and all
damage, loss, liability and expense (including without limitation
reasonable expenses of investigation and reasonable attorneys' fees
and expenses in connection with any action, suit or proceeding)
arising under or relating to Environmental Laws that Purchaser or
any of its Affiliates might have by statute or otherwise against
Participating Stockholders.
12.14. DISCLOSURE SCHEDULES. The Participating
Stockholders, the Holding Co. and the Operating Co. agree to use
their reasonable best efforts to cause each of the Schedules hereto
to refer to all matters appropriate for disclosure thereon.
However, if, notwithstanding such efforts, such matters are not so
<PAGE>
disclosed, then matters disclosed on any Schedule hereto shall,
should the existence of such matters be relevant to any other
Schedule, be deemed to be disclosed with respect to such other
Schedule whether or not an explicit cross-reference appears. The
foregoing provisions of this Section 12.14 shall not apply to
Schedules 2.3, 3.3, 3.4 or 3.5.
12.15. DRAFTING CONVENTION. Any use herein of the
phrase "and/or" shall be deemed to mean both "and" and "or". Any
use herein of the phrase "including" shall be deemed to mean
"including, without limitation".
12.16. ARBITRATION.
Disputes that arise under or with respect to this
Agreement or the Documents will be resolved as follows:
(i) except as set forth in the last paragraph of this
Section 12.16, no party shall bring a civil action arising
under or with respect to this Agreement or the Documents.
(ii) at any time any party may demand arbitration of any
dispute, arising under or with respect to any of this
Agreement by delivering written notice thereof to: (x) the
Sellers Representatives, the Purchaser and IMED Merger Sub;
and (y) an office of JAMS/Endispute located in New York City
(or, if none, then the office of JAMS/Endispute located
closest to New York City); and
(iii) any such arbitration shall be conducted in New York
City according to JAMS/Endispute's Arbitration Rules then in
effect applicable to disputes of the type submitted to
arbitration and the results of such arbitration shall be final
and binding on the parties.
In the event that JAMS/Endispute is not available to provide such
arbitration services with respect to any such dispute, then that
dispute shall be resolved by final, binding arbitration in New York
City by three arbitrators pursuant to the rules then prevailing of
the American Arbitration Association applicable to disputes of the
type submitted to arbitration. Judgment on the award rendered by
any of the above referenced arbitrators may be confirmed and
entered in and by any court having jurisdiction.
Notwithstanding the foregoing, each party specifically
reserves the right: (a) to seek equitable remedies in a court of
competent jurisdiction; and (b) to bring a third party action
against any other party in any proceeding to which such person (the
"Initiating Person") is a party under circumstances in which the
basis of the claim by the Initiating Party against the other party
is that such other party is liable (under any of the Agreements or
otherwise), in whole or in part, for or in respect of any claim or
counterclaim being asserted against the Initiating Party in such
proceeding.
<PAGE>
The parties hereto agree that the party losing any matter
that has been finally determined by arbitration pursuant thereto
shall promptly reimburse to all prevailing parties the reasonable
cost and expenses incurred by them in connection therewith
(including, without limitation, reasonable fees and disbursements
of counsel provided that: (i) the Purchaser and IMED Merger Sub
shall have no obligation to provide such reimbursement for more
than one counsel for all Participating Stockholders, the Holding
Co. and the Operating Co., collectively; and (ii) the Participating
Stockholders shall have no obligation to provide such reimbursement
for more than one counsel for the Purchaser and IMED Merger Sub,
collectively.
ARTICLE XIII
GLOSSARY
The following terms as used in this Agreement shall have
the meaning indicated below.
"Accounting Firm" has the meaning set forth in Section
1.8.
"Acquisition Proposal" has the meaning set forth in
Section 6.9.
"Advanced Medical" means Advanced Medical, Inc., a
Delaware corporation.
"Affiliate" shall mean, with respect to any person, any
other person controlling, controlled by or under common control
with, such person (provided that any reference to any "Affiliate"
of the Holding Co. herein or in any of the Documents shall be
deemed to include a reference to any person owning, or having a
right to acquire, in excess of 20% of the voting power of the
Holding Co. and any Affiliate of any such person).
"Aggregate Employee Option Exercise Price" has the
meaning set forth in Section 1.8.
"Approvals" has the meaning set forth in Section 3.21.
"Assignee" has the meaning set forth in Section 12.5.
"Benefit Plans" has the meaning set forth in Section
3.15.
"CERCLA" has the meaning set forth in Section 3.13(f).
"Certificate of Merger" has the meaning set forth in
Section 1.2.
"Certificates" has the meaning set forth in Section 1.10.
<PAGE>
"Class A Common Stock" shall mean the Class A Common
Stock of the Holding Co., par value $.01 per share.
"Class B Common Stock" shall mean the Class B Common
Stock of the Holding Co., par value $.01 per share.
"Closing" has the meaning set forth in Section 1.3.
"Closing Date" has the meaning set forth in Section 1.3.
"Code" has the meaning set forth in Section 3.14.
"Combination" shall mean the merger or consolidation of
the Surviving Corporation and/or the Operating Co. with or into the
Purchaser and/or any Assignee.
"Commitment Letters" has the meaning set forth in Section
4.6.
"Company" shall mean and include and be deemed to refer,
individually and collectively, to the Holding Co., the Operating
Co. and each person listed on Schedules 3.2 and 3.4 hereof.
"Compensating Adjustment" means an amount, determined at
the Effective Time, equal to 40% of the sum of: (i) the Special
Option Shortfall; (ii) the Other Option Shortfall; and (iii) the
Premium Shortfall.
"Constituent Corporations" has the meaning set forth in
Section 1.1.
"Contracts" has the meaning set forth in Section 3.19.
"Cooley Letter" shall have the meaning set forth in
Section 11.2.
"defined benefit plan" has the meaning set forth in
Section 3.15.
"DGCL" shall mean the General Corporation Law of the
state of Delaware.
"Disclosed Jurisdiction" has the meaning set forth in
Section 3.2.
"Dissenting Shares" has the meaning set forth in Section
1.9.
"DLJ" shall mean DLJ Merchant Banking, Inc.
"DLJ Debt" shall mean the Holding Co.'s 13.2% Junior
Subordinated Notes due 2006.
"Documents" shall mean and include and be deemed to refer
to all instruments, certificates, documents and agreements to be
<PAGE>
executed and/or delivered herewith or in connection with the
transactions contemplated hereby.
"Due Date" has the meaning set forth in Section 1.8.
"Effective Date" has the meaning set forth in Section
1.2.
"Effective Time" has the meaning set forth in Section
1.2.
"Eli Lilly" shall mean Eli Lilly and Company.
"Eli Lilly Obligation" shall mean all obligations to Eli
Lilly under agreements numbers 6, 16 and 17 set forth in Part III
of Schedule 6.17 hereof.
"employee benefit plan" has the meaning set forth in
Section 3.15.
"employee pension benefit plans" has the meaning set
forth in Section 3.15.
"employee welfare benefit plans" has the meaning set
forth in Section 3.15.
"Employees" has the meaning set forth in Section 3.15.
"Encumbrances" has the meaning set forth in Section 3.10.
"End Date" has the meaning set forth in Section
10.2.
"Environmental Law" has the meaning set forth in Section
3.13.
"ERISA" has the meaning set forth in Section 3.15.
"Expenses" has the meaning set forth in Section 1.8.
"FDA" shall mean the United States Food and Drug
Administration.
"Federal Tax" means any tax imposed under Subtitle A of
the Code.
"Final Determination" has the meaning set forth in
Section 11.6.
"Final Statement" has the meaning set forth in Section
1.8.
"GAAP" shall mean generally accepted accounting
principles.
<PAGE>
"Hazardous Material" has the meaning set forth in Section
3.13.
"HSR Act" has the meaning set forth in Section 6.12.
"IDE" has the meaning set forth in Section 3.25.
"Indemnified Party" has the meaning set forth in Section
11.4.
"Indemnifying Party" has the meaning set forth in Section
11.4.
"Initiating Party" has the meaning set forth in Section
12.16.
"Intangible Property" has the meaning set forth in
Section 3.11.
"Leased Real Property" has the meaning set forth in
Section 3.10.
"Losses" has the meaning set forth in Section 11.2.
"Material Adverse Effect" has the meaning set forth in
Section 3.9.
"Merger" has the meaning set forth in Section 1.1.
"Merger Consideration" has the meaning set forth in
Section 1.7(b).
"multiemployer plan" has the meaning set forth in Section
3.15.
"multiple employer plan" has the meaning set forth in
Section 3.15.
"1994 Stock Purchase Agreement" has the meaning set forth
in Section 3.14.
"Notes Obligation" shall mean all obligations under the
Senior Notes.
"Option" and "Options" has the meaning set forth in
Section 1.7.
"Other Option Shortfall" means the amount, if any, by
which $8 million exceeds the aggregate portion of the Total Option
Cancellation Amount to be paid pursuant to all Option Cancellation
Agreements entered into prior to the Closing by all persons, in the
form of Exhibits 8 and 9 hereof (other than Mr. William J. Mercer,
Mr. Gregory E. Sancoff and Mr. Albert Henry).
"Owned Real Property" has the meaning set forth in
Section 3.10.
<PAGE>
"Per Share Merger Consideration" has the meaning set
forth in Section 1.8.
"Permitted Liens" has the meaning set forth in Section
3.10.
"Person" and "person" shall mean any natural person and
any corporation, trust, partnership, limited liability partnership,
limited liability company, limited liability corporation, venture
or business entity.
"PMA" has the meaning set forth in Section 3.25.
"Preliminary Statement" has the meaning set forth in
Section 1.8.
"Premium Shortfall" means the amount, if any, by which:
(i) $6 million exceeds (ii) the excess of: (A) the aggregate of all
premiums, prepayment penalties and costs for defeasance (if any) of
the Senior Notes, paid (or to be paid) in connection with the
purchase and defeasance of the Senior Notes, as contemplated in
Section 6.15 hereof, over (B) $1 million.
"Purchase Price" has the meaning set forth in Section
1.8.
"Regulated Environmental Activity" has the meaning set
forth in Section 3.13.
"Release" has the meaning set forth in Section
3.13.
"Revolver Obligation" shall mean all obligations under
the Credit Agreement dated as of December 30, 1994 as amended and
restated, by and among the Holding Co., the Operating Co. and
Chemical Bank, and the lenders named therein.
"Rights" means any right (including, without limitation,
conversion right); option; warrant; call; put or similar commitment
of any character, authorized, granted or issued; right to acquire,
or to require purchase of, any security; right to acquire an equity
interest, or any interest measured by income, profits or any
results of operations or by the value of any stock, or any similar
or related right or interest.
"River" has the meaning set forth in Section 6.13.
"River Medical Liabilities" has the meaning set forth in
Section 11.2.
"Royalty" has the meaning set forth in Section 6.17.
"Section 338 Election Tax Liability" has the meaning set
forth in Section 3.14.
<PAGE>
"Sellers Representative" has the meaning set forth in
Section 10.3.
"Senior Notes" shall mean the 9 1/4% Senior Notes due
2002 of the Operating Co.
"Siemens" has the meaning set forth in Section 6.17.
"Siemens Obligation" shall mean, as of any date following
the date hereof, the minimum amount required to be paid pursuant to
the second paragraph of Section 2.02(a)(v) of agreement number 1
set forth on Part II of Schedule 6.17, determined on a net present
value basis in a manner consistent with the preparation of notes 5
to the financial statements of the Operating Co. for the period
ended December 31, 1995.
"Signature Product" means the single and multi-channel
versions of the Company's Signature Edition, IV infusion system
(including all related disposables).
"Signature Recall" shall mean the product recall
initiated in the recall notification (IVAC Medical Systems
Signature Edition Infusion Pump Models 7100 and 7200) dated August
8, 1996.
"Signature Recall Obligations" has the meaning set forth
in Section 3.7.
"SIS" has the meaning set forth in Section 6.17.
"Special Option Shortfall" means the amount, if any, by
which $7 million exceeds the aggregate portion of the Total Option
Cancellation Amount to be paid pursuant to all Option Cancellation
Agreements in the form of Exhibit 6 hereto entered into on the date
hereof by Mr. William J. Mercer and in the form of Exhibit 7 hereto
entered into on the date hereof by Mr. Gregory E. Sancoff and Mr.
Albert Henry.
"Special Purpose Statement of Cash Flows (1995)" has the
meaning set forth in Section 6.22 hereof.
"Special Purpose Statement of Cash Flows (1996)" has the
meaning set forth in Section 6.22 hereof.
"Stock" shall mean the Class A Common Stock of the
Holding Co. and the Class B Common Stock of the Holding Co.
"Stock Option Plans" has the meaning set forth in Section
1.7(c).
"Subsidiary Stock" means all of the issued and
outstanding stock of the Company other than the Stock.
"Surviving Corporation" has the meaning set forth in
Section 1.1.
<PAGE>
"Target NOL" means the amount by which $10 million
exceeds the lesser of: (i) $5.5 million and (ii) that portion of
the Total Option Cancellation Amount paid pursuant to Option
Cancellation Agreements entered into in the form of Exhibit 8 or 9
hereof (by persons other than Mr. William J. Mercer, Mr. Gregory E.
Sancoff and Mr. Albert Henry) in respect of Options that are vested
prior to the Closing Date.
"Tax" or "Taxes" has the meaning set forth in Section
3.14.
"Tax Asset" means any net operating loss, net capital
loss, investment tax credit or tax attribute which could reduce
Taxes (including, without limitation, deductions and credits
related to alternative minimum Taxes).
"Tax Lien" or "Tax Liens" has the meaning set forth in
Section 3.14.
"Tax Return" or "Tax Returns" has the meaning set forth
in Section 3.14(a).
"Tax Sharing Agreements" has the meaning set forth in
Section 3.14(a).
"Taxing Authority" has the meaning set forth in Section
3.14(a).
"Total Cash" has the meaning set forth in Section 1.8.
"Total Cash Certificate" has the meaning set forth in
Section 1.8.
"Total Debt" has the meaning set forth in Section 1.8.
"Total Option Cancellation Amount" has the meaning set
forth in Section 1.7.
"Welmed Product" means the Company's "P" Series syringe
IV pumps (models P1000; P2000; P3000; P4000 and P-CAM).
"Welmed Safety Alert" shall mean the product safety alert
initiated by the Company as contemplated in Item 4 of Schedule 3.25
hereof.
"Welmed Safety Alert Obligations" has the meaning set
forth in Section 3.7.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed the day and year first above written.
IMED CORPORATION
By:/s/Joseph W. Kuhn
______________________
Name: Joseph W. Kuhn
Title: President
IMED MERGER SUB, INC.
By:/s/Joseph W. Kuhn
______________________
Name: Joseph W. Kuhn
Title: President
IVAC HOLDINGS, INC.
By:/s/Reid S. Perper
______________________
Name: Reid S. Perper
Title: Senior Vice President
IVAC MEDICAL SYSTEMS, INC.
By:/s/William J. Mercer
______________________
Name: William J. Mercer
Title: President & CEO
PARTICIPATING STOCKHOLDERS
<PAGE>
AVALON BIOVENTURES, L.P.,
a California Limited Partnership
By:/s/Kevin J. Kinsella
______________________
Name: Kevin J. Kinsella
Title: General Partner
AVALON BIOVENTURES II, L.P.,
a California Limited Partnership
By:/s/Kevin J. Kinsella
______________________
Name:Kevin J. Kinsella
Title: General Partner
CHASE EQUITY ASSOCIATES,
a California Limited Partnership
By: CHASE CAPITAL PARTNERS,
its General Partner
By:/s/Mitchell J. Blutt, M.D.
______________________
Name: Mitchell J. Blutt, M.D.
Title: Executive Partner
DLJ MERCHANT BANKING PARTNERS, L.P.,
a Delaware Limited Partnership
By: DLJ MERCHANT BANKING, INC.,
Managing General Partner
By:/s/Ivy Dodes
______________________
Name: Ivy Dodes
Title: Vice President
DLJ INTERNATIONAL PARTNERS, C.V.
By: DLJ MERCHANT BANKING, INC.,
Advisory General Partner
By:/s/Ivy Dodes
______________________
Name: Ivy Dodes
Title: Vice President
<PAGE>
DLJ OFFSHORE PARTNERS, C.V.
By: DLJ MERCHANT BANKING, INC.,
Advisory General Partner
By:/s/Ivy Dodes
______________________
Name: Ivy Dodes
Title: Vice President
DLJ MERCHANT BANKING FUNDING, INC.
By:/s/Ivy Dodes
______________________
Name: Ivy Dodes
Title: Vice President
DLJ FIRST ESC L.L.C.
By:/s/Edward A. Poletti
______________________
Name: Edward A. Poletti
Title: Vice President and
Treasurer
DLJ CAPITAL CORPORATION
By:/s/Richard E. Kroon
______________________
Name: Richard E. Kroon
Title: President
ENGLISH & SCOTTISH
INVESTORS P.L.C.
By:/s/Ian Beveridge
______________________
Name: Ian Beveridge
Title: For and on behalf of
Gartmore Investment Ltd.
Secretaries
HENRY VENTURE II LIMITED,
an Isle of Man Entity
By:/s/Albert J. Henry
______________________
Name: Albert J. Henry
Title: Chairman
<PAGE>
INSTITUTIONAL VENTURE
PARTNERS V, L.P.,
a California Limited Partnership
By:/s/Samuel D. Colella
______________________
Name: Samuel D. Colella
Title: General Partner
INSTITUTIONAL VENTURE
MANAGEMENT V, L.P.,
a California Limited Partnership
By:/s/Samuel D. Colella
______________________
Name: Samuel D. Colella
Title: General Partner
INSTITUTIONAL VENTURE
PARTNERS VI, L.P.,
a California Limited Partnership
By:/s/Samuel D. Colella
______________________
Name: Samuel D. Colella
Title: General Partner
INSTITUTIONAL VENTURE
MANAGEMENT VI, L.P.,
a California Limited Partnership
By:/s/Samuel D. Colella
______________________
Name: Samuel D. Colella
Title: General Partner
MENLO VENTURES VI, L.P.,
a Delaware Limited Partnership
By: MV MANAGEMENT VI, L.P.,
its General Partner
By:/s/Thomas H. Bredt
______________________
Name: Thomas H. Bredt
Title: General Partner
<PAGE>
MENLO ENTREPRENEURS FUND VI, L.P.,
a Delaware Limited Partnership
By: MV MANAGEMENT VI, L.P.,
its General Partner
By:/s/Thomas H. Bredt
______________________
Name: Thomas H. Bredt
Title: General Partner
MR LIMITED,
a Cayman Islands Corporation
By:/s/G. C. Coldough
______________________
Name: G. C. Coldough
Title: Director
GREGORY E. SANCOFF
/s/Gregory D. Sancoff
SPROUT GROWTH II, L.P.
By: DLJ Capital Corporation or its
Mangaging General Partner
By:/s/Richard E.Kroon
Name: Richard E.Kroon
Title: President
<PAGE>
EXHIBIT 1
CERTIFICATE OF MERGER
MERGING IMED MERGER SUB, INC.
INTO IVAC HOLDINGS, INC.
(Pursuant to Section 251 of the
General Corporation Law
of the State of Delaware)
IVAC Holdings, Inc., a Delaware corporation, DOES HEREBY
CERTIFY that:
I. The name and state of incorporation of each of the
constituent corporations is as follows:
NAME STATE OF INCORPORATION
IVAC Holdings, Inc. Delaware
IMED Merger Sub, Inc. Delaware
II. An agreement and plan of merger dated as of August ___,
1996 (the "Agreement and Plan of Merger") has been approved,
adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with Section 251(c) of the
General Corporation Law of the State of Delaware.
III. The name of the surviving corporation is IVAC Holdings,
Inc.
IV. The Amended and Restated Certificate of Incorporation of
IVAC Holdings, Inc. as in effect at the date of the merger shall be
the certificate of incorporation of the surviving corporation,
which Restated certificate of incorporation shall be amended to
read in its entirety as set forth in Attachment I hereto.
V. An executed copy of the Agreement and Plan of Merger is
on file at the principal place of business of IVAC Holdings, Inc.,
10221 Wateridge Circle, San Diego, CA 92121.
<PAGE>
<PAGE>
VI. A copy of the Agreement and Plan of Merger will be
furnished by IVAC Holdings, Inc., on request and without cost, to
any stockholder of either of the constituent corporations.
IN WITNESS WHEREOF, IVAC Holdings, Inc. has caused this
Certificate of Merger to be executed and attested by the
undersigned as of the ___ day of ________________, 1996.
IVAC Holdings, Inc.
By:
______________________
Name:
Title:
<PAGE>
<PAGE>
Attachment I
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
IVAC HOLDINGS, INC.
FIRST: The name of this corporation shall be:
IVAC Holdings, Inc.
SECOND: Its registered office in the State of Delaware is to
be located at 1013 Centre Road, in the City of Wilmington, County
of New Castle 19805, and its registered agent at such address is
Corporation Service Company.
THIRD: The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of shares of stock which the
Corporation shall have the authority to issue is:
Three Thousand (3,000) shares of common stock with a par value
of One Cent ($.01) per share, amounting to Thirty Dollars ($30.00).
FIFTH: The Board of Directors shall have the power to
adopt, amend or repeal the by-laws of the Corporation.
SIXTH: No director shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach
of fiduciary duty by such director as a director except: (i) for
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of the law,
(iii) pursuant to Section 174 of the Delaware General Corporation
Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this
Article Sixth shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior
to such amendment.
SEVENTH: The corporation shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented,
indemnify any and all persons whom it shall have power to indemnify
under said Section from and against any and all of the expenses,
liabilities or other matters referred to or covered by said
Section, and the indemnification provided for herein shall not be
deemed exclusive of any other rights to which those indemnified may
be entitled under any by-law, agreement, vote of stockholders or
disinterested directors, or otherwise, both as
<PAGE>
to action in his official capacity and as to action in another
capacity while holding office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and
administrators of such a person.
EIGHTH: The corporation elects not to be governed by the
Section 203 of the Delaware General Corporation Law.
<PAGE>
<PAGE>
EXHIBIT 2
[Davis Polk & Wardwell Letterhead]
________________, 1996
[Purchaser]
Ladies and Gentlemen:
We have acted as special counsel to DLJ Merchant Banking
Partners, L.P.,### DLJ Merchant Banking Funding, Inc., DLJ First
ESC L.L.C., DLJ Capital Corporation and Sprout Growth II, L.P.
(collectively, the "Participating Stockholders"), IVAC Holdings,
Inc. ("Holding Co.") and IVAC Medical Systems, Inc. ("Operating
Co.") in connection with the Agreement and Plan of Merger dated
August ___, 1996 (the "Merger Agreement"). Unless otherwise
defined herein, all capitalized terms used but not defined herein
shall have the meanings set forth in the Merger Agreement.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Merger Agreement and such
other documents, corporate records, certificates of public
officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or
advisable for purposes of this opinion.
On the basis of the foregoing, we are of the opinion that:
1. Each of the Holding Co. and the Operating Co. is a
corporation duly organized, validly existing and in good standing
under the laws of Delaware. Each of the Holding Co. and the
Operating Co. have full corporate power and authority to enter into
the Merger Agreement and to consummate the transactions
contemplated thereby. The Merger Agreement has been duly and
validly authorized by written consent and duly executed and
delivered, by each of the Holding Co. and the Operating Co.
2. The Merger Agreement constitutes a valid and binding
agreement of each of the Participating Stockholders, the Holding
Co. and the Operating Co., enforceable against each in accordance
with its terms except (a) as (i) the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent transfer, moratorium
or similar laws affecting creditors' rights
<PAGE>
###DP&W will not give an opinion for DLJ International Partners,
C.V. and DLJ Offshore Partners, C.V. because they are organized in
the Netherlands Antilles.
generally and (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability, and (b)
that we express no opinion as to the enforceability of any
provisions purporting to grant the right to enforce the obligation
of the Participating Stockholders, the Holding Co. and the
Operating Co. to consummate the transactions contemplated by the
Merger Agreement by an action for specific performance, injunction
or other remedy.
3. The execution, delivery and performance by the
Participating Stockholders, the Holding Co. and the Operating Co.
of the Merger Agreement and the consummation by the Participating
Stockholders, the Holding Co. and the Operating Co. of the
transactions contemplated thereby require no action by or in
respect of, notice to, or filing with, or the consent, approval or
authorization of any governmental authority under, the laws of the
State of New York or the State of Delaware or the federal law of
the United States, other than such filings or approvals that have
been made or obtained.
4. The execution, delivery and performance by the
Participating Stockholders, the Holding Co. and the Operating Co.
of the Merger Agreement do not contravene or constitute a default
under any provision of applicable United States federal or New York
state law or regulation (provided that no opinion is rendered with
respect to any antitrust or similar law, rule or regulation) or the
General Corporation Law of the State of Delaware.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York,
the federal laws of the United States and the General Corporation
Law of the State of Delaware.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any
other purpose or relied upon by or furnished to any other person
without our prior written notice. Each financing institution###
specified on Schedule 1 hereto may rely on this opinion as if such
opinion were addressed to it.
Very truly yours,
<PAGE>
###List will include all those providing debt and equity financing
for the transaction.
<PAGE>
EXHIBIT 3
RELEASE AND WAIVER
FOR VALUE RECEIVED, the receipt and sufficiency of which
is hereby acknowledged, the undersigned, releasor ("Releasor"), on
behalf of itself and its Affiliates (as such term is defined in a
certain Agreement and Plan of Merger (the "Agreement") by and
between, among others, IMED Corporation, IMED Merger Sub, Inc.,
IVAC Holdings, Inc., and IVAC Medical Systems, Inc., dated as of
August ____, 1996.
HEREBY RELEASES AND DISCHARGES: The Company (as such
term is defined in the Agreement), and its successors (by merger or
otherwise), transferees, assigns (such successors, transferees and
assigns, collectively with IMED Corporation and IMED Merger Sub,
Inc., the "Released Party"), from any and all actions, causes of
action, suits, debts, claims, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims and demands whatsoever, in law,
admiralty or equity, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due,
including, but not limited to, any instruments or other writings
evidencing a right to the payment of money, which the Releasor ever
had, now has or hereafter can, shall or may have, against the
Released Party, for, upon, or by reason of any matter, cause or
thing whatever from the beginning of time to the date of this
release; provided that such release does not apply to Releasor's
rights under the Agreement or any ancillary documents;### and
Releasor further
HEREBY TERMINATES all agreements between Releasor and the
Company (and the same shall be null and void) and shall deliver to
Purchaser (as such term is defined in the Agreement) the originals
of all instruments evidencing any indebtedness or obligation with
respect thereto.
###For DLJ and its Affiliates, the following exception applies:
"the release and waiver contained herein shall not be deemed to
release, waive or terminate any right to indemnification that
Releasor may have against the Company under the Underwriting
Agreement between DLJSC and the Operating Co. dated November 3,
1995." For Gregory Sancoff and Albert Henry the following
exception applies: "the release and waiver contained herein shall
not be deemed to release, waive or terminate any right to
indemnification whether under any agreement or otherwise that
Releasor may have against the Company or any right under any Option
Cancellation Agreement."
<PAGE>
IN WITNESS WHEREOF, Releasor have hereunto set their hand
the ____ day of ______________, 1996.
RELEASOR:
______________________________
Sworn to before me on this
___ day of ______________, 1996
________________________________
<PAGE>
<PAGE>
EXHIBIT 4
AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION OF
IVAC HOLDINGS, INC.
IVAC Holdings, Inc. (the "Corporation"), a corporation
organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "GCL"), does hereby
further amend the Certificate of Incorporation of the Corporation,
which was originally filed on October 14, 1994 under the name River
Acquisition Corp. and subsequently amended and restated on December
29, 1994 and April 13, 1995.
The undersigned hereby certifies that this Amendment to
the Certificate of Incorporation has been duly adopted in
accordance with Sections 228 and 242 of the GCL. Written notice
has been given as provided in Section 228 of the GCL and written
consent has been given in accordance with that section.
(1) The first sentence of subparagraph (f) of
Article FOURTH is hereby deleted in its entirety and replaced with:
"Each share of Call B Common Stock shall
convert automatically (a "Conversion"),
without any action on the part of the
Corporation or any holder of Class B Common
Stock, immediately prior to the occurrence of
an Equity Liquidation Event as follows:"
(2) The last sentence of subparagraph (g)(iii) of
Article FOURTH is hereby deleted in its entirety and replaced with:
"Such Conversion shall be effective
immediately prior to the occurrence of the
Equity Liquidation Event, and the person in
whose name or names any certificate or
certificates for shares of Class A Common
Stock shall be issuable upon such Conversion
shall be deemed to have become the holder of
record of the shares of Class A Common Stock."
(3) Subparagraph (2)(b) of Article SEVENTH is
hereby deleted in its entirety and replaced with:
"The Corporation may, by action of its Board
of Directors, provide indemnification to such
of the employees and agents of the Corporation
to such extent and to such effect as the Board
of
<PAGE>
Directors shall determine to be appropriate and
authorized by Delaware Law."
THE UNDERSIGNED, being the Vice President of IVAC
Holdings, Inc., for the purpose of amending the Restated
Certificate of Incorporation of the Corporation pursuant to the
General Corporation Law of the State of Delaware, does declare and
certify that this is my act and deed and the facts herein stated
are true, and accordingly have hereunto set my hand as of this __th
day of August, 1996.
IVAC HOLDINGS, INC.
By: _______________________________
Reid S. Perper
Vice President
<PAGE>
EXHIBIT 5
[Gordon Altman Butowsky Weitzen Shalov & Wein letterhead]
________________, 1996
DLJ Merchant Banking Partners, L.P.,
DLJ Merchant Banking Funding, Inc.
DLJ First ESC L.L.C.,
DLJ Capital Corporation and
Sprout Growth II, L.P.
Ladies and Gentlemen:
We have acted as special counsel to IMED Corporation
("Purchaser") and IMED Merger Sub, Inc. ("Merger Sub") in
connection with the Agreement and Plan of Merger dated August ___,
1996 (the "Merger Agreement"). Unless otherwise defined herein,
all capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Merger Agreement and such
other documents, corporate records, certificates of public
officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or
advisable for purposes of this opinion.
On the basis of the foregoing, we are of the opinion that:
1. Each of the Purchaser and the Merger Sub is a
corporation duly organized, validly existing and in good standing
under the laws of Delaware and has full corporate power to carry on
the business which it is now conducting. Each of the Purchaser and
the Merger Sub have full corporate power and authority to enter
into the Merger Agreement and to consummate the transactions
contemplated thereby. The Merger Agreement has been duly and
validly authorized and duly executed and delivered, by each of
Purchaser and Merger Sub.
2. The Merger Agreement constitutes a valid and binding
agreement of each of Purchaser and Merger Sub, enforceable against
each in accordance with its terms except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent
transfer, moratorium or similar laws affecting creditors' rights
generally and (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability.
3. The execution, delivery and performance by the
Purchaser and Merger Sub of the Merger Agreement and the
consummation by them of the
<PAGE>
transactions contemplated thereby requires no action by or in
respect of, notice to, or filing with, or the consent, approval or
authorization of any governmental authority under, the laws of the
State of New York or the State of Delaware or the federal law of
the United States, other than such filings or approvals that have
been made or obtained.
4. The execution, delivery and performance by Purchaser
and Merger Sub of the Merger Agreement do not contravene or
constitute a default under any provision of applicable United
States federal or New York state law or regulation (provided that
no opinion is rendered with respect to any antitrust or similar
law, rule or regulation) or the General Corporation Law of the
State of Delaware.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York,
the federal laws of the United States and the General Corporation
Law of the State of Delaware.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any
other purpose or relied upon by or furnished to any other person
without our prior written notice.
Very truly yours,
<PAGE>
ADVANCED MEDICAL, INC.
9775 Businesspark Avenue
San Diego, CA 92131
Dear Mr. Picower:
As you know, Advanced Medical, Inc. ("AM") and its
subsidiary, IMED Corporation (together with AM, the
"Company"), are engaged in discussions regarding a transaction
(the "Transaction") to acquire a corporation (the "Target")
and will seek to enter into a Merger Agreement in connection
therewith (the "Merger Agreement"). Because the Company
currently believes that the acquisition by it of the Target at
the right price would be beneficial to it, the Company has
determined to attempt to obtain commitments from others to
provide it with funding resources necessary for it to complete
the Transaction if the Company is afforded the opportunity to
do so.
The Transaction would require the Company to obtain
substantial debt financing from third parties (the "New Debt")
and would require the Company to obtain common equity
financing of between $40 and $65 million (the amount actually
requested by AM in accordance herewith being referred to
herein as the "Takedown Amount") to provide: (i) amounts that
may be applied to the purchase price payable for the Target;
(ii) additional working capital requirements resulting from
the Transaction; and (iii) related transaction expenses and
the cost of other transactions currently contemplated.
AM believes that it is prudent to confirm in writing
its ability to procure the Takedown Amount and otherwise
engage in the transactions contemplated herein (collectively,
the "Additional Financing"). Accordingly, AM has requested
that you execute this letter agreement in order to evidence
your agreement and obligation to provide the Additional
Financing to AM; provided, however, that AM shall be entitled
to require you to provide amounts in excess of $40 million
with respect to the Takedown Amount only if such amounts are
necessary (in addition to the New Debt) to satisfy the funding
requirements contemplated in clauses (i)-(iii) above. This
letter also evidences the agreement of AM that proceeds with
the Transaction (which it may or may not do in its sole and
exclusive discretion), AM will be obligated to utilize the
Additional Financing. The Takedown Amount may, at your
option, be provided by you directly or through any one or more
of your designees.
<PAGE>
The Additional Financing will include the following
elements:
- The Additional Financing will provide for the
purchase of AM common stock from AM at a price
of $3.00 per share for an aggregate purchase
price equal to the Takedown Amount.
- You and your affiliates will, pursuant to a
written plan of recapitalization (all pursuant
to documentation that will reflect that the
exchange is pursuant to a plan under Section
368(a)(1)(E) of the Internal Revenue Code of
1986, as amended) transfer the three
outstanding notes <F1> (the "Notes") currently
held by you and your affiliates in exchange
for 29,416,086 shares of AM common stock.
- All accrued interests on the Notes will be
paid in cash at the time of the Transfer.
- The Additional Financing will only be required
to be provided to AM simultaneously with the
closing of the Transaction.
As you know, in light of the circumstances
surrounding the Transaction, including those referred to
above, there can be no assurance whatsoever that AM will be
able, or, even if it is able, will desire, to complete the
Transaction. If: (i) AM does not complete the Transaction and
request that you provide the Additional Financing as
contemplated above, prior to June 30, 1997; or (ii) the Merger
Agreement is terminated in accordance with its terms, the
obligations hereunder will terminate unless this limitation is
waived by the parties hereto in writing.
<PAGE>
This letter, when executed by you in the space
provided below, will evidence our mutual agreement with
respect to the foregoing.
Very truly yours,
ADVANCED MEDICAL, INC.
By: /s/ Joseph W. Kuhn
AGREED AND ACCEPTED:
/s/ Jeffry M. Picower
Jeffry M. Picower
[FN]
<F1>
The Notes include (i) a $6 million 7% convertible note issued
by AM due January 4, 2001, convertible into 6,024,096 shares
of AM common stock; (ii) a $6.5 million 9% convertible note
issued by AM due January 4, 2001, convertible into 10,534,848
shares of AM common stock; and (iii) a $25 million 7%
convertible debenture issued by AM due January 4, 2001, note
into 9,523,809 shares of AMI common stock.
