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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FISHER SCIENTIFIC INTERNATIONAL INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 5049 02-0451017
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(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
</TABLE>
FISHER SCIENTIFIC INTERNATIONAL INC.
ONE LIBERTY LANE
HAMPTON, NEW HAMPSHIRE 03842
(603) 926-5911
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
TODD M. DUCHENE, ESQ.
FISHER SCIENTIFIC INTERNATIONAL INC.
ONE LIBERTY LANE
HAMPTON, NEW HAMPSHIRE 03842
(603) 926-5911
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
With Copies to:
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PATRICK C. KELLY RAMAN BET-MANSOUR, ESQ. J. VAUGHAN CURTIS
CHIEF EXECUTIVE OFFICER DEBEVOISE & PLIMPTON ALSTON & BIRD LLP
PSS WORLD MEDICAL, INC. 875 THIRD AVENUE ONE ATLANTIC CENTER
4345 SOUTHPOINT BOULEVARD NEW YORK, NEW YORK 10022 1201 WEST PEACHTREE STREET
JACKSONVILLE, FLORIDA 32216 (212) 909-6000 ATLANTA, GEORGIA 30309-3424
(904) 332-3000 (404) 881-7000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement and the
consummation of the merger of PSS World Medical, Inc. with and into a wholly
owned subsidiary of the Registrant as described in this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities of an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of earlier effective registration statement for
the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER SHARE OFFERING PRICE(2) REGISTRATION FEE
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Common Stock, par value $0.01............... 23,809,925 -- $491,303,794 $129,704
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(1) The number of shares of Fisher Scientific International Inc. common stock,
par value $0.01 per share, registered is based on the maximum number of
shares to be issued in connection with the transactions described herein.
(2) Estimated solely for purposes of calculating the registration fee required
by Section 6(b) of the Securities Act of 1933, as amended (the "Securities
Act"). This fee has been computed pursuant to Rules 457(f) and (c) under the
Securities Act and is based on (i) $6.44, the average of the high and low
per share prices of Common Stock, par value $0.01 per share, of PSS World
Medical, Inc. on the Nasdaq National Market on August 18, 2000, and (ii) the
maximum number of shares of PSS World Medical, Inc. Common Stock, including
shares issuable pursuant to outstanding and exercisable options, to be
acquired by Fisher Scientific International Inc. pursuant to the
transactions described herein.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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[LOGO OF FISHER] [LOGO OF PSS]
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TO THE STOCKHOLDERS OF FISHER SCIENTIFIC INTERNATIONAL INC. AND PSS WORLD
MEDICAL, INC.
A MERGER PROPOSAL -- YOUR VOTE IS VERY IMPORTANT
Fisher Scientific International Inc. has agreed to acquire PSS World
Medical, Inc. through a merger of a wholly owned subsidiary of Fisher with and
into PSS. We believe that the acquisition will create substantially more value
for stockholders of Fisher and PSS than would otherwise be achieved by the
companies.
When the merger is completed, PSS will become a wholly owned subsidiary of
Fisher. PSS common stockholders will receive 0.3121 of a share of Fisher common
stock for each share of PSS common stock. We expect that upon completion of the
merger, approximately 64.4% of Fisher will be held by current Fisher
stockholders and approximately 35.6% of Fisher will be held by former PSS
stockholders.
After the merger, Fisher will continue to trade on the New York Stock
Exchange under the ticker symbol "FSH" and PSS will no longer trade on the
Nasdaq National Market.
The merger cannot be completed unless PSS's stockholders approve the merger
and Fisher's stockholders approve the issuance of Fisher common stock. The
boards of directors of both Fisher and PSS have approved these transactions and
recommend that their respective stockholders vote FOR the proposals. In
addition, certain Fisher stockholders holding a majority of the Fisher common
stock have agreed to vote in favor of the transaction. Information about the
merger is contained in this joint proxy statement/prospectus. In addition,
Fisher is submitting to its stockholders the adoption of Fisher Scientific
International Inc. 2000 Equity and Incentive Plan and an increase in the number
of its authorized shares of common stock for their approval. Information about
these proposals is also contained in this joint proxy statement/prospectus. WE
URGE YOU TO READ THIS DOCUMENT, INCLUDING THE SECTION DESCRIBING RISK FACTORS
THAT BEGINS ON PAGE 27.
The dates, times and places of the meetings are as follows:
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For Fisher stockholders: For PSS stockholders:
, 2000 at 10:00 a.m , 2000 at 10:00 a.m.
Mellon Bank Building PSS World Medical, Inc.
8 Loockerman Street 4345 Southpoint Blvd.
Dover, Delaware 19904 Jacksonville, Florida 32216
</TABLE>
Your vote is very important, regardless of the number of shares you own.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE VOTE AS SOON AS
POSSIBLE TO MAKE SURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING. IF YOU DO
NOT VOTE, IT WILL HAVE THE SAME EFFECT AS VOTING AGAINST THE MERGER.
We strongly support this combination of our companies and join with our
boards of directors in enthusiastically recommending that you vote in favor of
the merger.
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Paul M. Montrone Patrick C. Kelly
Chairman and Chief Executive Officer Chairman and Chief Executive Officer
Fisher Scientific International Inc. PSS World Medical, Inc.
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities to be issued in
connection with the merger or determined if this joint proxy
statement/prospectus is accurate or complete. Any representation to the contrary
is a criminal offense.
This joint proxy statement/prospectus is dated , 2000,
and is first being mailed to stockholders of Fisher and PSS on or about
, 2000.
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[LOGO OF FISHER APPEARS HERE]
FISHER SCIENTIFIC INTERNATIONAL INC.
ONE LIBERTY LANE
HAMPTON, NEW HAMPSHIRE 03842
NOTICE OF SPECIAL MEETING OF FISHER STOCKHOLDERS
, 2000 AT 10:00 A.M.
To the stockholders of Fisher Scientific International Inc.:
Notice is hereby given that a special meeting of stockholders of Fisher
will be held on , 2000 at 10:00 a.m., local time, at Mellon Bank
Building, 8 Loockerman Street, Dover, Delaware 19904 for the following purposes:
1. To consider and vote upon a proposal to approve the issuance of shares
of Fisher common stock pursuant to the Agreement and Plan of Merger,
dated as of June 21, 2000, by and among Fisher Scientific International
Inc., FSI Merger Corporation, a wholly owned subsidiary of Fisher, and
PSS World Medical, Inc., pursuant to which PSS will become a wholly
owned subsidiary of Fisher.
2. To consider and vote upon a proposal to adopt the Fisher Scientific
International Inc. 2000 Equity and Incentive Plan and make available
shares of common stock for issuance under this plan.
3. To consider and vote upon a proposal to amend Fisher's certificate of
incorporation to increase the number of authorized shares of common
stock from 100 million shares to 500 million shares.
4. To transact any other business as may properly come before the special
meeting or any adjournment or postponement of the special meeting.
These items of business are described in the attached joint proxy
statement/prospectus. Holders of record of Fisher common stock at the close of
business on , 2000, the record date, are entitled to notice of, and
to vote at, the special meeting and any adjournments or postponements of the
special meeting.
Your vote is very important, regardless of the number of shares you own.
Please vote as soon as possible to make sure that your shares are represented at
the meeting. To vote your shares, complete and return the enclosed proxy card or
submit your proxy or voting instructions by telephone or the Internet as
described in the attached joint proxy statement/prospectus. If you are a holder
of record, you may also cast your vote in person at the special meeting. If your
shares are held in an account at a brokerage firm or bank, you must instruct
them on how to vote your shares. If you do not vote or do not instruct your
broker or bank how to vote, it will have the same effect as voting against the
merger.
By Order of the Board of Directors of
Fisher Scientific International Inc.
--------------------------------------
Todd M. DuChene
Secretary
Hampton, New Hampshire
, 2000
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[LOGO OF PSS APPEARS HERE]
PSS WORLD MEDICAL, INC.
4345 SOUTHPOINT BOULEVARD
JACKSONVILLE, FLORIDA 32216
NOTICE OF SPECIAL MEETING OF PSS STOCKHOLDERS
, 2000 AT 10:00 A.M.
To the stockholders of PSS World Medical, Inc.:
We will hold a special meeting of stockholders of PSS on , 2000
at 10:00 a.m., local time, at the corporate offices of PSS World Medical, Inc.,
4345 Southpoint Blvd., Jacksonville, Florida 32216 for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger, dated June 21, 2000, by and among Fisher Scientific
International Inc., FSI Merger Corporation, a wholly owned subsidiary of
Fisher, and PSS World Medical, Inc. At the effective time of the merger,
FSI Merger Corporation will be merged with and into PSS World Medical,
Inc., with PSS being the surviving corporation. As a result of the
merger, PSS will become a wholly owned subsidiary of Fisher. Each share
of PSS common stock will be converted in the merger into 0.3121 of a
share of Fisher common stock.
2. To transact any other business that may properly come before the special
meeting or any adjournment or postponement of the special meeting.
These items of business are described in the attached joint proxy
statement/prospectus. Holders of record of PSS common stock at the close of
business on , 2000, the record date, are entitled to vote at the
special meeting and any adjournments or postponements of the special meeting.
Your vote is very important, regardless of the number of shares you own.
Please vote as soon as possible to make sure that your shares are represented at
the meeting. To vote your shares, complete and return the enclosed proxy card or
submit your proxy or voting instructions by telephone or the Internet as
described in the attached joint proxy statement/prospectus. If you are a holder
of record, you may also cast your vote in person at the special meeting. If your
shares are held in an account at a brokerage firm or bank, you must instruct
them on how to vote your shares. In almost all cases, if you do not vote or do
not instruct your broker or bank on how to vote, it will have the same effect as
voting against the merger.
By Order of the Board of Directors of
PSS World Medical, Inc.
--------------------------------------
David A. Smith
Secretary
Jacksonville, Florida
, 2000
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ADDITIONAL INFORMATION
This joint proxy statement/prospectus incorporates important business and
financial information about Fisher and PSS from other documents that are not
included in or delivered with the joint proxy statement/prospectus. This
information is available to you without charge upon your written or oral
request. You can obtain the documents incorporated by reference in this joint
proxy statement/prospectus by requesting them in writing or by telephone:
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FISHER SCIENTIFIC INTERNATIONAL INC. PSS WORLD MEDICAL, INC.
One Liberty Lane 4345 Southpoint Boulevard
Hampton, New Hampshire 03842 Jacksonville, Florida 32216
Attention: Matthew Murphy Telephone: Attention: David A. Smith
(603) 929-2376 Telephone: (904) 332-3333
</TABLE>
IF YOU WOULD LIKE TO REQUEST ANY DOCUMENTS, PLEASE DO SO BY
, 2000 IN ORDER TO RECEIVE THEM BEFORE THE SPECIAL MEETINGS.
See "Where You Can Find More Information" that begins on page 98.
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TABLE OF CONTENTS
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QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS............. 6
The Companies............................................. 6
Fisher Scientific International Inc.................... 6
PSS World Medical, Inc................................. 6
Strategy............................................... 7
The Merger................................................ 8
Recent Developments Regarding the Merger............... 8
The Structure of the Merger............................ 9
What You Will Receive.................................. 9
Recommendation of the Boards of Directors and Opinions
of Financial Advisors................................. 9
Appraisal Rights....................................... 10
The Special Meetings................................... 10
Board of Directors of Fisher Following the Merger...... 10
Interests of Directors and Executive Officers in the
Merger................................................ 10
Treatment of Stock Options and Other Equity Rights..... 10
Tax Consequences....................................... 11
Overview of the Merger Agreement....................... 11
Stock Option Agreement................................. 13
Voting Agreement....................................... 13
Market Price Information............................... 13
Selected Historical Financial Data of Fisher.............. 14
Selected Historical Financial Data of PSS................. 17
Unaudited Pro Forma Combined Financial Statements......... 19
Equivalent And Comparative Per Share Information.......... 24
Projected Pro Forma Financial Information................. 25
RISK FACTORS................................................ 27
Risk Factors Relating to the Merger....................... 27
Risk Factors Relating to Fisher's Business................ 30
Risk Factors Relating to PSS's Business................... 32
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION............ 39
FISHER SCIENTIFIC INTERNATIONAL INC......................... 40
The Industry.............................................. 40
Products and Services..................................... 41
Distribution, Manufacturing and Suppliers................. 41
Business Rationale and Strategy for the Combined
Company................................................ 42
THE FISHER SPECIAL MEETING.................................. 45
Date, Time and Place of the Fisher Special Meeting........ 45
Purpose of the Fisher Special Meeting..................... 45
Stockholder Record Date for the Fisher Special Meeting.... 45
Vote Required for Approval of the Issuance of Common Stock
Pursuant to the Merger Agreement....................... 45
Proxies................................................... 46
Voting Electronically or by Telephone..................... 46
Solicitation of Proxies................................... 47
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THE PSS SPECIAL MEETING..................................................................................... 48
Date, Time and Place of the PSS Special Meeting........................................................... 48
Purpose of the PSS Special Meeting........................................................................ 48
Stockholder Record Date for the PSS Special Meeting....................................................... 48
Vote Required for Approval of the Merger.................................................................. 48
Proxies................................................................................................... 48
Voting Electronically or by Telephone..................................................................... 49
Solicitation of Proxies................................................................................... 49
THE MERGER.................................................................................................. 50
Background of the Merger.................................................................................. 50
Fisher's Reasons for the Merger........................................................................... 52
PSS's Reasons for the Merger.............................................................................. 54
Recommendation of Fisher's Board of Directors............................................................. 55
Opinion of Fisher's Financial Advisor..................................................................... 55
Recommendation of PSS's Board of Directors................................................................ 60
Opinion of PSS's Financial Advisor........................................................................ 61
Interests of Executive Officers and Directors of PSS World Medical in the Merger.......................... 65
Completion and Effectiveness of the Merger................................................................ 68
Structure of the Merger and Conversion of PSS Stock....................................................... 68
Exchange of PSS Stock Certificates for Fisher Stock Certificates.......................................... 68
Treatment of PSS Stock Options and Other Equity Rights.................................................... 69
Material United States Federal Income Tax Consequences of the Merger...................................... 69
Regulatory Matters........................................................................................ 70
Restrictions on Resale.................................................................................... 70
Appraisal Rights.......................................................................................... 71
Delisting and Deregistration of PSS Common Stock after the Merger......................................... 71
The Merger Agreement...................................................................................... 71
Fisher Charter and Bylaws................................................................................. 78
Stock Option Agreement.................................................................................... 78
Voting Agreement.......................................................................................... 80
FISHER 2000 EQUITY AND INCENTIVE PLAN....................................................................... 81
General................................................................................................... 81
Awards Under the Plan..................................................................................... 82
Other Features of the Plan................................................................................ 82
Certain Federal Income Tax Consequences................................................................... 83
DESCRIPTION OF FISHER CAPITAL STOCK......................................................................... 85
Authorized Capital Stock.................................................................................. 85
Fisher Common Stock....................................................................................... 85
Non-Voting Common Stock................................................................................... 85
Fisher Preferred Stock.................................................................................... 86
Anti-Takeover Considerations.............................................................................. 86
Transfer Agent and Registrar.............................................................................. 86
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COMPARISON OF RIGHTS OF FISHER STOCKHOLDERS AND PSS STOCKHOLDERS............................................ 87
Capitalization............................................................................................ 87
Voting Rights............................................................................................. 87
Number and Election of Directors.......................................................................... 87
Vacancies on the Board of Directors and Removal of Directors.............................................. 88
Amendments to the Certificate or Articles of Incorporation................................................ 89
Amendments to Bylaws...................................................................................... 90
Action by Written Consent................................................................................. 90
Ability to Call Special Meetings.......................................................................... 91
Notice of Stockholder Action.............................................................................. 91
Limitation of Personal Liability of Directors and Officers................................................ 91
Indemnification of Directors and Officers................................................................. 92
Fisher Stockholders Rights Plans.......................................................................... 93
State Anti-Takeover Statutes.............................................................................. 95
MANAGEMENT AND OPERATIONS AFTER THE MERGER.................................................................. 97
Operations of the Company................................................................................. 97
Board of Directors of Fisher.............................................................................. 97
Board of Directors and Management of PSS.................................................................. 97
LEGAL MATTERS............................................................................................... 97
EXPERTS..................................................................................................... 97
OTHER MATTERS............................................................................................... 98
STOCKHOLDER PROPOSALS....................................................................................... 98
WHERE YOU CAN FIND MORE INFORMATION......................................................................... 98
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ANNEX A -- Agreement and Plan of Merger
ANNEX B -- Stock Option Agreement
ANNEX C -- Voting Agreement
ANNEX D -- Opinion of Lazard Freres & Co. LLC
ANNEX E -- Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation
ANNEX F -- Restated Certificate of Incorporation of Fisher Scientific
International Inc., as amended
ANNEX G -- Bylaws of Fisher Scientific International Inc.
ANNEX H -- Fisher Scientific International Inc. 2000 Equity and
Incentive Plan
ANNEX I -- Form of Certificate of Amendment to the Restated Certificate
of Incorporation of Fisher Scientific International Inc.
</TABLE>
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QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT WILL HAPPEN IN THE MERGER?
A: PSS will become a wholly owned subsidiary of Fisher, and PSS stockholders
will become stockholders of Fisher.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: Stockholders of PSS will receive in the merger 0.3121 of a share of Fisher
common stock for each share of PSS common stock. PSS stockholders will not
receive fractional shares; instead, PSS stockholders will receive the value
of any fractional shares in cash.
Fisher stockholders will continue to hold their Fisher stock and will not
receive any new shares or stock certificates in the merger. Fisher
stockholders' ownership of the company will be diluted to approximately
64.4% as a result of the issuance of approximately 22 million new shares of
Fisher common stock to PSS stockholders.
Q: WHY IS FISHER ACQUIRING PSS?
A: Fisher believes that the acquisition of PSS continues Fisher's long
standing strategy of growth through acquisition in related markets. The
combination of Fisher and PSS will create a diversified healthcare and
scientific product supplier with revenues of $4.3 billion from more than
400,000 customers around the world. The combined company will have $2.5
billion of sales to a wide range of healthcare providers, which complements
Fisher's existing $1.8 billion of sales to entities engaged in scientific
research and industrial testing. The companies have common characteristics
and distinct expertise that can be more effectively leveraged on a combined
basis. Fisher management has demonstrated financial and operational
discipline, technology leadership and the ability to achieve long-term
earnings growth. PSS is a sales driven company with expertise in sales,
marketing and customer service. Both Fisher and PSS have national
distribution networks capable of processing a high volume of transactions
with small average order sizes and delivering a high level of customer
service. The competitive strengths of the combined company will include:
- a broader product offering of self-manufactured, private label and name
brand products with over 80% of revenues representing recurring
consumable items and 20% of revenues representing higher value equipment
and instrumentation sales;
- a broader customer base consisting of leading organizations throughout
the healthcare industry;
- electronic-commerce leadership;
- integrated global sourcing and logistics capability; and
- a continuing leadership position in the scientific research market.
Fisher believes that by leveraging the strengths of Fisher and PSS, two
market leaders, the combined company will be better positioned to
capitalize on recent industry trends and realize increased stockholder
value through greater earnings growth and profitability than Fisher and PSS
would be individually.
Q: WHAT WILL BE THE COMPOSITION OF STOCKHOLDERS OF FISHER FOLLOWING THE
MERGER?
A: We expect that upon completion of the merger, approximately 64.4% of the
outstanding common stock of Fisher will be held by current Fisher
stockholders and approximately 35.6% of the outstanding common stock of
Fisher will be held by former PSS stockholders.
Following the merger, affiliates of Thomas H. Lee Company will own 32.3% of
Fisher common stock, management of Fisher will own 7.7%, affiliates of DLJ
Merchant Banking Partners II will own 9.7% and Chase Capital Partners will
own 6.5%. Assuming the exercise of options held by them, members of
Fisher's management would own 16.7% on a fully diluted basis. All of these
stockholders are party to an investors' agreement, the principal terms of
which are summarized on page 28.
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Q: WHO WILL BE FISHER'S DIRECTORS FOLLOWING THE MERGER?
A: Following the merger, Fisher's directors will consist of its nine current
directors, Messrs. Paul Montrone, Paul Meister, Mitchell Blutt, Robert Day,
Michael Dingman, Anthony DiNovi, David Harkins, Scott Sperling and Kent
Weldon. In addition, Fisher has agreed to appoint Messrs. Hugh Brown and
Patrick Kelly, two current directors of PSS, to the Fisher board of
directors as of the consummation of the merger.
Q: WHAT STOCKHOLDER APPROVALS ARE NEEDED FOR THE MERGER?
A: For PSS, the affirmative vote of the holders of a majority of the
outstanding shares of PSS's common stock is required to adopt the merger
agreement. PSS common stockholders are entitled to one vote per share.
For Fisher, the affirmative vote of the holders of a majority of the
outstanding shares of Fisher's voting common stock is required to approve
the proposed issuance of shares of Fisher common stock pursuant to the
merger agreement. Each holder of voting common stock is entitled to one
vote per share. As a result of a voting agreement among PSS and certain
stockholders of Fisher, the holders of a majority of the outstanding shares
of Fisher voting common stock are obligated to vote in favor of the
proposal to issue shares of Fisher common stock in the merger. Therefore,
the proposal to issue shares of Fisher common stock pursuant to the merger
agreement will be approved, regardless of the vote of Fisher stockholders
not a party to the voting agreement.
Q: WHY IS FISHER PROPOSING TO ADOPT THE 2000 EQUITY AND INCENTIVE PLAN?
A: Fisher has allocated 7,181,183 of the shares reserved for awards, such as
stock options available for grant under the current Fisher Scientific
International Inc. 1988 Equity and Incentive Plan, for allocation to key
employees and consultants of Fisher. As a result, only 2,818,817 shares
currently remain available for allocation for stock option awards,
including incentive stock options.
The boards of directors and Compensation Committees of both Fisher and PSS
have fostered ownership cultures that encourage superior performance of
their executive officers and employees through the use of stock-based
compensation plans. Fisher's board and its Compensation Committee need to
continue to have the flexibility to use stock-based compensation to
incentivize Fisher and PSS personnel. Fisher proposes to adopt the 2000
Equity and Incentive Plan and make available shares for issuance of
stock-based compensation to its key personnel and to institute provisions
that are deemed desirable by institutional investors, such as:
- Limiting the amount of stock-based awards to any single individual over
the term of the plan;
- Imposing a requirement that the exercise price per share subject to an
option be no less than the fair market value of a share of stock on the
date of grant;
- Prohibiting the repricing of outstanding options; and
- Limiting the maximum payment any grantee may receive pursuant to
cash-based awards.
The issuance of the shares of Fisher common stock in the merger is not
conditioned upon the adoption of the 2000 Equity and Incentive Plan.
Q: WHY IS FISHER PROPOSING TO INCREASE THE NUMBER OF ITS AUTHORIZED SHARES OF
COMMON STOCK?
A: Fisher currently has 100 million shares of common stock authorized. Fisher
expects that following the PSS acquisition, Fisher will have approximately
62.3 million shares of its common stock outstanding. Fisher proposes to
increase the authorized number of shares of its common stock from 100
million to 500 million shares. Fisher believes this increase is necessary
to provide its board of directors with flexibility to issue additional
shares to raise equity capital, grant options to incentivize management and
make future acquisitions.
The issuance of the shares of Fisher common stock in the merger is not
conditioned upon the increase in the shares of authorized capital stock of
Fisher.
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Q: WHEN ARE THE STOCKHOLDERS' MEETINGS?
A: Each company's meeting will take place on , 2000. The location of
each meeting is specified on the cover page of this document.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the information contained in this
joint proxy statement/prospectus, please respond by completing, signing and
dating your proxy card or voting instructions and returning it in the
enclosed postage paid envelope as soon as possible so that your shares may
be represented at your special meeting. If you sign and send in your proxy
and do not indicate how you intend to vote:
- If you are a Fisher stockholder, we will count your proxy as a vote in
favor of the issuance of the Fisher common stock in the merger, the
adoption of the Fisher Scientific International Inc. 2000 Equity and
Incentive Plan and the increase in number of Fisher's authorized common
stock; and
- If you are a PSS stockholder, we will count your proxy as a vote in favor
of the adoption of the merger agreement.
You may attend the applicable special meeting and vote your shares in
person, rather than providing your proxy.
Q: CAN I VOTE BY TELEPHONE OR OVER THE INTERNET?
A: Yes. As an alternative to mailing your proxy card, you may submit your
proxies either by telephone or over the Internet.
Fisher holders of record may submit their proxies:
- through the Internet by visiting a website established for that purpose
at and following the instructions; or
- by telephone by calling the toll-free number and following
the recorded instructions. Stockholders residing outside the United
States can call collect on a touch-tone phone and follow
the recorded instructions.
PSS holders of record may submit their proxies:
- through the Internet by visiting a website established for that purpose
at and following the instructions; or
- by telephone by calling the toll-free number and following
the recorded instructions. Stockholders residing outside of the United
States can call collect on a touch-tone phone and follow
the recorded instructions.
Q: WHAT IF I DON'T VOTE, DON'T INDICATE HOW I WANT TO VOTE OR ABSTAIN FROM
VOTING?
A: Whether you are a Fisher or a PSS stockholder:
- If you fail to respond, it will have the same effect as a vote against
the merger. If you are a Fisher stockholder, it will also have the same
effect as a vote against the other proposals submitted for Fisher
stockholder approval.
- If you respond and do not indicate how you want to vote, your proxy will
be counted as a vote in favor of the merger. If you are a Fisher
stockholder, your proxy will also be counted as a vote in favor of the
other proposals submitted for Fisher stockholder approval.
- If you respond and abstain from voting, your proxy will have the same
effect as a vote against the merger. If you are a Fisher stockholder, it
will have the same effect as a vote against the other proposals submitted
for Fisher stockholder approval.
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Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: If you do not provide your broker with instructions on how to vote your
"street name" shares, your broker will not be permitted to vote them. You
should therefore be sure to provide your broker with instructions on how to
vote your shares.
If you do not give voting instructions to your broker, you will, in effect,
be voting against the merger unless you appear in person at your
stockholders' meeting and vote in favor of the merger.
Q: CAN I CHANGE MY VOTE AFTER I HAVE DELIVERED MY PROXY?
A: Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You can do this in one of three ways. First, you can
revoke your proxy. Second, you can submit a new proxy. Third, if you are a
holder of record, you can attend the special meeting and vote in person.
If you choose either of the first two methods (that is, revoke your proxy
or submit a new proxy), you must submit your notice of revocation or your
new proxy to the secretary of Fisher or PSS, as appropriate, before the
special meeting. If your shares are held in an account at a brokerage firm
or bank, you should contact your brokerage firm or bank to change your
vote.
If you submit your proxy or voting instructions electronically through the
Internet or by telephone, you can change your vote by submitting a proxy at
a later date, using the same procedures, in which case your later submitted
proxy will be recorded and your earlier proxy revoked.
Q: SHOULD I SEND IN MY PSS STOCK CERTIFICATES NOW?
A: No. After the merger is completed, you will receive written instructions
from the exchange agent on how to exchange your PSS stock certificates for
shares of Fisher common stock. Please do not send in your stock
certificates with your proxy.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We expect to complete the merger immediately after the special meetings.
Q: WILL THE RIGHTS OF PSS STOCKHOLDERS BEFORE THE MERGER BE DIFFERENT THAN
THEIR RIGHTS AS FISHER STOCKHOLDERS AFTER THE MERGER?
A: Yes. For a summary of material differences between the rights of PSS
stockholders and the rights of Fisher stockholders, see page 87.
Q: AM I ENTITLED TO APPRAISAL RIGHTS?
A: No. Neither holders of Fisher common stock nor holders of PSS common stock
are entitled to appraisal rights in connection with the merger.
Q: WHAT ARE MY TAX CONSEQUENCES AS A RESULT OF THE MERGER?
A: We have structured the merger as a "reorganization" for United States
federal income tax purposes so that the holders of PSS common stock will
not recognize gain or loss for United States federal income tax purposes as
a result of the exchange of their PSS common stock for Fisher common stock
in the merger, except with respect to cash received instead of fractional
shares of Fisher common stock. Each of Fisher and PSS has received an
opinion from its legal counsel to the effect that the merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code. These opinions assume that factual representations
made by the parties, which will be reconfirmed prior to the merger, are
true and correct. We describe the material U.S. federal income tax
consequences of the merger in more detail beginning on page 69, although
your tax consequences will depend upon the facts of your own situation. You
should consult your own tax advisor regarding the specific tax consequences
to you in light of your particular circumstances.
4
<PAGE> 13
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have any questions about the merger or how to submit your proxy, or
if you need additional copies of this joint proxy statement/prospectus or
the enclosed proxy card or voting instructions, you should contact:
IF YOU ARE A FISHER STOCKHOLDER:
Fisher Scientific International Inc.
One Liberty Lane
Hampton, New Hampshire 03842
Attention: Matthew Murphy
Telephone: (603) 929-2376
e-mail: [email protected]
IF YOU ARE A PSS STOCKHOLDER:
PSS World Medical, Inc.
4345 Southpoint Boulevard
Jacksonville, Florida 32216
Attention: David A. Smith
Telephone: (904) 332-3333
e-mail: [email protected]
5
<PAGE> 14
SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS
This summary highlights selected information in the joint proxy
statement/prospectus and may not contain all of the information that is
important to you. You should carefully read this entire joint proxy statement/
prospectus and the other documents we refer to for a more complete understanding
of the merger. In particular, you should read the documents attached to this
joint proxy statement/prospectus, including the merger agreement which is
attached as Annex A. In addition, we incorporate by reference important business
and financial information about Fisher and PSS into this joint proxy
statement/prospectus. You may obtain the information incorporated by reference
into this joint proxy statement/prospectus without charge by following the
instructions in the section entitled "Where You Can Find More Information" that
begins on page 98 of this joint proxy statement/prospectus.
THE COMPANIES
FISHER SCIENTIFIC INTERNATIONAL INC.
Fisher is a world leader serving science. The scientific research supply
market consists primarily of the manufacture, distribution and sourcing of a
wide range of scientific instruments, research chemicals, clinical consumables,
diagnostic reagents, laboratory workstations and other supplies and consumables
to a wide range of scientific research, industrial and educational customers
throughout the world. The worldwide market for those products is estimated at
$20 billion.
The clinical laboratory market consists primarily of the manufacturing,
distribution and sourcing of a broad range of clinical consumables, diagnostic
reagents, equipment and supplies to hospitals, independent clinical laboratories
and other healthcare providers in the United States. Fisher estimates that the
U.S. market for medical equipment and supplies is $40 billion. Fisher also
distributes and sources complementary products in the safety supply and
educational markets. The U.S. markets for these products are $7 billion and $0.4
billion, respectively.
Fisher integrates its web-enabled, electronic-commerce technology with its
sourcing and distribution activities to provide a seamless solution to its
customers. As a result of Fisher's broad product offering, integrated global
logistics network and electronic-commerce technology, Fisher serves as a
one-stop source for the scientific research and clinical laboratory needs of its
customers.
Fisher serves over 250,000 customers located in 145 countries. It has
operations in North and South America, Europe, the Far East, the Middle East and
Africa through subsidiaries, joint ventures, agents and dealers. Fisher was
incorporated in Delaware in 1991, although the business conducted by its
principal operating subsidiary, Fisher Scientific Company LLC, has been in
operation since 1902 and traces its roots to 1851. Over the last two years,
Fisher has completed nine acquisitions. Key acquisitions include, BioBlock
Scientific, a leading supplier of scientific research equipment in France;
Systems Manufacturing Corporation, a leading manufacturer of local area network
equipment storage devices; and a diagnostic product manufacturing plant located
in Middletown, Virginia.
PSS WORLD MEDICAL, INC.
PSS is a leading specialty marketer and distributor of medical supplies and
equipment to physicians, alternate-site imaging centers, long-term care
providers, home care providers, and hospitals through 101 service centers to
customers in all 50 states and four European countries. PSS is a leader in each
of the three market segments that it serves with a focused, market specific
approach to consultative sales, customer service, exclusive and non-exclusive
arrangements with medical supply and equipment manufacturers and private label
products.
PSS, through its Physician Sales & Service division, is a leading
distributor of medical supplies, equipment and pharmaceuticals to office-based
physicians in the United States based on revenues, number of physician-office
customers, number and quality of sales representatives, number of service
centers, and exclusively distributed products. This division serves
approximately 50% of all physician offices in the United States, a market that
PSS estimates is $4.4 billion. It currently operates 51 distribution centers
with approximately 735 sales representatives. Fiscal 2000 revenues for this
division were approximately $706 million.
6
<PAGE> 15
PSS, through its wholly owned subsidiary, Diagnostic Imaging, Inc., is a
leading distributor of medical diagnostic imaging supplies, equipment, and
service to acute care and alternate-care markets in the United States based on
revenues, number of service specialists, number of distribution centers, and
number of sales representatives. PSS currently operates 34 imaging distribution
and service centers with over 900 service technicians and 230 sales
representatives serving over 45,000 customer sites in 42 states. The market for
imaging supplies, equipment and service is estimated by PSS at approximately $10
billion comprising 5,000 acute care hospitals, 3,000 imaging centers and 100,000
private practice physicians, veterinarians and chiropractors. Fiscal 2000
revenues for this subsidiary were approximately $701 million.
PSS, through its wholly owned subsidiary, Gulf South Medical Supply Inc.,
is a leading national distributor of medical supplies and related products to
the long-term care industry in the United States based on revenues, number of
sales representatives, and number of service centers. It operates 14
distribution service centers serving over 14,000 long-term care accounts in all
50 states through 131 sales representatives. The long-term care market is
estimated by PSS at $2.5 billion, and providers consist of a large number of
independent operators, small to mid-sized local and regional chains, and several
national chains. Fiscal 2000 revenues for this subsidiary were approximately
$363 million.
Recent Developments. For the quarter ended June 30, 2000, PSS reported
sales of $470 million, PSS EBITDA of $21 million and net income of $6 million,
compared with $437 million, $27 million and $10 million for the comparable
period in 1999. PSS EBITDA, as defined in footnote (c) on page 18 of this joint
proxy statement/prospectus, is net income plus income taxes, interest expense,
depreciation and amortization and excludes unusual and non-recurring items.
PSS's EBITDA for the quarter ended June 30, 2000, calculated in accordance with
the merger agreement, was $23.6 million.
For the fiscal year ended March 31, 2000, PSS reported sales of $1,794
million, PSS EBITDA of $70 million and net income of $21 million compared with
$1,565 million, $104 million and $44 million for the fiscal year ended April 2,
1999. PSS's financial results for fiscal year 2000 were negatively affected by
accounts receivable write-offs and reserves in the long-term care business due
to more stringent federal reimbursement regulations, manufacturing and product
recall issues faced by two key vendors, and the announcement in January 2000
that PSS was pursuing strategic alternatives which resulted in the merger.
STRATEGY
Fisher believes that by leveraging the strengths of Fisher and PSS, two
market leaders, the combined company will be better positioned to capitalize on
recent industry trends and realize increased stockholder value through greater
earnings growth and profitability than Fisher and PSS would be individually. To
achieve these goals, the combined company will pursue the following strategies:
- utilize the broad product and service offering of the combined company to
attract new customers and increase sales;
- expand its global product offering and strengthen its global supplier
relationships;
- bring Fisher's financial control, logistics infrastructure and technology
strength to PSS's sales and marketing expertise;
- exploit enhanced electronic-commerce capabilities;
- build on Fisher's international presence to expand PSS's overseas
opportunities; and
- continue to exploit strategic sourcing opportunities through increased
use of private label and self-manufactured products.
7
<PAGE> 16
THE MERGER
RECENT DEVELOPMENTS REGARDING THE MERGER
The obligation of Fisher to complete the merger is subject to the
satisfaction or waiver by Fisher of various conditions, including conditions
that:
- PSS's 2000 first quarter EBITDA, as defined in the merger agreement,
exceed $23 million. Under the merger agreement, PSS's 2000 first quarter
EBITDA is calculated as operating income plus (a) one-time merger and
restructuring charges, (b) trade receivables financing income and
(c) depreciation and amortization. This definition is different from the
"PSS EBITDA" definition used elsewhere in this joint proxy
statement/prospectus. On August 8, 2000, PSS reported its 2000 first
quarter EBITDA of $23.6 million and, thus, PSS has satisfied this
condition.
- PSS's representation and warranty that there be no adverse change that is
material to PSS in any of its relationships with its customers or
suppliers and that no such customer or supplier indicates that it seeks
such a change is true as of the closing date. Following the announcement
of the merger on June 22, 2000, Abbott Laboratories Inc., one of PSS's
largest suppliers, has required PSS to renegotiate terms of its agreement
for Abbott Laboratories not to exercise any termination right it has in
connection with the merger.
- PSS's representation and warranty that the implementation by PSS of J.D.
Edwards & Company's One World ERP System, and the conversion of PSS's
current systems to this ERP system, proceed substantially in accordance
with the roll-out schedule set forth in the merger agreement, and such
implementation and conversion has not materially adversely affected PSS's
business and operation is true as of the closing date. Fisher has not yet
completed its evaluation of the status of the implementation of this ERP
system or its impact on PSS's business.
8
<PAGE> 17
THE STRUCTURE OF THE MERGER (SEE PAGE 68)
Fisher formed a new company that will merge with and into PSS, with PSS as
the surviving corporation. As a result of the merger, PSS will become a wholly
owned subsidiary of Fisher. Fisher stockholders will retain their shares of
Fisher common stock, and PSS stockholders will receive newly-issued shares of
Fisher common stock. We intend to account for the merger under the purchase
method of accounting for business combinations.
The organization of the companies before and after the merger is
illustrated below:
BEFORE THE MERGER
[CHART]
AFTER THE MERGER
[CHART]
WHAT YOU WILL RECEIVE (SEE PAGE 68)
Fisher Stockholders. Fisher stockholders will not receive any additional
shares in connection with the merger. Other than dilution from the issuance of
new shares of Fisher common stock to PSS stockholders, the merger will have no
impact on the holdings of Fisher stockholders. Fisher stockholders will own
approximately 64.4% of the common stock of Fisher after consummation of the
merger.
PSS Stockholders. Each share of PSS common stock that you own at the
effective time of the merger will convert into the right to receive 0.3121 of a
share of Fisher common stock. However, Fisher will not issue fractional shares.
Instead, PSS stockholders will receive the value of any fractional share in
cash. PSS stockholders will own approximately 35.6% of the common stock of
Fisher after consummation of the merger.
RECOMMENDATION OF THE BOARDS OF DIRECTORS AND OPINIONS OF FINANCIAL ADVISORS
(SEE PAGE 55)
To Fisher Stockholders: The Fisher board of directors believes that the
merger is fair to you and in your best interest and unanimously voted to approve
the merger agreement and unanimously recommends that you vote FOR the approval
of the issuance of Fisher common stock pursuant to the merger agreement.
9
<PAGE> 18
To PSS Stockholders: The PSS board of directors believes that the merger is
fair to you and in your best interest and voted to approve the merger agreement
and recommends that you vote FOR the approval and adoption of the merger
agreement.
Opinion of Fisher's Financial Advisor. In deciding to approve the merger,
the Fisher board of directors considered the opinion of its financial advisor,
Lazard Freres & Co. LLC, or Lazard, that, as of the date of its opinion, and
subject to and based on the considerations referred to in its opinion, the
exchange ratio at which PSS common stock will be converted into the right to
receive Fisher common stock is fair, from a financial point of view, to Fisher.
The full text of this opinion is attached as Annex D to this joint proxy
statement/prospectus. FISHER URGES ITS STOCKHOLDERS TO READ THE OPINION OF
LAZARD IN ITS ENTIRETY.
Opinion of PSS's Financial Advisor. In deciding to approve the merger, the
PSS board of directors considered the opinion of its financial advisor,
Donaldson, Lufkin & Jenrette Securities Corporation, or DLJ, that, as of the
date of its opinion, and subject to and based on the assumptions, limitations
and qualifications referred to in its opinion, the consideration to be received
by the holders of PSS common stock pursuant to the merger agreement was fair,
from a financial point of view, to such holders. The full text of this opinion
is attached as Annex E to this joint proxy statement/prospectus. PSS URGES ITS
STOCKHOLDERS TO READ THE OPINION OF DLJ IN ITS ENTIRETY. Affiliates of DLJ own
15.1% of the common stock of Fisher, which will be reduced to 9.7% after giving
effect to the merger.
APPRAISAL RIGHTS (SEE PAGE 71)
Neither PSS stockholders nor Fisher stockholders will have appraisal rights
in connection with the merger.
THE SPECIAL MEETINGS (SEE PAGE 45)
Special Meeting of Fisher's Stockholders. The Fisher special meeting will
be held at the Mellon Bank Building, 8 Loockerman Street, Dover, Delaware 19904
on , 2000, starting at 10:00 a.m., local time.
Special Meeting of PSS's Stockholders. The PSS special meeting will be held
at the corporate offices of PSS World Medical, Inc., 4345 Southpoint Boulevard,
Jacksonville, Florida 32216 on , 2000, starting at 10:00 a.m., local
time.
BOARD OF DIRECTORS OF FISHER FOLLOWING THE MERGER (SEE PAGE 97)
Following the merger, Fisher's directors will consist of its nine current
directors, Messrs. Paul Montrone, Paul Meister, Mitchell Blutt, Robert Day,
Michael Dingman, Anthony DiNovi, David Harkins, Scott Sperling and Kent Weldon.
In addition, Fisher has agreed to appoint Hugh Brown to serve as a director of
Fisher with a term expiring in 2001 and Patrick Kelly to serve as a director
with a term expiring in 2003. Messrs. Brown and Kelly are currently directors of
PSS. If necessary for the appointment of Messrs Brown and Kelly, Fisher will
increase the size of its board from nine persons to eleven persons.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER (SEE PAGE 65)
Some of the directors and executive officers of PSS have interests in the
merger that are different from, or are in addition to, the interests of their
company's stockholders. These interests include the potential for positions as
directors or executive officers of Fisher, payments in consideration for
restrictive covenants agreements, entitlement to certain benefits upon PSS's
change of control, and the right to continued indemnification and insurance
coverage by Fisher for acts or omissions occurring prior to the merger.
TREATMENT OF STOCK OPTIONS AND OTHER EQUITY RIGHTS (SEE PAGE 69)
When the merger is completed, each outstanding PSS stock option or other
equity right will be converted into an option or equity right to purchase the
number of shares of Fisher common stock that is equal to the product of 0.3121
multiplied by the number of shares of PSS common stock that would have been
obtained before the merger upon the exercise of the option or equity right,
rounded to the nearest whole share. The exercise
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<PAGE> 19
price per share will be equal to the exercise price per share of PSS common
stock subject to the option or other equity right before the conversion divided
by 0.3121.
TAX CONSEQUENCES (SEE PAGE 69)
We have structured the merger so PSS stockholders who exchange their shares
for shares of Fisher capital stock will not recognize gain or loss for United
States federal income tax purposes in connection with the merger, except for
taxes payable because of cash received by PSS stockholders instead of fractional
shares.
Tax matters are very complicated and the tax consequences of the merger to
you will depend on the facts of your own situation. You should consult your own
tax advisors for a full understanding of the tax consequences of the merger to
you.
OVERVIEW OF THE MERGER AGREEMENT (SEE PAGE 71)
Conditions to the Completion of the Merger. Each of Fisher's and PSS's
obligation to complete the merger is subject to the satisfaction or waiver of
specified conditions, including those listed below:
- the merger agreement must be approved and adopted by PSS stockholders;
- the issuance of shares of Fisher common stock pursuant to the merger
agreement must be approved by Fisher stockholders;
- no law, injunction or order preventing the completion of the merger may
be in effect;
- the applicable waiting period under U.S. antitrust laws must expire or be
terminated;
- other required regulatory approvals from governmental entities must be
obtained;
- each of PSS and Fisher must have complied with its respective covenants
in the merger agreement;
- each of PSS's and Fisher's respective representations and warranties in
the merger agreement must be true and correct in all material respects as
of the closing date; and
- each of PSS and Fisher must receive an opinion of tax counsel to the
effect that the merger will qualify as a tax-free reorganization.
Additionally, Fisher's obligation to complete the merger is also subject to
the condition that EBITDA (earnings before interest expense, income taxes,
depreciation and amortization), after making certain adjustments described in
the merger agreement, of PSS for the quarter ended June 30, 2000 exceeds $23.0
million. Based on PSS's reported results for this quarter, as adjusted pursuant
to the merger agreement, this condition has been satisfied.
Two of PSS's representations and warranties that must be true and correct
in all material respects as a condition to Fisher's obligation to consummate the
merger are the following:
- since December 31, 1999, there has been no adverse change that is
material to PSS in the relationship of PSS with its customers or
suppliers and no such customer or supplier has indicated that it intends
to seek such a change; and
- the implementation by PSS of J.D. Edwards & Company's One World ERP
System, and the conversion of PSS's current systems to this ERP System,
have proceeded in accordance with PSS's roll-out schedule, and there is
no indication that such implementation and conversion have adversely
affected or will adversely affect in any material respect PSS's business
and operations.
There is no guarantee that these conditions will be satisfied.
Termination of the Merger Agreement. Fisher and PSS can jointly agree to
terminate the merger agreement at any time. Either company may also terminate
the merger agreement if:
- the merger is not completed (1) on or before January 15, 2001, if the
Securities and Exchange Commission has declared effective the
Registration Statement of which this joint proxy statement/
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<PAGE> 20
prospectus forms a part by December 1, 2000, or (2) on or before March
31, 2001, if the Registration Statement has not been declared effective
by December 1, 2000, unless the reason for the delay is a breach under
the merger agreement by the party seeking to terminate;
- government actions do not permit the completion of the merger;
- if the conditions to the company's obligations to complete the merger
cannot be satisfied before the applicable termination date set forth
above, so long as the terminating company is not then in material breach
of any representation, warranty or covenant in the merger agreement; or
- the other company breaches its representations, warranties or covenants
in the merger agreement in a material way.
PSS may also terminate the merger agreement if its board of directors
approves an unsolicited alternative acquisition proposal that is permitted by
the merger agreement and PSS pays the prescribed termination fee to Fisher.
Fisher may terminate the merger agreement if PSS's board of directors
withdraws, modifies or changes its recommendation of the merger or approves or
recommends an alternative acquisition proposal.
Termination Fees. The merger agreement provides that in several
circumstances, PSS may be required to pay termination fees to Fisher as follows:
- PSS is obligated to pay a termination fee of $28.5 million to Fisher and
to reimburse Fisher's expenses up to $4.5 million:
- If PSS terminates the merger agreement because it has approved or
recommended an alternative unsolicited acquisition proposal, which
approval or recommendation may occur only if PSS terminates the
merger agreement and pays the termination fee and reimburses
Fisher's expenses;
- If Fisher terminates the merger agreement because (1) the PSS Board
fails to recommend the merger to PSS stockholders or withdraws or
qualifies any such recommendation or (2) the PSS Board approves or
recommends an alternative unsolicited acquisition proposal; or
- If Fisher terminates the merger agreement because (1) PSS has
knowingly or willfully breached any of its representations,
warranties, covenants or agreements or failed to satisfy Fisher's
conditions precedent as a result of such a knowing or willful breach
and (2) an alternative transaction is announced or communicated to
PSS shareholders prior to such termination and PSS enters into a
definitive agreement or consummates an alternative transaction
within one year of such termination.
- PSS is obligated to pay Fisher's expenses up to $4.5 million in the event
that PSS has complied with its obligations regarding the non-solicitation
of alternative proposals, but the merger agreement is terminated because
the PSS stockholders do not vote in favor of the merger.
"No Solicitation" Provisions. The merger agreement prohibits PSS from
seeking an alternative transaction. These "no solicitation" provisions prohibit
PSS, as well as its officers, directors, subsidiaries and representatives, from
taking any action to solicit an acquisition proposal as described on page 73.
The merger agreement does not, however, prohibit PSS or its board of directors
from considering, and potentially recommending, an unsolicited bona fide written
superior proposal from a third party as described on pages 73 through 74.
Regulatory Matters. Pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act, the merger cannot be completed until after we have given
certain information and materials to the Antitrust Division of the Department of
Justice and the Federal Trade Commission and a required waiting period has
expired or been terminated. We expect to submit the pre-merger notification and
report forms at the end of August 2000. The waiting period will expire one month
following the filings unless the Department of Justice or the Federal Trade
Commission requests additional information or has concerns regarding the
proposed merger.
Effectiveness of Registration Statement. The registration statement of
Fisher (of which this joint proxy statement/prospectus is a part) must be
declared effective by the Securities and Exchange Commission.
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<PAGE> 21
Effectiveness of the registration statement must not have been revoked or
suspended and no stop order may be issued preventing the issuance of shares of
Fisher common stock in the merger.
Accounting Treatment. We intend to account for the merger under the
purchase method of accounting for business combinations.
Completion and Effectiveness of the Merger. We will complete the merger
when all of the conditions to completion of the merger are satisfied or waived
in accordance with the merger agreement. The merger will become effective when
we file articles of merger with the Secretary of State of the State of Florida.
We expect to complete the merger during the fourth quarter of 2000.
STOCK OPTION AGREEMENT (SEE PAGE 78)
PSS has granted Fisher an option to purchase up to 19.9% of its shares of
common stock at a price of $11.00 per share. The option becomes exercisable
under certain circumstances relating to another person pursuing an alternative
acquisition proposal with PSS.
VOTING AGREEMENT (SEE PAGE 80)
In a voting agreement with PSS, several stockholders of Fisher have agreed
to vote all their shares of Fisher common stock in favor of the approval of the
issuance of Fisher common stock pursuant to the merger agreement. As of June 21,
2000, these stockholders owned 14,380,166 shares of Fisher common stock,
representing approximately 53% of the outstanding shares of Fisher common stock
entitled to vote at the Fisher special meeting.
MARKET PRICE INFORMATION
Shares of Fisher and PSS common stock are traded on the New York Stock
Exchange and the Nasdaq National Market, respectively. On June 21, 2000, the
last trading day before the public announcement of the merger, Fisher common
stock closed at $38.00 per share and PSS common stock closed at $9.875 per
share. Based on the PSS common stock exchange ratio of 0.3121, the pro forma
equivalent per share value of the PSS common stock on June 21, 2000 was equal to
approximately $11.86 per share. On , 2000, Fisher common stock
closed at $ per share and PSS common stock closed at $ per share.
The pro forma equivalent per share value of the PSS common stock on
, 2000 was approximately $ per share.
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<PAGE> 22
SELECTED HISTORICAL FINANCIAL DATA OF FISHER
The selected historical financial data of Fisher has been derived from the
audited historical consolidated financial statements and related notes of Fisher
for each of the years in the five-year period ended December 31, 1999 and the
unaudited consolidated financial statements for the six months ended June 30,
2000 and 1999. The historical data is only a summary, and you should read it in
conjunction with the historical financial statements and related notes contained
in the annual and quarterly reports of Fisher which have been incorporated by
reference into this joint proxy statement/prospectus.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- --------------------------------------------------------
2000 1999 1999 1998(b) 1997 1996 1995(a)
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales.................................. $1,291.9 $1,216.4 $2,469.7 $2,252.3 $2,175.3 $2,144.4 $1,435.8
Cost of sales.......................... 930.2 867.4 1,771.4 1,616.0 1,583.6 1,565.9 1,048.9
-------- -------- -------- -------- -------- -------- --------
Gross profit........................... 361.7 349.0 698.3 636.3 591.7 578.5 386.9
Selling, general and administrative
expense.............................. 281.5 269.0 541.7 503.8 518.8 483.9 334.4
Restructuring and other charges (c).... -- -- (1.5) 23.6 51.8 -- 34.3
Recapitalization-related costs (d)..... -- -- -- 71.0 -- -- --
Loss from operations to be disposed of
(e).................................. -- 10.8 11.3 15.1 -- -- --
-------- -------- -------- -------- -------- -------- --------
Income from operations................. 80.2 69.2 146.8 22.8 21.1 94.6 18.2
Interest expense....................... 50.6 52.7 104.2 90.3 23.0 27.1 15.0
Other (income) expense, net............ (3.0) (5.2) (15.2) (7.2) 3.2 (0.1) (1.1)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes...... 32.6 21.7 57.8 (60.3) (5.1) 67.6 4.3
Provision (benefit) for income taxes... 14.7 12.6 34.4 (10.8) 25.4 30.8 1.1
-------- -------- -------- -------- -------- -------- --------
Net income (loss)...................... $ 17.9 $ 9.1 $ 23.4 $ (49.5) $ (30.5) $ 36.8 $ 3.2
======== ======== ======== ======== ======== ======== ========
Earnings (loss) per common share:
Basic................................ $ 0.45 $ 0.23 $ 0.59 $ (1.24) $ (0.30) $ 0.40 $ 0.04
Diluted.............................. $ 0.40 $ 0.21 $ 0.55 $ (1.24) $ (0.30) $ 0.38 $ 0.04
Weighted average common shares
outstanding:
Basic................................ 40.1 40.0 40.0 40.0 101.5 91.5 81.0
Diluted.............................. 44.6 42.4 42.8 40.0 101.5 102.5 81.0
Dividends declared per common share.... -- -- -- -- $ 0.012 $ 0.016 $ 0.016
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------------------------------------------------
2000 1999 1998(b) 1997 1996 1995(a)
-------- -------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................................... $ 125.9 $ 115.3 $ 107.9 $ 237.5 $ 259.8 $ 284.0
Total assets (f).................................. 1,403.5 1,402.6 1,357.6 1,176.5 1,262.7 1,270.5
Long-term liabilities............................. 1,211.3 1,213.7 1,229.1 474.5 483.5 654.9
Stockholders' equity (deficit).................... (322.3) (330.6) (324.7) 347.1 386.2 226.0
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- --------------------------------------------------------
2000 1999 1999 1998(b) 1997 1996 1995(a)
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
Earnings (loss) per common share,
excluding goodwill amortization (g):
Basic................................ $0.59 $0.40 $0.90 $ (1.03) $(0.22) $0.50 $ 0.10
Diluted.............................. 0.53 0.38 0.84 (1.03) (0.22) 0.46 0.10
Fisher EBITDA (h)...................... 112.2 106.8 221.1 167.5 137.2 157.2 98.4
Depreciation and amortization (i)...... 29.1 29.5 58.5 50.7 47.0 44.6 28.9
Capital expenditures................... 12.5 20.6 41.1 67.2 59.2 40.7 24.6
Cash flows provided by (used in):
Operating activities................. 22.8 (9.4) 121.3 149.9 46.1 49.0 54.9
Investing activities................. (38.5) (56.8) (62.5) (231.8) (50.7) (42.0) (332.8)
Financing activities................. 18.1 33.4 (74.1) 129.3 (1.9) (46.0) 304.7
</TABLE>
14
<PAGE> 23
---------------
(a) On October 17, 1995, Fisher acquired Curtin Matheson Scientific ("CMS") and
Fisons Scientific Equipment ("FSE") from Fisons. The operations of CMS and
FSE have been included in the consolidated financial statements from the
date of acquisition.
(b) On January 21, 1998, Fisher was recapitalized in a transaction whereby
approximately 87% of the fully diluted shares of common stock of Fisher were
converted into the right to receive $9.65 per share in cash (the
"Recapitalization") and, in connection with the Recapitalization, Fisher
entered into new debt financing arrangements, all of which is more fully
described in Notes 2 and 12 to the Financial Statements included in Form
10-K for the year ended December 31, 1999, which has been incorporated by
reference into this joint proxy statement/prospectus.
(c) During the third quarter of 1995, Fisher recorded a $34.3 million ($20.3
million, net of tax) restructuring charge. The charge is primarily related
to Fisher's long-term restructuring plan which includes the elimination, and
in some cases relocation, of certain administrative functions, a sales force
reorganization, and the global consolidation of certain domestic, Canadian
and international logistics and customer service facilities and systems.
During the fourth quarter of 1997, Fisher recorded $51.8 million ($47.0
million, net of tax) of restructuring and other charges. These charges
include costs associated with the closure of additional logistics and
customer-service centers and related asset write-offs in the United States
and internationally, the impairment of goodwill and property, plant and
equipment related to certain international operations and the impairment of
systems-related assets. During the fourth quarter of 1998, Fisher recorded
$23.6 million ($17.0 million net of tax) of restructuring and other charges.
These charges include asset impairment charges in the United States and Asia
and personnel reductions in the United States and Europe.
(d) In connection with the Recapitalization of Fisher on January 21, 1998,
Fisher recorded $71.0 million ($43.3 million after tax) of expenses
consisting primarily of noncash compensation expenses relating to the
conversion of employee stock options, the implementation of certain
executive severance agreements and the grant of options to certain
executives in accordance with the terms of the Recapitalization.
(e) Loss from operations to be disposed of includes a $5.2 million write-off of
in-process research and development costs associated with an acquisition in
the first quarter of 1999, and a $2.6 million charge for restructuring and
asset impairment costs in 1998.
(f) Excludes the net amount of accounts receivable sold under the accounts
receivable securitization facility of $40.7 million, $21.7 million and
$105.2 million at June 30, 2000, December 31, 1999 and December 31, 1998,
respectively.
(g) Amount is calculated by adding the amount of goodwill amortization, net of
tax, recognized during the period shown to net income (loss) divided by the
weighted average number of shares of common stock outstanding. Although the
presentation of earnings per common share excluding goodwill amortization
should not be considered an alternative to earnings per share as a measure
of operating results or to cash flows as a measure of liquidity in
accordance with generally accepted accounting principles, management
believes that this data provides a more comparable measure of the company's
earnings versus companies that account for acquisitions using the
pooling-of-interests method.
(h) "Fisher EBITDA" is defined in accordance with the Indenture for Fisher's 9%
Senior Subordinated Notes due 2008 as net income plus income taxes, interest
expense, depreciation and amortization and excludes unusual and nonrecurring
items, as described below. Fisher EBITDA is used here because Fisher
believes that it is an indicator of its ability to service existing and
future indebtedness. However, Fisher EBITDA should not be considered as an
alternative to net income as a measure of operating results or to cash flows
as a measure of liquidity in accordance with generally accepted accounting
principles. Fisher's computation of Fisher EBITDA may not be comparable to
similarly titled measures of other companies. Fisher EBITDA is calculated as
follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------
2000 1999 1999 1998 1997 1996 1995(a)
---------- ------ ------ ------ ------ ------ -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income (loss)........................ $ 17.9 $ 9.1 $ 23.4 $(49.5) $(30.5) $ 36.8 $ 3.2
Income tax provision (benefit)........... 14.7 12.6 34.4 (10.8) 25.4 30.8 1.1
Interest expense......................... 50.6 52.7 104.2 90.3 23.0 27.1 15.0
Depreciation and amortization (i)........ 29.1 29.5 58.5 50.7 47.0 44.6 28.9
------ ------ ------ ------ ------ ------ -----
Sub-total EBITDA....................... 112.3 103.9 220.5 80.7 64.9 139.3 48.2
Restructuring and other charges (c)...... -- -- (1.5) 23.6 51.8 -- 34.3
Recapitalization-related compensation
charges (d)............................ -- -- -- 71.0 -- -- --
Nonrecurring charges in loss from
operations to be disposed of (e)....... -- 5.2 5.2 3.5 -- -- --
Nonrecurring charges in selling, general
and administrative expense (1)......... 0.2 1.2 2.2 7.6 29.8 18.2 14.5
Nonrecurring charges in cost of sales
(1).................................... -- -- 5.3 2.7 6.7 1.2 1.2
Other items in other (income) expense
(2).................................... (0.1) (2.3) (6.8) (1.8) 3.7 (1.5) 0.2
Adjustment to restructuring and
nonrecurring charges (3)............... (0.2) (1.2) (3.8) (23.6) (19.7) -- --
Management compensation.................. -- -- -- 3.8(4) -- -- --
------ ------ ------ ------ ------ ------ -----
Fisher EBITDA............................ $112.2 $106.8 $221.1 $167.5 $137.2 $157.2 $98.4
====== ====== ====== ====== ====== ====== =====
</TABLE>
-------------------
(1) Selling, general and administrative expense and cost of sales include
nonrecurring and redundant costs associated with the implementation of
Fisher's long-term restructuring plan discussed in footnote (b) above,
Fisher's integration with CMS, management retention payments in 1998
and, in 1997, actions taken to improve operating efficiencies, software
write-offs and other information system-related charges associated with
Fisher's implementation of new global computer systems and an increase
in costs attributable to a UPS strike in 1997.
15
<PAGE> 24
(2) Includes certain gains on the sale of property, plant and equipment,
primarily related to Fisher's long-term restructuring plan, sales of
non-core assets and the disposition of Fisher's technology business
segment, gains and losses due to fluctuations in currency values and
certain costs incurred in 1997 related to Fisher's review of strategic
alternatives.
(3) The indenture for Fisher's 9% Senior Subordinated Notes due 2008 limits
the amount of nonrecurring and restructuring charges that can be
excluded from Fisher EBITDA. These amounts represent the excess of those
charges over the limit.
(4) The indenture calls for the add-back of certain senior management
compensation paid in the first quarter of 1998. Accordingly, $3.8
million was added to Fisher EBITDA for 1998.
(i) Excludes amortization of financing costs which is included in interest
expense.
16
<PAGE> 25
SELECTED HISTORICAL FINANCIAL DATA OF PSS
The selected historical financial data of PSS has been derived from the
audited historical consolidated financial statements and related notes of PSS
for each of the fiscal years in the five-year period ended March 31, 2000 and
the unaudited condensed consolidated financial statements for the three months
ended June 30, 2000 and 1999. The historical data is only a summary, and you
should read it in conjunction with the historical financial statements and
related notes contained in the annual and quarterly reports of PSS which have
been incorporated by reference into this joint proxy statement/prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED FISCAL YEAR ENDED
-------------------- -----------------------------------------------------------
JUNE 30, JUNE 30, MARCH 31, APRIL 2, APRIL 3, MARCH 28, MARCH 29,
2000 1999 2000 1999 1998 1997 1996
-------- -------- --------- -------- -------- --------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales........................ $ 470.2 $ 437.0 $1,793.5 $1,564.5 $1,381.8 $1,166.3 $ 719.2
Gross profit..................... 113.1 107.2 472.4 421.9 365.8 286.2 194.7
Selling, general and
administrative expense......... 99.1 85.3 427.7 348.1 333.7 269.1 177.8
Income before cumulative effect
of accounting change........... 5.6 11.7 22.2 43.7 15.3 13.3 10.7
Cumulative effect of accounting
change (a)..................... -- (1.5) (1.5) -- -- -- --
Net income....................... 5.6 10.2 20.7 43.7 15.3 13.3 10.7
Basic earnings per share:
Income before cumulative effect
of accounting change......... $ 0.08 $ 0.16 $ 0.31 $ 0.62 $ 0.22 $ 0.20 $ 0.19
Net income..................... $ 0.08 $ 0.14 $ 0.29 $ 0.62 $ 0.22 $ 0.20 $ 0.19
Diluted earnings per share:
Income before cumulative effect
of accounting change......... $ 0.08 $ 0.16 $ 0.31 $ 0.61 $ 0.22 $ 0.20 $ 0.19
Net income..................... $ 0.08 $ 0.14 $ 0.29 $ 0.61 $ 0.22 $ 0.20 $ 0.19
Weighted average shares
outstanding:
Basic.......................... 71.1 70.8 71.0 70.5 69.6 66.2 55.8
Diluted........................ 71.3 71.2 71.2 71.4 70.5 67.0 57.4
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, MARCH 31, APRIL 2, APRIL 3, MARCH 28, MARCH 29,
2000 2000 1999 1998 1997 1996
-------- --------- -------- -------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.............................. $387.3 $414.1 $355.3 $376.2 $267.8 $211.8
Total assets................................. 844.0 873.4 743.4 686.7 510.4 351.6
Long-term liabilities........................ 235.2 262.2 155.6 138.2 8.5 10.6
Total equity................................. 444.0 439.6 416.6 380.1 350.4 242.1
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED FISCAL YEAR ENDED
-------------------- ---------------------------------
JUNE 30, JUNE 30, MARCH 31, APRIL 2, APRIL 3,
2000 1999 2000 1999 1998
-------- -------- --------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
Earnings per common share, excluding goodwill amortization
(b):
Basic.................................................... $ 0.09 $ 0.16 $ 0.36 $ 0.67 $ 0.24
Diluted.................................................. 0.09 0.16 0.36 0.66 0.24
PSS EBITDA (c)............................................. 20.9 27.4 69.9 103.8 59.1
Depreciation and amortization.............................. 5.5 4.5 20.3 19.5 10.7
Capital expenditures....................................... 4.4 5.1 27.2 24.8 10.5
Cash flows provided by (used in):
Operating activities..................................... 12.9 16.7 17.0 (18.7) 27.9
Investing activities..................................... (4.6) (27.8) (94.3) (28.9) (48.0)
Financing activities..................................... (26.9) 8.9 96.7 7.6 64.0
</TABLE>
17
<PAGE> 26
---------------
(a) PSS adopted Staff Accounting Bulletin ("SAB") No. 101 in fiscal year 2000.
The impact of SAB No. 101 on fiscal years 1999, 1998, 1997, and 1996 is not
material to the consolidated financial statements of PSS taken as a whole.
(b) Amount is calculated by adding the amount of goodwill amortization, net of
tax, recognized during the period shown to net income divided by the
weighted average number of shares of common stock outstanding. Although the
presentation of earnings per common share excluding goodwill amortization
should not be considered an alternative to earnings per share as a measure
of operating results or to cash flows as a measure of liquidity in
accordance with generally accepted accounting principles, management
believes that this data provides a more comparable measure of the company's
earnings versus companies that account for acquisitions using the
pooling-of-interests method.
(c) PSS EBITDA, as presented in this joint proxy statement/prospectus, has been
restated from the amounts shown in PSS's Annual Report on Form 10-K and
other previously-reported results to conform to Fisher's presentation of the
Fisher EBITDA. Accordingly, PSS EBITDA is defined as net income plus income
taxes, interest expense, depreciation and amortization and excludes unusual
and nonrecurring items, as described below. PSS EBITDA is presented here
because Fisher believes that PSS EBITDA should be presented in a manner
consistent with Fisher EBITDA, which are indicators of the combined
company's ability to service debt. However, PSS EBITDA should not be
considered as an alternative to net income as a measure of operating results
or to cash flows as a measure of liquidity in accordance with generally
accepted accounting principles. PSS's computation of PSS EBITDA may not be
comparable to similarly titled measures of other companies. PSS EBITDA is
calculated as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED FISCAL YEAR ENDED
-------------------- ---------------------------------
JUNE 30, JUNE 30, MARCH 31, APRIL 2, APRIL 3,
2000 1999 2000 1999 1998
-------- -------- --------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net income.............................................. $ 5.6 $10.2 $20.7 $ 43.7 $15.3
Income tax provision (1)................................ 4.8 9.2 20.3 29.9 17.4
Interest expense........................................ 5.0 3.5 15.5 11.5 7.5
Depreciation and amortization........................... 5.5 4.5 20.3 19.5 10.7
----- ----- ----- ------ -----
Sub-total EBITDA...................................... 20.9 27.4 76.8 104.6 50.9
Restructuring and other charges (2)..................... -- (0.2) 4.5 1.5 9.5
Nonrecurring charges in selling, general and
administrative expense (3)............................ 3.6 1.1 26.3 8.8 22.5
Other items in other income (4)......................... -- -- (7.4) (0.8) --
Adjustment to restructuring and nonrecurring charges
(5)................................................... (3.6) (0.9) (30.3) (10.3) (23.8)
----- ----- ----- ------ -----
PSS EBITDA.............................................. $20.9 $27.4 $69.9 $103.8 $59.1
===== ===== ===== ====== =====
</TABLE>
-------------------
(1) Income tax provision for the three months ended June 30, 1999 and fiscal
year 2000 includes $1.0 million related to the cumulative effect of an
accounting change.
(2) During fiscal years 2000, 1999, and 1998, restructuring costs and
expenses of $4.0 million, $1.5 million, and $3.7 million, respectively,
were recorded. These costs were accrued as part of formal plans to
restructure operations and primarily relate to branch shutdown costs,
lease termination costs, and involuntary employee termination costs.
During the fourth quarter of fiscal year 2000, a $0.5 million goodwill
impairment charge as determined under Statement of Financial Accounting
Standards No. 121 resulting from the closure of an Imaging Business
facility was recorded. During fiscal year 1998, a $5.8 million goodwill
impairment charge related to three foreign acquired companies and one
Physician business acquired company was recorded.
(3) Includes (i) nonrecurring costs primarily associated with exit costs
related to restructuring plans that were not accruable at the time of
plan adoption, (ii) costs related to merger activity and related
integration plans and (iii) operational tax compliance charge at the
Gulf South subsidiary.
(4) Includes gains on asset sales and $6.5 million received related to a
favorable medical x-ray film antitrust settlement in the second quarter
of fiscal 2000.
(5) The indenture for Fisher's 9% Senior Subordinated Notes due 2008 limits
the amount of nonrecurring and restructuring charges that can be
excluded from Fisher EBITDA. Since PSS EBITDA is being presented in
conformity with the Fisher EBITDA, these amounts represent the excess of
those charges over the limit in Fisher's indenture.
18
<PAGE> 27
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements have been
prepared to give effect to Fisher's acquisition of PSS, which will be accounted
for using the purchase method of accounting. The total estimated purchase price
has been allocated on a preliminary basis to assets and liabilities based on
information that was available to management at the time these pro forma
financial statements were prepared. The adjustments to the unaudited pro forma
combined financial statements are subject to change pending a final analysis of
the total purchase price and the fair value of the assets and liabilities
assumed. The impact of these changes could be material. Estimates of acquisition
liabilities relating to the integration of PSS with Fisher's operations are not
reflected in the unaudited pro forma combined balance sheet as the integration
plans have not been finalized.
The unaudited pro forma combined balance sheet as of June 30, 2000 combines
the historical consolidated balance sheet of Fisher and PSS as of that date and
gives pro forma effect to the acquisition as if the acquisition had occurred on
June 30, 2000.
The unaudited pro forma combined statement of operations for the six months
ended June 30, 2000 and for the year ended December 31, 1999 give pro forma
effect to the acquisition as if the acquisition had occurred on the first day of
the periods presented. The unaudited pro forma combined statement of operations
for the six months ended June 30, 2000 combines the historical financial
statements of Fisher and PSS for the six months ended June 30, 2000. The
unaudited pro forma combined statement of operations for the year ended December
31, 1999 combines the historical financial statements of Fisher for the year
ended December 31, 1999 with the historical financial statements of PSS for
their fiscal year ended March 31, 2000. The three-month period ended March 31,
2000 of PSS has been included in both the unaudited pro forma combined statement
of operations for the six months ended June 30, 2000 and the year ended December
31, 1999. PSS's revenue and net loss for the three months ended March 31, 2000
were $443.4 million and $15.7 million, respectively.
The unaudited pro forma combined financial statements are based on
estimates and assumptions. These estimates and assumptions are preliminary and
have been made solely for the purposes of developing these pro forma combined
financial statements. Unaudited pro forma combined financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the combined financial position or results of operations of future periods or
the results that actually would have been realized had the entities been a
single entity during this period. These unaudited pro forma combined financial
statements are based upon the respective historical consolidated financial
statements of Fisher and PSS and notes thereto, incorporated in this joint proxy
statement/prospectus by reference and should be read in conjunction with those
statements and the related notes.
19
<PAGE> 28
FISHER SCIENTIFIC INTERNATIONAL INC.
PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 2000
(UNAUDITED, IN MILLIONS)
<TABLE>
<CAPTION>
HISTORICAL
------------------ PRO FORMA PRO FORMA
FISHER PSS ADJUSTMENTS COMBINED
-------- ------ ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................... $ 51.4 $ 41.8 $ 93.2
Marketable securities.......................... -- 1.9 1.9
Receivables, net............................... 276.5 286.1 562.6
Inventories.................................... 243.2 165.7 408.9
Other current assets........................... 69.3 56.6 125.9
-------- ------ --------
Total current assets................... 640.4 552.1 1,192.5
Property, plant and equipment, net............... 250.4 67.8 318.2
Goodwill, net.................................... 342.1 174.9 $ 386.1(a) 728.2
(174.9)(b)
Other assets..................................... 170.6 49.2 219.8
-------- ------ -------- --------
Total assets........................... $1,403.5 $844.0 $ 211.2 $2,458.7
======== ====== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Short-term debt................................ $ 46.5 $ 2.5 $ 49.0
Accounts payable............................... 305.0 118.7 423.7
Accrued and other liabilities.................. 163.0 43.6 $ 21.1(a) 227.7
-------- ------ -------- --------
Total current liabilities.............. 514.5 164.8 21.1 700.4
Long-term debt................................... 1,003.0 229.6 1,232.6
Other liabilities................................ 208.3 5.6 213.9
-------- ------ -------- --------
Total liabilities...................... 1,725.8 400.0 21.1 2,146.9
-------- ------ -------- --------
Stockholders' Equity (Deficit):
Common stock................................... 0.4 0.7 0.2(a) 0.6
(0.7)(b)
Capital in excess of par....................... 316.7 349.2 634.6(a) 951.3
(349.2)(b)
Retained earnings (accumulated deficit)........ (576.7) 96.5 (96.5)(b) (576.7)
Accumulated other comprehensive loss........... (62.4) (1.7) 1.7(b) (62.4)
Treasury stock................................. (0.3) -- (0.3)
Unearned ESOP shares........................... -- (0.7) (0.7)
-------- ------ -------- --------
Total stockholders' equity (deficit)... (322.3) 444.0 190.1 311.8
-------- ------ -------- --------
Total liabilities and stockholders'
equity............................... $1,403.5 $844.0 $ 211.2 $2,458.7
======== ====== ======== ========
</TABLE>
20
<PAGE> 29
FISHER SCIENTIFIC INTERNATIONAL INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
------------------ PRO FORMA PRO FORMA
FISHER PSS ADJUSTMENTS COMBINED(e)
-------- ------ ----------- -----------
<S> <C> <C> <C> <C>
Sales........................................... $1,291.9 $913.6 $2,205.5
Cost of sales................................... 930.2 688.6 1,618.8
-------- ------ --------
Gross profit.................................... 361.7 225.0 586.7
Selling, general and administrative expense..... 281.5 229.5 $ (3.0)(c) 517.7
9.7(d)
Restructuring and other charges................. -- 0.7 0.7
-------- ------ ------ --------
Income (loss) from operations................... 80.2 (5.2) (6.7) 68.3
Interest expense................................ 50.6 10.0 60.6
Other income.................................... (3.0) (2.6) (5.6)
-------- ------ ------ --------
Income (loss) before income taxes............... 32.6 (12.6) (6.7) 13.3
Provision (benefit) for income taxes............ 14.7 (2.5) 12.2
-------- ------ ------ --------
Net income (loss)............................... $ 17.9 $(10.1) $ (6.7) $ 1.1
======== ====== ====== ========
Net income (loss) per common share:
Basic......................................... $ 0.45 $(0.14) $ 0.02
Diluted....................................... $ 0.40 $(0.14) $ 0.02
Weighted average common shares outstanding:
Basic......................................... 40.1 71.1 62.3
Diluted (f)................................... 44.6 71.2 66.8
</TABLE>
21
<PAGE> 30
FISHER SCIENTIFIC INTERNATIONAL INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
--------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, MARCH 31,
1999 2000
------------ ---------- PRO FORMA PRO FORMA
FISHER PSS ADJUSTMENTS COMBINED(e)
------------ ---------- ----------- -----------
<S> <C> <C> <C> <C>
Sales...................................... $2,469.7 $1,793.5 $4,263.2
Cost of sales.............................. 1,771.4 1,321.1 3,092.5
-------- -------- --------
Gross profit............................... 698.3 472.4 1,170.7
Selling, general and administrative
expense.................................. 541.7 423.2 $ (5.7)(c) 978.5
19.3(d)
Restructuring and other charges............ (1.5) 4.5 3.0
Loss from operations to be disposed of..... 11.3 -- 11.3
-------- -------- ------- --------
Income from operations..................... 146.8 44.7 (13.6) 177.9
Interest expense........................... 104.2 15.5 119.7
Other income............................... (15.2) (12.3) (27.5)
-------- -------- ------- --------
Income before income taxes and cumulative
effect of accounting change.............. 57.8 41.5 (13.6) 85.7
Provision for income taxes................. 34.4 19.3 53.7
-------- -------- ------- --------
Income before cumulative effect of
accounting change........................ $ 23.4 $ 22.2 $ (13.6) $ 32.0
======== ======== ======= ========
Earnings per share:
Income before cumulative effect of
accounting change -- basic............ $ 0.59 $ 0.31 $ 0.51
Income before cumulative effect of
accounting change -- diluted.......... $ 0.55 $ 0.31 $ 0.49
Weighted average common shares outstanding:
Basic.................................... 40.0 71.0 62.2
Diluted (f).............................. 42.8 71.2 65.0
</TABLE>
22
<PAGE> 31
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS
On June 21, 2000, Fisher and PSS entered into a merger agreement. The terms
of the merger agreement call for 0.3121 of a share of Fisher common stock to be
exchanged for each outstanding PSS share.
(a) Represents the purchase by Fisher of the outstanding shares of PSS common
stock and the initial allocation of the pro forma purchase price (in
millions):
<TABLE>
<S> <C>
Aggregate value of stock consideration (1).................. $626.0
Value of PSS outstanding stock options and warrants, to be
assumed by Fisher (2)..................................... 8.8
Other consideration and costs (3)........................... 21.1
------
655.9
Book value of identifiable net assets acquired.............. 269.8
------
Excess of purchase price over identifiable net assets
acquired.................................................. $386.1
======
Allocation of excess purchase price over identifiable net
assets acquired:
Goodwill (4).............................................. $386.1
======
</TABLE>
--------------------
(1) Represents the value of 22.2 million shares of Fisher common stock,
$0.1 par value, issuable for the acquisition of the approximately 71.1
million shares of PSS common stock assumed to be outstanding. The price
per share of Fisher common stock of $28.22 was based upon the weighted
average of the closing price three days prior to and three days
following the announcement of the merger.
(2) Represents the estimated fair value, based upon a binomial valuation
model, of Fisher's stock options and warrants issuable for the
conversion of approximately 5.6 million of PSS's stock options and
warrants assumed to be outstanding. The estimated fair value was
calculated using a price of $28.22 for the Fisher common stock, and
will be adjusted based upon the price of Fisher's common stock on the
closing date of the merger.
(3) Represents the estimated amount to be paid for closing costs, certain
employee benefits triggered by the acquisition and other costs incurred
as a direct result of the merger.
(4) Represents an increase to goodwill to reflect the preliminary asset
allocation of the purchase price. For pro forma purposes, goodwill has
been amortized over an assumed useful life of 20 years.
(b) Represents the elimination of the historical net goodwill and equity of PSS.
(c) Represents the elimination of goodwill amortization recognized in the
historical financial statements of PSS.
(d) Represents the amortization of goodwill that results from the preliminary
purchase price allocation.
(e) The pro forma combined financial statements do not include any adjustments
for (i) the potential exercise of the call feature of PSS's $125 million,
8.5% senior subordinated notes due in 2007, (ii) the expected refinancing of
PSS's existing $94 million outstanding under its senior revolving credit
facility, or (iii) potential charges of up to approximately $13.5 million
related to existing employment agreements which entitle certain executives
to receive severance payments in the event that they terminate their
employment with Fisher within 30 days of the first anniversary of the
proposed acquisition.
(f) The weighted average amount of antidilutive common stock options assumed to
be outstanding and excluded from the computation of diluted earnings per
share was 1.5 million for the six months ended June 30, 2000 and 3.1 million
for the year ended December 31, 1999.
23
<PAGE> 32
EQUIVALENT AND COMPARATIVE PER SHARE INFORMATION
We present below per common share data regarding the income and book value
of Fisher and PSS on both historical and unaudited pro forma combined bases and
on a per share equivalent unaudited pro forma combined basis for PSS. We have
derived the unaudited pro forma combined per share information from the
unaudited pro forma combined financial statements presented elsewhere in this
joint proxy statement/prospectus. You should read the information below in
conjunction with the financial statements and accompanying notes of Fisher and
PSS that are incorporated by reference in this joint proxy statement/prospectus
and with the unaudited pro forma combined information included under "Unaudited
Pro Forma Combined Financial Statements."
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
---------------- -----------------
<S> <C> <C>
FISHER
HISTORICAL PER SHARE DATA:
Net income per share:
Basic..................................................... $ 0.45 $ 0.59
Diluted................................................... 0.40 0.55
Book value per share (a).................................... (8.04) (8.25)
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, 2000 MARCH 31, 2000
---------------- -----------------
<S> <C> <C>
PSS
HISTORICAL PER SHARE DATA:
Earnings per share -- Basic:
Income (loss) before cumulative effect of accounting
change................................................. $(0.14) $ 0.31
Net income (loss)......................................... (0.14) 0.29
Earnings per share -- Diluted:
Income (loss) before cumulative effect of accounting
change................................................. (0.14) 0.31
Net income (loss)......................................... (0.14) 0.29
Book value per share (a).................................... 6.24 6.19
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
---------------- -----------------
<S> <C> <C>
UNAUDITED PRO FORMA COMBINED
PRO FORMA COMBINED PER SHARE DATA:
Earnings per share:
Income before cumulative effect of accounting change -
basic.................................................. $ 0.02 $ 0.51
Income before cumulative effect of accounting change -
diluted................................................ 0.02 0.49
Earnings per equivalent PSS share (b):
Income before cumulative effect of accounting change -
basic.................................................. 0.01 0.16
Income before cumulative effect of accounting change -
diluted................................................ 0.01 0.15
Book value per share (a).................................... 5.00 N/A
Book value per equivalent PSS share (b)..................... 1.56 N/A
</TABLE>
---------------
(a) The historical book value per share is computed by dividing stockholders'
equity by the number of shares of common stock outstanding at June 30, 2000
and December 31, 1999 for Fisher and June 30, 2000 and March 31, 2000 for
PSS. The pro forma combined book value per share is computed by dividing pro
forma stockholders' equity by the pro forma number of shares of common stock
outstanding.
(b) The PSS equivalent pro forma combined per share amounts are calculated by
multiplying the Fisher and PSS pro forma combined per share amounts by the
exchange ratio of .3121.
24
<PAGE> 33
PROJECTED PRO FORMA FINANCIAL INFORMATION
Neither Fisher nor PSS makes as a matter of course public forecasts as to
their respective future financial performance and conditions. However, in
connection with the review of the merger, Fisher and PSS management prepared
financial projections for their respective organizations on a stand-alone,
pre-merger basis. These projections are a summary of the projections exchanged
by Fisher and PSS and were presented to, and considered by, the members of each
company's board of directors in its recommendation of the Fisher/PSS
transaction.
The financial projections are "forward-looking statements" and Fisher's
and/or PSS's actual results may differ materially from those set forth in the
projections. See "Forward-Looking Statements" on page 39 of this joint proxy
statement/prospectus for a discussion of the risks you should consider in
reviewing these projections.
These projections were not prepared with a view to public disclosure or
compliance with published guidelines established by the American Institute of
Certified Public Accountants regarding projections. None of Fisher, PSS or their
respective affiliates or Fisher's or PSS's independent auditors assume any
responsibility for the accuracy of this information. THESE PROJECTIONS WERE
BASED UPON MANAGEMENT ESTIMATES TAKING INTO ACCOUNT THE HISTORICAL PERFORMANCES
OF THE BUSINESSES, GENERAL ECONOMIC CONDITIONS AND ESTIMATED INDUSTRY GROWTH
RATES. ALTHOUGH FISHER AND PSS BELIEVE THAT SUCH ASSUMPTIONS WERE REASONABLE
WHEN MADE, SUCH ASSUMPTIONS ARE INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES
AND CONTINGENCIES WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT AND ARE BEYOND
THEIR CONTROL. ACCORDINGLY, THERE CAN BE NO ASSURANCES THAT THESE ESTIMATES WILL
BE REALIZED. ACTUAL RESULTS MAY BE MATERIALLY HIGHER OR LOWER THAN THOSE
ESTIMATED AND READERS OF THIS JOINT PROXY STATEMENT/PROSPECTUS ARE CAUTIONED NOT
TO PLACE UNDUE RELIANCE ON THIS PROJECTED PRO FORMA FINANCIAL INFORMATION.
FISHER AND PSS DO NOT GENERALLY PUBLISH THEIR RESPECTIVE BUSINESS PLANS AND
STRATEGIES OR MAKE EXTERNAL DISCLOSURES OF THEIR RESPECTIVE ANTICIPATED
FINANCIAL POSITION OR RESULTS OF OPERATIONS. ACCORDINGLY, FISHER AND PSS DO NOT
INTEND TO, AND SPECIFICALLY DECLINE ANY OBLIGATION TO, UPDATE OR OTHERWISE
REVISE THE PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING
SINCE THEIR PREPARATION OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS,
EVEN IF ANY OR ALL THE UNDERLYING ASSUMPTIONS ARE SHOWN TO BE IN ERROR. ALSO,
FISHER AND PSS DO NOT INTEND TO, AND SPECIFICALLY DECLINE ANY OBLIGATION TO,
UPDATE OR REVISE THE PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CHANGES IN
GENERAL ECONOMIC OR INDUSTRY CONDITIONS. Neither Fisher's auditors nor PSS's
auditors, nor any other independent accountants, have compiled, examined or
performed any procedures with respect to these projections, nor have they
expressed any opinion or any other form of assurance on this information or its
achievability, and assume no responsibility for, and disclaim any association
with, this prospective financial information. The independent public
accountants' reports incorporated by reference in this document relate to the
historical financial statements of Fisher and PSS. These reports do not extend
to these unaudited financial projections and should not be read to do so.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
2001E 2002E 2003E
-------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Sales:
Fisher:................................................... $2,806 $2,989 $3,183
PSS....................................................... 2,025 2,156 2,270
------ ------ ------
Total sales............................................... $4,831 $5,145 $5,453
Gross margin:
Fisher.................................................... $ 789 $ 840 $ 894
PSS....................................................... 537 577 613
------ ------ ------
Total gross margin........................................ $1,326 $1,417 $1,507
</TABLE>
25
<PAGE> 34
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
2001E 2002E 2003E
-------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Operating income:
Fisher, excluding goodwill amortization................... $ 194 $ 211 $ 229
PSS, excluding goodwill amortization(1)................... 100 118 139
Goodwill amortization..................................... (33) (33) (33)
------ ------ ------
Operating income............................................ $ 261 $ 296 $ 335
Interest expense............................................ $ 111 $ 105 $ 95
Net income.................................................. $ 83 $ 108 $ 137
Net income per common share:
Basic..................................................... $ 1.34 $ 1.74 $ 2.21
Diluted................................................... 1.27 1.64 2.09
Earnings per common share, excluding goodwill
amortization(2):
Basic..................................................... $ 1.78 $ 2.18 $ 2.65
Diluted................................................... 1.69 2.06 2.51
Earnings before interest, taxes, depreciation and
amortization (EBITDA)(3):
Fisher.................................................... $ 242 $ 260 $ 280
PSS(1).................................................... 110 130 151
------ ------ ------
Total EBITDA.............................................. $ 352 $ 390 $ 431
</TABLE>
---------------
(1) Includes $10 million, $20 million and $30 million in 2001, 2002 and 2003,
respectively, of projected cost savings relating to the combination of
Fisher and PSS.
(2) Represents net income per share increased by goodwill amortization, net of
taxes, per share. Incremental goodwill amortization relating to the
Fisher/PSS transaction equals $0.14 per share. Although the presentation of
earnings per common share excluding goodwill amortization should not be
considered an alternative to earnings per share as a measure of operating
results or to cash flows as a measure of liquidity in accordance with
generally accepted accounting principles, management believes that this data
provides a more comparable measure of the company's earnings versus
companies that account for acquisitions using the pooling-of-interests
method.
(3) EBITDA is defined in a manner consistent with Fisher EBITDA and PSS EBITDA.
Fisher EBITDA is defined in accordance with the Indenture for Fisher's 9%
Senior Subordinated Notes due 2008 as net income plus income taxes, interest
expense, depreciation and amortization and excludes unusual and nonrecurring
items, as described in footnote (h) to the Selected Historical Financial
Data of Fisher. PSS EBITDA has the same definition, as described in footnote
(c) to the Selected Historical Financial Data of PSS. EBITDA is used here
because Fisher believes that it is an indicator of the ability to service
existing and future indebtedness. However, Fisher EBITDA and PSS EBITDA
should not be considered as an alternative to net income as a measure of
operating results or to cash flows as a measure of liquidity in accordance
with generally accepted accounting principles. Fisher's and PSS's respective
computations of Fisher EBITDA and PSS EBITDA may not be comparable to
similarly titled measures of other companies.
26
<PAGE> 35
RISK FACTORS
In addition to the other information contained in or incorporated by
reference into this joint proxy statement/prospectus, you should carefully
consider the following risk factors in deciding whether to vote for adoption of
the merger agreement.
RISK FACTORS RELATING TO THE MERGER
FLUCTUATIONS IN MARKET PRICES MAY CAUSE THE VALUE OF THE SHARES OF FISHER STOCK
THAT PSS STOCKHOLDERS RECEIVE TO BE LESS THAN THE VALUE OF THE SHARES OF PSS
STOCK AT THE TIME OF THE MERGER.
Upon completion of the merger, all shares of PSS stock will be converted
into shares of Fisher stock. The ratio at which the shares will be converted is
fixed, and there will be no adjustment for changes in the market price of either
Fisher common stock or PSS common stock. Any change in the price of either
Fisher common stock or PSS common stock will affect the value PSS stockholders
will receive in the merger. Stock price changes may result from a variety of
factors that are beyond the control of Fisher and PSS, including changes in
their businesses, operations and prospects, regulatory considerations and
general market and economic conditions. Neither party is permitted to terminate
the merger agreement or resolicit the vote of its stockholders solely because of
changes in the market price of either party's common stock.
THE COMBINED FISHER AND PSS ENTITY MAY NOT PERFORM AS WELL AS EACH OF FISHER AND
PSS AS INDEPENDENT COMPANIES.
As a consequence of the merger, both the Fisher stockholders and the PSS
stockholders will lose the opportunity to invest in their company's business on
a stand-alone basis. In addition, the combined company will have different
management than current management. Consequently, the management of the combined
company may make strategic and operational decisions that differ from those of
their company's current management. It is possible that either Fisher or PSS, if
it were to remain independent, could achieve economic performance superior to
that of the combined company. In addition, the revenues of the combined company
may be less than the sum of the revenues of Fisher and PSS as separate
companies.
WE MAY NOT BE ABLE TO ACHIEVE ANTICIPATED BENEFITS OF THE COMBINATION OF FISHER
WITH PSS.
Fisher's ability to achieve the anticipated benefits of the merger will be
subject to risks associated with acquisitions, such as the potential disruption
of operations and the incurrence of substantial expenses that could adversely
affect its financial condition. Neither Fisher nor PSS can assure you that the
merger of PSS's business with Fisher will be accomplished in an efficient and
effective manner. If significant difficulties are encountered, it could have a
material adverse effect on the business, results of operations and financial
condition of the combined company.
The successful combination of Fisher with PSS will require the dedication
of the respective management and other personnel of the companies which may
distract their attention from the day-to-day business operations, the
development or acquisition of new products, services and technologies, and the
pursuit of other strategic opportunities. These difficulties may be increased by
the necessity of coordinating organizations with distinct cultures and widely
disbursed operations. Failure to successfully accomplish or delay in
accomplishing the combination of the two companies may have a material adverse
effect on the combined company.
PSS'S VENDORS MAY TERMINATE THEIR DISTRIBUTORSHIP AGREEMENTS AS A RESULT OF THE
MERGER.
PSS distributes over 56,000 medical products manufactured by approximately
5,000 vendors. PSS relies on these vendors for the manufacture and supply of
products. During the twelve-month period ended March 31, 2000, however, no
vendor relationship accounted for more than 10%, except for Eastman Kodak which
accounted for less than 22%, of PSS's inventory purchases. PSS's exclusive and
semi-exclusive distribution agreements include agreements for certain products
manufactured by: Biosound, Candela, Hologic, Inc., Philips Medical Systems,
Siemens, Sonosite, and Trex Medical Corporation. PSS is currently renegotiating
with Abbott
27
<PAGE> 36
Laboratories, one of its largest suppliers, the terms of its distribution
agreement, as Abbott Laboratories has required such renegotiation in order not
to exercise any termination right it has in connection with the merger.
FISHER IS CONTROLLED BY A LIMITED NUMBER OF STOCKHOLDERS, WHOSE ACTIONS FROM
TIME TO TIME MAY LIMIT THE RIGHTS OF PSS STOCKHOLDERS AS HOLDERS OF FISHER
COMMON STOCK.
A group of equity investors comprised of affiliates of Thomas H. Lee
Company, DLJ Merchant Banking Partners II, Chase Capital Partners and Merrill
Lynch currently own 78.3% of Fisher's outstanding common stock. In addition,
these equity investors and certain members of Fisher management (who currently
hold 12% of Fisher's outstanding common stock) have entered into an investors'
agreement dated January 21, 1998. The investors' agreement provides that
Fisher's board of directors will have at least nine, but not more than ten
directors, four of whom may be appointed by Thomas H. Lee Company, one of whom
may be (but to date has not been) appointed by DLJ Merchant Banking Partners II,
one of whom will be Mr. Paul M. Montrone and one of whom will be Mr. Paul M.
Meister. As a result, a majority of the Fisher's board of directors will be
comprised of appointees of parties to the investors' agreement. Although there
is no agreement or requirement that these stockholders vote together as a group,
except with respect to the election of certain directors of Fisher, if they were
to do so, they would control the outcome of matters submitted to a vote or for
the consent of Fisher's stockholders; that includes the power to approve any
action requiring the approval of our stockholders, including adopting amendments
to Fisher's charter and approving mergers or sales of substantially all of our
assets. In addition, the possibility of these stockholders voting together as a
group may make it more difficult for a third party to acquire, or may discourage
a third party from seeking to acquire, a majority of Fisher's common stock,
which could negatively affect Fisher's stock price. The interests of these
stockholders could conflict with the interest of Fisher's other stockholders.
The interests of the equity investors may, from time to time, conflict with
the interests of the other Fisher stockholders. After the merger, these equity
investors will hold approximately 50.4% of Fisher's outstanding common stock,
and Fisher's management will hold 7.7% of Fisher's outstanding common stock.
FISHER'S STOCK PRICE MAY BE ADVERSELY AFFECTED BY FUTURE SALES OF FISHER COMMON
STOCK.
Upon completion of the merger, Fisher will have outstanding approximately
62.3 million shares of common stock. Of these shares, 58.2% will be held by the
equity investors and Fisher's management, all of whom are party to the
investors' agreement. Although this agreement imposes certain restrictions on
transfers of their shares, if these stockholders sell substantial amounts of
Fisher's common stock in the public market following the merger, the market
price of Fisher's common stock could fall. The negative effect of these sales on
the market price of Fisher common stock could be more pronounced given the
larger number of shares held by these stockholders relative to the total number
of shares of Fisher common stock that will be outstanding following the merger.
FISHER'S STOCK PRICE HAS BEEN VOLATILE AND MAY REMAIN VOLATILE AFTER THE MERGER.
Fisher's common stock price has been volatile in the past, due, in part, to
low trading volume and the small percentage of the stock held by persons other
than parties to the investors agreement. Although trading volume and public
float should increase following the merger, Fisher's common stock price may
continue to be volatile in the future due to factors such as:
- Fisher's historical and anticipated quarterly and annual operating
results;
- lack of coverage by stock analysts;
- variations between Fisher's actual results and analyst and investor
expectations, as well as variations between Fisher's actual results and
the projections in this joint proxy statement/prospectus;
- announcements by Fisher or others and developments affecting its
business;
- investor perceptions of Fisher and comparable public companies;
- conditions and trends in the combined company's markets; and
28
<PAGE> 37
- investor perceptions of future economic growth.
In particular, the stock market has from time to time experienced
significant price and volume fluctuations affecting the common stocks of
companies. Volatility can also arise as a result of the activities of short
sellers and risk arbitrageurs regardless of the combined company's performance.
This volatility may result in a material decline in the market price of the
Fisher common stock, and may have little relationship to Fisher's financial
results or prospects.
ANY DELAYS IN THE CLOSING OF THE MERGER MAY ADVERSELY AFFECT THE BUSINESS OF
PSS.
Any delay in the closing of the merger could raise uncertainties as to
whether the merger will eventually be consummated. Such uncertainty could have
the following adverse impacts on PSS:
- the company's ability to attract and retain key management, sales,
marketing and other personnel may be adversely affected;
- customers and potential customers may delay or cancel contracts for
products and services due to uncertainty about integration of products
and services of the company; and
- the stock price of the company may become more volatile due to the
uncertainty.
FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY IMPACT THE MARKET PRICE OF PSS
COMMON STOCK AND PSS'S OPERATING RESULTS.
The proposed merger with Fisher is subject to various conditions, including
approval of the stockholders of PSS and Fisher, filings under and compliance
with securities and antitrust laws, the financial and operating performance of
PSS and certain other matters. In particular, the transaction is conditioned
upon PSS retaining customers and suppliers that are material to its business and
the successful rollout of PSS's new technology systems. PSS cannot assure you
that the merger will occur in a timely manner, if at all. If the merger is not
completed for any reason, PSS may be subject to a number of material risks,
including:
- PSS may be required to pay Fisher a termination fee of $28.5 million and
reimburse Fisher for expenses of up to $4.5 million;
- the market price of PSS common stock may decline to the extent that the
current market price of PSS common stock since the announcement of the
proposed merger has been higher as a result of a market assumption that
the merger will in fact be completed; and
- costs related to the merger, such as legal and accounting fees, must be
paid even if the merger is not completed.
If the merger is terminated and the PSS board of directors seeks another
merger or business combination, you cannot be certain that PSS will be able to
find a partner willing to pay an equivalent or more attractive price than the
price to be paid by Fisher in the merger.
PSS'S OFFICERS AND DIRECTORS HAVE INTERESTS IN THE MERGER THAT DIFFER FROM OTHER
STOCKHOLDERS AND MAY INFLUENCE THEM TO SUPPORT OR APPROVE THE MERGER.
The directors and officers of PSS have interests in the merger that are
different from, or in addition to, yours, including the following:
- officers of PSS may be entitled to certain benefits, including
substantial severance packages, under their employment agreements with
PSS and/or an acceleration of their retention bonuses under PSS's
retention bonus plans, if the employee is terminated without "cause" or
resigns for "good reason" in connection with or following a change of
control of PSS, such as the merger;
- officers of PSS have entered into restrictive covenants agreements in
which, effective as of the merger, they have agreed not to disclose
confidential information, solicit employees or customers or compete with
PSS and its successors for specified time periods in consideration of an
acceleration of the payment of
29
<PAGE> 38
their retention bonuses and the payment by PSS of premiums on insurance policies
on behalf of such officers;
- Patrick C. Kelly, the Chief Executive Officer of PSS, has entered into an
employment agreement and a restrictive covenants agreement which provide
for salary, bonus, options, benefits and other cash payments to Mr. Kelly
following the merger;
- Fisher and PSS may negotiate new employment agreements with certain
officers of PSS prior to the completion of the merger, which may become
effective upon the completion of the merger and may provide for an
acceleration of the payment of their retention bonus as well as salary,
bonus and other cash payments;
- Officers of PSS hold options which will fully vest upon the consummation
of the merger in accordance with the terms of PSS's option plans and
option agreements;
- Fisher has agreed to cause the surviving corporation in the merger to
indemnify each present and former PSS officer and director against
liabilities arising out of such person's services as an officer or
director and to cause the surviving corporation to maintain officers' and
directors' liability insurance to cover any such liabilities for the next
six years; and
- Fisher has agreed to appoint Mr. Kelly and Mr. Hugh Brown, a current PSS
director, to its board of directors.
The directors and officers of PSS may be more likely to vote to approve the
merger agreement and the merger than if they did not have these interests. PSS
stockholders should consider whether these interests may have influenced these
directors and officers to support or recommend the merger. You should read more
about these interests under "The Merger--Interests of Executive Officers and
Directors of PSS World Medical in the Merger" beginning on page 65.
RISK FACTORS RELATING TO FISHER'S BUSINESS
SUBSTANTIAL LEVEL OF INDEBTEDNESS COULD ADVERSELY AFFECT FISHER'S OPERATIONS.
Fisher has a substantial amount of outstanding indebtedness, although the
merger will reduce Fisher's overall leverage (defined as total debt divided by
pro forma combined Fisher EBITDA). As of June 30, 2000, Fisher's aggregate
outstanding indebtedness was $1,049.5 million (excluding $40.7 million of net
receivables sold under Fisher's accounts receivable securitization facility) and
its stockholders' equity was a deficit of $322.3 million. Fisher's credit
facility and indenture permit it to incur or guarantee certain additional
indebtedness, subject to certain limitations.
Following the merger, Fisher's substantial indebtedness could have
important consequences to you. For example, it could:
- place Fisher at a competitive disadvantage if it is more leveraged than
its competitors by limiting Fisher's flexibility, including for the
reasons described in the next paragraph; and
- make Fisher more vulnerable to a downturn in general economic conditions
or its business or changing market conditions and regulations.
RESTRICTIONS AND COVENANTS IN FISHER'S DEBT AGREEMENTS LIMIT ITS ABILITY TO TAKE
CERTAIN ACTIONS AND FAILURE TO COMPLY WITH SUCH COVENANTS COULD ADVERSELY AFFECT
ITS BUSINESS OPERATIONS.
Fisher's credit facilities contain a number of covenants that significantly
restrict its operations and its ability to issue additional debt, make
investments and pay dividends. In addition, under the credit facilities, Fisher
is required to comply with specified financial ratios and tests, including
maximum leverage ratios and minimum Fisher EBITDA to cash interest expense
ratios, and certain of these ratios and tests may be more restrictive in future
years. Fisher cannot be sure that it will be able to comply with such covenants
or restrictions in the future. Fisher's ability to comply with such covenants
and other restrictions may be affected by events beyond its
30
<PAGE> 39
control, including prevailing economic, financial and industry conditions. A
breach of any such covenants or restrictions could result in a default or a
termination event under the credit facilities that would permit the lenders
under such facilities to declare all amounts outstanding under such facilities
to be immediately due and payable, together with accrued and unpaid interest,
and would permit the lenders to terminate their commitments to make further
extensions of credit.
A DECREASE IN RESEARCH AND DEVELOPMENT SPENDING BY ITS CUSTOMERS COULD ADVERSELY
AFFECT FISHER'S RESULTS OF OPERATIONS.
Fisher's customers include corporations active in scientific or
technological research, healthcare, industrial, safety and other markets, in the
U.S. and internationally. The research and development budgets and activities of
these companies have a significant effect on the demand for products
manufactured and/or distributed by Fisher. Such policies are based on a variety
of factors, including the need to develop new products, competition and
availability of resources. Although scientific and technology-related research
and development spending in the U.S. historically has not been subject to
cyclical swings, no assurance can be made that this trend will continue. In
addition, as Fisher continues to expand its international operations, the
research and development spending levels in other global markets will become
increasingly important. A decrease in research and development spending by
Fisher's customers could have a material adverse effect on Fisher's results of
operations.
HEALTHCARE REFORM AND COST CONTAINMENT INITIATIVES IN THE HEALTHCARE INDUSTRY
MAY ADVERSELY AFFECT FISHER'S RESULTS OF OPERATIONS.
Fisher's sales to the U.S. clinical laboratory market are significant. The
trend towards managed care, together with efforts to reform the healthcare
delivery system in the U.S., has resulted in increased pressure on healthcare
providers and other participants in the healthcare industry to reduce costs. To
the extent that Fisher's customers in the healthcare industry seek to address
the need to contain costs by limiting the number of clinical tests being
performed, Fisher's results of operations would be materially and adversely
affected.
FISHER OPERATES IN A HIGHLY COMPETITIVE MARKET.
Fisher competes with a wide range of distributors, suppliers and
manufacturers that sell their own products directly to end users in the
scientific research, healthcare, safety and industrial markets. Some of these
competitors are larger and may have greater resources than Fisher. In addition,
potential competitors in the future could include suppliers and manufacturers
that currently rely on one or more third party distributors to distribute its
products. Competition may also come from business-to-business sales over the
Internet between manufacturers and customers. Competitive factors in its
markets, both international and domestic, could have a material adverse effect
on Fisher's financial condition and results of operations.
FISHER'S RELIANCE ON THIRD PARTY PACKAGE DELIVERY SERVICES COULD ADVERSELY
AFFECT FISHER IF THERE IS A DISRUPTION IN SERVICE.
A significant portion of Fisher's products are shipped to customers by
independent package delivery companies. Fisher also maintains a fleet of
approximately 73 transportation vehicles dedicated to the delivery of its
products. The principal independent delivery service Fisher uses is UPS, which
shipped products accounting for approximately 65% percent of Fisher's U.S.
shipments in 1999. Other carriers used by Fisher include national and regional
trucking firms, overnight courier services and the United States Postal Service.
A major work stoppage or other series of events that would make such carriers
unavailable to Fisher could have a significant adverse effect upon Fisher's
ability to conduct its business.
SOME OF FISHER'S OPERATIONS ARE SUBJECT TO ENVIRONMENTAL REGULATION WHICH MAY
CHANGE AND ADVERSELY AFFECT FISHER'S FINANCIAL CONDITION.
Some of Fisher's operations involve and have involved the handling,
manufacture or use of many substances that are classified as toxic or hazardous
substances within the meaning of applicable environmental and other laws. Some
risk of environmental and other damage or hazard is inherent in particular
operations and products Fisher manufactures, sells or distributes. Fisher cannot
guarantee that damage, hazard or loss will not occur. To a large extent, such
damage is uninsured. Fisher continually monitors and reviews its procedures and
policies for compliance with existing laws and the cost of compliance with
existing environmental laws is not expected to
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have a material adverse effect on Fisher's earnings, liquidity or competitive
position. However, future events, including changes in existing laws and
regulations may give rise to additional costs which are currently unintended and
unforeseen and which could have a material adverse effect on Fisher's financial
condition.
FISHER'S BUSINESS DEPENDS ON ITS KEY PERSONNEL. FAILURE TO RETAIN THEM COULD
HARM FISHER'S BUSINESS.
Fisher depends heavily on the services of its senior management, including
Paul M. Montrone, chairman of the board and chief executive officer of Fisher,
and Paul M. Meister, vice chairman of the board, executive vice president and
chief financial officer of Fisher. The loss of any member of Fisher's senior
management, including Mr. Montrone or Mr. Meister, could have a material adverse
effect on Fisher.
FISHER'S INTERNATIONAL OPERATIONS ARE SUBJECT TO ADDITIONAL RISKS, SUCH AS
POLITICAL AND ECONOMIC RISKS, WHICH MAY ADVERSELY AFFECT FISHER'S BUSINESS AND
OPERATING RESULTS.
Fisher conducts international operations through a variety of wholly owned
subsidiaries, majority-owned subsidiaries, joint ventures, equity interests and
agents located in North and South America, Europe, the Far East, the Middle East
and Africa. Fisher cannot guarantee that it will maintain significant operations
internationally or that any such operations will be successful. Fisher's
international operations will be subject to additional risks, such as:
- lack of complete operating control;
- lack of local business experience;
- difficulty in enforcing intellectual property rights;
- language and other cultural barriers; and
- political and economic instability.
EXCHANGE RATE FLUCTUATIONS MAY HAVE AN ADVERSE EFFECT ON FISHER'S INTERNATIONAL
OPERATIONS.
Approximately 80% of Fisher's revenues and expenses are denominated in U.S.
dollars, although Fisher owns properties and conducts operations in many foreign
countries. Accordingly, fluctuations in the exchange rate between the U.S.
dollar and various foreign currencies could have an adverse effect on Fisher.
STATE LAWS AND FISHER'S CHARTER AND BYLAWS COULD MAKE IT DIFFICULT FOR A THIRD
PARTY TO ACQUIRE FISHER, WHICH COULD ADVERSELY AFFECT FISHER'S STOCK PRICE.
Delaware laws and some of the provisions of Fisher's charter and bylaws
could discourage, delay or prevent Fisher's acquisition at a premium price by a
third party, even if Fisher's stockholders believe the change of control would
be in their best interests. Additionally, Fisher's stockholders rights plan may
also have anti-takeover effects. These factors could have an adverse effect on
Fisher's stock price. See "Comparison of Rights of Fisher Stockholders and PSS
Stockholders."
RISK FACTORS RELATING TO PSS'S BUSINESS
PSS MAY NOT BE ABLE TO ENTER INTO A MERGER OR BUSINESS COMBINATION WITH ANOTHER
PARTY AT A FAVORABLE PRICE BECAUSE OF RESTRICTIONS IN THE MERGER AGREEMENT.
While the merger agreement is in effect, PSS is prohibited from soliciting,
initiating or encouraging any inquiries or proposals that may lead to a proposal
or offer for a merger, consolidation, business combination, sale of substantial
assets, tender offer, sale of shares of capital stock or other similar
transactions with any person other than Fisher. As a result of this prohibition,
PSS may not be able to enter into an alternative transaction at a more favorable
price.
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PSS'S NET SALES AND OPERATING RESULTS MAY FLUCTUATE QUARTERLY AND MAY BE BELOW
ANALYSTS' AND INVESTORS' EXPECTATIONS IN ANY PARTICULAR QUARTER.
PSS's net sales and operating results may fluctuate quarterly as a result
of many factors, including:
- fluctuating demand for PSS's products and services;
- the introduction of new products and services by PSS and its competitors;
- acquisitions or investments;
- financial difficulties of PSS's customers;
- changes in manufacturers' prices or pricing policies;
- changes in the level of operating expenses;
- product supply shortages;
- product recalls by manufacturers;
- inventory adjustments;
- changes in product mix; and
- general competitive and economic conditions.
In addition, a substantial portion of PSS's net sales in each quarter
result from orders placed in such quarter and, in particular, toward the end of
such quarter. Accordingly, PSS believes that period-to-period comparisons of its
operating results should not be relied upon as an indication of future
performance. It is possible that in certain future periods PSS's operating
results may be below analysts' and investors' expectations. This could
materially and adversely affect the trading price of PSS's common stock.
PRICING AND CUSTOMER CREDIT QUALITY PRESSURES DUE TO REDUCED SPENDING BUDGETS BY
HEALTHCARE PROVIDERS MAY IMPAIR PSS'S REVENUES, THE COLLECTIBILITY OF ITS
ACCOUNTS RECEIVABLE AND ITS EARNINGS.
The cost of a significant portion of medical care in the United States is
funded by government and private insurance programs, such as Medicare, Medicaid,
and corporate health insurance plans. In recent years, government-imposed limits
on reimbursement of hospitals and other health care providers have significantly
impacted spending budgets in certain markets within the medical-products
industry. In particular, recent changes in the Medicare program have limited
payments to providers in the long-term care industry, the principal customers of
PSS's Gulf South subsidiary. For cost-reporting periods beginning on or after
July 1, 1998, Medicare's prospective payment system was applied to the long-term
care industry. This prospective payment system will limit government payments to
long-term care providers to federally established cost levels. Prior to this
time, the long-term care facilities were reimbursed by the Medicare program
pursuant to a cost-based reimbursement system. This shift was designed to
encourage greater provider efficiency and to help stem the growth in
reimbursement relating to the care of long-term care patients. Under the
prospective payment system, the customers of PSS's Gulf South subsidiary are now
receiving revenues that are substantially less than they received under
cost-based reimbursement. In addition, private third-party reimbursement plans
are also developing increasingly sophisticated methods of controlling health
care costs. Over 10 Gulf South customers, including several of PSS's largest
customers, have declared bankruptcy due to the significant reductions in their
revenues. Therefore, particularly with respect to PSS's Gulf South customers,
PSS cannot assure you that the purchase of its medical products will not be
limited or reduced or that PSS will be able to collect its receivables in a
timely manner, if at all. This may adversely affect PSS's accounts receivable
and future sales, earnings and results of operations.
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PSS'S BUSINESS DEPENDS UPON SOPHISTICATED DATA PROCESSING SYSTEMS WHICH MAY
IMPAIR ITS BUSINESS OPERATIONS IF THEY FAIL TO OPERATE PROPERLY OR AS PSS
ANTICIPATES.
The success of PSS's business relies on its ability to (1) obtain, process,
analyze and manage data and (2) maintain and upgrade its data processing
capabilities.
PSS relies on this capability because it:
- typically receives rebates from manufacturers when it sells certain
products for its imaging business and needs sophisticated systems to
track and apply for such rebates;
- must convert data and information systems after acquisitions;
- must receive and process customer orders quickly;
- must ship orders on a timely basis;
- must manage the billing and collections, from over 179,000 customers;
- must manage the purchasing and distribution of over 84,000 inventory
items from 101 distribution centers; and
- is processing approximately $450 million of its revenues through its
sales force automation technology over the Internet.
PSS is in the early stages of implementing J.D. Edwards & Company's One
World ERP system throughout its physician office and long-term care businesses
and has nearly completed the implementation of J.D. Edwards systems in its
imaging business.
With regard to financial cost, implementation of the program has resulted
in and will continue to result in significant expenditures by PSS's personnel
and outside software and equipment providers and expenditures for equipment and
software upgrades and replacements. PSS estimates that it will incur an
additional $ million in operating expenses and $ million in capital
expenditures to upgrade its information systems.
PSS's forecasted costs and timing for completion of its upgrade are based
on its best estimates, which in turn are based on numerous assumptions about
future events, including the continued availability and cost of necessary
personnel and other resources, third party modification plans, and other
factors. However, PSS cannot be certain that these estimates will be achieved
and actual results could differ materially from these estimates.
PSS's business, financial conditions and results of operations may be
materially adversely affected if, among other things:
- its data processing capabilities are interrupted or fail for any extended
length of time;
- it fails to upgrade its data services;
- its data processing system is unable to support PSS's expanded business;
or
- it loses or is unable to store data.
PSS'S RATE OF REVENUE GROWTH WILL BE ADVERSELY AFFECTED IF PSS DOES NOT MAKE
FUTURE ACQUISITIONS.
Much of PSS's recent sales growth has been the result of acquisitions. If
PSS is unable to make suitable acquisitions, it may not meet its revenue growth
expectations and its business, financial condition, and results of operations
could be materially and adversely affected. PSS is not currently a party to any
agreements or understandings for any material acquisitions and, after the
merger, PSS's acquisition strategy will be subject to Fisher and factors
involving Fisher's operations. In addition, PSS may be unable to continue to
identify suitable acquisition candidates or successfully acquire any such
candidates. PSS competes with other companies to acquire businesses that
distribute medical equipment and supplies to physicians, other alternate-site
providers, long-term care providers, home care providers, and hospitals as well
as other lines of business. PSS expects this competition to continue to
increase, making it more difficult to acquire suitable companies on favorable
terms.
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IF PSS CANNOT INTEGRATE ACQUIRED COMPANIES WITH ITS BUSINESS, ITS PROFITABILITY
MAY BE ADVERSELY AFFECTED.
Even if PSS acquires additional companies in the future, PSS may be unable
to successfully integrate the acquired businesses and realize anticipated
economic, operational and other benefits in a timely manner. If PSS is unable to
successfully integrate acquired businesses:
- it may incur substantial costs and delays;
- it may experience other operational, technical or financial problems;
- management's attention and other resources may be diverted; and
- relationships with PSS's key clients and employees may be damaged.
PSS'S STRATEGY FOR GROWTH MAY NOT RESULT IN ADDITIONAL REVENUE OR OPERATING
INCOME AND MAY HAVE AN ADVERSE EFFECT ON WORKING CAPITAL AND EARNINGS.
A key component of PSS's growth strategy is to increase sales to both
existing and new customers, including large chains, independent operators and
provider groups. PSS intends to accomplish this by:
- expanding its electronic-commerce initiatives and development;
- adding one or more new strategic distribution centers;
- expanding some existing distribution centers;
- hiring additional direct sales or other personnel; and
- increasing its national sales efforts.
PSS cannot assure you that these efforts will result in additional revenues
or operating income. PSS also anticipates continuing to grow through the opening
of start-up imaging and long-term care service centers. PSS anticipates these
start-ups to generally incur operating losses for approximately 18 months. This
expansion, therefore, entails risks, including:
- an adverse effect on working capital and earnings during the expansion
period;
- the incurrence of significant indebtedness; and
- significant losses from unsuccessful start-ups.
AS PSS CONTINUES TO INCREASE ITS SALES TO LARGE CHAINS AND CONSOLIDATING
PROVIDER GROUPS, IT MAY FACE COMPETITIVE PRICING PRESSURES.
PSS is expanding its business with large chains and consolidating provider
groups, especially in the long-term care market. This may result in competitive
pricing pressures. PSS's gross margins on these large group chains are lower
than average due to:
- additional negotiating leverage of large chains;
- vendor agreements containing volume discounts;
- customer volume specifications; and
- service specifications.
PSS'S GULF SOUTH SUBSIDIARY DEPENDS ON A LIMITED NUMBER OF LARGE CUSTOMERS.
Consolidation among long-term care providers, including several national
hospital and drug wholesale distributors and health care manufacturers, may
result in a loss of large customers. Gulf South's business depends on a limited
number of large customers for a significant portion of its net sales. As is
customary in its industry, Gulf South does not have long-term contracts with its
customers and sells on a purchase order basis only. The
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loss of, or significant declines in, the level of purchases by one or more of
these large customers would have a material adverse effect on our business and
results of operations. Gulf South has experienced failure to collect accounts
receivable from its largest customers, and continued adverse changes in the
financial condition of any of these customers could have a material adverse
effect upon our results of operations or financial condition.
PSS FACES LITIGATION AND LIABILITY EXPOSURE FOR SECURITIES CLASS ACTION CLAIMS.
PSS and certain of its current officers and directors are named as
defendants in a purported securities class action lawsuit entitled Jack Hirsch
v. PSS World Medical, Inc., et al., Civil Action No. 98-502-cv-J-20A. The
action, which was filed on or about May 28, 1998, is pending in the United
States District Court for the Middle District of Florida, Jacksonville Division.
An amended complaint was filed December 11, 1998. The plaintiff alleges, for
himself and for a purported class of similarly situated stockholders who
allegedly purchased PSS's stock between December 23, 1997 and May 8, 1998, that
the defendants engaged in violations of certain provisions of the Exchange Act,
and Rule 10b-5 promulgated thereunder. The allegations are based upon a decline
in the PSS stock price following announcement by PSS in May 1998 regarding the
Gulf South merger which resulted in earnings below analyst's expectations. The
plaintiff seeks indeterminate damages, including costs and expenses. PSS filed a
motion to dismiss the first amended complaint on January 25, 1999. The court
granted that motion without prejudice by order dated February 9, 2000.
Plaintiffs filed their second amended complaint on March 15, 2000. PSS filed a
motion to dismiss the second amended complaint on May 1, 2000, which is pending.
PSS believes that the allegations contained in the second amended complaint are
without merit and intend to defend vigorously against the claims. However, there
can be no assurance that this litigation will be ultimately resolved on terms
that are favorable to PSS.
PSS MAY BECOME SUBJECT TO PRODUCT LIABILITY LAWSUITS.
Although PSS does not manufacture products, the distribution of medical
supplies and equipment entails inherent risks of product liability. PSS is a
party to various legal and administrative legal proceedings and claims arising
in the normal course of business. However, to date PSS has not had significant
product liability claims and maintains product liability insurance coverage.
PSS NEEDS TO HIRE AND RETAIN QUALIFIED SALES REPRESENTATIVES AND SERVICE
SPECIALISTS TO CONTINUE ITS SALES GROWTH.
In PSS's experience, its ability to retain existing customers and attract
new customers is dependent upon:
- hiring and developing new sales representatives;
- adding, through acquisitions, established sales representatives whose
existing customers become customers of PSS;
- retaining those sales representatives; and
- hiring and retaining skilled service specialists in a tight market to
maintain radiology and imaging equipment for its diagnostic imaging
business.
AN INABILITY TO ADEQUATELY RETAIN SALES REPRESENTATIVES OR SERVICE SPECIALISTS
COULD LIMIT PSS'S ABILITY TO EXPAND ITS BUSINESS AND GROW SALES.
Due to relationships developed between PSS' sales representatives and its
customers, upon the departure of a sales representative, PSS faces the risk of
losing the representative's customers. This is particularly a risk where the
representative goes to work as a sales representative for a competitor. PSS
generally requires its sales representatives and service specialists to execute
a non-competition agreement as a condition of employment. PSS has not, however,
obtained these agreements from some of these employees. In addition, courts do
not always uphold the terms of non-competition agreements.
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PSS MAY NOT BE ABLE TO CONTINUE TO COMPETE SUCCESSFULLY WITH OTHER MEDICAL
SUPPLY COMPANIES.
The medical supply distribution market is very competitive. PSS's principal
competitors are the few full-line and full-service multi-market medical
distributors and direct manufacturers, most of which are national in scope. Many
of these national companies:
- have sales representatives competing directly with PSS;
- are substantially larger in size; and
- have substantially greater financial resources than PSS does.
PSS also competes with:
- local dealers; and
- mail order firms.
Most local dealers are privately owned and operate within limited product
lines. Several of PSS's mail order competitors distribute medical supplies on a
national or regional basis.
CONTINUED CONSOLIDATION WITHIN THE HEALTHCARE INDUSTRY MAY LEAD TO INCREASED
COMPETITION.
Consolidation within the healthcare industry has resulted in increased
competition by large national distributors and drug wholesalers. In response to
competitive pressures, PSS has lowered and may continue to lower selling prices
in order to maintain or increase its market share. These lower selling prices
have resulted and may continue to result in lower gross margins.
PSS could face additional competition because:
- many of its products can be readily obtained by competitors from various
suppliers;
- competitors could obtain exclusive rights to market a product to PSS's
exclusion;
- national hospital, drug wholesale distributors and healthcare
manufacturers could begin focusing their efforts more directly on the
long-term care market;
- hospitals forming alliances with long-term care facilities to create
integrated healthcare networks may look to hospital distributors and
manufacturers to supply their long-term care affiliates;
- as provider networks are created through consolidation among physician
provider groups, long-term care facilities and other alternate site
providers, purchasing decisions may shift to people with whom PSS has no
selling relationship; and
- PSS is increasingly focusing on national accounts where the purchasing
decision may not be made by PSS's traditional customers.
Therefore, PSS cannot assure you:
- that it will be able to maintain its customer relationships in such
circumstances;
- that such provider consolidation will not result in reduced operating
margins; or
- that it will not face increased competition and significant pricing
pressure in the future.
THE CONTINUED DEVELOPMENT AND GROWTH OF DIGITAL RADIOLOGY EQUIPMENT MAY
ADVERSELY AFFECT PROFITS FROM PSS'S IMAGING BUSINESS.
Recently, certain manufacturers have developed digital radiology equipment
that does not rely on film and film products. Film and film products constitute
a substantial percentage of the products distributed by PSS's imaging business.
PSS cannot assure you that the introduction and proliferation of digital
radiology or other technological changes will not result in a material adverse
change in its imaging business. While PSS anticipates that it will distribute
new imaging technology, PSS cannot assure you that it will obtain distribution
agreements
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or develop vendor relationships to distribute such new technology. In addition,
PSS cannot assure that it would be able to distribute any such new technology
profitably.
PSS MAINTAINS A SIGNIFICANT INVESTMENT IN PRODUCT INVENTORY WHICH EXPOSES IT TO
RISKS OF PRODUCT OBSOLESCENCE OR PRICE DECREASES.
In order to provide prompt and complete service to its customers, PSS
maintains a significant investment in product inventory at its warehouse
locations. Although PSS closely monitors inventory exposure through inventory
control procedures and policies, PSS cannot assure you that:
- such procedures and policies will continue to be effective; or
- unforeseen product development or price changes will not occur.
In addition, PSS may assume inventory of distributors it acquires. This
inventory may include product lines or operating assets not normally carried or
used by PSS. These product lines or assets may:
- be difficult to sell; and
- result in PSS writing off any such unsold inventory or unused assets in
the future.
PSS cannot assure you that such risks will not adversely affect its
business or results of operations.
THE EXPANSION OF THE TWO-TIERED PRICING STRUCTURE MAY PLACE PSS AT A COMPETITIVE
DISADVANTAGE.
As a result of the Non-Profit Act of 1944, the medical-products industry is
subject to a two-tier pricing structure. Under this structure, certain
institutions, originally limited to nonprofit hospitals, can obtain more
favorable prices for medical products than PSS. The two-tiered pricing structure
continues to expand as many large integrated health care providers and others
with significant purchasing power demand more favorable pricing terms. Although
PSS is seeking to obtain similar terms from its manufacturers, PSS cannot assure
you that it can obtain such terms. Such a pricing structure, should it persist,
may place PSS at a competitive disadvantage.
VENDOR PRODUCT RECALL AND MANUFACTURING ISSUES MAY NOT IMPROVE.
PSS's financial results in the quarter ended March 31, 2000 were negatively
impacted by product recalls and manufacturing problems of two key vendors. PSS
is not able to predict when the vendors will fix these problems or if it will be
able to obtain and market replacement products to satisfy the demands of its
customers in the physician and diagnostic imaging markets. If PSS is not able to
supply such products or replacement products, it may impact sales of other
products or lead to a loss of customers. In PSS supplies its customers with
replacement products, PSS may not be able to generate the same margins, further
reducing PSS's profitability.
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STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
The Securities and Exchange Commission encourages companies to disclose
forward-looking information so that investors can better understand a company's
future prospects and make informed investment decisions. This joint proxy
statement/prospectus contains such "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements may be made directly in this joint proxy statement/prospectus
referring to Fisher and PSS and they may also be made a part of this joint proxy
statement/prospectus by reference to other documents filed with the Securities
and Exchange Commission by Fisher and PSS, which is known as "incorporation by
reference." These statements may include statements regarding the period
following completion of the merger.
Words such as "anticipate," "estimate," "expects," "projects," "intends,"
"plans," "believes" and words and terms of similar substance used in connection
with any discussion of future operating or financial performance, or the merger
of Fisher and PSS, identify forward-looking statements. All forward-looking
statements are management's present expectations of future events and are
subject to a number of factors and uncertainties that could cause actual results
to differ materially from those described in the forward- looking statements. In
addition to the risks related to the businesses of Fisher and PSS, the factors
relating to the merger discussed in the "Risk Factors" section, among others,
could cause actual results to differ materially from those described in the
forward-looking statements. These factors include:
- relative value of Fisher's and PSS's stocks;
- the market's difficulty in valuing the business model of the combined
companies;
- conflicts of interest of directors recommending the merger and adverse
regulatory conditions.
- failure to achieve the benefits of the combination of PSS with Fisher,
some of which are discussed in this joint proxy statement/prospectus;
- the success of Fisher's strategy for the combined companies; and
- possibility that suppliers of PSS will change their respective
relationships with PSS as a result of the merger.
Stockholders are cautioned not to place undue reliance on the
forward-looking statements, which speak only of the date of this joint proxy
statement/prospectus or the date of the document incorporated by reference in
this joint proxy statement/prospectus. Neither Fisher nor PSS is under any
obligation, and each expressly disclaims any obligation, to update or alter any
forward-looking statements, whether as a result of new information, future
events or otherwise.
For additional information about factors that could cause actual results to
differ materially from those described in the forward-looking statements, please
see the quarterly reports on Form 10-Q and the annual reports on Form 10-K that
Fisher and PSS have filed with the Securities and Exchange Commission.
All subsequent forward-looking statements attributable to Fisher, PSS or
Fisher or any person acting on their behalf are expressly qualified in their
entirety by the cautionary statements contained or referred to in this section.
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FISHER SCIENTIFIC INTERNATIONAL INC.
Fisher Scientific International Inc. is a world leader serving science.
Fisher focuses on the global manufacturing, distribution and sourcing of
laboratory equipment, supplies and related consumables and the use, provision
and installation of web-enabled global integrated electronic-commerce
procurement technology and related services for customers in the research and
analytical testing, healthcare, science education and occupational safety
markets. As a result of Fisher's broad product offering, integrated global
logistics network and electronic-commerce technology, Fisher serves as a
one-stop source for the scientific research and clinical laboratory needs of its
customers. Fisher serves 250,000 customers located in 145 countries. It has
operations in North and South America, Europe, the Far East, the Middle East and
Africa through one or more subsidiaries, joint ventures, agents, and dealers.
THE INDUSTRY
Fisher markets its products to four principal customer groups:
- biotechnology, pharmaceutical, chemical, environmental and other
scientific laboratories engaged in scientific research and testing;
- independent clinical laboratories, hospitals and other healthcare
providers that perform diagnostic tests on patients;
- research institutions, medical schools, universities, colleges,
elementary and secondary schools; and
- users of occupational health and safety products in production and other
activities.
Fisher manages its business in three segments: U.S. distribution, International
distribution and Laboratory Workstations.
U.S. Distribution. Fisher's U.S. distribution segment is focused on the
manufacturing, distribution and sourcing principally for the following customer
groups:
Scientific Research. The scientific research supply market consists
primarily of the manufacture, distribution and sourcing of a wide range of
scientific instruments, research chemicals, clinical consumables,
diagnostic reagents and other supplies and consumables to a wide range of
scientific research, industrial and educational customers. During 1999, the
scientific research supply market in the U.S. was approximately $8 billion.
Clinical Laboratory Testing. The clinical laboratory testing market
consists primarily of the distribution and sourcing of a broad range of
clinical consumables, diagnostic reagents, equipment and supplies to
independent clinical laboratories, hospitals and other healthcare providers
in the United States. In addition, Fisher serves as the prime vendor to
member organizations of group purchasing organizations. Sales of medical
supplies and equipment are estimated at approximately $40 billion. Fisher
estimates that the clinical testing equipment and supply market, the market
which it serves, totals approximately $8 billion.
Safety Supply. The safety supply market consists of the distribution
and sourcing of occupational health and safety products to customers
involved in production and other activities. Sales of occupational health
and safety products is estimated to be approximately $7 billion.
International Distribution. Fisher's international distribution segment is
focused on the manufacturing, distribution and sourcing of laboratory equipment
and supplies and safety products for scientific research, healthcare and
industrial concerns outside of the U.S., including Canada, Europe, the Far East
and Latin America. The international markets served by Fisher are estimated at
$12 billion.
Laboratory Workstations. Fisher is a leading manufacturer and distributor
of laboratory workstations, fume hoods used to provide ventilation and
enclosures for technology and communication centers.
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PRODUCTS AND SERVICES
Fisher currently has over 360,000 products available for delivery from its
Internet and other electronic and non electronic order-entry systems and is
continuously expanding and refining its product offerings to provide its
customers with a complete array of laboratory and clinical testing supplies. In
addition to supplying leading brands of instruments, supplies and equipment,
Fisher offers research chemicals, clinical consumables, instruments,
diagnostics, and laboratory workstations of its own manufacture.
Fisher Products. Fisher's product portfolio is comprised of proprietary
products as well as sourced products. Proprietary offerings consist of private
label, self-manufactured products and products sold through exclusive
distribution agreements. Management estimates that proprietary products
accounted for over 40% of Fisher's sales in 1999 and for the first six months of
2000. Consumable products, such as laboratory supplies and specialty chemicals,
have historically represented approximately 80% of Fisher's total sales.
Sales and Customer Service Professionals. Fisher provides customer support
through a worldwide sales and customer service network. Fisher's direct sales
force consists of over 1,400 account representatives and product/systems sales
specialists worldwide. Most of the members of Fisher's direct sales force have
scientific or medical backgrounds, which enable them to provide technical
assistance to the end users of Fisher products. In addition to performing
traditional selling functions, these representatives identify customer needs and
help translate those needs into new services or products, which may be
manufactured by either Fisher or its suppliers. In addition, Fisher's customer
service organization includes over 1,200 representatives worldwide who,
supported by a scientific and technical staff, respond to end-user product or
application questions and assist Fisher's customers with efficient order entry
and order expediting.
Electronic Commerce. Fisher has been a leader and pioneer of
electronic-commerce initiatives for over 30 years dating back to its first
proprietary electronic ordering system introduced in 1967. Fisher's business can
be described as operating a marketplace since Fisher links buyers and sellers
through the flow of information, services and products. Serving as an
intermediary to millions of transactions each year, Fisher is uniquely qualified
to understand the electronic-commerce needs of both customers and suppliers.
More recently, Fisher launched its industry-leading web site,
fishersci.com, a web-enabled, electronic-procurement system that can be easily
implemented throughout our customers' organization. Over 360,000 products can be
purchased on-line through fishersci.com including products that we source
directly from manufacturers and other suppliers. Fishersci.com can be customized
to individual customers' needs and seamlessly integrated into their enterprise
resource planning system. In addition, the system is integrated into Fisher's
logistics and customer service systems allowing customers to have real time
access to product availability, pricing and order status. Fisher has invested in
other electronic-commerce initiatives to enhance the products and services
available to our customers including on-line research publications and safety
training programs.
In March 2000, Fisher combined all of its electronic-commerce initiatives
under a newly formed, wholly-owned subsidiary named Alchematrix. Alchematrix
incorporates all of the features and functionality of fishersci.com and will
serve Fisher customers in each of our key markets: scientific research and
education, clinical laboratories and safety products.
Fisher Catalog. The Fisher Catalog has been published for over 90 years and
is a standard reference for the scientific community worldwide. In addition,
Fisher publishes the Fisher HealthCare catalog, the Acros Organics Catalog of
Fine Chemicals, the Fisher Chemical catalog, the Fisher Science Education
catalog and the Fisher Scientific Safety Products Manual, as well as several
international catalogs in eight different languages. More than one million
copies of Fisher's various catalogs are produced biannually, with supplements
tailored to specific market segments such as biotechnology, research chemicals,
educational materials and occupational health and safety.
DISTRIBUTION, MANUFACTURING AND SUPPLIERS
Fisher's distribution network comprises 25 locations in the U.S., including
a national distribution center in Somerville, New Jersey, four regional centers
(Massachusetts, California, Illinois and Georgia) and 22 local
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facilities throughout the United States. Fisher also has two distribution
centers in each of Canada and France and one center each of Germany, England,
Singapore, Korea, Malaysia, Hong Kong, Mexico and Switzerland. Through its
worldwide distribution network, Fisher distributes an average of almost 50,000
items every business day, with products accounting for more than 90% of sales in
1999 shipped to customers within 24 hours of being ordered.
Fisher operates principal manufacturing facilities in Fair Lawn, Somerville
and Swedesboro, New Jersey; Two Rivers, Wisconsin; Indiana and Pittsburgh,
Pennsylvania; Loughborough, United Kingdom; Geel, Belgium; Rochester and
Conklin, New York; Mountain Home, Arkansas; and Middletown, Virginia. Products
manufactured include: research, bulk and organic chemicals; laboratory
equipment; laboratory fume hoods; wood, plastic and metal laboratory
workstations and furniture; computer local area network furniture; scientific
glassware and plastic labware; and diagnostic instruments and educational
materials.
Fisher's manufacturing operations are operated on a basis to complement the
Company's distribution organization by providing the Company's sales
representatives with a full range of value added service and product offerings
and to position the Company as a one-stop source for all of its customers'
scientific research, analytical testing and laboratory needs.
In addition to selling its own manufactured products, Fisher distributes
laboratory instruments, supplies and equipment obtained from approximately 4,500
vendors. Vendors generally offer these products to all distributors on
substantially similar terms. Although certain products are available from only a
limited number of vendors, Fisher believes that it will be able to continue to
purchase all of the products it currently distributes. Fisher is not materially
dependent or any single supplier or group of suppliers. The products of Fisher's
largest supplier accounted for approximately 9% of Fisher's sales in 1999 and
the first six months of 2000.
BUSINESS RATIONALE AND STRATEGY FOR THE COMBINED COMPANY
Over the last few years, several trends have impacted the distribution of
medical equipment and supplies to the U.S. healthcare market, including:
- Initiatives to control the rising costs of healthcare services, impacting
all industry participants, from suppliers, to healthcare providers, to
patients.
- Rapid pace of new product introductions driven by increased spending on
research and development, placing significant demands on the distribution
chain and procurement management and costs.
- Emergence of group purchasing organizations, or GPOs, and integrated
delivery networks, or IDNs, in order to aggregate the purchasing power of
individual healthcare providers. To reduce their procurement costs, over
the last few years, healthcare providers have been consolidating their
vendor base or outsourcing their procurement functions, enhancing their
leverage in dealings with suppliers and distributors.
- The consolidation of healthcare product manufacturers and distributors.
This trend has been in response to initiatives to control costs of
healthcare services, increased demand for research and development
spending and the increased leverage of end users.
- Electronic-commerce initiatives designed to streamline and reduce
procurement costs throughout the healthcare supply chain, particularly
with the growth and rapid acceptance of Internet-based business-to-
business solutions.
The combination of Fisher and PSS will create a diversified healthcare and
scientific product supplier with revenues of $4.3 billion from more than 400,000
customers around the world. The combined company will have $2.5 billion of sales
to a wide range of healthcare providers, which complements Fisher's existing
$1.8 billion of sales to entities engaged in scientific research and industrial
testing. The companies have common characteristics and distinct expertise that
can be more effectively leveraged on a combined basis. Fisher's management has
demonstrated financial and operational discipline, technology leadership and the
ability to achieve long-term earnings growth. PSS is a sales driven company with
expertise in sales, marketing and customer service. Both Fisher and PSS have
national distribution networks capable of processing a high volume of
transactions with
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small average order sizes and delivering a high level of customer service. The
competitive strengths of the combined company will include:
- a broader product offering of self-manufactured, private label and name
brand products with over 80% of revenues representing recurring
consumable items and 20% of revenues representing higher value equipment
and instrumentation sales;
- a broader customer base consisting of leading organizations throughout
the healthcare industry;
- electronic-commerce leadership;
- integrated global sourcing, technology and logistics capability; and
- a continuing leadership position in the scientific research market.
By leveraging the strengths of Fisher and PSS, two market leaders, Fisher
believes that the combined company will be better positioned to capitalize on
recent industry trends and realize increased stockholder value through greater
earnings growth and profitability than Fisher and PSS would be individually. To
achieve these goals, the combined company will pursue the following strategies.
Leverage Larger Product Lines Across Greater Customer Base and Attract New
Customers. Each of the companies has exclusive and non-exclusive relationships
along with hundreds of healthcare suppliers. Many of these relationships are
separate and distinct from those of the other. When combined, the company will
have a depth and breadth of hundreds of thousands of products. This product
offering will enable the combined company to compete more effectively in the $40
billion medical equipment and supplies marketplace than either company could
individually, providing the combined company with a superior opportunity to
become the prime vendor to more GPOs and IDNs.
Bring Fisher's Financial Control, Logistics Infrastructure and Technology
Strength to PSS's Sales and Marketing Expertise. Fisher and PSS have
complementary organizational strengths. Fisher's management team has an
established track record of delivering increased value to shareholders and
acquiring, integrating and managing diverse businesses. Fisher intends to
implement a more centralized financial and operational management approach to
PSS in order to improve our ability to proactively manage the business and
increase profits. PSS has achieved growth through its sales and marketing
expertise and customer service in an entrepreneurial, decentralized environment.
Fisher intends to enhance its sales and marketing efforts by accessing PSS's
expertise while applying its disciplined financial and operational approach to
improve PSS's profitability.
Exploit Enhanced Electronic-Commerce Capabilities. Fisher and PSS have each
developed electronic-commerce capabilities targeting both the healthcare and
scientific research marketplaces. Through its electronic-commerce subsidiary,
Alchematrix, Fisher is the leading electronic-commerce solution serving science
and it is expanding its capabilities in the clinical healthcare market. Among
other things, Alchematrix offers a robust web-enabled, on-line procurement
system for both end users and purchasing professionals designed to streamline
purchasing and reduce costs. Alchematrix is expected to generate approximately
$140 million of sales in 2000, which can be increased by offering the
Alchematrix solution to PSS's physician office and long-term care customers. PSS
has developed and implemented a web-enabled sales force automation tool that
enhances sales force productivity and streamlines the internal order entry
process which may be adaptable to one or more of Fisher's sales organizations.
Fisher believes that these initiatives will lead to opportunities to increase
sales growth and improve profit margins. Additionally, by sharing in the cost of
developing and marketing these new electronic-commerce initiatives and solutions
the combined company expects to further reduce costs.
Build on Fisher's International Presence to Expand PSS's Overseas
Opportunities. Fisher currently serves 145 countries through direct presence in
30 countries, a broad network of dealers and export programs. Fisher intends to
use its existing infrastructure and twelve non-U.S. distribution facilities to
expand PSS's overseas opportunities. Fisher believes that it can accelerate its
growth in international markets by utilizing PSS's supplier relationships
outside of the United States.
Increase Private Label Business. Currently, Fisher generates approximately
20% of its sales through private label products, half of which are manufactured
in Fisher's facilities, while PSS's private label sales
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represent only about 6% of sales. The combined company will seek to leverage
Fisher's success in private label and self-manufacturing capabilities and expand
PSS's private label business resulting in increased profitability for the
combined company.
Anticipated Synergies. Fisher has identified approximately $30 million of
profit improvement expected to be realized over the first three years following
the acquisition. The areas of synergies include logistics and distribution,
centralization of certain back office and accounting functions and product
sourcing opportunities. In addition, Fisher believes that there may be other
profit improvement opportunities, including opportunities to reduce PSS's
investment in working capital. If this occurs it may give the combined company
access to additional cash to reinvest in the business or pay down debt. Although
Fisher is unable to quantify the potential impact or provide assurances that
Fisher will be able to successfully implement any of these opportunities, Fisher
believes PSS's profitability could be enhanced through these types of
initiatives. These initiatives will require careful analysis prior to
implementation in order to minimize any potential disruption to customers,
suppliers and employees.
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THE FISHER SPECIAL MEETING
DATE, TIME AND PLACE OF THE FISHER SPECIAL MEETING
The Fisher special meeting is scheduled to be held as follows:
, 2000
10:00 a.m., local time
Mellon Bank Building
8 Loockerman Street
Dover, Delaware 19904
PURPOSE OF THE FISHER SPECIAL MEETING
The Fisher special meeting is being held so that Fisher stockholders may
consider and vote upon proposals to
- issue new shares of Fisher common stock pursuant to the merger agreement,
- adopt the Fisher Scientific International Inc. 2000 Equity and Incentive
Plan and make available shares for issuance under this plan,
- amend Fisher's certificate of incorporation to increase the number of
authorized shares of capital stock, and
- transact any other business that properly comes before the special
meeting or any adjournment or postponement of the special meeting.
STOCKHOLDER RECORD DATE FOR THE FISHER SPECIAL MEETING
Fisher's board of directors has fixed the close of business on
, 2000 as the record date for determination of Fisher stockholders
entitled to notice of and to vote at the special meeting. On the record date,
there were shares of Fisher common stock outstanding, held by
approximately holders of record.
VOTE REQUIRED FOR APPROVAL OF THE ISSUANCE OF COMMON STOCK PURSUANT TO THE
MERGER AGREEMENT
A majority of the outstanding shares of Fisher voting common stock must be
represented, either in person or by proxy, to constitute a quorum at the Fisher
special meeting. The affirmative vote of the holders of a majority of the
outstanding shares of Fisher's voting common stock as of the record date is
required to adopt the merger agreement. At the Fisher special meeting, each
share of Fisher voting common stock is entitled to one vote on all matters
properly submitted to the Fisher stockholders. Holders of Fisher non-voting
common stock and Series B non-voting common stock are not entitled to vote.
As a result of a voting agreement among PSS and certain stockholders of
Fisher, the holders of a majority of the outstanding shares of Fisher voting
common stock are obligated to vote in favor of the proposal to issue shares of
Fisher common stock in the merger. It is expected, therefore, that the proposal
to issue shares of Fisher common stock pursuant to the merger agreement will be
approved, regardless of the vote of Fisher stockholders not a party to the
voting agreement. These Fisher stockholders have also indicated that they will
vote in favor of the proposals for the adoption of the 2000 Equity and Incentive
Plan and the increase in the number of authorized shares of common stock.
As of the record date there were shares of Fisher common stock
outstanding. As of the record date, Fisher directors and executive officers and
their affiliates owned approximately % of the outstanding shares of Fisher
common stock.
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PROXIES
Shares of Fisher common stock that are entitled to vote and are represented
by a proxy properly signed and received at or prior to the Fisher special
meeting, unless subsequently properly revoked, will be voted in accordance with
the instructions indicated thereon. If a proxy is signed and returned without
indicating any voting instructions, shares of Fisher common stock represented by
such proxy will be voted for the proposal to approve the issuance of Fisher
common stock pursuant to the merger agreement, the adoption of the 2000 Equity
and Incentive Plan and the increase in the number of authorized shares of common
stock. The board of directors of Fisher is not currently aware of any business
to be acted upon at the Fisher special meeting other than as described herein.
If, however, other matters are properly brought before the Fisher special
meeting or any adjournments or postponements thereof shall occur, the persons
appointed as proxies will have discretion to vote or act thereon in accordance
with their best judgment. The persons appointed as proxies may not exercise
their discretionary voting authority to vote any proxy in favor of any
adjournments or postponements of the Fisher special meeting if such proxy
contains an instruction to vote against the approval of the issuance of Fisher
common stock pursuant to the merger agreement or any of the other proposals set
forth on the proxy card.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before the shares represented by such proxy are voted at
the Fisher special meeting by:
- attending and voting in person at the special meeting;
- giving notice of revocation of the proxy at the Fisher special meeting;
- delivering to the secretary of Fisher
- a written notice of revocation or
- a duly executed proxy relating to the same shares and matters to be
considered at the Fisher special meeting, bearing a date later than
the proxy previously executed.
Attendance at the Fisher special meeting will not in and of itself constitute a
revocation of a proxy. All written notices of revocation and other
communications with respect to revocation of proxies should be addressed as
follows: Fisher Scientific International Inc., Liberty Lane, Hampton, New
Hampshire 03842, Attention: Secretary, and must be received before the taking of
the votes of the Fisher special meeting.
VOTING ELECTRONICALLY OR BY TELEPHONE
Delaware, the state in which Fisher is incorporated, permits electronic
submission of proxies through the Internet or by telephone, instead of
submitting proxies by mail on the enclosed proxy card. Therefore, many Fisher
stockholders will have the option to submit their proxies or voting instructions
electronically through the Internet or by telephone. Please note that there are
separate arrangements for using the Internet and telephone depending on whether
your shares are registered in your company's stock records, in your name or in
the name of a brokerage firm or bank. Stockholders should check their proxy card
or voting instructions forwarded by their broker, bank or other holder of record
to see which options are available.
The Internet and telephone procedures described below for submitting your
proxy or voting instructions are designed to authenticate stockholders'
identities, to allow stockholders to have their shares voted and to confirm that
their instructions have been properly recorded. Stockholders submitting proxies
or voting instructions via the Internet should understand that there may be
costs associated with electronic access, such as usage charges from Internet
access providers and telephone companies, that would be borne by the
stockholder.
Fisher common stock holders of record may submit their proxies:
- through the Internet by visiting a website established for that purpose
at and following the instructions; or
- by telephone by calling the toll-free number and following
the recorded instructions. Stockholders residing outside the United
States can call collect on a touch-tone phone and follow
the recorded instructions.
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SOLICITATION OF PROXIES
Proxies are being solicited by and on behalf of the Fisher board. Fisher
will bear the cost of solicitation of proxies from its own stockholders, except
that Fisher and PSS will share the expenses related to printing this joint proxy
statement/prospectus, as well as all mailing and Securities and Exchange
Commission filing fees incurred in connection with the joint proxy
statement/prospectus. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation material
to the beneficial owners of Fisher shares held of record by such persons, and
Fisher will reimburse its custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses in connection therewith. In addition to
soliciting proxies by mail, officers, directors and employees of Fisher, without
receiving additional compensation, may solicit proxies by telephone, telegraph,
in person or by other means.
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THE PSS SPECIAL MEETING
DATE, TIME AND PLACE OF THE PSS SPECIAL MEETING
The PSS Special Meeting is scheduled to be held as follows:
, 2000
10:00 a.m., local time
PSS World Medical, Inc.
4345 Southpoint Boulevard
Jacksonville, Florida 32216
PURPOSE OF THE PSS SPECIAL MEETING
The PSS Special Meeting is being held so that PSS stockholders may consider
and vote upon a proposal to approve and adopt the Agreement and Plan of Merger,
dated June 21, 2000, by and among Fisher, PSS and FSI Merger Corporation, a
wholly owned subsidiary of Fisher. At the effective time of the merger, FSI
Merger Corporation will be merged with and into PSS with PSS being the surviving
corporation. As a result of the merger, PSS will become a wholly owned
subsidiary of Fisher. Each share of PSS common stock will be converted in the
merger into 0.3121 of a share of Fisher common stock.
STOCKHOLDER RECORD DATE FOR THE PSS SPECIAL MEETING
PSS's board of directors has fixed the close of business on
, 2000 as the record date for determination of PSS's stockholders
entitled to notice of and to vote at the PSS special meeting. On the record
date, there were shares of PSS common stock outstanding, held by
approximately holders of record.
VOTE REQUIRED FOR APPROVAL OF THE MERGER
A majority of the outstanding shares of PSS common stock must be
represented, either in person or by proxy, to constitute a quorum at the PSS
special meeting. The affirmative vote of the holders of a majority of the
outstanding shares of PSS common stock outstanding as of the record date is
required to approve and adopt the merger agreement. At the PSS special meeting,
each share of PSS common stock is entitled to one vote on all matters properly
submitted to the PSS stockholders.
As of the date of record date there were shares of PSS
common stock outstanding. As of the record date, PSS directors and executive
officers and their affiliates owned of record approximately % of the
outstanding PSS common stock.
PROXIES
Shares of PSS common stock that are entitled to vote and are represented by
a proxy properly signed and received at or prior to the PSS special meeting,
unless subsequently properly revoked, will be voted in accordance with the
instructions indicated thereon. If a proxy is signed and returned without
indicating any voting instructions, shares of PSS common stock represented by
such proxy will be voted FOR the proposal to approve and adopt the merger
agreement. The board of directors of PSS is not currently aware of any business
to be acted upon at the PSS special meeting other than as described herein. If,
however, other matters are properly brought before the PSS special meeting or
any adjournments or postponements thereof shall occur, the persons appointed as
proxies will have discretion to vote or act thereon in accordance with their
best judgment. The persons appointed as proxies may not exercise their
discretionary voting authority to vote any proxy in favor of any adjournments or
postponements of the PSS special meeting if such proxy contains an instruction
to vote against the approval of the merger agreement.
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Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before the shares represented by such proxy are voted at
the PSS special meeting by:
- attending and voting in person at the PSS special meeting;
- giving notice of revocation of the proxy at the PSS special meeting;
- delivering to the secretary of PSS
- a written notice of revocation or
- a duly executed proxy relating to the same shares and matters to be
considered at the PSS special meeting, bearing a date later than the
proxy previously executed.
Attendance at the PSS special meeting will not in and of itself constitute
revocation of a proxy. All written notices of revocation and other
communications with respect to revocation of proxies should be addressed as
follows: PSS World Medical, Inc. 4345 Southpoint Boulevard, Jacksonville,
Florida 32216, Attention: Secretary, and must be received before the taking of
the votes at the PSS special meeting.
VOTING ELECTRONICALLY OR BY TELEPHONE
Florida, the state in which PSS is incorporated, permits electronic
submission of proxies through the Internet or by telephone, instead of
submitting proxies by mail on the enclosed proxy card. Therefore, many PSS
stockholders will have the option to submit their proxies or voting instructions
electronically through the Internet or by telephone. Please note that there are
separate arrangements for using the Internet and telephone depending on whether
your shares are registered in your company's stock records, in your name or in
the name of a brokerage firm or bank. Stockholders should check their proxy card
or voting instructions forwarded by their broker, bank or other holder of record
to see which options are available.
The Internet and telephone procedures described below for submitting your
proxy or voting instructions are designed to authenticate stockholders'
identities, to allow stockholders to have their shares voted and to confirm that
their instructions have been properly recorded. Stockholders submitting proxies
or voting instructions via the Internet should understand that there may be
costs associated with electronic access, such as usage charges from Internet
access providers and telephone companies, that would be borne by the
stockholder.
PSS holders of record may submit their proxies:
- through the Internet by visiting a website established for that purpose
at and following the instructions; or
- by telephone by calling the toll-free number and following
the recorded instructions. Stockholders residing outside the United
States can call collect on a touch-tone phone and follow
the recorded instructions.
SOLICITATION OF PROXIES
Proxies are being solicited by and on behalf of the PSS board. PSS will
bear the cost of solicitation of proxies from its own stockholders, except that
Fisher and PSS will share the expenses related to printing this joint proxy
statement/prospectus, as well as all mailing and Securities and Exchange
Commission filing fees incurred in connection with the joint proxy
statement/prospectus. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation material
to the beneficial owners of PSS shares held of record by such persons, and PSS
will reimburse its custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses in connection therewith. In addition to soliciting
proxies by mail, officers, directors and employees of PSS, without receiving
additional compensation, may solicit proxies by telephone, telegraph, in person
or by other means. PSS has also made arrangements with to
assist in soliciting proxies from stockholders.
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THE MERGER
This section of the joint proxy statement/prospectus describes material
aspects of the proposed merger, including the merger agreement. While we believe
that the description covers the material terms of the merger, this summary may
not contain all of the information that is important to you. You should read
this entire joint proxy statement/prospectus and the other documents we refer to
carefully for a more complete understanding of the merger. In addition, we
incorporate important business and financial information about each of us into
this joint proxy statement/prospectus by reference. You may obtain the
information incorporated by reference into this joint proxy statement/prospectus
without charge by following the instructions in the section entitled "Where You
Can Find More Information" that begins on page 98 of this joint proxy
statement/prospectus.
BACKGROUND OF THE MERGER
At a meeting held on January 22, 2000, the PSS board considered the
preliminary results of its third quarter ended December 31, 1999, including
product recalls and the shortfall of shipments from several of its equipment
suppliers which negatively impacted revenues of its physician and imaging
businesses. The board addressed ways to increase stockholder value, including
the pursuit of strategic alternatives that might result in a business
combination involving all or a part of PSS. The board hired Donaldson, Lufkin &
Jenrette Securities Corporation, or DLJ, to assist PSS in exploring its
strategic alternatives.
On January 24, 2000, the PSS board announced results for PSS's third
quarter and that it had engaged DLJ to pursue strategic alternatives. Following
the announcement, Fisher contacted PSS to express Fisher's interest in pursuing
an acquisition of PSS. At PSS's direction Fisher contacted DLJ to express its
interest in PSS.
DLJ set up a process for evaluating these alternatives, which included the
preparation of confidential information memoranda regarding each of the specific
operating divisions of PSS. DLJ identified the most likely strategic partners
for and purchasers of PSS. Several interested parties signed confidentiality
agreements and received copies of the confidential information memoranda. On
March 17, 2000, Fisher executed a confidentiality agreement with DLJ as PSS's
agent. On March 20, 2000, DLJ sent to Fisher the Confidential Information
Memoranda regarding PSS.
On March 29, 2000, PSS held a board meeting at Ponte Vedra Beach, Florida,
which was also attended by its financial and legal advisors. At this meeting,
the board received a report regarding the process that had been undertaken by
DLJ and the status of confidentiality agreements and discussions with third
parties. The board also discussed a potential timetable for further
consideration of the strategic alternatives.
On April 3, 2000, Fisher attended PSS management presentations at Ponte
Vedra Beach, Florida, at which officers from each of PSS's three operating
divisions outlined in broad terms the nature of its business and its
organizational structure, financial performance, market and industry trends.
Thereafter, Fisher conducted additional due diligence of PSS, primarily based on
publicly-available information and discussions with members of senior management
of PSS.
On April 12, 2000, Fisher submitted a preliminary, non-binding proposal to
acquire PSS in a stock-for-stock transaction. DLJ informed Fisher that it was
one of several bidders invited by PSS to conduct additional due diligence.
On April 17, 2000 the PSS board of directors met telephonically with
financial and legal advisors to receive an update on the process, the
preliminary indications of interest and the timing of any potential transaction.
On May 3 and 4, 2000, Fisher personnel, including its legal and accounting
advisors, attended a data room at the offices of Alston & Bird LLP, counsel to
PSS, in Atlanta to conduct further due diligence regarding PSS.
On May 10 and 11, 2000, Fisher attended meetings at Ponte Vedra Beach,
Florida with PSS executives and operations management to obtain more detailed
information regarding PSS's operations, financial performance, sales force,
products and customers in order to evaluate potential synergies and prepare a
revised proposal.
On May 19, 2000, the designated deadline for the submission of proposals,
Fisher submitted a revised, non-binding proposal to acquire PSS in a
stock-for-stock transaction, including its proposed changes to the form of
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merger agreement forwarded by DLJ. At that time, Fisher also engaged Lazard
Freres to act as its financial advisor and to undertake a study to enable it to
render an opinion in connection with the possible acquisition of all or a
portion of PSS.
On May 22, 2000, PSS held a telephonic board meeting at which DLJ presented
a summary of the final proposals to the board of PSS. On May 26 and 31, 2000,
PSS held telephonic board meetings at which management, financial and legal
advisors updated the PSS board members on the progress of the ongoing
conversations with third parties and the status of their due diligence efforts.
On May 31, 2000, Fisher and PSS held a conference call to discuss the
preliminary results of PSS's preparation of its financial statements for the
quarter and year ended March 31, 2000. Management for the parties held further
discussions regarding the possibilities for increasing revenues, possible
synergies and costs savings and the proposed financial assumptions upon which
the respective valuation models of the two companies would be built.
On June 2, 5, and 6, 2000, the PSS board held additional telephonic
meetings at which management, financial and legal advisors updated the board on
the status of discussions and negotiations with third parties and the timing of
future contacts.
On June 8, 2000, Fisher, PSS and their respective financial and legal
advisors met in New York to negotiate the terms of the transaction and to
develop a plan for addressing the open due diligence items. PSS's management and
advisors commenced their due diligence of Fisher, which included a review of
information in a data room at Fisher's offices in Hampton, New Hampshire from
June 10 through June 12, 2000 and a detailed presentation by Fisher management
on June 12, 2000.
Fisher, PSS and their advisors began negotiation of the terms of the
agreements for the merger beginning on June 8, 2000. Fisher and PSS continued
their due diligence of each other.
On June 11, 2000, PSS held a telephonic board meeting to discuss the
results of the meeting held in New York on June 8, 2000 and the initial terms of
a transaction with Fisher and primary open issues.
On June 13 and 14, 2000, PSS held telephonic board meetings to update the
board on the status of the negotiations. In addition, after the June 14 board
meeting, representatives of Fisher presented a background of the senior
management, business operations, financial position and capital and governance
structure of Fisher to the PSS board.
On June 17, 2000, the board of Fisher met telephonically, during which the
management of Fisher presented the proposed transaction to its board of
directors.
On June 17, 2000, the PSS board met at PSS's offices in Jacksonville,
Florida. At this meeting, the management, financial, accounting and legal
advisors to PSS presented the proposed transaction to the PSS board. The parties
updated the board on their continuing due diligence of Fisher, the status of the
negotiations and the agreements and the remaining open issues to be addressed
before a transaction could be finalized. The board agreed to reconvene the
following week once additional information was available.
Negotiations and additional due diligence continued through June 21, 2000.
The transaction was approved by the Fisher board unanimously during a conference
call on the evening of June 21, 2000. The board of PSS also held a telephonic
meeting on the evening of June 21, 2000, at which management and PSS's advisors
updated the board on the negotiations and final agreements. At that time, the
PSS board approved the merger by a seven to one vote. Mr. Charles Scott
dissented to the transaction due to his concerns regarding the merger, primarily
the lack of liquidity of Fisher common stock, the lack of a termination right by
the PSS board in the event that the Fisher stock price declined below a certain
level and the equity interest of an affiliate of DLJ in Fisher.
Following these board meetings, the documentation was completed and
definitive agreements relating to the merger were executed. The merger was
publicly announced early on June 22, 2000.
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FISHER'S REASONS FOR THE MERGER
The combination of Fisher and PSS will create a diversified healthcare and
scientific product supplier with revenues of $4.3 billion from more than 400,000
customers around the world. The combined company will have $2.5 billion of sales
to a wide range of healthcare providers, which complements Fisher's existing
$1.8 billion of sales to entities engaged in scientific research and industrial
testing. The companies have common characteristics and distinct expertise that
can be more effectively leveraged on a combined basis. Fisher's management has
demonstrated financial and operational discipline, technology leadership and
long-term earnings growth. PSS is a sales driven company with expertise in
sales, marketing and customer service. Both Fisher and PSS have national
distribution networks capable of processing a high volume of transactions with
small average order sizes and delivering a high level of customer service. The
competitive strengths of the combined company will include:
- a broader product offering of self-manufactured, private label and name
brand products with over 80% of revenues representing recurring
consumable items and 20% of revenues representing higher value equipment
and instrumentation sales;
- a broader customer base consisting of leading organizations throughout
the healthcare industry;
- electronic-commerce leadership;
- integrated global sourcing and logistics capability; and
- a continuing leadership position in the scientific research market.
Fisher believes that by leveraging the strengths of Fisher and PSS, two
market leaders, the combined company will be better positioned to capitalize on
recent industry trends and realize increased stockholder value through greater
earnings growth and profitability than Fisher and PSS would be individually.
Fisher's strategy for the combined company is described in more detail in
"Fisher Scientific International Inc. -- Business Rational and Strategy for the
Combined Company."
Information and Factors Considered by the Fisher Board of Directors. In
connection with its approval of the merger and its determination that the merger
is fair to and in the best interest of Fisher's stockholders and its
recommendation, the board of directors of Fisher consulted with Lazard Freres &
Co. LLC, its financial advisor, and with its legal advisors, including its
general counsel and representatives of Debevoise & Plimpton, outside counsel on
the transaction, regarding the duties of the members of the board. The Fisher
board also considered the following material information and factors in reaching
its determination to approve the merger, to conclude that the merger is fair to
and in the best interest of Fisher's stockholders, and to recommend that
stockholders adopt the merger agreement:
- the strategic fit of Fisher and PSS, including the belief that the merger
has the potential to enhance stockholder value through the numerous
growth opportunities and synergies resulting from combining the two
companies' complementary strengths and assets, including:
- utilizing complementary and common vendors, products and customers;
- increasing PSS's private label business and utilizing Fisher's
self-manufacturing capabilities to improve PSS's private label gross
margins;
- leveraging Fisher's global presence and strategic sourcing
capabilities; and
- enhancing Fisher's electronic-commerce capabilities by including
PSS's electronic-commerce activities in Alchematrix;
- the reasons described under "Fisher Scientific International
Inc. -- Business Rationale and Strategy for Combined Company";
- the exchange ratio being used in the merger and the resulting continuing
64.4% ownership interest in Fisher by Fisher's stockholders and the
history of the negotiations between Fisher and PSS;
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<PAGE> 61
- presentations by senior members of Fisher's management regarding the
strategic advantages of combining with PSS, operational aspects of the
transaction, and the results of management's operational and legal due
diligence review;
- historical information concerning Fisher's and PSS's respective
businesses, financial performance and condition, operations, technology,
management, competitive position, and stock performance;
- Fisher management's view as to the financial condition, results of
operations and businesses of Fisher and PSS before and after giving
effect to the merger based on management's due diligence and publicly
available earnings estimates;
- the analyses prepared by Lazard, Freres & Co. LLC and presented to the
board of directors of Fisher, and its written opinion, to the effect
that, as of June 21, 2000, and based on and subject to the various
considerations set forth in its opinion, the exchange ratio of Fisher
common stock for shares of PSS common stock was fair from a financial
point of view to Fisher;
- the terms and conditions of the merger agreement, including the fact that
the exchange ratio is fixed, the agreement of certain Fisher stockholders
to vote in favor of the issuance of Fisher common stock in the merger,
the limitations on the interim business operations of each of Fisher and
PSS, the conditions to consummation of the merger, the right of the
parties to the merger agreement, under certain circumstances, to respond
to, evaluate and negotiate with respect to other business combination
proposals, the circumstances under which the merger agreement could be
terminated and the size and impact of termination fees associated with a
termination; the grant by PSS of an option to purchase shares of PSS
common stock by Fisher, as well as the advice of Fisher's financial and
legal advisors that these provisions were reasonable in the context of
the transaction;
- the representations and warranties and conditions obtained by Fisher in
the merger agreement pertaining to the relationships between PSS and its
suppliers, and the condition regarding the implementation of J.D. Edwards
& Company's OneWorld ERP System;
- the corporate governance arrangements established for the transaction,
including the board composition, designation of key senior management and
the establishment of an integration committee, which are designed to
promote the continuity of management from each company and smooth
integration of the businesses;
- the fact that the merger likely will be completed, including the
likelihood that the merger will receive the necessary regulatory
approvals;
- the expected tax treatment of the merger for U.S. federal income tax
purposes; and
- the interests of the officers and directors of Fisher and PSS in the
merger, including the matters described under "-- Interests of Certain
Fisher Directors and Executive Officers in the Merger," and the impact of
the merger on Fisher's stockholders, customers and employees.
The Fisher board also considered the potential adverse consequences of
other factors on the proposed merger, including:
- the challenges of combining the businesses, assets and workforces of two
major companies and the risks of not achieving the expected operating
efficiencies or growth;
- the risk of diverting management focus and resources from other strategic
opportunities and from operational matters while working to implement the
merger;
- PSS's poor financial results in its 2000 fiscal year, particularly its
quarter ended March 31, 2000;
- continuing problems relating to the product recall and manufacturing
issues faced by PSS in the quarter ended March 31, 2000;
- the costs and other problems associated with implementing Fisher's
internal control systems throughout PSS' sales organization and
decentralized branch management system; and
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<PAGE> 62
- the risk that the merger will not be consummated.
This discussion of the information and factors considered by the Fisher
board is not intended to be exhaustive, but includes the material factors
considered. The Fisher board did not assign particular weight or rank to the
factors it considered in approving the merger. In considering the factors
described above, individual members of the Fisher board may have given different
weight to various ones. The Fisher board considered all these factors as a
whole, and overall, considered them to be favorable to and to support its
determination.
PSS'S REASONS FOR THE MERGER
The PSS board, after consideration of many factors, has concluded that the
merger is in the best interests of PSS and its stockholders. The PSS board
believes that the merger is desirable for many reasons, including:
- the terms of the merger agreement and the ability of PSS stockholders to
continue to participate in the potential growth of the combined entity;
- the complementary nature of Fisher's products and expertise in the
healthcare industry;
- the significantly greater resources of the combined entity and the
prospects for enhanced value of the combined entity in the future;
- the business strategies, the strength and depth of management of the
combined entity;
- the potential for sales growth and cross-marketing;
- the ability of the larger combined company to compete in a consolidating
and competitive environment;
- the commitment of Fisher to continue to motivate the PSS sales force and
to improve the operating efficiencies of PSS through economies of scale
and a continuing investment in technology;
- the tax-free nature of the merger;
- the likelihood of the merger to obtain regulatory approval;
- the fact that the merger should provide additional liquidity to the
Fisher common stock on the New York Stock Exchange; and
- the fact that the exchange ratio represented a premium of approximately
20% over the closing market price of PSS common stock on the business day
prior to the announcement of the merger.
At its meetings held in May and June 2000, the PSS board reviewed a number
of factors in evaluating the merger, including, but not limited to, the
following:
- historical information concerning PSS's and Fisher's respective business
focus, financial performance and condition, operations, technology and
management;
- the consideration PSS stockholders will receive in the merger in light of
comparable merger transactions;
- an analysis prepared by DLJ and presented to the PSS board that, as of
June 21, 2000, and subject to the various considerations set forth in its
opinion, the merger consideration was fair, from a financial point of
view, to the stockholders of PSS;
- the terms of the merger agreement and other related agreements;
- PSS's view of the financial condition, results of operations and business
of PSS and Fisher before and after giving effect to the merger;
- the results of the strategic alternatives pursued by PSS, with the
assistance of DLJ, since January 2000, including the timeliness and the
likelihood of the same;
- the issues that faced PSS in the fourth quarter of its fiscal year ended
March 31, 2000, including product recalls and the collection of accounts
receivable from Gulf South customers who have declared bankruptcy;
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<PAGE> 63
- the prospects for PSS on a stand-alone basis;
- current financial market conditions and historical stock market prices,
volatility and trading information; and
- the impact of the merger on PSS's customers and employees.
The PSS World Medical board also identified and considered a number of
potentially negative factors in its deliberations concerning the merger
including the following:
- the risk that the potential benefits and synergies of the merger may not
be realized;
- the conditions to the consummation of the merger and possibility that the
merger may not be completed, even if approved by the PSS stockholders,
including the specific representations, warranties and conditions
contained in the agreement regarding the retention of customers and
suppliers, the achievement of $23 million of EBITDA, as defined in the
merger agreement, for the quarter ended June 30, 2000, and the continued
successful implementation of its J.D. Edwards OneWorld technology;
- the provisions of the agreement which require PSS to halt its pursuit of
strategic alternatives and impairs the ability of the PSS board to seek a
superior proposal;
- the $28.5 million fee and/or $4.5 million expenses of Fisher required to
be paid by PSS to Fisher under certain circumstances, including the
termination of the agreement in the event of an unsolicited superior
proposal or due to certain breaches by PSS;
- the potential for PSS to lose customers and suppliers following the
announcement of the merger, particularly those customers and suppliers
who may terminate their agreements upon a change of control or without
cause;
- the potential for PSS to lose employees as a result of the announcement
of the merger;
- the significant control that financial investors, particularly THL, have
over the board of directors and the business affairs of Fisher;
- the current lack of trading volume in the Fisher common stock and the
fact that significant financial investors may desire to sell large blocks
of Fisher common stock in the market in the future; and
- other applicable risks described in this proxy statement/prospectus under
the heading "Risk Factors."
The PSS board concluded, however, that, on balance, the merger's potential
benefits to PSS and its stockholders outweighed the associated risks. The
discussion of the information and factors considered by the PSS board is not
intended to be exhaustive. In view of the variety of factors considered in
connection with its evaluation of the merger, the PSS board did not find it
practicable to, and did not quantify or otherwise assign relative weight to, the
specific factors considered in reaching its determination.
RECOMMENDATION OF FISHER'S BOARD OF DIRECTORS
The Fisher board of directors believes that the merger is fair to and in
the best interest of Fisher's stockholders, and recommends the approval of the
proposal to issue shares of Fisher common stock pursuant to the merger
agreement.
OPINION OF FISHER'S FINANCIAL ADVISOR
On June 21, 2000, Lazard delivered its oral opinion to the Fisher board of
directors, which was subsequently confirmed in writing, to the effect that, as
of the date of the opinion and based upon and subject to the various
considerations set forth in the opinion, the exchange ratio in connection with
the merger was fair to Fisher from a financial point of view.
A copy of the full text of Lazard's opinion dated June 21, 2000, which sets
forth the assumptions made, matters considered and limitations on the review
undertaken in connection with the opinion, is attached to this joint proxy
statement/prospectus as Annex D. This summary discussion of Lazard's opinion is
qualified in its
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<PAGE> 64
entirety by reference to the full text of the opinion. The engagement of Lazard
and its opinion are solely for the benefit of the Fisher board of directors, and
its opinion was rendered to the Fisher board of directors in connection with the
Fisher board of directors' consideration of the merger. Lazard's opinion is
directed only to the fairness of the exchange ratio from a financial point of
view to Fisher, and does not address any other aspects of the merger. The
opinion is not intended to, and does not, constitute a recommendation to any
holder of Fisher's common stock as to how that holder should vote with respect
to any matter relating to the merger. Holders of Fisher's common stock are urged
to read Lazard's opinion in its entirety.
In connection with its written opinion, dated June 21, 2000, to the Fisher
board of directors, Lazard:
- reviewed the terms and conditions of the merger agreement, dated June 21,
2000;
- analyzed certain historical publicly available business and financial
information relating to Fisher and PSS;
- reviewed various financial forecasts and other data provided to Lazard by
Fisher and PSS relating to their respective businesses;
- held discussions with members of the senior managements of Fisher and PSS
with respect to the businesses and prospects of Fisher and PSS,
respectively, the strategic objectives of each and possible benefits
which might be realized following the merger;
- reviewed the synergistic savings and benefits and the timing of their
occurrence as projected by Fisher to be realized by the combined entities
in connection with the merger;
- reviewed public information with respect to some other companies in lines
of businesses Lazard believed to be generally comparable to the
businesses of Fisher and PSS;
- reviewed the financial terms of various significant business combinations
involving companies in lines of businesses Lazard believed to be
generally comparable to those of Fisher and PSS;
- reviewed the historical trading prices and trading volumes of Fisher's
common stock and PSS's common stock; and
- conducted other financial studies, analyses and investigations as Lazard
deemed appropriate.
Lazard relied upon the accuracy and completeness of the foregoing
information and did not assume any responsibility for any independent
verification of that information or any independent valuation or appraisal of
any of the assets or liabilities of Fisher or PSS, or concerning the solvency of
or issues relating to the solvency concerning Fisher or PSS. With respect to
financial forecasts, including the synergistic savings and benefits projected to
be realized following the merger, and the timing of these savings and benefits,
Lazard assumed that they were reasonably prepared on bases reflecting the best
currently available estimates and judgments of management of Fisher and PSS as
to the future financial performance of Fisher and PSS, respectively. Lazard
assumed no responsibility for and expressed no view as to such forecasts or the
assumptions on which they were based.
The written opinion of Lazard was necessarily based on economic, monetary,
market and other conditions as in effect on, and the information made available
to it as of, June 21, 2000. In rendering its opinion, Lazard did not address the
relative merits of the merger, or the merits of Fisher's underlying decision to
engage in the merger.
In connection with rendering its opinion, Lazard assumed that the merger
would be consummated on the terms described in the merger agreement, without any
waiver of any material terms or conditions by Fisher, that obtaining the
necessary approvals for the merger would not have an adverse effect on Fisher or
PSS, and that the synergistic savings and benefits of the merger projected by
the management of Fisher will be realized both in scope and timing.
The following is a summary of the material financial and comparative
analyses performed by Lazard in connection with providing to, and reviewing
with, the Fisher board of directors its opinion at the meeting of the Fisher
board of directors on June 21, 2000.
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<PAGE> 65
Comparable Publicly Traded Companies Analysis. Lazard performed a
comparable public companies analysis to assist the Fisher board of directors in
valuing PSS based on various financial multiples of selected comparable public
companies in the U.S. healthcare distribution industry. In performing this
analysis, Lazard reviewed certain financial information regarding PSS and
compared this information to corresponding financial information, ratios and
public market multiples for five other companies Lazard deemed in lines of
business generally comparable to that of PSS. The selected public companies in
lines of business believed to be generally comparable to that of PSS's U.S.
healthcare distribution business included:
- Bergen Brunswig Corp.,
- Bindley Western Industries, Inc.,
- Cardinal Health, Inc.,
- Henry Schein, Inc., and
- Owens & Minor, Inc.
Using Fisher management estimates for Fisher and PSS and publicly available
information for the comparable companies, Lazard calculated the following
multiples for these comparable companies and compared the enterprise value of
each of these comparable companies as a multiple of their respective calendar
2000 and 2001 estimated EBITDA (earnings before interest, income taxes,
depreciation and amortization) and estimated EBIT (earnings before interest and
income taxes) to the multiples of PSS:
<TABLE>
<CAPTION>
ENTERPRISE
COMPANY VALUE/EBITDA ENTERPRISE VALUE/EBIT
------- -------------------- ----------------------
CALENDAR CALENDAR CALENDAR CALENDAR
2000E 2001E 2000E 2001E
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
PSS (@ $11.00 price per share)...................... 10.5x 9.9x 13.3x 12.6x
Fisher (@ $35.25 price per share)................... 10.9x 10.6x 15.0x 14.2x
Bergen Brunswig (@ $5.50 price per share)........... 6.5x 5.5x 7.9x 6.6x
Bindley Western Industries (@ $20.94 price per
share)............................................ 10.1x 8.8x 11.3x 9.7x
Cardinal Health (@ $63.50 price per share).......... 11.9x 10.0x 14.5x 12.2x
Henry Schein (@ $17.94 price per share)............. 6.6x 5.6x 8.1x 6.8x
Owens & Minor (@ $11.63 price per share)............ 6.4x 5.9x 8.1x 7.3x
</TABLE>
Using Fisher management estimates for Fisher and PSS and I.B.E.S
projections for the comparable companies, Lazard calculated the following
price/earnings per share ratios:
<TABLE>
<CAPTION>
COMPANY PRICE/EPS
------- --------------------------------
CALENDAR 2000E CALENDAR 2001E
-------------- --------------
<S> <C> <C>
PSS (@ $11.00 price per share).............................. 22.0x 20.5x
Fisher (@ $35.25 price per share)........................... 40.7x 31.1x
Bindley Western Industries (@ $20.94 price per share)....... 15.7x 13.2x
Bergen Brunswig (@ $5.50 price per share)................... 9.6x 7.3x
Cardinal Health (@ $63.50 price per share).................. 22.4x 18.6x
Henry Schein (@ $17.94 price per share)..................... 11.1x 9.7x
Owens & Minor (@ $11.63 price per share).................... 12.5x 11.1x
</TABLE>
Based on these calculations, Lazard noted that the range of enterprise
value multiples for these comparable companies in the U.S. healthcare
distribution industry for calendar 2000 was 6.4x to 11.9x for estimated EBITDA
and 7.9x to 14.5x for estimated EBIT. Lazard noted that the range of enterprise
value multiples for these comparable companies in the U.S. healthcare
distribution industry for calendar 2001 was 5.5x to 10.0x for estimated EBITDA
and 6.6x to 12.2x for estimated EBIT.
Selected Precedent Transaction Analysis. Lazard reviewed selected publicly
available financial, operating and stock market information of six merger
transactions in the U.S. healthcare distribution industry.
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<PAGE> 66
These transactions consisted of (acquiror/target):
<TABLE>
<CAPTION>
ANNOUNCED ACQUIROR TARGET
--------- -------- ------
<S> <C> <C>
June 8, 1999 EM Laboratories VWR Scientific Products
October 9, 1998 Cardinal Health Inc. Allegiance Corporation
December 15, 1997 Physician Sales and Service Inc. Gulf South Medical Supply Inc.
August 7, 1997 Thomas H. Lee Co. Fisher Scientific International
Inc.
August 29, 1995 Fisher Scientific International Curtin Matheson Scientific
Inc.
May 24, 1995 VWR Corporation Industrial and Life Sciences
Division (Baxter International
Inc.)
</TABLE>
The multiples for these transactions were:
<TABLE>
<CAPTION>
TRANSACTION VALUE/LTM
EQUITY VALUE/ -------------------------------
LTM NET INCOME SALES EBITDA EBIT
-------------- ----- ------ ----
<S> <C> <C> <C> <C>
High.................................... 49.6 2.5 26.4 27.2
Low..................................... 17.3 0.4 9.3 9.8
Mean.................................... 31.1 1.1 13.8 17.4
Median.................................. 27.5 0.8 11.3 15.9
</TABLE>
Based upon information for these transactions, the transaction value as a
multiple of the last twelve months revenues ranged from 0.40x to 2.50x, the
transaction value as a multiple of the last twelve months EBITDA ranged from
9.3x to 26.4x, and the transaction value as a multiple of the last twelve months
EBIT ranged from 9.8x to 27.2x. Based upon information for these transactions,
the equity value as a multiple of the last twelve months net income ranged from
17.3x to 49.6x.
Discounted Cash Flow Analysis. Based upon forecasts provided by the
managements of PSS World Medical and Fisher, Lazard performed a discounted cash
flow analysis to assist the Fisher board of directors in valuing PSS based on
the present value of expected future cash flows of PSS. The discounted cash flow
analysis of PSS without synergies was based upon a range of terminal multiples
of EBITDA of 8.5x to 10.5x and a range of discount rates from 9.0% to 11.0%. The
discounted cash flow analysis of potential synergies was based upon a range of
perpetual growth rates of 0.0% to 2.0% and a range of discount rates from 9.0%
to 11.0%. The forecasts for synergies assumed $10 million pre-tax synergies in
2001, $20 million in 2002 and $30 million thereafter, and included a $15 million
cost to achieve these synergies in 2001. Using this analysis, Lazard derived a
range of implied equity values and implied values per share for PSS common stock
as follows:
<TABLE>
<CAPTION>
IMPLIED EQUITY VALUE
CASE (IN MILLIONS) IMPLIED VALUE PER SHARE
---- -------------------- -----------------------
<S> <C> <C>
PSS without synergies................................. $564 - $804 $ 8 - $11
Synergies............................................. $132 - $210 $1.9 - $3.0
</TABLE>
Contribution Analysis. Lazard analyzed the relative contributions by Fisher
and PSS to the pro forma combined company. Lazard calculated the relative
contribution by Fisher and PSS to the combined company with
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respect to equity market value and enterprise value and projected financial data
including EBITDA, EBIT and net income, as follows:
<TABLE>
<CAPTION>
PERCENTAGE CONTRIBUTION
-----------------------
FISHER PSS
-------- -----
<S> <C> <C>
EBITDA
2001E................................................ 71% 29%
2002E................................................ 70% 30%
2003E................................................ 70% 30%
EBIT
2001E................................................ 70% 30%
2002E................................................ 69% 31%
2003E................................................ 69% 31%
NET INCOME
2001E................................................ 57% 43%
2002E................................................ 59% 41%
2003E................................................ 60% 40%
MARKET VALUE........................................... 67% 33%
ENTERPRISE VALUE....................................... 72% 28%
</TABLE>
The results of the contribution analysis indicated that PSS would
contribute to the combined entity as follows:
- 33% of the combined entity's equity market value based on closing prices
for Fisher and PSS stock as of June 7, 2000; and
- 28% of the combined entity's enterprise value based on closing prices for
Fisher and PSS stock as of June 7, 2000.
Accretion/Dilution Analysis. Lazard performed a pro forma merger analysis
to assist the Fisher board of directors in determining the financial impact of
the merger on Fisher. Using earnings estimates provided by Fisher management for
2000, 2001, 2002 and 2003, Lazard compared the fully diluted earnings per share
and the fully diluted cash earnings per share of Fisher on a stand-alone basis
to the fully diluted earnings per share and the fully diluted cash earnings per
share of the pro forma combined company. Lazard performed this analysis based on
the exchange ratio of 0.3121 and assumed that the combination of Fisher and PSS
would yield pre-tax synergies of $10 million in 2001, $20 million in 2002 and
$30 million thereafter and excluded cost to achieve synergies. This analysis
indicated that the merger would be accretive to stand-alone earnings per share
and the stand-alone cash earnings per share of Fisher in 2001, 2002 and 2003.
Lazard performed a pro forma credit analysis to assist the Fisher board of
directors in determining the financial impact of the merger on Fisher's credit
position. Lazard compared various debt ratios of Fisher on a stand-alone basis
to the debt ratios of the pro forma combined company. Lazard concluded that the
merger of Fisher with PSS would enhance Fisher's credit position.
Some of the debt ratios of Fisher that Lazard calculated and compared to
those of the pro forma projected combined company are as follows:
<TABLE>
<CAPTION>
PRO FORMA PROJECTED CALENDARIZED
FOR YEAR END DECEMBER 31,
FISHER 2000E --------------------------------------
STAND ALONE 2000E 2001E 2002E 2003E
------------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Total Debt/EBITDA..................... 4.5x 3.9x 3.5x 2.9x 2.4x
EBITDA/Total Interest Expense......... 2.3x 2.8x 3.1x 3.7x 4.4x
EBITDA-Capex/Total Interest Expense... 1.9x 2.3x 2.6x 3.1x 3.8x
</TABLE>
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The summary set forth above does not purport to be a complete description
of the analyses performed by Lazard, although it is a summary of the material
financial and comparative analyses performed by Lazard in arriving at its
opinion. The preparation of the fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or the summary set forth above without considering the
analyses as a whole could create an incomplete or misleading view of the process
underlying the opinion of Lazard. No company or transaction used in the above
analyses as a comparison is identical to Fisher, PSS or the transactions
contemplated in the merger agreement. Accordingly, an analysis of the publicly
traded comparable companies and comparable business combinations is not
mathematical, rather, it involves complex considerations and judgments
concerning the differences in financial and operating characteristics of the
companies. In arriving at its opinion, Lazard considered the results of all the
analyses and did not assign relative weights to any of the analyses. The
analyses were prepared solely for the purpose of Lazard providing its opinion to
the Fisher board of directors in connection with the Fisher board of directors'
consideration of the merger. Lazard expressed no opinion as to the prices at
which Fisher common stock or PSS common stock would actually trade at any time.
Lazard was also provided by the managements of Fisher and PSS with preliminary
drafts of estimates and forecasts based upon numerous assumptions with respect
to industry performance, general business and economic conditions and other
matters, many of which are beyond the control of Fisher, PSS and Lazard. Any
estimate of values or forecast of future results contained in the analyses is
not necessarily indicative of actual values or actual future results, which may
be significantly more or less favorable than suggested by the analyses.
In performing its analyses, Lazard made numerous assumptions with respect
to industry performance, general business and economic conditions and other
matters. Because these analyses are inherently subject to uncertainty, being
based upon numerous factors or events beyond the control of the parties or their
advisors, none of the Fisher, PSS, Lazard or any other person assumes
responsibility if future results or actual values are materially different from
these forecasts or estimates contained in the analyses.
The opinion and presentation of Lazard to the Fisher board of directors was
only one of many factors taken into consideration by the Fisher board of
directors in making its determination to approve the merger agreement. In
addition, the terms of the merger agreement were determined through arm's-length
negotiations between Fisher and PSS, and were approved by the Fisher board of
directors.
Lazard is an internationally recognized investment banking firm and is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements, leveraged
buyouts, and valuations for estate, corporate and other purposes. Lazard was
selected to act as investment banker to the Fisher board because of its
expertise and its reputation in investment banking and mergers and acquisitions.
In connection with Lazard's services as investment banker to Fisher,
including its delivery of the opinion summarized above, Fisher has agreed to pay
Lazard a fee of approximately $5 million, a substantial portion of which is
contingent upon the completion of the merger. Lazard has in the past provided
financial advisory services to Fisher for which it received usual and customary
compensation. Fisher also has agreed to reimburse Lazard for its reasonable
out-of-pocket expenses (including reasonable fees and expenses of its legal
counsel) and will indemnify Lazard and other related parties against some
liabilities that may arise out of the rendering of the opinion.
In the ordinary course of its business, Lazard and its affiliates may
actively trade in the securities of Fisher or PSS World Medical for its own
account and for the account of its customers and, accordingly, may at any time
hold a long or short position.
RECOMMENDATION OF PSS'S BOARD OF DIRECTORS
After careful consideration, the PSS board has determined that the merger
is fair to and in the best interests of PSS and its stockholders. Accordingly,
the PSS board has approved the merger agreement and recommends that PSS
stockholders vote for approval of the merger.
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In considering the recommendation of the PSS board of directors with
respect to the merger agreement, you should be aware that certain directors and
executive officers of PSS have interests in the merger that are different from,
or are in addition to, the interests of PSS's stockholders. Please see the
section entitled "Interests of Executive Officers and Directors of PSS World
Medical in the Merger" that begins on page 65 of this joint proxy
statement/prospectus.
OPINION OF PSS'S FINANCIAL ADVISOR
PSS asked DLJ, in its role as financial advisor to PSS, to render an
opinion to the PSS board of directors as to the fairness, from a financial point
of view, to the holders of PSS common stock of the consideration to be received
by such holders in the merger. On June 21, 2000, DLJ delivered to the PSS board
of directors its written opinion, dated June 21, 2000, to the effect that, as of
that date, based on and subject to the assumptions, limitations and
qualifications set forth in its written opinion, the consideration to be
received by the holders of PSS common stock pursuant to the merger agreement was
fair from a financial point of view to such holders. A copy of the DLJ opinion
is attached as Annex E to this joint proxy statement/prospectus.
DLJ expressed no opinion as to the prices at which Fisher common stock or
PSS common stock would actually trade at any time. DLJ's opinion did not address
the relative merits of the merger and the other business strategies considered
by the PSS board of directors nor did it address the PSS board of director's
decision to proceed with the merger. DLJ's opinion does not constitute a
recommendation to any PSS stockholder as to how such stockholder should vote on
the merger.
PSS and Fisher determined the consideration to be received by the holders
of PSS common stock in arm's length negotiations in which DLJ advised PSS. PSS
selected DLJ as its financial advisor because DLJ is an internationally
recognized investment banking firm that has substantial experience providing
strategic advisory services. DLJ was not retained as an advisor or agent to the
stockholders of PSS or any other person. As part of its investment banking
business, DLJ is regularly engaged in the valuation of businesses and securities
in connection with mergers, acquisitions, underwritings, sales and distributions
of listed and unlisted securities, private placements and valuations for
corporate and other purposes. PSS did not impose any restrictions or limitations
upon DLJ with respect to the investigations made or the procedures followed by
DLJ in rendering its opinion.
In arriving at its opinion, DLJ:
- reviewed the drafts dated June 21, 2000 of the merger agreement, and the
exhibits thereto, and the stock option agreement and assumed the final
forms of the merger agreement and the stock option agreement would be
substantially similar to the drafts DLJ reviewed;
- reviewed financial and other information that was publicly available or
furnished to DLJ by PSS and Fisher, including information provided during
discussions with their respective managements. Included in the
information provided during discussions with the respective managements
were certain financial projections of PSS for the period beginning April
1, 2000 and ending March 31, 2005, prepared by the management of PSS and
certain financial projections of Fisher for the period beginning January
1, 2000 and ending December 31, 2003 prepared by the management of
Fisher;
- compared certain financial and securities data of PSS and Fisher with
various other companies whose securities are traded in public markets;
- reviewed the historical stock prices and trading volumes of the common
stock of PSS and Fisher;
- reviewed prices and premiums paid in certain other business combinations;
and
- conducted other financial studies, analyses and investigations as DLJ
deemed appropriate for purposes of rendering its opinion.
In rendering its opinion, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
it from public sources, that was provided to it by PSS and Fisher, or their
respective representatives, or that was otherwise reviewed by DLJ. In
particular, DLJ relied upon the
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estimates of the managements of PSS and Fisher of the operating synergies
achievable as a result of the merger and upon DLJ's discussion of such synergies
with the managements of PSS and Fisher. With respect to the financial
projections supplied to DLJ, DLJ relied on representations that the projections
were reasonably prepared on the basis reflecting the best currently available
estimates and judgments of the managements of PSS and Fisher as to the future
operating and financial performance of PSS and Fisher, respectively. DLJ also
did not assume responsibility for making any independent evaluation of any
assets or liabilities of PSS or Fisher, or for making any independent
verification of the information reviewed by DLJ. DLJ has relied as to certain
legal matters on advice of counsel to PSS, including that the merger will
qualify as a tax free "reorganization" within the meaning of Section 368(a) of
the Internal Revenue Code.
DLJ's opinion was necessarily based on economic, market, financial and
other conditions as they existed on, and on the information made available to
DLJ as of, the date of its opinion. DLJ states in its opinion that, although
subsequent developments may affect the conclusions reached in its opinion, DLJ
does not have any obligation to update, revise or reaffirm its opinion.
SUMMARY OF FINANCIAL ANALYSES PERFORMED BY DLJ
The following is a summary of the financial analyses presented by DLJ to
the PSS board of directors on June 21, 2000 in connection with the preparation
of DLJ's opinion. No company or transaction used in the analyses described below
is directly comparable to PSS or the merger. In addition, mathematical analysis
such as determining the mean or median is not in itself a meaningful method of
using selected PSS company or transaction data. The analyses performed by DLJ
are not necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by these analyses. The
information summarized in the tables which follow should be read in conjunction
with the accompanying text.
Common Stock Trading History. DLJ examined the historical closing prices of
PSS common stock from June 15, 1999 to June 15, 2000. During this time period,
PSS common stock reached a high of $12.75 and a low of $5.81 per share. DLJ also
examined the historical closing prices of Fisher common stock from June 15, 1999
to June 15, 2000. During this time period, Fisher reached a high of $51.00 per
share and a low of $17.56 per share.
Comparable Publicly Traded Company Analysis. DLJ analyzed the market values
and trading multiples of selected publicly traded medical related distribution
companies that DLJ believed were reasonably comparable to PSS. These comparable
companies consisted of:
- AmeriSource Corp.,
- Bergen Brunswig Corp.,
- Bindley Western Industries, Inc.,
- Cardinal Health, Inc.,
- Henry Schein, Inc.,
- McKesson HBOC, Inc., and
- Owens & Minor, Inc.
In examining these comparable companies, DLJ calculated the enterprise
value of each company as a multiple of its respective: (a) LTM revenue; (b) LTM
EBITDA; and (c) LTM EBIT. The enterprise value of a company is equal to the
value of its fully-diluted common equity plus debt and the liquidation value of
outstanding preferred stock, if any, minus cash and the value of certain other
assets, including minority interests in other entities. LTM means the last
twelve-month period for which financial data for the company at issue has been
reported. EBITDA means earnings before interest expense, taxes, depreciation and
amortization. EBIT means earnings before interest expense and taxes. DLJ also
calculated a ratio of trading price of PSS common stock on June 15, 2000 to (a)
CY 2000 EPS and (b) projected CY 2001 EPS. CY means calendar year, and EPS
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<PAGE> 71
means earnings per share. The EPS for these comparable companies was obtained
from First Call Corporation. DLJ's analysis of the comparable companies yielded
the following multiple ranges:
<TABLE>
<CAPTION>
ENTERPRISE VALUE/
---------------------------
LTM LTM LTM PRICE/ PRICE/
REVENUES EBITDA EBIT CY 2000 EPS CY 2001 EPS
-------- ------ ----- ----------- -----------
<S> <C> <C> <C> <C> <C>
High.................................. 0.9x 14.8x 18.0x 24.4x 20.2x
Low................................... 0.1x 7.4x 9.2x 10.8x 9.7x
Average............................... 0.3x 9.9x 12.3x 16.5x 13.8x
</TABLE>
Based on an analysis of this data and PSS's projected results for
comparable periods, DLJ estimated an implied value per share of PSS common stock
ranging from $6.00 to $11.00, compared to the implied consideration to be
received by the holders of PSS common stock in the merger of $11.00 per share.
Precedent Merger and Acquisition Transaction Analysis. DLJ reviewed
selected acquisitions involving companies in the medical related distribution
industry that DLJ believed were reasonably comparable to the merger. The most
relevant transactions consisted of (acquiror/target):
- McKesson Corp./General Medical Corp.,
- Private investor group/Fisher Scientific International Inc.,
- Invacare Corp./Suburban Ostomy Supply Co., Inc., and
- Cardinal Health, Inc./Allegiance Corp.
In examining these acquisitions, DLJ calculated the enterprise value of the
acquired company implied by each of these transactions as a multiple of its
respective: (a) LTM revenue; (b) LTM EBITDA; and (c) LTM EBIT. Based on this
analysis, the ratio of enterprise value to LTM revenues, LTM EBITDA and LTM EBIT
yielded an average multiple of 0.9x, 10.7x, and 15.5x, respectively. Based on an
analysis of this data, DLJ estimated an implied value per share of PSS common
stock ranging from $9.00 to $13.00, compared to the implied consideration to be
received by the holders of PSS common stock of $11.00 per share.
Discounted Cash Flow Analysis. DLJ performed a DCF analysis of the
projected cash flows of PSS for the fiscal years ending December 31, 2000
through December 31, 2005, using projections and assumptions provided by the
management of PSS. DCF means discounted cash flow. The DCFs for PSS were
estimated using discount rates ranging from 10.0% to 14.0%, based on estimates
related to the weighted average costs of capital of PSS, and terminal multiples
of estimated EBITDA for PSS's fiscal year ending December 31, 2005 ranging from
9.0x to 11.0x. Based on an analysis of this data, DLJ estimated an implied value
per share of PSS common stock ranging from $8.50 to $11.50, compared to the
implied consideration to be received by the holders of PSS common stock in the
merger of $11.00 per share.
Accretion/Dilution Analysis. Using projections prepared by the managements
of PSS and Fisher, respectively, DLJ compared the projected cash EPS, EBITDA per
share and EPS of Fisher, with and without synergies, for calendar years 2001 and
2002 on a stand-alone basis to the projected pro forma cash EPS, EBITDA per
share and EPS, with and without synergies, for the same periods of the combined
company after the merger. Synergies were estimated to be $10 million for CY 2001
and $20 million for CY 2002. This analysis showed that the Merger would be
accretive to cash EPS of Fisher common stock, with or without synergies,
dilutive to EBITDA per share without synergies and accretive to EBITDA per share
with synergies, and dilutive to EPS without synergies and accretive to EPS with
synergies, for each of the periods analyzed.
Fisher Comparable Publicly Traded Company Analysis. DLJ analyzed the market
values and trading multiples of selected publicly traded manufacturing and
distribution companies that DLJ believed were reasonably comparable to Fisher.
These comparable companies consisted of:
- Cardinal Health, Inc.,
- W.W. Grainger, Inc.,
- McKesson HBOC, Inc.,
- Sigma-Aldrich Corporation, and
- Sybron International Corp.
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<PAGE> 72
In examining these comparable companies, DLJ calculated the enterprise
value of each company as a multiple of its respective: (a) LTM revenue; (b) LTM
EBITDA; and (c) LTM EBIT. DLJ also calculated a ratio of trading price of Fisher
common stock on June 15, 2000 to (a) CY 2000 EPS and (b) projected CY 2001 EPS.
The EPS for these comparable companies was obtained from First Call. DLJ's
analysis of the comparable companies yielded the following multiple ranges:
<TABLE>
<CAPTION>
ENTERPRISE VALUE/
---------------------------
LTM LTM LTM PRICE/ PRICE/
REVENUES EBITDA EBIT CY 2000 EPS CY 2001 EPS
-------- ------ ----- ----------- -----------
<S> <C> <C> <C> <C> <C>
High.................................. 3.7x 14.8x 18.0x 24.4x 20.2x
Low................................... 0.2x 8.8x 11.9x 16.3x 14.0x
Average............................... 1.7x 11.2x 14.4x 20.3x 16.9x
</TABLE>
DLJ then calculated the multiples for each of the items described above for
Fisher as follows:
<TABLE>
<CAPTION>
ENTERPRISE VALUE/
---------------------------
LTM LTM LTM PRICE/ PRICE/
REVENUES EBITDA EBIT CY 2000 EPS CY 2001 EPS
-------- ------ ----- ----------- -----------
<S> <C> <C> <C> <C> <C>
Fisher................................ 1.1x 12.5x 17.6x 43.8x 33.5x
</TABLE>
Given the high degree of financial leverage of Fisher as compared to the
companies which comprised the comparable company universe, DLJ advised the PSS
Board that it believed enterprise value based multiple were more appropriate for
assessing relevant trading valuations. Based on an analysis of this data, DLJ
concluded that the trading multiples of Fisher common stock were within the
range of the comparable companies.
The summary set forth above does not purport to be a complete description
of the analyses performed by DLJ but describes, in summary form, the material
elements of the presentation made by DLJ to the PSS board of directors on June
21, 2000 in connection with the preparation of DLJ's fairness opinion. The
preparation of a fairness opinion involves various determinations as to the most
appropriate and relevant methods of financial analysis and the application of
these methods to the particular circumstances and, therefore, such an opinion is
not readily susceptible to summary description. Each of the analyses conducted
by DLJ was carried out in order to provide a different perspective on the
transaction and to add to the total mix of information available. DLJ did not
form a conclusion as to whether any individual analysis, considered in
isolation, supported or failed to support an opinion as to fairness from a
financial point of view. Rather, in reaching its conclusion, DLJ considered the
results of the analyses in light of each other and ultimately reached its
opinion based on the results of all analyses taken as a whole. DLJ did not place
any particular reliance or weight on any individual analysis, but instead
concluded that its analyses, taken as a whole, supported its determination.
Accordingly, notwithstanding the separate factors summarized above, DLJ has
indicated to PSS that it believes that its analyses must be considered as a
whole and that selecting portions of its analyses and the factors considered by
it, without considering all analyses and factors, could create an incomplete
view of the evaluation process underlying its opinion. The analyses performed by
DLJ are not necessarily indicative of actual values or future results, which may
be significantly more or less favorable than suggested by these analyses.
ENGAGEMENT LETTER
Pursuant to the terms of an engagement agreement dated January 25, 2000,
PSS has agreed to pay a fee that is customary in transactions of this nature, a
substantial portion of which is contingent upon the consummation of the Merger.
In addition, PSS agreed to reimburse DLJ, upon request by DLJ from time to time,
for all out-of-pocket expenses (including fees and expenses of counsel) incurred
by DLJ in connection with its engagement thereunder and to indemnify DLJ and
certain related persons against certain liabilities in connection with its
engagement, including liabilities under U.S. federal securities laws. DLJ and
PSS negotiated the terms of the fee arrangement.
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OTHER RELATIONSHIPS
In the ordinary course of business, DLJ and its affiliates may own or
actively trade the securities of PSS and Fisher for their own accounts and for
the accounts of their customers and, accordingly, may at any time hold a long or
short position in PSS or Fisher securities. DLJ has performed investment banking
and other services for Fisher in the past and has been compensated for such
services, including acting as its co-manager in two high yield financings
totaling nearly $600 million in 1998, and earning a commitment fee for a Bridge
Loan.
DLJ Merchant Banking Partners II, L.P. and associated entities, which are
affiliated with DLJ, collectively own approximately 15% of the outstanding
common stock of Fisher and approximately 24% of the voting stock of Fisher and
have the right to designate one member of the board of directors of Fisher.
Currently, there is no such designee serving on Fisher's board of directors.
INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS OF PSS WORLD MEDICAL IN THE MERGER
In considering the recommendation of the PSS board, you should be aware of
the interests that PSS executive officers and directors have in the merger. When
considering the merger, the PSS board took into account these interests. These
interests are different from and in addition to their interests as stockholders
of PSS.
Employment Agreements. Patrick C. Kelly, the chief executive officer of PSS
who is chairman of the PSS board, has entered into an employment agreement that
will be effective upon consummation of the merger and will replace his existing
employment agreement with PSS. The new agreement calls for the nomination of Mr.
Kelly to Fisher's board of directors for a term of three years. Under the terms
of his new employment agreement, Mr. Kelly will be guaranteed a minimum annual
salary of $660,000 and he will be entitled to participate in all incentive,
savings, retirement and welfare benefit plans generally made available to
employees or other senior executives of PSS. Under the agreement, PSS will
continue certain benefits currently in place for Mr. Kelly, including the
payment of premiums on certain life insurance policies, payment of membership
dues at certain private clubs, and annual payment, on a tax grossed-up basis, of
an amount necessary to cover the Florida intangibles tax with respect to Mr.
Kelly's ownership of employer securities. In addition, PSS will continue to
include a charitable contribution in its annual budget each year, which Mr.
Kelly may direct to be donated to such charitable organizations as he shall
designate and are reasonably acceptable to Fisher. If Mr. Kelly is terminated
without "cause" as defined in the employment agreement, or if he resigns under
certain circumstances deemed to be a constructive termination without cause, he
would receive his accrued salary through the date of termination, his prorata
target bonus for the year of termination, a lump-sum severance payment equal to
six months' salary, and up to three years' continued welfare insurance coverage,
and he would be permitted to buy from PSS at book value the company car and
computer equipment he is using at the time of termination. In addition, PSS
would transfer to Mr. Kelly's name any corporate club memberships in which he is
then participating and make a final allocation of $300,000 to PSS's charitable
donation pool which Mr. Kelly would have the ability to direct. If Mr. Kelly
chooses to resign (absent certain specified events of good reason), or if he is
terminated for cause, PSS would have no further obligations to Mr. Kelly other
than the payment of accrued obligations and any vested rights. As a condition to
his entry into his employment agreement, Mr. Kelly will wave any rights he might
have (including, but not limited to, rights to severance payments) under his
existing employment agreement with PSS. Consistent with his existing employment
agreement, the new employment agreement provides that Mr. Kelly will be entitled
to a tax gross-up payment from PSS to cover any excise tax liability he may
incur as a result of payments or benefits contingent on a change in control, but
such gross-up payment will be made only if the after-tax benefit to Mr. Kelly of
such tax gross-up is at least $50,000. If not, the benefits would be reduced to
an amount that would not trigger the excise tax.
Each of the other executive officers of PSS, including David A. Smith, the
chief financial officer of PSS who is a member of the PSS board, has an
employment agreement with PSS which provides that if the executive is terminated
without "cause" or resigns for "good reason," as such terms are defined in the
employment agreement (but which terms include any termination by the executive
for any reason or no reason during the 30-day period beginning on the first
anniversary of the merger), in either case after or in connection with a change
in control of PSS, he would receive his accrued salary through the date of
termination, a pro rata bonus for the year of termination, a lump-sum severance
payment equal to two years' salary, and up to two years' continued welfare
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insurance coverage, and reimbursement of certain outplacement expenses. If the
executive resigns without good reason or is terminated for cause, PSS would have
no further obligations to him other than the payment of accrued obligations and
any vested rights. The term of such employment agreements will automatically
extend to three years from the merger date for the three executive officers in
"Level 2"; two years from the merger for the eight executive officers in "Level
3." The merger will constitute a change in control of PSS and, accordingly, if
any such executive officer's employment is terminated without cause or for good
reason following the merger, these benefits may be triggered. The executive
officer will be entitled to a tax gross-up payment from PSS to cover any excise
tax liability the executive may incur as a result of payments or benefits
contingent on a change in control, but such gross-up payment will be made only
if the after-tax benefit to the executive of such tax gross-up is at least
$50,000. If not, the benefits would be reduced to an amount that would not
trigger the excise tax.
PSS has also entered into employment agreements with other officers of PSS.
These agreements, although not as extensive as the agreements entered into with
the executive officers, have terms and conditions similar to those described
above. The restrictive covenants that otherwise would apply to each of these
officers, will lapse upon the merger. Each such officer may enter into new
employment agreements with PSS and/or Fisher prior to the merger.
Restrictive Covenants Agreements. Mr. Kelly has entered into a restrictive
covenants agreement with PSS, pursuant to which he has agreed not to divulge
confidential information or trade secrets, solicit customers or employees of PSS
and its successors or compete with PSS and its successors in the United States
for a period of seven years following termination of his employment. In
consideration for this agreement:
- Mr. Kelly will receive $2,310,000, payable in five annual installments of
$462,000 each, beginning on the merger date.
- The promissory note between Mr. Kelly and PSS in the original face amount
of $3,000,000 will be amended to provide that principal and interest is
due and payable only upon his death. PSS will purchase and pay the
premiums on a life insurance policy in a face amount that can be
purchased with $1,600,000 in premiums. Mr. Kelly can designate the
beneficiary of such life insurance policy; however, PSS must be
designated a beneficiary to the extent of the amount of the principal
outstanding and the accrued and unpaid interest unpaid on the note at the
time of Mr. Kelly's death.
- PSS will purchase and pay the premiums on a split-dollar life insurance
policy for Mr. Kelly in a face amount that can be purchased with premiums
of $2,600,000. Premiums will be returned to PSS upon the earlier of the
surrender of the policy or Mr. Kelly's death, and any remaining benefits
from the policy will be paid to Mr. Kelly's estate or his designated
beneficiaries. Mr. Kelly will be permitted to borrow from the cash
surrender value of the policy, but only to the extent the cash surrender
value is in excess of the premiums to be repaid to PSS.
Each of the other executive officers of PSS, including Mr. Smith who is a
member of the PSS board, has entered into a restrictive covenants agreement,
pursuant to which he has agreed not to divulge confidential information or trade
secrets, solicit customers or employees of PSS or compete with PSS in the United
States for a period of one and a half years for "Level 3" executive officers and
two years for "Level 2" executive officers following termination of his
employment. In consideration for this agreement, one half of the retention bonus
payable to such executive officer, as discussed below, will accelerate and
become payable upon consummation of the merger ($225,000, $200,000, $175,000,
$175,000 and $150,000 in the case of Messrs. Smith, Dell, Sasen, Zambetti and
Corless, respectively), and PSS will purchase and pay the premiums on a
split-dollar life insurance policy for such executive in a face amount that can
be purchased with premiums of $500,000 (or $240,000 in the case of Mr. Zambetti
and $226,000 in the case of Mr. Corless). Premiums will be returned to PSS upon
the earlier of the surrender of the policy or the executive's death, and any
remaining benefits from the policy will be paid to the executive's estate or his
designated beneficiaries. The executive will be permitted to borrow from the
cash surrender value of the policy, but only to the extent the cash surrender
value is in excess of the premiums to be repaid to PSS.
Retention Bonuses. Each of the executive officers in Levels 2 and 3, and
each other officer of PSS other than Mr. Kelly is a participant in PSS's Officer
Retention Bonus Plan, which provides a retention bonus, payable,
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in general, 50% on February 1, 2001, 30% on February 1, 2002 and 20% on February
1, 2003, provided the executive or officer is employed by PSS on such dates. As
described above, as partial consideration for entering into restrictive
covenants agreements with PSS, the payments that would otherwise be payable on
February 1, 2002 and 2003 will be payable to the executive officers in levels 2
and 3 upon consummation of the merger. The 50% that would be payable on February
1, 2001 will be accelerated if, after the merger, the executive's employment is
terminated without "cause" or he resigns for "good reason" as such terms are
defined in the retention bonus plan. The full retention bonuses payable under
the bonus plan to Messrs. Smith, Dell, Sasen, Zambetti and Corless are $450,000,
$400,000, $350,000, $350,000 and $300,000, respectively. Any amount not already
paid to each other officer will be accelerated if, after the merger, the
officer's employment is terminated without "cause" or he resigns for "good
reason."
Officer Deferral Incentive Program. Each of the executive officers of PSS
is a participant in the PSS Officer Deferral Incentive Program. Under this
program, participants may voluntarily defer compensation, which, together with a
PSS matching contribution on deferrals of up to a designated percentage of
compensation, will earn interest at a specified rate, and participants are
granted options to purchase PSS stock at a premium price (reflecting growth in
the stock value exceeding the growth credited to their contributions under the
plan over the first four years of deferral). If a change in control of PSS
occurs and its successor terminates the plan or within 24 months thereafter the
participant is terminated without "cause" as such term is defined, then the
participant will become vested 100% in his PSS matching contributions, with
interest. The stock options granted to him under the program will vest 100% upon
a change of control of PSS.
The following chart shows the balance in the deferred compensation account
of each of the named executive officers and the number of stock options credited
to his Officer Deferral Incentive Program account as of June 30, 2000:
<TABLE>
<CAPTION>
DEFERRAL ACCOUNT OPTIONS PRICED AT OPTIONS PRICED AT OPTIONS PRICED AT
NAME BALANCE $19.24 $10.62 $8.48
---- ---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Patrick C. Kelly........... $409,202 6,858 24,864 38,916
David A. Smith............. $221,931 4,064 13,813 17,292
Frederick E. Dell.......... $213,778 5,588 9,670 17,292
John F. Sasen, Sr.......... $402,590 6,720 11,679 17,597
Kirk A. Zambetti........... $ 75,658 1,143 4,835 8,196
Gary A. Corless............ $ 76,858 1,738 3,576 6,216
</TABLE>
Indemnification; Directors And Officers Insurance. For a period of six
years after the completion of the merger, Fisher has agreed to indemnify the
present and former directors, officers, employees, and agents of PSS and its
subsidiaries against certain liabilities arising out of actions or omissions
occurring at or prior to the time the merger becomes effective (including the
merger) to the full extent permitted under Delaware law, and PSS's articles of
incorporation and bylaws. Fisher has also agreed to use its reasonable efforts
to maintain in effect for a period of six years after completion of the merger,
PSS's existing directors' and officers' liability insurance policy.
Options. Officers and directors of PSS hold options which will fully vest
upon the consummation of the merger in accordance with the terms of PSS's option
plans and option agreements. The number of options which will vest upon a change
of control are:
<TABLE>
<CAPTION>
NAME NUMBER OF OPTIONS
---- -----------------
<S> <C>
Patrick C. Kelly....................................... 70,636
David A. Smith......................................... 35,167
Frederick E. Dell...................................... 32,548
John F. Sasen, Sr...................................... 35,996
Kirk A. Zambetti....................................... 14,172
Gary A. Corless........................................ 11,528
</TABLE>
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COMPLETION AND EFFECTIVENESS OF THE MERGER
The merger will be completed when all of the conditions to completion of
the merger are satisfied or waived, including the adoption of the merger
agreement by the stockholders of Fisher and PSS. The merger will become
effective upon the filing of articles of merger with the Secretary of State of
the State of Florida.
We are working toward completing the merger as quickly as possible. We
expect to complete the merger during the fourth quarter of 2000.
STRUCTURE OF THE MERGER AND CONVERSION OF PSS STOCK
Structure. To accomplish the combination of their businesses, Fisher formed
a new company, FSI Merger Corporation. At the time the merger is completed, FSI
Merger Corporation will be merged with and into PSS, and PSS will be the
surviving corporation. As a result, PSS will become a wholly owned subsidiary of
Fisher.
Conversion of PSS Stock. When the merger is completed, PSS common
stockholders will receive 0.3121 shares of Fisher common stock for each share
they own. The number of shares of Fisher stock issuable in the merger will be
proportionately adjusted for any stock split, stock dividend or similar event
with respect to the Fisher common stock or PSS capital stock effected between
the date of the merger agreement and the date of completion of the merger.
Cash in Lieu of Fractional Shares. Fisher will not issue a certificate
representing fractional shares of Fisher common stock in exchange for PSS
certificates. Each holder of PSS common stock who, after taking into account all
Fisher shares that holder is entitled to receive in the aggregate, would
otherwise be entitled to receive a fractional share of Fisher common stock will
be entitled to receive cash equal to the product of such fractional share
multiplied by the average of the daily closing prices for a share of Fisher
common stock for the ten consecutive trading days ending on the second trading
day immediately prior to the day we close the transactions.
EXCHANGE OF PSS STOCK CERTIFICATES FOR FISHER STOCK CERTIFICATES
When the merger is completed, the exchange agent will mail to PSS
stockholders a letter of transmittal and instructions for use in surrendering
your PSS stock certificates in exchange for statements indicating book-entry
ownership of Fisher common stock or, if requested, stock certificates. When you
deliver your stock certificates to the exchange agent along with a properly
executed letter of transmittal and any other required documents, your stock
certificates will be canceled and you will receive statements indicating
book-entry ownership of Fisher common stock or, if requested, stock certificates
representing the number of full shares of Fisher stock to which you are entitled
under the merger agreement. PSS stockholders will receive payment in cash,
without interest, in lieu of any fractional shares of Fisher common stock or
series common stock which would have been otherwise issuable to them as a result
of the merger.
YOU SHOULD NOT SUBMIT YOUR PSS STOCK CERTIFICATES FOR EXCHANGE UNTIL YOU RECEIVE
THE TRANSMITTAL INSTRUCTIONS AND A FORM OF LETTER OF TRANSMITTAL FROM THE
EXCHANGE AGENT.
You are not entitled to receive any dividends or other distributions on
Fisher common stock until the merger is completed and you have surrendered your
PSS stock certificates in exchange for Fisher stock certificates.
If there is any dividend or other distribution on Fisher stock with a
record date after the date on which the merger is completed and a payment date
prior to the date you surrender your PSS stock certificates in exchange for
Fisher stock certificates, you will receive the dividend or distribution with
respect to the whole shares of Fisher stock issued to you promptly after they
are issued. If there is any dividend or other distribution on Fisher stock with
a record date after the date on which the merger is completed and a payment date
after the date you surrender your PSS stock certificates in exchange for Fisher
stock certificates, you will receive the dividend or distribution with respect
to the whole shares of Fisher stock issued to you promptly after the payment
date.
Fisher will only issue a Fisher stock certificate or a check in lieu of a
fractional share in a name other than the name in which a surrendered PSS stock
certificate is registered if you present the exchange agent with all
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documents required to show and effect the unrecorded transfer of ownership and
show that you paid any applicable stock transfer taxes.
TREATMENT OF PSS STOCK OPTIONS AND OTHER EQUITY RIGHTS
Upon completion of the merger, each outstanding PSS stock option or other
equity right will be converted into an option or equity right to purchase the
number of shares of Fisher common stock that is equal to the product of 0.3121
multiplied by the number of shares of PSS common stock that would have been
obtained before the merger upon the exercise of the option or other equity
right, rounded to the nearest whole share. The exercise price per share will be
equal to the exercise price per share of PSS common stock subject to the option
or other equity right before the conversion divided by 0.3121.
The other terms of each PSS option and other equity rights referred to
above will continue to apply.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion provides a summary of the material United States
federal income tax consequences of the merger to holders of PSS common stock who
hold PSS common stock as a capital asset (generally, property held for
investment). It is based on the opinions of counsel delivered to each of Fisher
and PSS by their respective counsel, which are filed as exhibits to the Fisher
registration statement that includes this joint proxy statement/prospectus. The
discussion does not address the individual tax position of any holder of PSS
common stock nor does it address the tax consequences that may be relevant to
holders of PSS common stock with special tax status, including insurance
companies, financial institutions, dealers in securities, holders that are not
citizens or residents of the United States, tax-exempt entities and holders that
acquired PSS common stock upon the exercise of employee stock options or
otherwise as compensation. Moreover, the discussion does not address any
consequences arising under the laws of any state, locality or foreign
jurisdiction. Finally, the tax consequences to holders of PSS stock options or
other equity rights are not discussed. The following discussion is based on the
Internal Revenue Code, the regulations promulgated under the Internal Revenue
Code, and administrative rulings and court decisions as of the date of this
joint proxy statement/prospectus. These authorities are all subject to change,
possibly with retroactive effect, and any change could affect the accuracy of
the following discussion. No ruling has been or will be sought from the Internal
Revenue Service concerning the tax consequences of the merger. HOLDERS OF PSS
COMMON STOCK SHOULD CONSULT WITH THEIR TAX ADVISORS REGARDING THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO THEM IN LIGHT OF THEIR PARTICULAR INDIVIDUAL
CIRCUMSTANCES, INCLUDING THE EFFECTS OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS.
Alston & Bird LLP, counsel to PSS, has delivered to PSS an opinion dated on
or about the date of this joint proxy statement/prospectus, to the effect that
the merger will constitute a reorganization within the meaning of Section 368(a)
of the Code. Debevoise & Plimpton, counsel to Fisher, has delivered the same
opinion to Fisher. The opinions assume that the merger will take place as
described in the merger agreement and that certain factual matters represented
by Fisher and PSS, which will be reconfirmed prior to the merger, are true and
correct. It is a condition to the obligations of Fisher and PSS to consummate
the merger that each shall receive an opinion, dated immediately prior to the
merger, confirming the previously received opinion described herein. Based upon
these opinions, the following will be the material United States federal income
tax consequences of the merger:
- no gain or loss will be recognized by the stockholders of PSS upon
receipt of shares of Fisher common stock in exchange for their PSS common
stock, except that a holder of PSS common stock who receives cash in lieu
of a fractional share of Fisher common stock will recognize gain or loss
equal to the difference between the amount of this cash and the tax basis
allocated to the holder's fractional share of Fisher common stock. In the
case of a stockholder of PSS that is not a corporation, long-term capital
gain recognized from a fractional share will be taxed at a maximum United
States federal income tax rate of 20% if the holding period for this
fractional share is more than one year;
- the aggregate tax basis of Fisher common stock received in the merger,
including fractional shares of Fisher common stock for which cash is
received, will be the same as the tax basis of PSS common stock for which
it is exchanged; and
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- the holding period of Fisher common stock received in the merger will
include the holding period of PSS common stock for which it is exchanged.
REGULATORY MATTERS
Approvals and Consents. The agreement provides that Fisher and PSS will use
their commercially reasonable efforts to cause the transactions to be
consummated, including the obtaining of all necessary consents, waivers,
permits, authorizations, orders and consents of third parties, whether private
or governmental, in connection with the transactions.
U.S. Antitrust Laws. Under the Hart-Scott-Rodino Act, specified business
combination transactions may not be consummated unless notice has been given and
required information furnished to the Antitrust Division of the United States
Department of Justice and the Federal Trade Commission and specified waiting
period requirements have been satisfied, unless earlier termination has been
granted. Fisher and PSS expect to file with the Department of Justice and the
Federal Trade Commission a Notification and Report Form with respect to the
merger on or before August 31, 2000. At any time before or after the effective
time, and notwithstanding that the Hart-Scott-Rodino Act waiting period has been
terminated, the Department of Justice could take such action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin consummation of the merger and scheme of arrangement or
seeking divestiture of substantial assets of Fisher or PSS. Private parties also
may seek to take legal action under the antitrust laws under certain
circumstances.
Effectiveness of Registration Statement. The registration statement of
Fisher (of which this joint proxy statement/prospectus is a part) must be
declared effective by the Securities and Exchange Commission. Effectiveness of
the registration statement may not be revoked or suspended and no stop order may
be issued preventing the issuance of shares of Fisher common stock in the
merger.
Other. In addition to the foregoing, we may be required to obtain
regulatory approvals, file notices, or make other filings in other jurisdictions
in which one or the other maintains an office, conducts business or has
customers. At the time of this filing, we do not expect any such other
approvals, notices or other filings to be material in connection with the
transactions.
Status of Regulator Approvals and Other Information. We will have received
all requisite regulatory approvals prior to consummation of the merger.
We are not aware of any governmental approvals or actions that may be
required for consummation of the transactions other than as described above.
Should any other approval or action be required, we currently contemplate that
such approval or action would be sought.
RESTRICTIONS ON RESALE
The Fisher shares of common stock issued to stockholders pursuant to the
transactions will be registered under the Securities Act. As a result, the
Fisher shares issued pursuant to the transactions will be freely transferable
under the United States federal securities laws, except that Fisher shares
received by persons who are deemed to be "affiliates", as such term is defined
under the Securities Act, of Fisher after the transactions, or of Fisher or PSS
before the transactions, may be resold by them only in transactions permitted by
the resale provisions of Rule 145(d)(1), (2) or (3) promulgated under the
Securities Act or as otherwise permitted under the Securities Act. Rule
145(d)(1) generally provides that "affiliates" of Fisher, or PSS before the
transactions, may not sell securities of Fisher received in the transactions
unless pursuant to an effective registration statement or unless pursuant to the
volume, current public information, manner of sale and timing limitations of
Rule 144. These limitations generally require that any sale made by an affiliate
in any three-month period not exceed the greater of 1% of the outstanding shares
or contingent value rights, as the case may be, of Fisher or the average weekly
trading volume of that security over the four calendar weeks preceding the
placement of the sell order and that such sales be made in unsolicited, open
market "brokers transactions". Rules 145(d)(2) and (3) generally provide that
the foregoing limitations lapse for non-affiliates after a period of one or two
years, respectively, depending upon whether currently available information
continues to be available with respect to Fisher.
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Persons who may be deemed to be affiliates of an issuer generally include
individuals or entities that control, are controlled by, or under common control
with, such issuer, and may include officers and directors of such issuer as well
as principal stockholders of such issuers.
PSS has agreed to use its reasonable best efforts to cause each person who
is an "affiliate", for purposes of Rule 145 under the Securities Act, of PSS to
deliver to Fisher, a written agreement in connection with restrictions on
affiliates under Rule 145, in customary form mutually agreeable to PSS and
Fisher.
APPRAISAL RIGHTS
Under Florida law, PSS stockholders are not entitled to appraisal rights in
connection with the merger.
DELISTING AND DEREGISTRATION OF PSS COMMON STOCK AFTER THE MERGER
When the merger is completed, PSS common stock will be delisted from the
Nasdaq National Market and will be deregistered under the Securities Exchange
Act of 1934, as amended.
THE MERGER AGREEMENT
The following summary of the merger agreement is qualified in its entirety
by reference to the complete text of the merger agreement, which is incorporated
by reference and attached as Annex A to this joint proxy statement/prospectus.
We urge you to read the full text of the merger agreement.
Conditions to the Merger. Each of Fisher's and PSS's obligations to
complete the merger are subject to the satisfaction or waiver of specified
conditions before completion of the merger, including the following:
- the adoption of the merger agreement by the affirmative vote of the
holders of a majority of the outstanding shares of PSS common stock;
- the approval of the issuance of Fisher common stock pursuant to the
merger agreement by the holders of a majority of the outstanding shares
of Fisher common stock;
- the absence of any law, order or injunction prohibiting completion of the
merger;
- the expiration or termination of the applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976;
- the receipt of all approvals and consents of, and the completion of
filings with, or notices to, any regulatory authorities necessary for
completion of the merger, other than those approvals, consents, filings
and notice requirements, the failure of which to obtain are individually
or in the aggregate, would not reasonably be likely to have a PSS
Material Adverse Effect or Fisher Material Adverse Effect, as described
below;
- the declaration of effectiveness of the registration statement on Form
S-4, of which this joint proxy statement/prospectus forms a part, by the
Securities and Exchange Commission, and the absence of any stop order or
threatened or pending proceedings seeking a stop order; and
- the listing of the new shares of Fisher common stock to be issued in the
merger on the New York Stock Exchange.
"PSS Material Adverse Effect" means a material adverse impact on:
- the results of operations, financial condition or business of PSS and its
subsidiaries, taken as a whole; or
- the ability of PSS to perform its obligations under the merger agreement
or to consummate the merger or the other transactions contemplated by the
merger agreement.
However, "PSS Material Adverse Effect" will not include the impact of:
- actions and omissions of PSS (or any of its subsidiaries) taken with the
prior informed written consent of Fisher in contemplation of the
transactions completed hereby;
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- changes in laws of general applicability or interpretations thereof by
courts or governmental authorities;
- changes in generally accepted accounting principles;
- the expenses incurred by PSS in consummating the transactions
contemplated by the merger agreement;
- any adverse change in the price of PSS common stock, as quoted on the
Nasdaq National market; and
- items disclosed in PSS's disclosure memorandum.
"Fisher Material Adverse Effect" means a material adverse impact on:
- the results of operations, financial condition or business of Fisher and
its subsidiaries, taken as a whole; or
- the ability of Fisher to perform its obligations under the merger
agreement or to consummate the merger or other transactions contemplated
by the merger agreement.
However, "Fisher Material Adverse Effect" will not include the impact of:
- actions and omissions of Fisher (or any of its subsidiaries) taken with
the prior informed written consent of PSS in contemplation of the
transactions completed hereby;
- changes in laws of general applicability or interpretations thereof by
courts or governmental authorities;
- changes in generally accepted accounting principles;
- the expenses incurred by Fisher in consummating the transactions
contemplated by this agreement;
- any adverse change in the price of Fisher common stock, as quoted on the
New York Stock Exchange; and
- items disclosed in the Fisher disclosure memorandum.
Fisher's obligations to complete the merger relating to Fisher are subject
to the satisfaction or waiver of the following additional conditions before
completion of the merger:
- PSS's representations and warranties must be true and correct in all
material respects as of the date of the merger agreement and as of the
date of completion of the merger, except for:
- changes contemplated by the merger agreement; and
- representations and warranties that expressly address matters only
as of a particular date, which must be true and correct as of such
date.
- PSS must have performed or complied in all material respects with all
agreements and covenants required to be performed and complied with by it
under the merger agreement.
- Fisher must have received from Debevoise & Plimpton a written opinion to
the effect that for federal income tax purposes, the merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code.
- The amount of the PSS 2001 First Quarter EBITDA will have been in excess
of $23.0 million. The "PSS 2001 First Quarter EBITDA" means PSS's EBITDA
(earnings before interest expense, income taxes, depreciation and
amortization) for the quarter ended June 30, 2000 as reported in PSS's
Quarterly Report on Form 10-Q for such quarter, which shall be calculated
by:
- taking PSS's operating income for such period, calculated on a basis
consistent with the calculation of PSS's operating income for prior
periods reflected in PSS's financial statements and Securities and
Exchange Commission reports, and without including any reversal of
reserves or provisions; and
- adding back one-time merger and restructuring charges relating to
existing mergers and restructuring plans (including those related to
the transactions contemplated by the merger agreement), financing
income relating to trade accounts, and depreciation and amortization
expenses during such period accounted for on a basis consistent with
past practice to the extent reported in PSS's financial statements
and Securities and Exchange Commission reports.
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This condition expires 15 business days after PSS files its Quarterly
Report on Form 10-Q for such quarter and provides Fisher with its
calculation of PSS's 2001 First Quarter EBITDA in reasonable detail,
unless Fisher terminates the merger agreement by reason of the
non-satisfaction of this condition within such 15 business day period.
Based on PSS's reported results for this quarter, this condition has
been satisfied.
PSS's obligations to complete the merger relating to PSS are subject to the
satisfaction or waiver of the following additional conditions before completion
of the merger:
- Fisher's representations and warranties must be true and correct in all
material respects as of the date of the merger agreement and as of the
date of completion of the merger, except for:
- changes contemplated by the merger agreement; and
- representations and warranties that expressly address matters only
as of a particular date, which must be true and correct as of such
date.
- Fisher must have performed or complied in all material respects with all
agreements and covenants required to be performed and complied with by it
under the merger agreement.
- PSS must have received from Alston & Bird LLP a written opinion to the
effect that for federal income tax purposes, the merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code.
- Each party to the Amended and Restated Investors' Agreement dated March
29, 1999, among Fisher and certain of its stockholders will have waived
or declined to exercise the preemptive rights of such parties contained
in the Investors' Agreement with respect to the issuance of shares of
Fisher common stock in the merger, except for any non-waivers or
exercises of preemptive rights with respect to an immaterial number of
shares of Fisher common stock.
No Other Transactions Involving PSS. The merger agreement contains detailed
provisions prohibiting PSS from seeking an alternative transaction. Under these
"no solicitation" provisions, PSS has agreed that neither it nor any of its
subsidiaries, officers and directors, will, and that it will use reasonable best
efforts to ensure that its and its subsidiaries' employees, agents and
representatives, do not, directly or indirectly:
- initiate, solicit, encourage or knowingly facilitate any inquires or the
making of an Acquisition Proposal, as described below;
- have any discussion with, or provide any confidential information or data
to, any person relating to an Acquisition Proposal, or engage in any
negotiations concerning an Acquisition Proposal, or knowingly facilitate
any effort or attempt to make or implement an Acquisition Proposal; or
- accept an Acquisition Proposal.
"Acquisition Proposal" means any proposal or offer (in each case, whether
or not in writing and whether or not delivered to the stockholders of PSS
generally) to acquire in any manner, directly or indirectly, all or a
substantial portion of the assets of PSS or a greater than 30% equity interest
in PSS or any of its subsidiaries, whether by merger, tender offer, exchange
offer, sale of assets or similar transactions involving PSS or any subsidiary,
division or operating or principal business unit of PSS, other than pursuant to
the transactions contemplated by the merger agreement.
However, the merger agreement does not prevent PSS or its board of
directors from:
- complying with Rule 14d-9 and Rule 14e-2 promulgated under the Securities
Exchange Act of 1934, as amended with regard to an Acquisition Proposal;
and
- engaging in discussions or negotiations with, or providing any
information to, any person in response to an unsolicited bona fide
written Acquisition Proposal by that person, if and only to the extent
that:
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- its board of directors concludes in good faith that there is a
reasonable likelihood that the Acquisition Proposal could constitute
a Superior Proposal and (after consultation with outside legal
counsel) that the failure to take such action would be inconsistent
with its fiduciary duties under applicable law;
- before providing any information or data to any person in connection
with an Acquisition Proposal by that person, its board of directors
receives from that person an executed confidentiality agreement with
customary confidentiality and standstill provisions (and in any
event no more favorable in any material respects to such person than
PSS's confidentiality agreement with Fisher); and
- before providing any information or data to any person or entering
into discussions or negotiations with any person, PSS promptly
notifies Fisher of receipt of the Acquisition Proposal, including
the name of the person and the material terms and conditions of such
inquiry, proposal or offer.
In addition, in the event PSS has received an Acquisition Proposal not
solicited in violation of the merger agreement and the PSS Board determines
(after consultation with outside legal counsel), that the failure to take the
following action would be inconsistent with its fiduciary duties under
applicable law, and PSS has provided Fisher three full business days notice of
its intentions to take the following action, the PSS board may:
- withdraw or modify its approval or recommendation of the merger agreement
and the merger and disclosure to PSS's stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) under the Securities Exchange
Act of 1934, as amended or otherwise make disclosure to them; or
- approve or recommend such an Acquisition Proposal that is a Superior
Proposal.
- "Superior Proposal" means with respect to PSS or its subsidiaries, any
Acquisition Proposal made by a person other than Fisher, FSI Merger
Corporation or any of their respective affiliates which is on terms which
the board of directors of PSS in good faith concludes (after consulting
with its independent financial advisors): (a) would, if consummated,
result in a transaction that is more favorable to its stockholders than
the transactions contemplated by the merger agreement and (b) is
reasonably capable of being completed.
Termination. The merger agreement may be terminated at any time prior to
the completion of the merger, whether before or after the stockholder approvals
have been obtained:
- by mutual written consent of Fisher and PSS;
- by either of PSS or Fisher:
- if the merger shall not have occurred on or prior to January 15,
2001, if the Securities and Exchange Commission shall have declared
effective the registration statement of which this joint proxy
statement/prospectus forms a part by December 1, 2000, and March 31,
2001, if the Securities and Exchange Commission shall not have
declared effective the registration statement by December 1, 2000;
provided, however, that the right to terminate will not be available
to any party whose failure to fulfill any obligation under the
merger agreement has been the cause of, or resulted in, the failure
of the consummation of the merger on or prior to such date;
- if any court or regulatory authority of competent jurisdiction shall
have issued any order or taken any other action (which order or
other action the parties will use their reasonable efforts to lift),
which permanently restrains, enjoins or otherwise prohibits the
acceptance for payment of, or payment for, shares pursuant to the
merger, and such order or other action shall have become final and
non-appealable; or
- if the conditions precedent to the obligations of such party to
consummate the merger cannot be satisfied or fulfilled by the date
specified above; provided that the terminating party is not then in
material breach of any representation, warranty, covenant or other
agreement contained in the merger agreement; or
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- by PSS:
- if Fisher has breached any of its representations or warranties
which breach would give rise to the failure of the conditions
relating to the accuracy of representations and warranties relating
to the performance of or compliance with agreements and covenants
contained in the merger agreement to be satisfied or if Fisher
failed to perform its covenants or other agreements contained in the
merger agreement which failure to perform would give rise to the
failure of the conditions to be satisfied, which breach or failure
to perform is incapable of being cured or has not been cured by the
date that is 15 business days following written notice thereof to
Fisher from PSS; or
- if the board of directors of PSS has finally determined to approve,
endorse or recommend an Acquisition Proposal (other than the
Acquisition Proposal contemplated by the merger agreement) to PSS's
stockholders after complying with the terms of the merger agreement
relating to alternative acquisition proposals; provided that such
termination shall not be effective unless concurrently with or prior
to such termination PSS or its designee has made payment of the
termination fee set forth in the merger agreement relating to
alternative acquisition proposals; or
- by Fisher:
- if the PSS board of directors or any committee thereto has
withdrawn, or modified or changed or qualified, or publicly proposed
to withdraw, modify or change or qualify, in a manner adverse to
Fisher its approval or recommendations of the merger agreement or
the merger or has approved, endorsed or recommended or publicly
proposed to approve, endorse or recommend an Acquisition Proposal,
or if the PSS board of directors or any committee thereof fails to
reaffirm publicly and unconditionally its recommendation to PSS's
stockholders of the merger, which public reaffirmation must be made
within five business days after Fisher's written request to do so
(which request may be made at any time that a publicly announced
Acquisition Proposal is pending and not withdrawn); or
- if PSS has breached any of its representations or warranties which
breach would give rise to the failure of the conditions set forth in
the merger agreement relating to the accuracy of representations and
warranties or if PSS has failed to perform its covenants or other
agreements contained in this Agreement which failure to perform
would give rise to the failure of the conditions set forth in the
merger agreement relating to the performance of or compliance with
agreements and covenants contained in the merger agreement, which
breach or failure to perform is incapable of being cured or has not
been cured by the date that is 15 business days following written
notice thereof to PSS from Fisher; or
- if the condition relating to PSS's 2001 First Quarter EBITDA is not
satisfied, as contemplated by the merger agreement.
Termination Fee. As set forth in more detail below, the merger agreement
requires PSS to pay a termination fee to Fisher in specified circumstances. If:
- Fisher terminates the merger agreement because PSS's board of directors
withdrew, modified, or changed its recommendation concerning the merger,
or approved, endorsed or recommended an alternative Acquisition Proposal,
or PSS terminates this Agreement because it approved, endorsed or
recommended an alternative Acquisition Proposal; or
- Fisher terminates the merger agreement (a) because of PSS's breach of
representations or warranties or failure to perform agreements or
covenants (but only as a result of a knowing or willful breach by PSS of
any of its representations or warranties or knowing or willful failure of
PSS to perform its covenants or other agreement contained in the merger
agreement) or (b) because the conditions precedent to the obligations of
Fisher to consummate the merger cannot be satisfied by January 15, 2001
or March 31, 2001, as applicable (but only on the basis of the failure of
PSS to satisfy any of conditions precedent to the obligations of Fisher
as a result of knowing or willful breach by PSS of any of its
representations or warranties or knowing or willful failure of PSS to
perform its covenants or other agreements contained in the merger
agreement), and, in the case of a termination pursuant to (a) or (b)
above:
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- at any time after the date of the merger agreement and prior to such
termination, an alternative Acquisition Proposal is publicly
announced; and
- prior to the first anniversary of such termination, PSS has entered
into a definitive agreement with respect to an Acquisition Proposal
or an Acquisition Proposal is consummated;
then PSS shall pay to Fisher, or cause to be paid, a termination fee, in cash, a
wire transfer of immediately available funds to an account designated by Fisher,
in an amount equal to the sum of (i) $28,500,000 plus (ii) out-of-pocket
expenses incurred by Fisher exclusively with the transactions contemplated by
the merger agreement not to exceed $4,500,000 in the aggregate.
If Fisher or PSS terminates the merger agreement on the basis of the
failure of the stockholders of PSS to approve the merger and in the absence of a
publicly announced Acquisition Proposal pending which has not been withdrawn at
the time of the PSS stockholders' meeting and if PSS has complied with all its
obligations relating to alternative Acquisition Proposals under the merger
agreement, then PSS will pay to Fisher, or cause to be paid, prior to or
concurrently with such termination the out-of-pocket expenses incurred by Fisher
exclusively in connection with the transactions contemplated by the merger
agreement not to exceed $4,500,000 in the aggregate.
Conduct of Business Pending the Merger. Under the merger agreement, PSS has
agreed that, during the period before completion of the merger, except as
expressly contemplated or permitted by the merger agreement, or to the extent
that the other party consents in writing, it will carry on its respective
business in the usual, regular and ordinary course, will use its reasonable
efforts to preserve intact its business organization and assets and maintain its
rights and franchises, comply in all material respects with all applicable laws,
continue the implementation of its new technology systems and not take any
action that would materially adversely affect the ability of any party to obtain
consents necessary to the merger or the ability of any party to perform required
covenants under the merger agreement.
In addition to these agreements regarding the conduct of business
generally, PSS has agreed to some specific restrictions relating to the
following:
- the amendment of its certificate of incorporation or bylaws;
- the incurrence of debt;
- the declaration or payment of dividends;
- the repurchase or redemption of capital stock;
- the issuance or sale of capital stock or other equity interests;
- the alteration of share capital, including, among other things, stock
splits, combinations or reclassifications;
- acquisition of securities or material investments in other entities;
- compensation of directors, executive officers and key employees;
- accounting policies and procedures and tax elections; and
- actions that would cause any of the conditions to the merger to not be
satisfied.
Unless the prior written consent of PSS will have been obtained, and except
as otherwise expressly contemplated by the merger agreement, Fisher and FSI
Merger Corporation will cause each of its subsidiaries not to take any action
which would (a) materially adversely affect the ability of any party to obtain
any consents required for the merger, (b) cause any of the closing conditions
not to be satisfied, (c) materially adversely affect the ability of any party to
perform its covenants and agreements under the merger agreement or (d) amend
Fisher's certificate of incorporation or bylaws except as contemplated by the
merger agreement (except for amendments necessary to increase the number of
authorized share capital of Fisher).
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Additional Agreements. Each of Fisher and PSS has agreed to cooperate with
each other and to use its reasonable best efforts to take all actions and do all
things necessary, proper and advisable under the merger agreement and applicable
laws to complete the merger as soon as practicable, including using its
reasonable efforts to lift or rescind any order adversely affecting its ability
to consummate the merger and to cause to be satisfied the closing conditions;
provided that neither party is precluded from exercising its rights under the
merger agreement. Each party shall use, and shall cause each of its subsidiaries
to use, its reasonable efforts to obtain all consents necessary or desirable for
the consummation of the merger. Each party undertakes and agrees to use its
reasonable efforts to cause the merger and to take no action which would cause
the merger not to qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes.
Amendment, Extension and Waiver. The merger agreement may be amended by the
parties, by action taken or authorized by their respective boards of directors,
at any time before or after approval of the merger by the stockholders of Fisher
and PSS has been obtained. After the approval has been obtained, no amendment
may be made which under Florida corporate law requires further approval by the
stockholders of PSS, without the further approval. All amendments to the merger
agreement must be in writing signed by each party.
At any time before the completion of the merger, the parties may, by action
taken or authorized by their respective boards of directors, to the extent
legally allowed:
- waive any default in the performance of any term of the merger agreement;
- waive or extend the time for the performance of any of the obligations or
other acts of the other parties;
- waive compliance with any of the agreements or conditions contained in
the merger agreement, except any condition which, if not satisfied, would
result in any violation of law.
All extensions and waivers must be in writing and signed by the party
against whom the waiver is to be effective.
Expenses. Whether or not the merger is completed, all expenses and fees
incurred in connection with the merger agreement and the merger will be paid by
the party incurring the expenses or fees, except that PSS is required to pay up
to $4.5 million of out-of-pocket expenses of Fisher if the merger agreement is
terminated under circumstances enumerated therein.
Representations and Warranties. The merger agreement contains customary
representations and warranties of Fisher and PSS relating to, among other
things:
- corporate organization and similar corporate matters;
- subsidiaries;
- capital structure;
- authorization and absence of conflicts;
- documents filed with the Securities and Exchange Commission and financial
statements included in those documents;
- information supplied in connection with this joint proxy
statement-prospectus and the registration statement of which it is a
part;
- board approval and applicable state takeover laws;
- the stockholder vote required to adopt the merger agreement or approve
the issuance of Fisher common stock, as applicable;
- litigation;
- compliance with applicable laws;
- absence of specified changes or events;
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- intellectual property;
- brokers and finders;
- opinions of financial advisors;
- taxes;
- specified contracts;
- stockholder rights plans; and
- employee benefits.
Two of PSS's representations and warranties that must be true and correct
in all material respects as a condition to Fisher's obligation to consummate the
merger are the following:
- since December 31, 1999, there has been no adverse change that is
material to PSS in the relationship of PSS with its customers or
suppliers and no such customer or supplier has indicated that it intends
to seek such a change; and
- the implementation by PSS of J.D. Edwards & Company's One World ERP
System, and the conversion of PSS's current systems to this ERP System,
have proceeded in accordance with PSS's roll-out schedule, and there is
no indication that such implementation and conversion have adversely
affected or will adversely affect in any material respect PSS's business
and operations.
FISHER CHARTER AND BYLAWS
Upon completion of the merger, the restated certificate of incorporation
for Fisher will be in substantially the form set forth in Annex F to this joint
proxy statement/prospectus and the bylaws of Fisher will be substantially in the
form set forth in Annex G to this joint proxy statement/prospectus. For a
summary of the material provisions of the restated certificate of incorporation
and bylaws of Fisher, and the rights of stockholders of Fisher under the
restated certificate of incorporation and bylaws, see the section entitled
"Description of Fisher Capital Stock."
STOCK OPTION AGREEMENT
The following summary of the stock option agreement is qualified in its
entirety by reference to the complete text of the stock option agreement, which
is incorporated by reference and attached as Annex B to this joint proxy
statement/prospectus. We urge you to read the full text of the stock option
agreement.
In connection with the execution and delivery of the merger agreement,
Fisher and PSS entered into a stock option agreement under which PSS granted to
Fisher an irrevocable option to purchase, in whole or in part, an aggregate of
up to 14,142,672 shares of PSS common stock at a price of $11.00 per share, but
in no event more than 19.9% of the issued and outstanding shares of common stock
of PSS at the time of exercise of the option.
Exercise of the Options. The option granted by PSS to Fisher pursuant to
the stock option agreement may be exercised, in whole or in part, at any time,
after the date on which Fisher:
- becomes entitled under the merger agreement to receive the portion of the
termination fee which does not relate to the reimbursement of Fisher
expenses;
- a public announcement by PSS of an intention to enter into an agreement
with any person with respect to an acquisition proposal is issued;
- notice of any acquisition by any person who already owns shares of more
than 30% of the then outstanding shares of common stock of PSS is given;
or
- any person has commenced a tender or exchange offer to purchase 30% or
more of the outstanding shares of common stock of PSS.
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The right to purchase shares of common stock will expire on the first to
occur of:
- the completion of the merger;
- written notice of termination of the stock option agreement by Fisher;
- 180 days after the date on which Fisher becomes entitled to exercise the
option; or
- the date of termination of the merger agreement, unless Fisher has the
right to receive the termination fee upon the termination of the merger
agreement, in which case the right to purchase shares of common stock
under the stock option agreement will not terminate until 30 business
days after the termination fee becomes due and payable.
Any purchase of shares of PSS common stock by Fisher will occur only if:
- Fisher is not in breach of its agreements or covenants in the stock
option agreement and the merger agreement;
- no preliminary or permanent injunction or order against the delivery of
the option shares is in effect; and
- any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, has expired or been terminated.
Each of Fisher and PSS has agreed to use their reasonable best efforts to:
- promptly make and process all necessary filings and applications, obtain
all consents, and approvals, and comply with all applicable laws; and
- have any judgment, order, writ, injunction, ruling or decree of any
governmental entity vacated or reversed.
Adjustments Upon Changes in Capitalization and Substitute Option. The
number and kind of securities subject to the stock option agreement and the
exercise price will be adjusted for any change in the number of issued and
outstanding shares of common stock of the issuer of the option in the event of
any change in the corporate or capital structure of the issuer which would have
the effect of diluting or otherwise diminishing the optionholder's rights under
the stock option agreement. Accordingly, the optionholder will receive, upon
exercise of the option, the number and kind of shares or other securities or
property that the optionholder would have received if the option had been
exercised immediately before the event or record date for the event, as
applicable.
In the event that the issuer of the option enters into any agreement:
- to consolidate with or merge into any person other than the optionholder
or any of its subsidiaries, and the issuer of the option will not be the
continuing or surviving corporation in the consolidation or merger;
- to permit any person, other than the optionholder or any of its
subsidiaries, to merge into the issuer of the option and the issuer of
the option will be the continuing or surviving or acquiring corporation;
or
- to sell or otherwise transfer all or substantially all of its assets to
any person, other than the optionholder and its subsidiaries;
then, in each case, the agreement governing the transaction must contain a
provision that, unless exercised earlier by the optionholder, the option granted
under the stock option agreement will, upon completion of the transaction and
upon specified terms and conditions, be converted into, or exchanged for, an
option with identical terms appropriately adjusted, to acquire the number and
class of shares or other securities or property that the optionholder would have
received under the stock option agreement if the option had been exercised
immediately before the consolidation, merger, or sale, as applicable.
Profit Limitations. The stock option agreement provides that in no event
will Fisher's value of the shares purchased under the stock option agreement,
plus any termination fee paid by PSS under the merger agreement, exceed an
amount equal to $29.0 million.
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The value of the shares shall be the difference between:
(x) the product of (A) the sum of the total number of shares that Fisher
intends to purchase and previously purchased pursuant to the prior
exercise of the option and (B) the average of the last reported sales
price of the common stock of PSS on the Nasdaq National Market for the
ten trading commencing on the 12th trading immediately preceding the
day at which the option closes, and
(y) the product of (A) the total number of shares that Fisher intends to
purchase at the date at which the option closes pursuant to the
exercise of the option and previously purchased pursuant to the prior
exercise of the option and (B) $11.00 per share.
Registration Rights and Listing. The stock option agreements provide that
the optionholder has specified rights to require the issuer to register, under
the Securities Act of 1933, as amended and any applicable state law, all shares
purchased by the optionholder pursuant to the stock option agreement. The stock
option agreement also provides that the optionholder has specified rights to
require that the issuer list the shares purchased by the optionholder pursuant
to the stock option agreement on the New York Stock Exchange or other national
securities exchange or trading system on which shares of the issuer's common
stock are listed for trading or quotation.
Assignability. Neither the stock option agreement, nor any of the rights,
interests or obligations under it may be assigned by either of the parties
without the prior written consent of the other party.
Effect of Stock Option Agreement. The stock option agreement is intended to
increase the likelihood that the merger will be completed on the terms set forth
in the merger agreement. Consequently, the stock option agreement may discourage
persons who might be interested in acquiring all or a significant interest in
PSS before completion of the merger from considering or proposing an
acquisition, even if those persons were prepared to offer higher consideration
per share of PSS common stock than the consideration implicit in the merger or a
higher price per share of PSS common stock than the stock market price.
VOTING AGREEMENT
The following summary of the voting agreement is qualified in its entirety
by reference to the complete text of the voting agreement, which is incorporated
by reference and attached as Annex C to this proxy statement/prospectus. We urge
you to read the full text of the voting agreement.
In connection with the execution and delivery of the merger agreement, PSS
entered into a voting agreement with the principal stockholders of Fisher listed
on the signature pages of the voting agreement under which these principal
stockholders agreed to vote substantially all their shares of Fisher common
stock in favor of the adoption of the merger agreement. As of the record date
for the special meeting, these stockholders owned shares of Fisher common stock
representing approximately 53% of the outstanding shares of Fisher voting common
stock.
The voting agreement prohibits, subject to limited exceptions, any
stockholder from selling, transferring, pledging, encumbering, assigning or
otherwise disposing of any shares of Fisher common stock, except to a person who
agrees in writing to be bound by the terms of the voting agreement. The voting
agreement is binding upon any person or entity who acquires shares, by operation
of law or otherwise.
The voting agreement terminates upon the earlier to occur of the completion
of the merger and the termination of the merger agreement in accordance with its
terms.
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FISHER 2000 EQUITY AND INCENTIVE PLAN
The board has approved and adopted, subject to stockholder approval, the
Fisher Scientific International Inc. 2000 Equity and Incentive Plan. The plan is
intended to afford an incentive to key employees and consultants of the Company
or any subsidiary or affiliate that now exists or hereafter is organized or
acquired, to continue as key employees or consultants, as the case may be, to
increase their efforts on behalf of Fisher and to promote the success of
Fisher's business.
The plan is intended to provide performance-based compensation so as to be
eligible for compliance with Section 162(m) of the Internal Revenue Code which,
generally, limits the deduction by an employer for compensation of certain
covered employees. Under Section 162(m) of the Internal Revenue Code, certain
compensation, including compensation based on the attainment of performance
goals, may be disregarded for purposes of this deduction limit if certain
requirements are met. Among the requirements for compensation to qualify for
this exception is that the material terms pursuant to which the compensation is
to be paid be disclosed to and approved by the stockholders in a separate vote
prior to the payment. Accordingly, if the plan is approved by the stockholders
and the other conditions of Section 162(m) relating to performance-based
compensation are satisfied, compensation paid to covered employees pursuant to
the plan will be deductible under Section 162(m) of the Internal Revenue Code.
GENERAL
The plan provides for the granting of awards to such employees and
consultants of Fisher as the committee established by the board to administer
the plan may select from time to time. The plan provides for an aggregate of not
more than shares of common stock to be reserved for issuance under the
plan, subject to adjustment as described below. Such shares may be authorized
but unissued shares of common stock or authorized and issued common stock held
in Fisher's treasury. Generally, shares subject to an award that remain unissued
upon expiration or cancellation of the award will be available for other awards
under the plan. No more than shares of common stock may be awarded in
respect of options and stock appreciation rights to any individual under the
plan. No more than shares of common stock may be awarded in respect of
restricted stock, restricted stock units or other stock-based awards to any
individual under the plan. In the event that the committee determines that any
dividend or other distribution, stock split, recapitalization, reorganization,
merger or other similar corporate transaction or event affects the common stock
such that an adjustment would be appropriate in order to prevent dilution or
enlargement of the rights of participants under the plan, then the committee may
make such equitable changes or adjustments as it deems necessary to the number
and kind of shares of common stock or other property (including cash) which may
thereafter be issued in connection with awards, the limit on individual awards,
the number and kind of shares of common stock subject to each outstanding award,
the performance goals related to an award and the exercise price, grant price or
purchase price of each award.
Awards under the plan may be made in the form of:
- options intended to be and designated as incentive stock options within
the meaning of Section 422 of the Internal Revenue Code ("Incentive Stock
Options");
- options designated as non-qualified stock options ("Non-Qualified Stock
Options") (Incentive and Non-Qualified Stock Options are collectively
referred to as "Options");
- stock appreciation rights;
- certain shares of stock subject to transferability and other restrictions
("Restricted Stock");
- rights granted to receive Restricted Stock;
- rights granted to receive cash, stock or other property equal in value to
dividends paid with respect to a specified number of shares of stock and
- other cash- and stock-based awards ("Other Awards"). Awards may be
granted to such employees and consultants of Fisher and its subsidiaries
as the committee may select in its discretion.
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The plan is expected to be administered by the committee. The composition
of the committee will, at all times, satisfy the provisions of Section 162(m) of
the Internal Revenue Code. The committee will be authorized, among other things,
to construe, interpret and implement the provisions of the plan, to select the
persons to whom awards will be granted, to determine the terms and conditions of
such awards and to make all other determinations deemed necessary or advisable
for the administration of the plan.
AWARDS UNDER THE PLAN
Stock Options. Options awarded pursuant to the plan will become exercisable
at such times and upon such conditions as the committee may determine. The
committee will determine each option's expiration date; provided, however, that
no incentive stock option may be exercised more than ten years after the date of
grant. The purchase price per share payable upon the exercise of an option (the
"option exercise price") will be established by the committee; provided,
however, that unless the option exercise price may not be less than the fair
market value of a share of common stock on the date of grant. The option
exercise price will be payable by any one of the following methods or a
combination thereof: (a) cash; (b) by surrender of shares of common stock held
at least six months by the participant and having a fair market value on the
date of the exercise equal to the option exercise price; (c) by having shares of
common stock with a fair market value on the date of exercise equal to the
aggregate exercise price withheld by Fisher or sold by a broker-dealer; or (d)
by such other method as the committee may determine.
Stock Appreciation Rights. Stock appreciation rights may be granted in
connection with all or part of, or independently of, any option granted under
the plan. Unless the committee determines otherwise, a stock appreciation right
granted in tandem with any stock option will be exercisable only when and to the
extent the option to which it relates is exercisable. The grantee of a stock
appreciation right will have the right to surrender the stock appreciation right
and receive from Fisher, in cash, an amount equal to the excess of the fair
market value of a share of common stock over the exercise price of the stock
appreciation right for each share of common stock in respect of which such stock
appreciation right is being exercised.
Restricted Stock. The committee may grant restricted shares of common stock
to such persons, in such amounts, and subject to such terms and conditions as
the committee may determine in its discretion. Awards of restricted stock may be
made contingent upon the attainment by Fisher of one or more pre-established
performance goals established by the committee. The performance goals may
consist of the attainment by Fisher (and/or its subsidiaries or divisions if
applicable) of targets based upon any one or more of the following criteria: (i)
pre-tax income or after-tax income, (ii) operating profit, (iii) return on
equity, assets, capital or investment, (iv) earnings or book value per share,
(v) sales or revenues, (vi) operating expenses, (vii) common stock price
appreciation and (viii) implementation or completion of critical projects or
processes.
Other Awards. The committee may grant awards to grantees in the form of
either stock-based or cash-based awards. Such awards may be granted with value
and payment contingent upon the attainment of performance goals similar to the
performance goals described in the preceding paragraph. The maximum payment that
any grantee may receive pursuant to any cash-based award granted under the plan
in respect of any performance period is $ . Other awards valued in whole
or in part by reference to, or otherwise based on, common stock may be granted
either alone or in addition to other awards under the plan. Subject to the
provisions of the plan, the committee is expected to have the sole and complete
authority to determine the persons to whom and the time or times at which such
other awards will be granted, the number of shares of common stock to be granted
pursuant to such other awards and all other conditions (including performance
goals, if any) of such other awards.
OTHER FEATURES OF THE PLAN
In the event of a change in control, all outstanding awards will become
fully vested and/or immediately exercisable, unless otherwise determined by the
committee at the time of the grant and evidenced in an award agreement.
The board may suspend, revise, terminate or amend the plan at any time;
provided, however, that no such action may, without the consent of a
participant, adversely affect the participant's rights under any outstanding
award. It is expected that the number of participants in the plan will vary over
the term of the plan.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a brief summary of certain U.S. federal income
tax consequences under current federal income tax laws relating to awards under
the plan to be approved. This summary is not intended to be exhaustive and,
among other things, does not describe state, local or foreign income and other
tax consequences.
Non-Qualified Stock Options. An optionee will not recognize any taxable
income upon the grant of a Non-Qualified Stock Option. Fisher will not be
entitled to a tax deduction with respect to the grant of a Non-Qualified Stock
Option. Upon exercise of a Non-Qualified Stock Option, the excess of the fair
market value of the common stock on the exercise date over the option exercise
price will be taxable as compensation income to the optionee and will be subject
to applicable withholding taxes. Fisher will generally be entitled to a tax
deduction at such time in the amount of such compensation income. The optionee's
tax basis for the common stock received pursuant to the exercise of a
Non-Qualified Stock Option will equal the sum of such compensation income and
the exercise price. The optionee's holding period in the common stock received
upon the exercise of a Non-Qualified Stock Option immediately after such common
stock is acquired.
In the event of a sale, exchange or other distribution of common stock
received upon the exercise of a Non-Qualified Stock Option, any appreciation or
depreciation after the exercise date generally will constitute as capital gain
or loss.
Incentive Stock Options. An optionee will not recognize any taxable income
at the time of grant or timely exercise of an Incentive Stock Option and Fisher
will not be entitled to a tax deduction with respect to such grant or exercise.
Exercise of an Incentive Stock Option may, however, give rise to taxable
compensation income, and a tax deduction to Fisher, if the Incentive Stock
Option is not exercised on a timely basis (generally, while the optionee is
employed by Fisher or within 90 days after termination of employment) or if the
optionee subsequently engages in a "disqualifying disposition," as described
below.
A sale or exchange by an optionee of shares acquired upon the exercise of
an Incentive Stock Option more than one year after the transfer of the shares to
such optionee and more than two years after the date of grant of the Incentive
Stock Options will result in any difference between the net sale proceeds and
the exercise price being treated as long-term capital gain (or loss) to the
optionee. If such sale or exchange takes place within two years after the date
of the grant of the Incentive Stock Option or within one year from the date of
transfer of the Incentive Stock Option shares to the optionee, such sale or
exchange will generally constitute a "disqualifying disposition" of such shares
that will have the following results: any excess of (a) the lesser of (i) the
fair market value of the shares at the time of exercise of the Incentive Stock
Option and (ii) the amount realized on such disqualifying disposition of the
shares over (b) the option exercise price of such shares, will be ordinary
income to the optionee, subject to applicable withholding taxes, and Fisher will
generally be entitled to a tax deduction in the amount of such income. Any
further gain or loss after the date of exercise generally will constitute as
capital gain or loss and will not result in any deduction by the Company.
Restricted Stock. A grantee will not recognize any taxable income upon the
receipt of Restricted Stock unless the grantee elects under Section 83(b) of the
Internal Revenue Code, within thirty days of such receipt, to recognize ordinary
income in an amount equal to the fair market value of the Restricted Stock at
the time of receipt, less any amount paid for the shares. If the election is
made and the Restricted Stock is returned to Fisher, the holder will not be
allowed a deduction except to the extent of the amount, if any, paid by the
holder for such Restricted Stock, and such amount will be treated as a capital
loss. If the election is not made, the holder will generally recognize ordinary
income on the date that the restrictions to which the Restricted Stock are
subject are removed, in an amount equal to the fair market value of such shares
on such date, less any amount paid for the shares. At the time the holder
recognizes ordinary income, Fisher generally will be entitled to a deduction in
the same amount. If an election under Section 83(b) of the Internal Revenue Code
is not made, the grantee's holding period in the Fisher common stock will begin
immediately after the restrictions to which the Restricted Stock are subject are
removed. If such an election is made, the grantee's holding period in the Fisher
common stock will begin immediately after the date such Restricted Stock is
transferred.
Generally, upon a sale, exchange or other disposition of Restricted Stock
with respect to which the holder has previously made a Section 83(b) election or
the restrictions were previously removed, the holder will
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recognize capital gain or loss in an amount equal to the difference between the
amount realized on such sale or other disposition and the holder's tax basis in
such shares.
Stock Appreciation Rights. The grant of a stock appreciation right will not
result in income for the grantee or in a tax deduction for Fisher. Upon the
settlement of such a right, the grantee will recognize ordinary income equal to
the aggregate value of the payment received, and Fisher generally will be
entitled to a tax deduction in the same amount.
Other Types of Awards. Other types of awards under the plan generally would
result in taxable ordinary income to the grantee, the amount and timing of which
would depend upon the terms and conditions of the particular award. Fisher would
generally be entitled to a corresponding tax deduction.
Tax Consequences of Change in Control. The accelerated vesting of awards
under the plan in connection with a Change in Control could cause award holders
to be subject to the federal excise tax on "excess parachute payments" and cause
a corresponding loss of deduction on the part of the Company. In addition,
options that otherwise qualified as Incentive Stock Options could be treated as
Non-Qualified Options as a result of such accelerated vesting.
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DESCRIPTION OF FISHER CAPITAL STOCK
This section of the joint proxy statement/prospectus describes the material
terms of the capital stock of Fisher under the restated certificate of
incorporation and bylaws that will be in effect immediately after the merger is
completed. This section also summarizes relevant provisions of the Delaware
General Corporation Law, which we refer to as "Delaware law." The terms of the
Fisher restated certificate of incorporation and by-laws, as well as the terms
of Delaware law, are more detailed than the general information provided below.
Therefore, you should carefully consider the actual provisions of these
documents. The Fisher restated certificate of incorporation is attached as Annex
F to this joint proxy statement/prospectus, and the Fisher bylaws are attached
as Annex G to this joint proxy statement/prospectus.
AUTHORIZED CAPITAL STOCK
Fisher is authorized by its restated certificate of incorporation, as
amended, to issue an aggregate of 115,000,000 shares. These shares consist of
100,000,000 shares of common stock, par value $.01 per share, of which 4,035,290
shares are designated as non-voting common stock and 9,000,000 shares are
designated as Series B non-voting common stock, and 15,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"), of which
500,000 shares are designated Series A Junior Participating Preferred Stock,
without par value (the "Series A Preferred Stock"). Currently, Fisher has no
shares of preferred stock issued or outstanding. The following is a summary of
certain of the rights and privileges pertaining to Fisher capital stock.
Fisher's Board of Directors has adopted, subject to stockholder approval,
an amendment to Fisher's restated certificate of incorporation to increase
Fisher's authorized number of shares of common stock from 100,000,000 shares to
500,000,000 shares.
The additional common stock to be authorized by adoption of the amendment
would have rights identical to the currently outstanding common stock of Fisher.
Adoption of the proposed amendment would not affect the rights of the holders of
currently outstanding common stock of Fisher. Any future issuances of any of the
newly authorized shares would have effects incidental to increasing the number
of shares of the Fisher common stock outstanding, such as dilution of the
earnings per share and voting rights of current holders of common stock. If the
amendment is adopted, it will become effective upon filing of a certificate of
amendment of Fisher's restated certificate of incorporation with the Secretary
of State of the State of Delaware. A copy of the proposed certificate of
amendment to Fisher's restated articles of incorporation, as amended, is
attached as Annex I to this joint proxy/statement prospectus.
FISHER COMMON STOCK
The holders of Fisher common stock are entitled to one vote per share on
all matters submitted for action by the stockholders. Stockholders holding a
majority of the shares of Fisher common stock can, if they elect to do so,
approve the merger. There is no provision for cumulative voting with respect to
the election of directors. Accordingly, the holders of more than 50% of the
shares of Fisher common stock can, if they choose to do so, elect all of the
directors. In such event, the holders of the remaining shares will not be able
to elect any directors.
Holders of shares of Fisher common stock are entitled to share equally,
share for share, in such dividends as the board of directors may from time to
time declare from sources legally available therefor.
NON-VOTING COMMON STOCK
Each outstanding share of non-voting common stock is generally not entitled
to vote on any matter on which the stockholders of Fisher are entitled to vote,
and shares of non-voting common stock are not included in determining the number
of shares voting or entitled to vote on any such matters. However, the holders
of non-voting common stock shall have the right to vote as a separate class on
any merger or consolidation of Fisher with or into another entity or entities,
or any recapitalization or reorganization, in which shares of non-voting common
stock would receive or be exchanged for consideration different on a per share
basis from consideration received with respect to or in exchange for the shares
of voting common stock of Fisher or would otherwise be treated differently from
shares of voting common stock in connection with such transactions, except that
shares of non-
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voting common stock may, without such a separate class vote, receive or be
exchanged for non-voting securities which are otherwise identical on a per share
basis in amount and form to the voting securities received with respect to or
exchanged for the common stock so long as (i) such non-voting securities are
convertible into such voting securities on the same terms as the non-voting
common stock is convertible into voting common stock and (ii) all other
consideration is equal on a per share basis.
Subject to certain restrictions, or regulated stockholders who are subject
to Regulation Y of the Federal Reserve System, each record holder of non-voting
common stock is entitled at any time and from time to time in such holder's sole
discretion and at such holder's option, to convert any or all of the shares of
such holder's non-voting common stock into the same number of shares of voting
common stock.
FISHER PREFERRED STOCK
The board is also empowered under Fisher's restated certificate of
incorporation to divide any and all shares of the preferred stock into series
and to fix and determine the relative rights and preferences of the shares of
any series so established. The issuance of preferred stock by the board could
affect the rights of holders of shares of Fisher common stock. For example,
issuance of preferred stock could result in a class of securities outstanding
that will have certain preferences with respect to dividends and in liquidation
over the Fisher common stock, and may enjoy certain voting rights, contingent or
otherwise, in addition to that of the Fisher common stock, and could result in
the dilution of the voting rights, net income per share and net book value of
the Fisher common stock.
ANTI-TAKEOVER CONSIDERATIONS
Delaware law and the Fisher restated certificate of incorporation and
bylaws will contain a number of provisions which may have the effect of
discouraging transactions that involve an actual or threatened change of control
of Fisher. For a description of the provisions, see "Comparison of Rights of
Fisher Stockholders and PSS Stockholders -- Amendments to Bylaws,"
"-- Amendments to the Certificate or Articles of Incorporation" and "-- State
Anti-Takeover Statutes."
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for Fisher common stock is ChaseMellon
Stockholders Services, L.L.C.
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COMPARISON OF RIGHTS OF
FISHER STOCKHOLDERS AND PSS STOCKHOLDERS
This section of the proxy statement/prospectus describes the material
differences between the rights of Fisher stockholders and PSS stockholders. This
section does not include a complete description of all differences among the
rights of these stockholders, nor does it include a complete description of the
specific rights of these stockholders. In addition, the identification of some
of the differences in the rights of these stockholders as material is not
intended to indicate that other differences that are equally important do not
exist. All Fisher stockholders and PSS stockholders are urged to read carefully
the relevant provisions of Florida and Delaware law, as well as the charter and
bylaws of each of Fisher and PSS. Copies of the forms of restated certificate of
incorporation, as amended, and bylaws for Fisher are attached to this joint
proxy statement/prospectus as Annexes G and H, respectively.
CAPITALIZATION
Fisher. The authorized capital stock of Fisher consists of:
- 100,000,000 shares of Fisher common stock, of which 4,035,290 shares have
been designated as non-voting common stock and 9,000,000 shares have been
designated as Series B non-voting common stock; and
- 15,000,000 shares of Fisher preferred stock, of which 500,000 shares have
been designated as Fisher series A junior participating preferred stock
under the Fisher stockholders rights plan.
Fisher expects that following the PSS acquisition, Fisher will have
approximately 62.3 million shares of its common stock outstanding. As a result,
Fisher's board of directors will only be able to issue an additional 37.7
million shares. Therefore, Fisher proposes to increase the authorized number of
shares of its capital stock to 500 million shares of common stock. Fisher
believes this increase is necessary to provide its board of directors with the
necessary flexibility to issue additional shares to raise equity capital, grant
options to incentivize management and make future acquisitions.
PSS. The authorized capital stock of PSS consists of:
- 150,000,000 shares of common stock; and
- 1,000,000 shares of preferred stock, of which 300,000 shares have been
designated as PSS Series A Participating Preferred Stock under the PSS
stockholders rights plan.
VOTING RIGHTS
Fisher. Each holder of Fisher common stock has the right to cast one vote
for each share of Fisher common stock held of record on all matters submitted to
a vote of stockholders of Fisher, including the election of directors. Holders
of Fisher common stock have no cumulative voting rights.
PSS. Each holder of PSS common stock has the right to cast one vote for
each share of PSS common stock held of record on all matters submitted to a vote
of stockholders of PSS, including the election of directors. Holders of PSS
common stock have no cumulative voting rights.
NUMBER AND ELECTION OF DIRECTORS
Fisher. The board of directors of Fisher currently has nine members. The
Fisher bylaws provide that the Fisher board of directors will consist of a
number of directors to be fixed from time to time by a vote of the majority of
the Fisher board of directors or by the affirmative vote of the holders of at
least 80% of the voting power of Fishers capital stock, and the Fisher restated
certificate of incorporation provides that any change in the size of the board
of directors requires the vote of a majority of the total number of authorized
directors.
The Fisher restated certificate of incorporation and bylaws provide for the
Fisher board of directors to be divided into three classes, as nearly equal in
size as possible, with one class being elected annually. Members of
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the Fisher board of directors are elected to serve a term of three years, and
until their successors are elected and qualified.
The merger agreement provides that Fisher will take, or cause to be taken,
such action required to appoint Hugh Brown to serve as a director with a term
expiring in 2001 and Patrick Kelly to serve as a director with a term expiring
in 2003, effective as of the consummation of the merger. If necessary for such
appointments, Fisher will increase the size of its Board from nine persons to
eleven persons with three directors whose terms expire in 2003, four directors
whose terms expire in 2002 and four directors hose terms expire in 2001.
Under Delaware law, stockholders do not have cumulative voting rights for
the election of directors unless the corporation's certificate of incorporation
so provides. Fisher's restated certificate of incorporation does not provide for
cumulative voting.
PSS. The board of directors of PSS currently has eight members. The PSS
articles and bylaws provide that the number of directors will be fixed from time
to time by the consent of three-fifths of the PSS board.
The PSS articles and bylaws provide for the PSS board to be divided into
three classes of directors, with each class consisting, as nearly as possible,
of one-third of the total number of directors constituting the entire board. The
term of one class of directors expires every year, so that the term of each
class is for a period of three years.
Under Florida law, stockholders do not have cumulative voting rights for
the election of directors unless the corporation's articles of incorporation so
provide. PSS's articles do not provide for cumulative voting.
VACANCIES ON THE BOARD OF DIRECTORS AND REMOVAL OF DIRECTORS
General. Delaware law provides that if, at the time of the filing of any
vacancy or newly created directorship, the directors then in office constitute
less than a majority of the authorized number of directors, the Delaware Court
of Chancery may, upon application of any stockholder or stockholders holding at
least 10% of the outstanding stock of the corporation having the right to vote
for such directors, order an election to be held to fill the vacancy or replace
the directors selected by the directors then in office.
Florida law provides that a vacancy in the board of directors, including
any vacancy by any increase in the number of directors, may be filled by the
affirmative vote of a majority of the remaining directors, though less than a
quorum of the board of directors, or by the stockholders, unless the articles of
incorporation provide otherwise.
Florida law also provides that stockholders may remove one or more
directors with or without cause unless the articles of incorporation provide
that directors may be removed only for cause.
Fisher. Vacancies on the board of directors of Fisher, including vacancies
and unfilled newly created directorships resulting from any increase in the
authorized number of directors, may be filled only by a majority vote of the
directors then in office, though less than a quorum.
Fisher's restated certificate of incorporation provides that directors may
be removed only for cause and only by the affirmative vote of the holders of at
least 80% of the voting power of the then outstanding shares of Fisher capital
stock entitled to vote generally in the election of directors, voting together
as one group.
PSS. The PSS articles provide that any vacancy in the PSS board, including
any vacancy created by reason of an increase in the number of directors, may be
filled by the affirmative vote of three-fifths of the directors then in office.
A director elected to fill a vacancy shall hold office for the unexpired term
and until his or her successor shall have been elected or qualified, or for
newly created directorships, until the next election of the class for which such
director shall have been chosen and until his or her successor shall have been
elected or qualified.
The PSS articles provide that directors may be removed with or without
cause only by the affirmative vote of holders of at least four-fifths of the
outstanding shares of PSS common stock, except that if the PSS board, by an
affirmative vote of at least three-fifths of the entire PSS board, recommends
removal of a director to the stockholders, such removal may be effected by the
affirmative vote of the holders of a majority of the PSS
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common stock. The PSS articles provide that the affirmative vote of the holders
of at least four-fifths of the PSS common stock is required to alter, amend or
adopt any provision inconsistent with, or to repeal, this provision.
AMENDMENTS TO THE CERTIFICATE OR ARTICLES OF INCORPORATION
General. Under Delaware law, an amendment to the certificate of
incorporation of a corporation requires the approval of the corporation's board
of directors and the approval of holders of a majority of the outstanding stock
entitled to vote upon the proposed amendment, unless a higher vote is required
by the corporation's certificate of incorporation.
Under Florida law, amendments to a corporation's articles of incorporation
relating to the following matters may be made by the board of directors without
stockholder approval, unless the articles of incorporation provide otherwise:
- the extension of the duration of the corporation if it was incorporated
at a time when limited duration was required by law;
- the deletion of the names and addresses of the initial directors and the
initial registered agent;
- the deletion of information solely for historical interest;
- in connection with a stock combination or division, changes to the par
value of the shares, number of authorized shares and any other changes
necessary or appropriate to assure the rights and preferences of each
holder of shares will not be adversely affected;
- the deletion of authorization for a class or series of shares if no such
class or series are issued;
- minor changes in the corporation's name relating to the identity of the
entity such as "corp.," "inc.," "co." or similar phrases;
- changes to the par value for a class or series of shares;
- to provide that if the corporation acquires its own shares, such shares
constitute treasury shares until disposed of or canceled by the
corporation; and
- any other change permitted by Florida law.
All other amendments to the articles of incorporation must be recommended
by the board of directors to the stockholders and approved by a majority of the
stockholders entitled to vote on an amendment unless a greater percentage is
provided for in the articles of incorporation or in the resolution of the board
of directors proposing such amendment. In addition, Florida law provides that
the holders of the outstanding shares of a class shall be entitled to vote as a
single class if the holders of such a class would be adversely or particularly
affected by the amendment.
Fisher. Fisher's restated certificate of incorporation provides that the
affirmative vote of the holders of at least 80% of the voting power of all of
the then outstanding Fisher capital stock entitled to vote generally in the
election of directors, voting together as one group, is required to:
- amend, or repeal, or adopt provisions inconsistent with, the provisions
of Fisher's restated certificate of incorporation relating to:
- undesignated preferred stock;
- the board of directors, including the powers and authority expressly
conferred upon the board of directors, the number of members, board
classification, vacancies and removal;
- calling of special meetings of stockholders;
- the manner in which stockholder action may be effected; or
- amendments to Fisher's bylaws.
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PSS. The PSS articles do not alter the vote required under Florida law
except as follows. The PSS Articles provide that the approval of four-fifths of
the PSS common stock is required to alter, amend, modify or repeal the
provisions in the PSS articles regarding the removal of directors. The PSS
articles also provide that if the stockholders have adopted or amended a
provision of the PSS articles that fixes a greater quorum or voting requirement
for stockholders than is required by Florida law, the adoption or amendment of a
provision in the PSS articles that adds, changes or deletes a greater quorum or
voting requirement for stockholders must meet the same quorum requirements and
be adopted by the same vote and voting groups required to take action under the
quorum and voting requirements then in effect or proposed to be adopted,
whichever is greater.
AMENDMENTS TO BYLAWS
General. Under Delaware law, stockholders entitled to vote have the power
to adopt, amend or repeal by-laws. In addition, a corporation may, in its
certificate of incorporation, confer this power on the board of directors. The
stockholders always have the power to adopt, amend or repeal the bylaws, even
though the board may also be delegated the power.
Under Florida law, either the board of directors or stockholders may amend
or repeal a corporation's bylaws unless (i) the articles of incorporation or
Florida law reserves the power to amend the bylaws generally or a particular
bylaw provision, to the stockholders, or (ii) the stockholders, in amending or
repealing the bylaws generally or a particular bylaw provision, provide
expressly that the board of directors may not amend or repeal the bylaws or that
bylaw provision. Florida law permits a corporation's stockholders to amend or
repeal the corporation's bylaws even though the bylaws may also be amended or
repealed by its board of directors.
Fisher. Fisher's restated certificate of incorporation authorizes the
Fisher board of directors to adopt, amend or repeal any provision of Fisher's
bylaws by the affirmative vote of a majority of the total number of authorized
directors. Fisher's restated certificate of incorporation further provides that
the stockholders may change or repeal any by-law adopted by the board, and that
no amendment or supplement to the bylaws adopted by the board may vary or
conflict with any amendment or supplement adopted by the stockholders. The
restated certificate of incorporation further provides that bylaws pertaining to
special meetings, meetings of stockholders, member election and terms of
directors, and removal of directors, may be adopted, amended or repealed only by
the affirmative vote of the holders of at least 80% of the then outstanding
shares of capital stock entitled to vote generally in the election of directors,
voting together as one group.
PSS. The PSS bylaws are consistent with Florida law. The PSS articles
provide that if the stockholders have adopted or amended a provision of the PSS
bylaws that fixes a greater quorum or voting requirement for stockholders than
is required by Florida law, the adoption or amendment of a provision in the PSS
bylaws that adds, changes or deletes a greater quorum or voting requirement for
stockholders must meet the same quorum requirements and be adopted by the same
vote and voting groups required to take action under the quorum and voting
requirements then in effect or proposed to be adopted, whichever is greater.
ACTION BY WRITTEN CONSENT
General. Delaware law provides that, unless otherwise stated in the
certificate of incorporation, any action which may be taken at an annual meeting
or special meeting of stockholders may be taken without a meeting, if a consent
in writing is signed by the holders of the outstanding stock having the minimum
number of votes necessary to authorize the action at a meeting of stockholders.
Florida law provides that, unless otherwise stated in the articles of
incorporation, any action which may be taken at an annual meeting or special
meeting of stockholders may be taken without a meeting, if a consent in writing
is signed by the holders of the outstanding stock having the minimum number of
votes necessary to authorize the action at a meeting of stockholders.
Fisher. The Fisher restated certificate of incorporation prohibits
stockholder actions by written consent.
PSS. PSS's bylaws permit stockholder actions by written consent.
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ABILITY TO CALL SPECIAL MEETINGS
Fisher. Special meetings of Fisher stockholders may be called by Fisher's
board of directors, by affirmative vote of a majority of the total number of
authorized directors, or by the chief executive officer.
PSS. The PSS bylaws provide that special meetings of the stockholders may
be called, as provided under Florida law, by the PSS board of directors or by
any other person authorized by the PSS articles or bylaws, or by the holders of
not less than 10% of the shares entitled to vote.
NOTICE OF STOCKHOLDER ACTION
Fisher. Under Fisher's bylaws, at any annual meeting, only such business
will be conducted as is brought before the annual meeting by or at the direction
of the board of directors, or by any stockholder who complies with the
procedures set forth in the bylaws.
For business properly to be brought before an annual meeting by a
stockholder, the stockholder must have given timely notice in proper written
form to the secretary of Fisher. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of Fisher
not less than 30 days nor more than 60 days prior to the annual meeting;
provided, however, that in the event that less than 40 days' notice or prior
public disclosure of the date of the annual meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the tenth day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made.
To be in proper written form, a stockholder's notice to the secretary must
set forth in writing as to each matter the stockholder proposes to bring before
the annual meeting:
- a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting;
- the name and address, as they appear on Fisher's books, of the
stockholder proposing such business;
- the class and number of shares of Fisher which are beneficially owned by
the stockholder; and
- any material interest of the stockholder in such business.
The chairman of an annual meeting will, if facts warrant, determine and
declare to the annual meeting that business was not properly brought before the
annual meeting in accordance with the provisions of the bylaws. If he determines
that business is not properly before the annual meeting, he will declare that
such business not properly brought before the annual meeting may not be
transacted.
PSS. None of the PSS articles or bylaws or Florida law impose any
additional requirements or restrictions on the ability of a stockholder to
propose action to be addressed at a meeting of the stockholders of PSS.
Therefore, a PSS stockholder need only comply with the proxy rules of the
Securities and Exchange Commission in order to propose a stockholder action.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS AND OFFICERS
General. Delaware law provides that a corporation may include in its
certificate of incorporation a provision limiting or eliminating the liability
of its directors to the corporation and its stockholders for monetary damages
arising from a breach of fiduciary duty, except for:
- a breach of the duty of loyalty to the corporation or its stockholders;
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- payment of a dividend or the repurchase or redemption of stock in
violation of Delaware law; or
- any transaction from which the director derived an improper personal
benefit.
Florida law provides that a director is not personally liable for monetary
damages to the corporation or any other person for any statement, vote, decision
or failure to act, regarding corporate management or policy, unless
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the director breached or failed to perform his duties as a director and the
director's breach of, or failure to perform those duties constitutes:
- a violation of criminal law, unless the director had reasonable cause to
believe his conduct was lawful or had no reason to believe his conduct
was unlawful;
- a transaction from which the director, either directly or indirectly,
derived an improper personal benefit;
- a violation of Florida law concerning the unlawful payment of dividends;
- in a proceeding by or in the right of the corporation or a stockholder,
conscious disregard for the best interest of the corporation, or willful
misconduct; or
- in a proceeding by or in the right of someone other than the corporation
or a stockholder, recklessness or an act or omission which was committed
in bad faith or with malicious purpose or in a manner exhibiting wanton
and willful disregard of human rights, safety or property.
Fisher. The Fisher restated certificate of incorporation provides that a
director of Fisher will not be personally liable to Fisher or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability:
- for any breach of the director's duty of loyalty to Fisher or its
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the Delaware General Corporation Law; or
- for any transaction from which the director derived an improper personal
benefit.
PSS. Neither the PSS articles or bylaws modify the limitation of the
liability of directors of PSS provided by Florida law.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
General. Under Delaware law, a corporation generally may indemnify
directors and officers:
- for actions taken in good faith and in a manner they reasonably believed
to be in, or not opposed to, the best interests of the corporation; and
- with respect to any criminal proceeding, they had no reasonable cause to
believe that their conduct was unlawful.
In addition, Delaware law provides that a corporation may advance to a
director or officer expenses incurred in defending any action upon receipt of an
undertaking by the director or officer to repay the amount advanced if it is
ultimately determined that he or she is not entitled to indemnification.
Under Florida law, a corporation generally may indemnify directors and
officers:
- for actions taken in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the corporation; and
- with respect to any criminal proceeding, if such person had no reasonable
cause to believe that his or her conduct was unlawful.
Florida law provides however that a person may not be indemnified nor may
expenses be advanced if a judgment or final adjudication establishes that his
actions, or omissions to act, were material to the cause of action so
adjudicated and constitute:
- a violation of criminal law, unless such person had reasonable cause to
believe his conduct was lawful or had no reasonable cause to believe his
conduct was unlawful;
- a transaction from which such person derived an improper personal
benefit;
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- in the case of a director, an unlawful distribution under Florida law; or
- willful misconduct or conscious disregard for the best interests of the
corporation in a proceeding by or in the right of the corporation to
procure a judgment in its favor or in a proceeding by or in the right of
a stockholder.
Fisher. The Fisher restated certificate of incorporation will provide for
indemnification, to the fullest extent permitted by Delaware law, of any person
who is or was a director or officer of Fisher and who is or was involved in any
manner, or who is threatened to be made involved in any manner, in any pending
or completed investigation, claim, action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was a director, officer, employee or agent of Fisher, or is or was serving
at the request of Fisher as a director, officer, employee or agent of another
corporation, or of a partnership, joint venture, trust or other enterprise.
Fisher is authorized to purchase and maintain insurance on behalf of its
directors, officers, employees and agents.
PSS. The PSS articles and bylaws provide that PSS shall indemnify officers
and directors to the fullest extent permitted by law. The PSS bylaws also state
that PSS may purchase insurance on behalf of any person who is or was a
director, officer, employee or agent of PSS.
FISHER STOCKHOLDERS RIGHTS PLANS
On June 9, 1997, the board of directors of Fisher authorized and declared a
dividend of one preferred share purchase right for each share of Fisher common
stock outstanding at the close of business on June 19, 1997, to the stockholders
of record on that date. Each right entitles the registered holder to purchase
from Fisher one one-hundredth of a share of series A preferred stock at a price
of $190 per one one-hundredth of a share of preferred stock, subject to
adjustment. On August 7, 1997, the board approved a First Amendment, dated as of
August 7, 1997, to the rights agreement dated as of June 9, 1997, between Fisher
and Chase Mellon Stockholder Services, L.L.C. as rights agent. The following is
a description of the rights agreement, as amended.
Until the earlier to occur of (1) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "acquiring
person") have acquired beneficial ownership of 15% or more of the outstanding
Fisher common stock or (2) 10 business days (or such later date as may be
determined by action of the board of directors prior to such time as any person
or group of affiliated persons becomes an acquiring person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Fisher common
stock (the earlier of such dates being called the "distribution date"), the
rights will be evidenced, with respect to any of the Fisher common stock
certificates outstanding as of the rights record date of June 19, 1997, by such
Fisher common stock certificate with a copy of a summary of rights attached
thereto.
The rights agreement provides that, until the distribution date (or earlier
redemption or expiration of the rights), the rights will be transferred with and
only with the Fisher common stock. Until the distribution date (or earlier
redemption or expiration of the rights), new Fisher common stock certificates
issued after the rights record date upon transfer or new issuance of Fisher
common stock will contain a notation incorporating the rights agreement by
reference. Until the distribution date (or earlier redemption or expiration of
the rights), the surrender for transfer of any certificates for Fisher common
stock outstanding as of the rights record date, even without such notation or a
copy of the summary of rights being attached thereto, will also constitute the
transfer of the rights associated with the Fisher common stock represented by
such certificate. As soon as practicable following the distribution date,
separate certificates evidencing the rights will be mailed to holders of record
of the Fisher common stock as of the close of business on the distribution date
and such separate right certificates alone will evidence the rights.
The rights are not exercisable until the distribution date. The rights will
expire on June 8, 2007 (the "final expiration date"), unless the final
expiration date is extended or unless the rights are earlier redeemed or
exchanged by Fisher, in each case, as described below.
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The purchase price payable, and the number of shares of series A preferred
stock or other securities or property issuable, upon exercise of the rights are
subject to adjustment from time to time to prevent dilution:
- in the event of a stock dividend on, or a subdivision combination or
reclassification of, the series A preferred stock;
- upon the grant to holders of shares of series A preferred stock of
certain rights or warrants to subscribe for or purchase shares of series
A preferred stock at a price, or securities convertible into series A
preferred stock with a conversion price, less than the then-current
market price of the series A preferred stock; or
- upon the distribution to holders of the series A preferred stock of
evidences of indebtedness or assets (excluding regular periodic cash
dividends paid out of earnings or retained earnings or dividends payable
in series A preferred stock) or of subscription rights or warrants (other
than those referred to above).
The number of outstanding rights and the number of one one-hundredths of a
share of series A preferred stock issuable upon exercise of each right are also
subject to adjustment in the event of a stock split of the Fisher common stock
or a stock dividend on the Fisher common stock payable in shares of Fisher
common stock or subdivisions, consolidations or combinations of the common stock
occurring, in any such case, prior to the distribution date.
The shares of series A preferred stock purchasable upon exercise of the
rights will not be redeemable. Each share of series A preferred stock will be
entitled to a minimum preferential quarterly dividend payment of $1 per share
but will be entitled to an aggregate dividend of 100 times the dividend declared
per share of Fisher common stock. In the event of liquidation, the holders of
the series A preferred stock will be entitled to a minimum preferential
liquidation payment of 100 times the payment made per share of Fisher common
stock. Each share of series A preferred stock will have 100 votes, voting
together with the Fisher common stock. Finally, in the event of any merger,
consolidation or other transaction in which Fisher common stock is exchanged,
each share of series A preferred stock will be entitled to receive 100 times the
amount received per share of Fisher common stock. These rights are protected by
customary antidilution provisions.
Because of the nature of the series A preferred stock's dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
share of series A preferred stock purchasable upon exercise of each right should
approximate the value of one share of Fisher common stock.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an acquiring person, proper
provision will be made so that each holder of a right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the right, that number of shares of Fisher common stock of the acquiring
company which at the time of such transaction will have a market value of two
times the exercise price of the right. In the event that any person or group of
affiliated or associated persons becomes an acquiring person, proper provision
shall be made so that each holder of a right, other than rights beneficially
owned by the acquiring person (which will thereafter be void), will thereafter
have the right to receive upon exercise that number of shares of Fisher common
stock having a market value of two times the exercise price of the right.
At any time after any person or group becomes an acquiring person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of Fisher common stock, the board of directors may exchange the rights
(other than rights owned by such person or group which will have become void),
in whole or in part, at an exchange ratio of one share of Fisher common stock,
or one one-hundredth of a share of series A preferred stock (or of a share of a
class or series of Fisher's preferred stock having equivalent rights,
preferences and privileges), per right (subject to adjustment).
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments require an adjustment of at least 1% in
such purchase price. No fractional shares of series A preferred stock will be
issued (other than fractions which are integral multiples of one one-hundredth
of a share of series A preferred stock, which may, at the election of Fisher, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the series A preferred stock on the
last trading day prior to the date of exercise.
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At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
Fisher common stock, the board of directors may redeem the rights in whole, but
not in part, at a price of $.01 per right. The redemption of the rights may be
made effective at such time on such basis with such conditions as the board of
directors in its sole discretion may establish. Immediately upon any redemption
of the rights, the right to exercise the rights will terminate and the only
right of the holders of rights will be to receive the redemption price of $.01
per right.
The terms of the rights may be amended by the board of directors without
the consent of the holders of the rights, including an amendment to lower
certain thresholds described above to not less than the greater of (i) the sum
of .001% and the largest percentage of the outstanding shares of Fisher common
stock then known to Fisher to be beneficially owned by any person or group of
affiliated or associated persons and (ii) 10%, except that from and after such
time as any person or group of affiliated or associated persons becomes an
acquiring person no such amendment may adversely affect the interests of the
holders of the rights.
Until a right is exercised, the holder thereof, as such will have no rights
as a stockholder of Fisher, including, without limitation, the right to vote or
to receive dividends.
STATE ANTI-TAKEOVER STATUTES
General. Under the business combination statute of Delaware law, a
corporation is prohibited from engaging in any business combination with an
interested stockholder who, together with its affiliates or associates, owns, or
who is an affiliate or associate of the corporation and within a three-year
period did own, 15% or more of the corporation's voting stock for a three year
period following the time the stockholder became an interested stockholder,
unless:
- prior to the time the stockholder became an interested stockholder, the
board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming
an interested stockholder;
- the interested stockholder owned at least 85% of the voting stock of the
corporation, excluding specified shares, upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder; or
- at or subsequent to the time the stockholder became an interested
stockholder, the business combination is approved by the board of
directors of the corporation and authorized by the affirmative vote, at
an annual or special meeting and not by written consent, of at least
66 2/3% of the outstanding voting shares of the corporation, excluding
shares held by that interested stockholder.
A business combination generally includes:
- mergers, consolidations and sales or other dispositions of 10% or more of
the assets of a corporation to or with an interested stockholder;
- specified transactions resulting in the issuance or transfer to an
interested stockholder of any capital stock of the corporation or its
subsidiaries; and
- other transactions resulting in a disproportionate financial benefit to
an interested stockholder.
The provisions of the Delaware business combination statute do not apply to
a corporation if, subject to certain requirements, the certificate of
incorporation or bylaws of the corporation contain a provision expressly
electing not to be governed by the provisions of the statute or the corporation
does not have voting stock listed on a national securities exchange, authorized
for quotation on an inter-dealer quotation system of a registered national
securities association or held of record by more than 2,000 stockholders.
Florida has adopted a statute applicable to affiliated transactions.
Florida law and the PSS articles require that any merger, consolidation, asset
transfer or other extraordinary transaction of the corporation with a
stockholder who is the beneficial owner of more than ten percent of the
outstanding voting shares of the corporation, or an interested stockholder, must
be approved by two-thirds of the voting shares other than the
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shares beneficially owned by the interested stockholder. The voting requirements
described above do not apply if certain conditions are met, including, but not
limited to:
- the transaction being approved by a majority of disinterested directors;
or
- the price to be paid to the stockholders exceeding certain price
thresholds, including that the price per share must be higher than the
fair market value per share on the announcement date and must be higher
than the highest price paid by the interested stockholder within the two
years preceding the transaction.
The affiliated transaction statute applies to any Florida corporation
unless the original articles of incorporation or an amendment to the articles of
incorporation or bylaws contain a provision expressly electing not to be
governed by the statute. Such an amendment to the article of incorporation or
bylaws must be approved by the affirmative vote of a majority of disinterested
shareholders and is not effective until 12 months after approval.
Another Florida statute governs control share acquisitions. The control
share acquisition statute generally denies voting rights to shares owned by an
acquiring person who has obtained or anticipates obtaining in excess of
specified thresholds of voting control in shares of an issuing public
corporation. The purchase of shares of a public corporation is not deemed to be
a control share acquisition if, among other things, the acquisition is pursuant
to a merger or share exchange agreement to which the public corporation is a
party or the acquisition has been approved by the board of directors of the
public corporation before such acquisition. In the event that a purchase of
shares does constitute a control share acquisition, the shares acquired will
only have voting rights to the extent granted by resolution approved by a
majority of the shares of the public corporation entitled to vote (excluding all
interested shares) with each class or series voting as a separate class to the
extent required by Florida law. The control share acquisition statute applies to
a corporation unless, prior to such acquisition, the corporation's articles of
incorporation or bylaws provide that this statute does not apply to control
share acquisitions.
Fisher. Because Fisher has not adopted any provision in its restated
certificate of incorporation to "opt-out" of the Delaware business combination
statute, the statute is applicable to business combinations involving Fisher.
PSS. PSS's articles specifically provide that the Florida affiliated
transactions statute is applicable to the corporation. In addition, PSS has not
taken any action to "opt-out" of the control share acquisition statute, and
therefore the statute is applicable to acquisitions of shares of PSS common
stock. PSS's board of directors has adopted resolutions approving its
acquisition by Fisher and specifically providing that the merger shall not
trigger the affiliated transactions statute or the control share acquisition
statute or any other state anti-takeover law.
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MANAGEMENT AND OPERATIONS AFTER THE MERGER
OPERATIONS OF THE COMPANY
After the transaction, Fisher will be the parent corporation of PSS. Except
as indicated in this joint proxy statement/prospectus, Fisher currently does not
have any plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving Fisher, a sale or transfer of a material amount of assets of Fisher or
any material change in Fisher's capitalization or any other material changes in
Fisher's business.
It is currently anticipated that the business and operations of Fisher and
PSS will be continued substantially as they are currently being conducted,
except that PSS will be a wholly owned subsidiary of Fisher. Changes may be made
as are deemed appropriate and Fisher's assets, business, operations, properties,
policies, corporate structure, capitalization and management will be reviewed in
the future to determine if any changes would be desirable in light of the
circumstances then existing.
BOARD OF DIRECTORS OF FISHER
Fisher shall take such necessary action in order to appoint, as of the
effective time of the merger, Hugh Brown, a director of PSS, to serve as a
director of Fisher with a term expiring in 2001 and Patrick Kelly, chairman,
chief executive officer and a director of PSS, to serve as a director with a
term expiring in 2003. If necessary for the appointment of Messrs. Brown and
Kelly, Fisher will increase the size of its board of directors from nine persons
to eleven persons.
All of Fisher's current directors will continue as directors following the
merger. These directors are Paul M. Montrone (Chairman), Paul M. Meister (Vice
Chairman), Mitchell J. Blutt, M.D., Robert A. Day, Michael D. Dingman, Anthony
J. DiNovi, David V. Harkins, Scott M. Sperling and Kent R. Weldon.
BOARD OF DIRECTORS AND MANAGEMENT OF PSS
Member of the PSS Board of Directors. Following the merger, the directors
of FSI Merger Corporation will be the directors of PSS. These persons are Paul
M. Meister, the Vice Chairman of the Board and Executive Vice President and
Chief Financial Officer of Fisher, and Todd M. DuChene, Vice President and
General Counsel of Fisher.
Executive Officers of PSS. Following the merger, the officers of PSS in
office immediately prior to the effective time of the merger will continue in
office until their successors are duly elected and qualified.
LEGAL MATTERS
The validity of the shares of Fisher stock offered by this joint proxy
statement/prospectus will be passed upon for Fisher by Debevoise & Plimpton.
Alston & Bird LLP, counsel for PSS, and Debevoise & Plimpton, counsel for
Fisher, will pass upon certain Federal income tax consequences of the merger for
PSS and Fisher, respectively.
EXPERTS
The consolidated financial statements of Fisher incorporated in this
prospectus by reference from Fisher's Annual Report on Form 10-K for the year
ended December 31, 1999 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The financial statements and schedule of PSS World Medical, Inc. included
in its Annual Report on Form 10-K for the year ended March 31, 2000 incorporated
by reference in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent certified public accountants,
as
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indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
Reference is made to said report, which includes an explanatory paragraph with
respect to the adoption of Staff Accounting Bulletin No. 101, "Revenue
Recognition," in fiscal 2000 as discussed in Note 1 to the financial statements.
OTHER MATTERS
Neither Fisher nor PSS presently intends to bring any matters other than
those described in this document before its special meeting. Further, neither
Fisher nor PSS has any knowledge of any other matters that may be introduced by
other persons. If any other matters do properly come before either company's
special meeting or any adjournment or postponement of either company's special
meeting, the persons named in the enclosed proxy forms of Fisher or PSS, as
applicable, will vote the proxies in keeping with their judgment on such
matters.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present
proper proposals for inclusion in a company's proxy statement and for
consideration at the next annual meeting of its stockholders by submitting their
proposals to the company in a timely manner.
WHERE YOU CAN FIND MORE INFORMATION
This joint proxy statement/prospectus incorporates documents by reference
which are not presented in or delivered with this joint proxy
statement/prospectus.
All documents filed by Fisher or PSS pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this joint proxy
statement/prospectus and before the date of each company's special meeting are
incorporated by reference into and are deemed to be a part of this joint proxy
statement/prospectus from the date of filing of those documents.
You should rely only on the information contained in this document or that
which we have referred you to. We have not authorized anyone to provide you with
any additional information.
The following documents, which have been filed by Fisher with the
Securities and Exchange Commission (Securities and Exchange Commission file
number 1-10920), are incorporated by reference into this joint proxy
statement/prospectus:
- Fisher's Annual Report on Form 10-K for the fiscal year ended December
31, 1999 (filing date March 23, 2000);
- Fisher's Quarterly Report on Form 10-Q, for the quarterly period ended
March 31, 2000 (filing date May 15, 2000);
- Fisher's Quarterly Report on Form 10-Q, for the quarterly period ended
June 30, 2000 (filing date August 14, 2000); and
- Fisher's Proxy Statement on Schedule 14A (filing date April 7, 2000).
The following documents, which were filed by PSS with the Securities and
Exchange Commission (Securities and Exchange Commission file number 0-23832),
are incorporated by reference into this joint proxy statement/prospectus:
- PSS's Annual Report on Form 10-K for the fiscal year ended March 31, 2000
(filing date June 23, 2000), as amended by PSS's Annual Report on Form
10-K/A (filing date July 31, 2000);
- PSS's Current Report on Form 8-K (filed June 27, 2000);
- PSS's Quarterly Report on Form 10-Q, for the quarterly period ended June
30, 2000 (filing date August 10, 2000); and
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- The description of Common Stock contained in PSS's Registration Statement
filed under Section 12 of the Exchange Act, including all amendments or
reports filed for the purpose of updating such description.
Any statement contained in a document incorporated or deemed to be
incorporated by reference into this joint proxy statement/prospectus will be
deemed to be modified or superseded for purposes of this joint proxy
statement/prospectus to the extent that a statement contained in this joint
proxy statement/prospectus or any other subsequently filed document that is
deemed to be incorporated by reference into this joint proxy
statement/prospectus modifies or supersedes the statement. Any statement so
modified or superseded will not be deemed, except as so modified or superseded,
to constitute a part of this joint proxy statement/prospectus.
The documents incorporated by reference into this joint proxy
statement/prospectus are available from us upon request. We will provide a copy
of any and all of the information that is incorporated by reference in this
joint proxy statement/prospectus to any person, without charge, upon written or
oral request. If exhibits to the documents incorporated by reference in this
joint proxy statement/prospectus are not themselves specifically incorporated by
reference in this joint proxy statement/prospectus, then the exhibits will not
be provided. ANY REQUEST FOR DOCUMENTS SHOULD BE MADE BY , 2000 TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS.
Requests for documents relating to Fisher should be directed to:
Fisher Scientific International Inc.
One Liberty Lane
Hampton, New Hampshire 03842
Attention: Matthew Murphy
telephone: (603) 929-2376
Requests for documents relating to PSS should be directed to:
PSS World Medical, Inc.
4345 Southpoint Boulevard
Jacksonville, Florida 32216
Attention: David A. Smith
telephone: (904) 332-3333
We file reports, proxy statements and other information with the Securities
and Exchange Commission. Copies of our reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Securities and Exchange Commission at:
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Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024450 500 West Madison Street 13th Floor
Fifth Street, N.W Suite 1400 New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
</TABLE>
Reports, proxy statements and other information concerning Fisher may be
inspected at:
The New York Stock Exchange
20 Broad Street
New York, New York 10005
Reports, proxy statements and other information concerning PSS may be
inspected at:
National Association of Securities Dealers, Inc.
1735 K. Street, N.W.
Washington, D.C. 20006
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Room of the Securities and Exchange Commission, 450
Fifth Street, N.W., Washington, D.C. 20549 or by calling the
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Securities and Exchange Commission at l-800-SEC-0330. The Securities and
Exchange Commission maintains a website that contains reports, proxy statements
and other information regarding each of us. The address of the Securities and
Exchange Commission website is http://www.sec.gov.
Fisher has filed a registration statement on Form S-4 under the Securities
Act with the Securities and Exchange Commission with respect to Fisher's stock
to be issued in the merger. This joint proxy statement-prospectus constitutes
the prospectus of Fisher filed as part of the registration statement. This joint
proxy statement/prospectus does not contain all of the information set forth in
the registration statement because certain parts of the registration statement
are omitted in accordance with the rules and regulations of the Securities and
Exchange Commission. The registration statement and its exhibits are available
for inspection and copying as set forth above.
If you have any questions about the merger, please call either Matthew
Murphy at Fisher Investor Relations at (603) 929-2376 or David A. Smith at PSS
Investor Relations at (904) 332-3333.
This joint proxy statement/prospectus does not constitute an offer to sell,
or a solicitation of an offer to purchase, the securities offered by this joint
proxy statement/prospectus, or the solicitation of a proxy, in any jurisdiction
to or from any person to whom or from whom it is unlawful to make such offer,
solicitation of an offer or proxy solicitation in such jurisdiction. Neither the
delivery of this joint proxy statement/prospectus nor any distribution of
securities pursuant to this joint proxy statement/prospectus shall, under any
circumstances, create any implication that there has been no change in the
information set forth or incorporated into this joint proxy statement/prospectus
by reference or in our affairs since the date of this joint proxy
statement/prospectus. The information contained in this joint proxy
statement/prospectus with respect to Fisher was provided by Fisher and the
information contained in this joint proxy statement/prospectus with respect to
PSS was provided by PSS.
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ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FISHER SCIENTIFIC INTERNATIONAL INC.,
FSI MERGER CORPORATION
AND
PSS WORLD MEDICAL, INC.
DATED AS OF JUNE 21, 2000
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TABLE OF CONTENTS
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Preamble............................................................. 1
ARTICLE I THE MERGER............................................. 1
1.1 Merger...................................................... 1
1.2 Effective Time.............................................. 1
1.3 Time and Place of Closing................................... 1
1.4 Articles of Incorporation and Bylaws........................ 1
1.5 Directors................................................... 2
1.6 Officers.................................................... 2
1.7 Stock Option Agreement...................................... 2
ARTICLE II MANNER OF CONVERTING SHARES IN THE MERGER............. 2
2.1 Conversion of Shares........................................ 2
2.2 Shares Held by Company or Parent............................ 2
2.3 Fractional Shares........................................... 2
2.4 Payment in Respect of Equity Rights......................... 3
2.5 Adjustments................................................. 4
ARTICLE III EXCHANGE OF SHARES................................... 4
3.1 Exchange Procedures......................................... 4
3.2 Rights of Former Company Shareholders....................... 6
3.3 Affiliates.................................................. 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY............. 6
4.1 Organization, Standing and Power............................ 6
4.2 Authority of Company; No Breach By Agreement................ 6
4.3 Capital Stock............................................... 7
4.4 Company Subsidiaries........................................ 7
4.5 SEC Filings; Financial Statements........................... 8
4.6 Absence of Undisclosed Liabilities.......................... 9
4.7 Absence of Certain Changes or Events........................ 9
4.8 Tax Matters................................................. 9
4.9 Assets...................................................... 10
4.10 Intellectual Property....................................... 10
4.11 Environmental Matters....................................... 10
4.12 Compliance with Laws........................................ 11
4.13 Labor Relations............................................. 11
4.14 Employee Benefit Plans...................................... 11
4.15 Material Contracts.......................................... 12
4.16 Legal Proceedings........................................... 12
4.17 Opinion of Financial Advisor................................ 13
4.18 State Takeover Laws......................................... 13
4.19 Charter Provisions.......................................... 13
4.20 Rights Agreement............................................ 13
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4.21 Tax Reorganization.......................................... 13
4.22 Customers and Suppliers..................................... 13
4.23 ERP Rollout................................................. 13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER.......................................................... 14
5.1 Organization, Standing and Power............................ 14
5.2 Authority; No Breach By Agreement........................... 14
5.3 Capital Stock............................................... 14
5.4 Parent Subsidiaries......................................... 15
5.5 SEC Filings; Financial Statements........................... 15
5.6 Absence of Undisclosed Liabilities.......................... 16
5.7 Absence of Certain Changes or Events........................ 16
5.8 Tax Matters................................................. 16
5.9 Environmental Matters....................................... 17
5.10 Compliance with Laws........................................ 17
5.11 Legal Proceedings........................................... 17
5.12 Authority of Purchaser...................................... 18
5.13 Tax Reorganization.......................................... 18
ARTICLE VI CONDUCT OF BUSINESS PENDING CONSUMMATION.............. 18
6.1 Affirmative Covenants of Company............................ 18
6.2 Negative Covenants of Company............................... 19
6.3 Covenants of Parent and Purchaser........................... 20
6.4 Adverse Changes in Condition................................ 20
6.5 Reports..................................................... 20
ARTICLE VII ADDITIONAL AGREEMENTS................................ 21
Registration Statement; Proxy Statement; Shareholder
7.1 Approval.................................................... 21
7.2 NYSE Listing................................................ 22
7.3 Purchaser Compliance........................................ 22
7.4 Applications; Antitrust Notification........................ 22
7.5 Filings with State Offices.................................. 22
7.6 Agreement as to Efforts to Consummate....................... 22
7.7 Investigation and Confidentiality........................... 22
7.8 Press Releases.............................................. 23
7.9 No Solicitation; Acquisition Proposals...................... 23
7.10 State Takeover Laws......................................... 24
7.11 Employee Benefits and Contracts............................. 24
7.12 Indemnification............................................. 25
7.13 Repayment of Certain Indebtedness........................... 25
7.14 Senior Subordinated Notes due 2007.......................... 26
7.15 Section 16 Matters.......................................... 26
7.16 Affiliates.................................................. 26
7.17 Employment and Non-Compete Agreements....................... 26
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7.18 Voting Agreement.................................................................................... 26
7.19 Accountant's Letters................................................................................ 26
7.20 Waiver or Declination of Preemptive Rights.......................................................... 27
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE............................................. 27
8.1 Conditions to Obligations of Each Party............................................................. 27
8.2 Conditions to Obligations of Parent and Purchaser................................................... 27
8.3 Conditions to Obligations of Company................................................................ 28
ARTICLE IX TERMINATION..................................................................................... 29
9.1 Termination......................................................................................... 29
9.2 Effect of Termination............................................................................... 30
9.3 Non-Survival of Representations and Covenants....................................................... 30
ARTICLE X MISCELLANEOUS.................................................................................... 30
10.1 Definitions......................................................................................... 30
10.2 Expenses............................................................................................ 37
10.3 Brokers and Finders................................................................................. 38
10.4 Entire Agreement.................................................................................... 38
10.5 Amendments.......................................................................................... 38
10.6 Waivers............................................................................................. 38
10.7 Assignment.......................................................................................... 38
10.8 Notices............................................................................................. 39
10.9 Governing Law....................................................................................... 39
10.10 Counterparts........................................................................................ 39
10.11 Captions; Articles and Sections..................................................................... 39
10.12 Interpretations..................................................................................... 39
10.13 Enforcement of Agreement............................................................................ 39
10.14 Severability........................................................................................ 39
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LIST OF EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
<C> <S>
1.6 Officers of Company
1.7 Stock Option Agreement
4.23 ERP System Roll-Out Schedule
7.16 Rule 145 Affiliates of Company
7.18(a) Parent Shareholders Party to Voting Agreement
7.18(b) Voting Agreement
8.2(d) Tax Representations Letter of Parent
8.3(e) Tax Representations Letter of Company
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of June 21, 2000, by and among FISHER SCIENTIFIC INTERNATIONAL INC.
("Parent"), a Delaware corporation; FSI MERGER CORPORATION ("Purchaser"), a
Florida corporation; and PSS WORLD MEDICAL, INC. ("Company"), a Florida
corporation.
PREAMBLE
The respective Boards of Directors of the Company, Parent and Purchaser
have each determined that it is in the best interests of their respective
shareholders for Parent, through Purchaser, to acquire the Company upon the
terms and subject to the conditions set forth herein. The transactions described
in this Agreement are subject to the approvals of the stockholders of Company
and Parent, expiration of the required waiting period under the HSR Act, and the
satisfaction of other terms and conditions described in this Agreement. It is
the intention of the parties to this Agreement that, for federal income tax
purposes, the Merger shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code.
Immediately after the execution and delivery of this Agreement, and as
condition and inducement to the willingness of Parent to enter into this
Agreement, Company and Parent are entering into a stock option agreement
pursuant to which Company is granting Parent an option to purchase shares of
Company Common Stock.
Certain terms used in this Agreement are defined in Section 10.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time, Purchaser shall be merged with and into Company in accordance
with the provisions of Section 607.1106 of the FBCA and with the effect provided
therein (the "Merger"). Company shall be the Surviving Corporation resulting
from the Merger and shall become a wholly owned Subsidiary of Parent and shall
continue to be governed by the Laws of the State of Florida. The Merger shall be
consummated pursuant to the terms of this Agreement, which has been adopted by
the respective Boards of Directors of Company, Purchaser and Parent and approved
by Parent, as the sole shareholder of Purchaser.
1.2 EFFECTIVE TIME. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Articles of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Florida (the "Effective Time"). Subject to the terms and
conditions hereof, the Parties shall cause the Effective Time to occur on or
prior to the first business day (unless a greater delay is required by
applicable Law or unless the Parties agree on another date) following the
satisfaction or (to the extent permissible under Law) waiver of all the
conditions of Article 8.
1.3 TIME AND PLACE OF CLOSING. The closing of the Transactions (the
"Closing") will take place at the Effective Time, or at such other time as the
Parties, acting through their authorized officers, may mutually agree. The
Closing shall be held at the offices of Debevoise & Plimpton, 875 Third Avenue,
New York, New York or such other location as may be mutually agreed upon by the
Parties.
1.4 ARTICLES OF INCORPORATION AND BYLAWS.
(a) At the Effective Time, the articles of incorporation of the
Surviving Corporation shall be amended in their entirety to become the same
as the articles of incorporation of Purchaser, as in effect immediately
before the Effective Time, until thereafter amended as provided by law and
such articles of incorporation.
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(b) The bylaws of Purchaser in effect immediately prior to the
Effective Time shall be the bylaws of the Surviving Corporation until duly
amended or repealed.
1.5 DIRECTORS.
(a) The directors of Purchaser in office immediately prior to the
Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the initial directors of the Surviving Corporation
to hold office in accordance with the articles of incorporation and bylaws
of the Surviving Corporation until such director's successor is duly
elected and qualified.
(b) Parent shall take, or cause to be taken, such action as may be
required (including if and to the extent amending the Investor Agreement)
in order to, effective as of the Effective Time, (i) appoint or cause to be
appointed Hugh Brown to serve as a director with a term expiring in 2001
and Patrick Kelly to serve as a director with a term expiring in 2003 and
(ii) if necessary for the appointment of directors contemplated by clause
(i), increase the size of its Board of Directors from nine persons to
eleven persons with three directors whose terms expire in 2003, four
directors whose terms expire in 2002 and four directors whose terms expire
in 2001.
1.6 OFFICERS. The officers of Company in office immediately prior to the
Effective Time, together with the persons named on Exhibit 1.6 hereto, shall
serve as the initial officers of the Surviving Corporation until such officer's
successor is duly elected and qualified.
1.7 STOCK OPTION AGREEMENT. Simultaneous with the execution of this
Agreement by the Parties as a condition thereto, Company and Parent are
executing and delivering the Stock Option Agreement in substantially the form of
Exhibit 1.7.
ARTICLE II
MANNER OF CONVERTING SHARES IN THE MERGER
2.1 CONVERSION OF SHARES. Subject to the provisions of this Article 2, at
the Effective Time, by virtue of the Merger and without any action on the part
of Parent, Company, Purchaser or the shareholders of any of the foregoing, the
shares of the constituent corporations shall be converted as follows:
(a) each share of common stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding and
shall be converted into one validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation; and
(b) each Share (excluding Shares held by any Company Entity or any
Parent Entity) issued and outstanding immediately prior to the Effective
Time shall be cancelled and shall be converted into and exchanged for the
right to receive 0.3121 of a fully paid and non-assessable share of Parent
Common Stock (the "Exchange Ratio"). The consideration referred to in the
preceding sentence and in Section 2.3 is hereinafter referred to as the
"Merger Consideration."
2.2 SHARES HELD BY COMPANY OR PARENT. Each of the Shares held by any
Company Entity or any Parent Entity shall, by virtue of the Merger, cease to be
outstanding and will be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
2.3 FRACTIONAL SHARES.
(a) Notwithstanding any other provision of this Agreement, no
certificates or scrip or shares of Parent Common Stock representing
fractional shares of Parent Common Stock or book-entry credit of the same
shall be issued upon the surrender for exchange of the Certificate and such
fractional share interests will not entitle the owner thereof to vote, to
be entitled to dividends or to have any rights of a shareholder of Parent
or a holder of shares of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of Company Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a
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fraction of a share of Parent Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
Parent Common Stock multiplied by the market value of one share of Parent
Common Stock at the Effective Time. The market value of one share of Parent
Common Stock at the Effective Time shall be the Average Stock Price. As
promptly as practicable after the determination of the amount of cash, if
any, to be paid to holders of fractional interests, the Exchange Agent
shall so notify Parent, and Parent shall cause the Surviving Corporation to
deposit such amount with the Exchange Agent and shall cause the Exchange
Agent to forward payments to such holders of fractional interests subject
to and in accordance with the terms hereof.
2.4 PAYMENT IN RESPECT OF EQUITY RIGHTS.
(a) At the Effective Time, (i) each outstanding Equity Right relating
to Company Common Stock, whether or not then exercisable, shall be
converted, in the manner described below, into and become a right to
acquire Parent Common Stock, (ii) Parent shall assume each Equity Right in
accordance with the terms of the Company Stock Plans and/or the agreements
governing such Equity Right, subject to the modifications set forth in this
Section 2.4, and (iii) the Company Stock Plans and the agreements
evidencing the grants of such Equity Rights shall continue in effect on the
same terms and conditions, subject to the modifications set forth in this
Section 2.4. The number of shares of Parent Common Stock subject to such
converted Equity Right shall equal the product of (i) the number of shares
of Company Common Stock into which such Equity Right was exercisable prior
to the Effective Time and (ii) the Exchange Ratio. The exercise, price, if
any, applicable to such Equity Right shall be equal to the per share
exercise price applicable to such Equity Right prior to the Effective Time
divided by the Exchange Ratio.
(b) Prior to the Effective Time, Company shall use all commercially
reasonable efforts to obtain all necessary consents or releases from
holders of Equity Rights, to the extent required by the terms of the plans
or agreements governing such Equity Rights, as the case may be, or pursuant
to the terms of any Equity Right granted thereunder, and take all such
other lawful action as may be necessary to give effect to the transactions
contemplated by this Section 2.4 (except for such action that may require
the approval of Company's stockholders). Except as otherwise agreed to by
Parent or Purchaser and Company, Company shall take all action necessary to
ensure that following the Effective Time, (x) no participant in any Company
Stock Plan or other plans, programs or arrangements shall have any right
thereunder to acquire equity securities of Company, the Surviving
Corporation or any Subsidiary thereof, and (y) Company will not be bound by
any Equity Right which would entitle any Person to own any capital stock of
Company, the Surviving Corporation or any Subsidiary thereof. Any amounts
otherwise payable under this Section 2.4 shall be subject to any income or
employment tax withholding required under the Internal Revenue Code or any
provision of state or local Law.
(c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery
upon the exercise or conversion of Equity Rights. As soon as practicable
after the Effective Time, Parent shall file a registration statement on
Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), with respect to the shares of Parent Common Stock
subject to such Equity Rights and shall use its reasonable best efforts to
maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such Equity Rights remain
outstanding.
(d) With respect to the Company Stock Plans, from and after the
Effective Time, Parent and its Compensation Committee shall be substituted
for Company and Company's Compensation Committee administering the Company
Stock Plans. As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Equity Rights appropriate notices setting forth
such holders' rights pursuant to the Company Stock Plans. Notwithstanding
the provisions of clause (a) above, each Equity Right which is an
"incentive stock option" shall be adjusted as required by Section 424 of
the Internal Revenue Code, and the regulations promulgated thereunder, so
as not to constitute a modification, extension or renewal of such Equity
Right, within the meaning of Section 424(h) of the Internal Revenue Code.
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(e) With respect to those individuals who subsequent to the Merger
will be subject to the reporting requirements under Section 16(a) of the
1934 Act, where applicable, Parent shall administer the Company Stock Plans
in a manner that complies with Rule 16b-3 promulgated under the 1934 Act to
the extent the Company Stock Plans complied with such rule prior to the
Merger.
2.5 ADJUSTMENTS. If, during the period between the date of this Agreement
and the Effective Time, any change in the outstanding Shares of Company Common
Stock or Parent Common Stock shall occur, including by reason of the Company
Rights Agreement, any reclassification, recapitalization, stock split or
combination, exchange or readjustment of Shares, or stock dividend thereon, in
any of these cases with a record date during such period, the Exchange Ratio and
any other amounts payable pursuant to this Agreement shall be appropriately
adjusted.
ARTICLE III
EXCHANGE OF SHARES
3.1 EXCHANGE PROCEDURES.
(a) Prior to the Effective Time, Parent shall select a bank or trust
company, which shall be reasonably satisfactory to Company, to act as
exchange agent (the "Exchange Agent") to receive the funds and to deliver
the certificates for the shares of Parent Common Stock upon surrender of
certificates which represented Shares immediately prior to the Effective
Time (the "Certificates"). At or prior to the Effective Time, Parent shall
deposit with the Exchange Agent, in trust for the benefit of holders of
shares of Company Common Stock, certificates representing the Parent Common
Stock issuable pursuant to Section 2.1 in exchange for outstanding shares
of Company Common Stock. Parent agrees to make available to the Exchange
Agent from time to time as needed, cash sufficient to pay cash in lieu of
fractional shares pursuant to Section 2.3 and any dividends and other
distributions pursuant to Section 3.1(h). Any cash and certificates of
Parent Common Stock deposited with the Exchange Agent are hereinafter be
referred to as the "Exchange Fund".
(b) As soon as reasonably practicable after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail to each holder
of a Certificate (i) a letter of transmittal which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent,
and which letter shall be in customary form and have such other provisions
as Parent may reasonably specify, and (ii) instructions for effecting the
surrender of such Certificates in exchange for the applicable Merger
Consideration. Upon surrender of a Certificate to the Exchange Agent
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other documents as may
reasonably be required by the Exchange Agent, (A) the holder of such
Certificate shall be entitled to receive in exchange therefor (x) one or
more shares of Parent Common Stock (which shall be in uncertificated
book-entry form unless a physical certificate is requested) representing,
in the aggregate, the whole number of shares that such holder has the right
to receive pursuant to Section 2.1 (after taking into account all shares of
Company Common Stock then held by such holder) and (y) a check in the
amount equal to the cash that such holder has the right to receive cash in
lieu of any fractional shares of Parent Common Stock pursuant to Section
2.3 and dividends and other distributions pursuant to Section 3.1(h), after
giving effect to any tax withholdings, and (B) the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or will
accrue on any cash payable pursuant to Section 2.3 or Section 3.1(h). In
the event of a transfer of ownership of Company Common Stock that is not
registered in the transfer records of the Company, one or more shares of
Parent Common Stock evidencing, in the aggregate, the proper number of
shares of Parent Common Stock, a check in the proper amount of cash in lieu
of any fractional shares of Parent Common Stock pursuant to Section 2.3 and
any dividends or other distributions to which such holder is entitled
pursuant to Section 3.1(h), may be issued with respect to such Company
Common Stock to such a transferee if the Certificate representing such
shares of Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer
and to evidence that the payment of applicable stock transfer taxes.
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(c) If any Certificates shall have been lost, stolen, mislaid or
destroyed, upon receipt of (i) an affidavit of that fact from the holder of
record claiming such Certificates to be lost, mislaid, stolen or destroyed,
(ii) such bond, security or indemnity as Parent and the Exchange Agent may
reasonably require and (iii) any other documents necessary to evidence and
effect the bona fide exchange thereof, the Exchange Agent shall issue to
such holder the consideration into which the Shares represented by such
lost, stolen, mislaid or destroyed Certificates shall have been converted.
(d) Any other provision of this Agreement notwithstanding, neither
Parent, the Surviving Corporation nor the Exchange Agent shall be liable to
a holder of Company Common Stock for any Merger Consideration or amounts
paid or property delivered in good faith to a public official pursuant to
any applicable abandoned property, escheat or similar Law. Any portion of
the Exchange Fund remaining unclaimed by the holders of Company Common
Stock five years after the Effective Time, (or immediately prior to such
earlier date on which payment pursuant to Article 2 would otherwise escheat
to or become the property of any governmental entity) shall, to the extent
permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any Person
previously entitled thereto.
(e) The Exchange Agent shall invest any cash in the Exchange Fund, as
directed by Parent, in (i) direct obligations of the United States of
America, (ii) obligations for which the full faith and credit of the United
States of America is pledged to provide for the payment of principal and
interest, (iii) commercial paper rated the highest quality by either
Moody's Investors Services, Inc. or Standard & Poor's Corporation, or (iv)
certificates of deposit, bank repurchase agreements or bankers' acceptances
of commercial banks with capital exceeding $500 million. Any net earnings
with respect to the funds deposited with the Exchange Agent shall be the
property of and paid over to Parent as and when requested by Parent.
(f) Any portion of the Exchange Fund which remains undistributed to
the holders of Certificates for six months after the Effective Time shall
be delivered to Parent together with any Certificates and other documents
in the Exchange Agent's possession, upon demand, and any holders of
Certificates that have not theretofore complied with this Section 3.1 shall
thereafter only look to Parent, and only as general creditors thereof, for
payment of their claim for any Merger Consideration, any cash in lieu of
fractional shares of Parent Common Stock to which such holders are entitled
pursuant to Section 2.3 and any dividends or distributions with respect to
shares of Parent Common Stock to which such holders are entitled pursuant
to Section 3.1(h).
(g) Parent, Purchaser or the Surviving Corporation, as the case may
be, shall be entitled to deduct and withhold from the consideration
otherwise payable to any holder of Company Common Stock pursuant to this
Agreement such amounts as may be required to be deducted and withheld with
respect to the making of such payment under the Internal Revenue Code or
under any provision of state or local Tax Law. To the extent that amounts
are so withheld by the Surviving Corporation or Parent, as the case may be,
such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of Company Common Stock in
respect of which such deduction and withholding was made by the Surviving
Corporation or Parent, as the case may be.
(h) No dividends or other distributions declared or made with respect
to shares of Parent Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock that such holder would be
entitled to receive upon surrender of such Certificate, and no cash payment
in lieu of fractional shares of Parent Common Stock shall be paid to any
such holder pursuant to Section 2.3, in each case unless and until such
holder surrenders such Certificate in accordance with this Section 3.1.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to such holder of shares of Parent Common
Stock issuable in exchange therefor, without interest, (i) promptly after
the time of such surrender, the amount of any cash payable in lieu of
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.3 and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect
to such whole shares of Parent Common Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record
date after the Effective Time but
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prior to such surrender and a payment date subsequent to such surrender
payable with respect to shares of Parent Common Stock.
3.2 RIGHTS OF FORMER COMPANY SHAREHOLDERS. At the Effective Time, the stock
transfer books of Company shall be closed and no transfer of Company Common
Stock by any such holder shall thereafter be registered or recognized. Until
surrendered for exchange in accordance with the provisions of Section 3.1, each
Certificate (other than Shares to be canceled pursuant to Section 2.2) shall
from and after the Effective Time represent for all purposes only the right to
receive the consideration provided in Sections 2.1 and 2.3 in exchange therefor,
subject, however, to the Surviving Corporation's obligation to pay any dividends
or make any other distributions with a record date prior to the Effective Time
which have been declared or made by Company in respect of such Shares of Company
Common Stock in accordance with the terms of this Agreement and which remain
unpaid at the Effective Time. However, upon surrender of such Certificate, any
undelivered dividends and cash payments payable hereunder (without interest)
shall be delivered and paid with respect to each Share formerly represented by
such Certificate. All shares of Parent Common Stock issued and cash paid in lieu
of fractional shares pursuant to Section 2.3, and any dividends or distributions
pursuant to Section 3.1(h), shall be deemed to have been issued or paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock.
3.3 AFFILIATES. Notwithstanding anything to the contrary herein, no shares
of Parent Common Stock or cash shall be delivered to a Person who may be deemed
an "affiliate" of Company in accordance with Section 7.16 of this Agreement for
purposes of Rule 145 under the 1933 Act until such Person has executed and
delivered an Affiliate Agreement to Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent as follows:
4.1 ORGANIZATION, STANDING AND POWER.
(a) Company is a corporation validly existing and in good standing
under the Laws of the State of Florida, and has the corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its material Assets. Company is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States
of the United States and foreign jurisdictions where the character of its
Assets owned, leased or operated or the nature or conduct of its business
requires it to be so qualified or licensed, except for such failures which
are not reasonably likely to have a Company Material Adverse Effect.
(b) Company has heretofore furnished to Parent a complete and correct
copy of the Amended and Restated Articles of Incorporation (the "Company
Articles of Incorporation") and the Bylaws (the "Company Bylaws") of
Company as currently in effect. No other similar organizational documents
are applicable to or binding upon Company. Company is not in violation of
any of the provisions of the Company Articles of Incorporation or the
Company Bylaws.
4.2 AUTHORITY OF COMPANY; NO BREACH BY AGREEMENT.
(a) Company has the corporate power and authority necessary to
execute, deliver, and perform its obligations under the Transaction
Agreements and to consummate the Transactions. The execution, delivery, and
performance of the Transaction Agreements and the consummation of the
Transactions have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Company, subject to the
approval of this Agreement by the holders of the outstanding shares of
Company Common Stock, as and to the extent required by Law. Subject to such
requisite shareholder approval, each of the Transaction Agreements
represents a legal, valid, and binding obligation of Company, enforceable
against Company in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of
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specific performance or injunctive relief is subject to the discretion of
the court before which any proceeding may be brought).
(b) Neither the execution and delivery of the Transaction Agreements
by Company, nor the consummation by Company of the Transactions, nor
compliance by Company with any of the provisions thereof, will (i) conflict
with or result in a breach of any provision of the Company Articles of
Incorporation or the Company Bylaws or the certificate or articles of
incorporation or bylaws or other organizational documents of any Company
Subsidiary or any resolution adopted by the board of directors or the
shareholders of any Company Entity, or (ii) except as disclosed in Section
4.2(b) of the Company Disclosure Memorandum, constitute or result in a
Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any Company Entity under, any Contract
or Permit of any Company Entity, where such Default or Lien, or any failure
to obtain such Consent, is reasonably likely to have a Company Material
Adverse Effect, or, (iii) subject to receipt of the requisite Consents
referred to in Section 4.2(c), constitute or result in a Default under, or
require any Consent pursuant to, any Law or Order applicable to any Company
Entity or any of their respective material Assets where such Default, or
any failure to obtain such Consent is reasonably likely to have a Company
Material Adverse Effect.
(c) No notice to, filing with, or Consent of, any public body or
authority by Company or any of its Subsidiaries is necessary for the
consummation by Company of the Transactions other than (i) in connection or
compliance with the provisions of the Securities Laws, applicable state
corporate and securities Laws, and rules of the NASD, (ii) notices to or
filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans or under the HSR
Act, and (iii) Consents, filings, or notifications (including Consents
required from Regulatory Authorities) which, if not obtained or made, are
not reasonably likely to have a Company Material Adverse Effect.
4.3 CAPITAL STOCK.
(a) The authorized capital stock of Company consists solely of (i)
150,000,000 shares of Company Common Stock, $0.01 par value per share, of
which 71,068,708 shares are issued and outstanding as of the date of this
Agreement, and (ii) 1,000,000 shares of preferred stock, of which 300,000
shares are designated as Series A Participating Preferred Stock, $0.01 par
value per share, none of which are issued and outstanding. All of the
issued and outstanding shares of capital stock of Company are duly
authorized, validly issued and outstanding and are fully paid and
nonassessable under the FBCA and are free of pre-emptive rights and were
issued in compliance, in all material respects, with the FBCA and all
applicable Securities Laws.
(b) Section 4.3 of the Company Disclosure Memorandum sets forth a
complete and correct list, as of June 21, 2000, of (i) the name of each
person holding Equity Rights relating to Company Common Stock, and (ii) the
number of shares of Company Common Stock subject to such person's Equity
Rights, and the dates of grant and the exercise prices thereof. Except as
set forth in Section 4.3(a), or as provided pursuant to the Company Rights
Agreement, or under the Company Stock Plans, or as disclosed in Section 4.3
of the Company Disclosure Memorandum, (i) there are no shares of capital
stock or other equity securities of Company outstanding and no outstanding
Equity Rights relating to the capital stock of Company, (ii) since June 1,
2000, no Company Entity has issued or granted, or authorized the issuance
or grant of any Equity Right relating to the capital stock of the Company,
and (iii) no Company Entity has any obligation or commitment to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or
any Equity Right relating to the capital stock of the Company.
4.4 COMPANY SUBSIDIARIES. Except as disclosed in Section 4.4 of the Company
Disclosure Memorandum, Company or one of its Subsidiaries owns all of the issued
and outstanding shares of capital stock (or other equity interests), and Equity
Rights relating to capital stock, of each Company Subsidiary. Except as
disclosed in Section 4.4 of the Company Disclosure Memorandum, no capital stock
(or other equity interest) of any Company Subsidiary is or may become required
to be issued (other than to another Company Entity) by reason of any Equity
Rights, and there are no Contracts by which any Company Subsidiary is bound to
issue (other than to another Company Entity) additional shares of its capital
stock (or other equity interests) or Equity Rights or by which any Company
Entity is or may be bound to transfer, sell, purchase, redeem or otherwise
acquire any shares
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of the capital stock (or other equity interests) of any Company Subsidiary or
any Equity Rights relating to any such capital stock (other than to or from
another Company Entity). Except as disclosed in Section 4.4 of the Company
Disclosure Memorandum, there are no Contracts relating to the rights of any
Company Entity to vote or to dispose of any shares of the capital stock (or
other equity interests) of any Company Subsidiary. Except as disclosed in
Section 4.4 of the Company Disclosure Memorandum, all of the shares of capital
stock (or other equity interests) of each Company Subsidiary held by a Company
Entity are duly authorized, validly issued and outstanding and are fully paid,
nonassessable, free of pre-emptive rights and were issued in compliance with the
applicable corporation Law of the jurisdiction in which such Subsidiary is
incorporated and are owned by a Company Entity free and clear of any Lien. Each
Company Subsidiary is a corporation, and each such Subsidiary is validly
existing and in good standing under the Laws of the jurisdiction in which it is
incorporated, has the corporate power and authority necessary for it to own,
lease, and operate its material Assets and to carry on its business as now
conducted, and is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such failures
which are not reasonably likely to have a Company Material Adverse Effect. The
copies of the organizational and charter documents for the Company Subsidiaries
made available to Parent are true and correct as of the date hereof. Section 4.4
of the Company Disclosure Memorandum lists all of the Company Subsidiaries and
correctly sets forth the percentage of Company's ownership of each Company
Subsidiary and the jurisdiction in which each Company Subsidiary is organized or
formed.
4.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Company has timely filed and made available to Parent all SEC
Documents required to be filed by Company since March 31, 1998 (the
"Company SEC Reports"). Except as disclosed in Section 4.5 of the Company
Disclosure Memorandum, the Company SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Laws and other applicable Laws and (ii) did not, at the time
they were filed (or, if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to
be stated in such Company SEC Reports or necessary in order to make the
statements in such Company SEC Reports, in light of the circumstances under
which they were made, not misleading; provided, that any pro forma
financial statements contained in the Company SEC Reports are not
necessarily indicative of the consolidated financial position of the
Company Entities as of the respective dates thereof and the consolidated
results of operations and cash flows of the Company Entities for the
periods indicated. No Company Subsidiary is required to file any SEC
Documents.
(b) Except as disclosed in Section 4.5 of the Company Disclosure
Memorandum, each of the Company Financial Statements (including, in each
case, any related notes) contained in the Company SEC Reports, including
any Company SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto,
was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to
such financial statements or, in the case of unaudited interim statements,
as permitted by Form 10-Q of the SEC), and fairly presented in all material
respects the consolidated financial position of Company and its
Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
material in amount or effect and that any pro forma financial statements
contained in the Company SEC Reports are not necessarily indicative of the
consolidated financial position of the Company Entities as of the
respective dates thereof and the consolidated results of operations and
cash flows of the Company Entities for the periods indicated.
(c) Attached to the Company Disclosure Memorandum are the consolidated
balance sheet of the Company as of March 31, 2000 and the consolidated
statements of income, changes in shareholders' equity and cash flows for
the fiscal year ended March 31, 2000 and the notes related thereto (the
"2000 Financial Statements"). The 2000 Financial Statements comply as to
form in all material respects with the applicable published rules and
regulations of the SEC relating to such financial statements, have been
prepared in
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accordance with GAAP applied on a basis consistent with the Company
Financial Statements and fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as at
the date and for the periods indicated. The audited financial statements of
the Company for the fiscal year ended March 31, 2000, including the notes
thereto, included in any SEC Document of the Company will be the same as
the 2000 Financial Statements, except for any immaterial changes to the
notes to such financial statements.
(d) None of the information supplied or to be supplied by Company for
inclusion or incorporation by reference in the Proxy Statement/Prospectus
will, on the date it is first mailed to Company stockholders or Parent
stockholders or at the time of the Company Stockholders Meeting or the
Parent Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy
Statement/Prospectus will comply as to form in all material respects with
the requirements of the 1934 Act and the 1933 Act and the rules and
regulations of the SEC thereunder. Notwithstanding the provisions of this
Section 4.5(c), no representation or warranty is made by Company with
respect to statements made or incorporated by reference in the Proxy
Statement/Prospectus based on information supplied by Parent for inclusion
or incorporation by reference therein.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Company Entity has any
Liabilities that are reasonably likely to have a Company Material Adverse
Effect, other than Liabilities or allowances which are disclosed or accrued or
reserved against in the consolidated balance sheet included in the 2000
Financial Statements or reflected in the notes thereto. No Company Entity has
incurred or paid any Liability since December 31, 1999, except as disclosed in
the Company Financial Statements and the 2000 Financial Statements and for such
Liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have a
Company Material Adverse Effect or (ii) in connection with the transactions
contemplated by this Agreement.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999, there
have been no events, changes or occurrences which have had, or are reasonably
likely to have a Company Material Adverse Effect, except (i) as disclosed in the
Company Financial Statements and the 2000 Financial Statements delivered prior
to the date of this Agreement, or (ii) as disclosed in Section 4.7 of the
Company Disclosure Memorandum.
4.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any of the
Company Entities on or before the Effective Time have been or will be
timely filed or requests for extensions have been or will be timely filed,
granted, and shall not have expired, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a
Company Material Adverse Effect, and all Tax Returns filed are complete and
accurate in all material respects, except as disclosed in Section 4.8 of
the Company Disclosure Memorandum. All Taxes shown on filed Tax Returns
have been paid. There is no audit, examination, notice of deficiency, or
refund Litigation with respect to any Taxes, except as reserved against in
the Company Financial Statements delivered prior to the date of this
Agreement or as disclosed in Section 4.8 of the Company Disclosure
Memorandum, or except for audits, examinations or notices of deficiency
that are not reasonably likely to have a Company Material Adverse Effect.
There are no Liens with respect to Taxes upon any of the Assets of the
Company Entities, except for any such Liens which are not reasonably likely
to have a Company Material Adverse Effect.
(b) Except as disclosed in Section 4.8 of the Company Disclosure
Memorandum, none of the Company Entities has executed an extension or
waiver of any statute of limitations on the assessment or collection of any
Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) The provision for any Taxes due or to become due for any of the
Company Entities for the period or periods through and including the date
of the respective Company Financial Statements that has been made and is
reflected on such Company Financial Statements is sufficient to cover all
such Taxes.
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(d) Deferred Taxes of the Company Entities have been provided for in
the Company Financial Statements in accordance with GAAP.
(e) Except as disclosed in Section 4.8 of the Company Disclosure
Memorandum, none of the Company Entities is a party to any Tax allocation,
indemnification or sharing agreement and none of the Company Entities has
been a member of an affiliated group filing a consolidated federal income
Tax Return, has any Liability for Taxes of any Person (other than Company
and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign Law) or as a transferee or
successor or by Contract or otherwise.
(f) Except as disclosed in Section 4.8 of the Company Disclosure
Memorandum, no Company Entity is required to include any amount in income
pursuant to Section 481 of the Internal Revenue Code.
(g) Except as disclosed in Section 4.8 of the Company Disclosure
Memorandum, each Company Entity has withheld all Taxes required to be
withheld and has paid all such withholdings to the proper governmental
entity.
4.9 ASSETS.
(a) Except as disclosed in Section 4.9 of the Company Disclosure
Memorandum or as disclosed or reserved against in the Company Financial
Statements delivered prior to the date of this Agreement, the Company
Entities have good and marketable title, free and clear of all Liens, to
all of their respective Assets, except for any such Liens or other defects
of title which are not reasonably likely to have a Company Material Adverse
Effect.
(b) The Company Entities currently maintain insurance similar in
amounts, scope, and coverage as Company believes is adequate to conduct its
business. None of the Company Entities has received notice from any
insurance carrier that (i) any policy of insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs
with respect to such policies of insurance will be substantially increased.
4.10 INTELLECTUAL PROPERTY. Except as disclosed in Section 4.10 of the
Company Disclosure Memorandum, (i) each Company Entity owns or has a license to
use all of the Intellectual Property used by such Company Entity in the course
of its business, (ii) each Company Entity is the owner of or has a license to
any Intellectual Property sold or licensed to a third party by such Company
Entity in connection with such Company Entity's business operations, and such
Company Entity has the right to convey by sale or license any Intellectual
Property so conveyed, (iii) no Company Entity is in Default under any of its
Intellectual Property licenses and no proceedings which challenge the rights of
any Company Entity with respect to Intellectual Property used, sold, or licensed
by such Company Entity in the course of its business have been instituted, are
pending, or, to the knowledge of the Company, have been threatened, nor, to the
Knowledge of Company, has any person claimed or alleged any rights to such
Intellectual Property, except for any failure to own or license, Default or
proceeding which is not reasonably likely to have a Company Material Adverse
Effect. To the Knowledge of Company, the conduct of the business of the Company
Entities does not infringe any Intellectual Property of any other person. Except
as disclosed in Section 4.10 of the Company Disclosure Memorandum, no Company
Entity is obligated to pay any recurring royalties to any Person with respect to
any such Intellectual Property.
4.11 ENVIRONMENTAL MATTERS. Except as set forth in Section 4.11 of the
Company Disclosure Memorandum:
(a) Each Company Entity, and its Operating Properties are, and have
been, in material compliance with all Environmental Laws.
(b) There is no Litigation pending or, to the knowledge of the
Company, threatened before any court, governmental agency, or authority or
other forum in which any Company Entity or any of its Operating Properties
(or Company in respect of such Operating Property) has been or, with
respect to threatened Litigation, may be named (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or
(ii) relating to the release, discharge, spillage, or disposal into the
environment of any Hazardous Material, whether or not occurring at, on,
under, adjacent to, or affecting (or potentially affecting)
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a site currently or formerly owned, leased, operated or used by any Company
Entity or any of its Operating Properties.
(c) To the Knowledge of Company, there have been no releases,
discharges, spillages, or disposals of Hazardous Material in, on, under,
adjacent to, or affecting (or potentially affecting) any property currently
or formerly owned, operated or used by a Company Entity, except such as are
not reasonably likely to have a Company Material Adverse Effect.
4.12 COMPLIANCE WITH LAWS. Each Company Entity has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, except for those Permits the absence of which are
not reasonably likely to have a Company Material Adverse Effect. Except as
disclosed in Section 4.12 of the Company Disclosure Memorandum, the operations
of the Company Entities do not violate any applicable Law, Order or Permit,
other than violations which are not reasonably likely to have a Company Material
Adverse Effect. None of the Company Entities is currently subject to any fine or
penalty as the result of a failure to comply with any requirement of Law nor has
the Company received any notice from any Regulatory Authorities of such
non-compliance.
4.13 LABOR RELATIONS. No Company Entity is the subject of any Litigation
asserting that it or any other Company Entity has committed an unfair labor
practice (within the meaning of the National Labor Relations Act, as amended) or
seeking to compel it or any other Company Entity to bargain with any labor
organization as to wages or conditions of employment, nor is any Company Entity
party to any collective bargaining agreement, nor is there any strike involving
any Company Entity pending or, to the knowledge of the Company, threatened, or
is there any activity involving any Company Entity's employees seeking to
certify a collective bargaining unit or engaging in any other organization
activity.
4.14 EMPLOYEE BENEFIT PLANS.
(a) Except as disclosed in Section 4.14 of the Company Disclosure
Memorandum, none of the Company Entities or their ERISA Affiliates
maintains, sponsors, contributes to, has a commitment to establish or has
any liability or contingent liability with respect to any pension,
retirement, profit-sharing, deferred compensation, stock option, employee
stock ownership, severance pay, vacation, bonus, or other incentive plan,
any employee program, arrangement, or agreement, any medical, vision,
dental, or other health plan, any life insurance plan or any other employee
benefit plan or fringe benefit plan, including any "employee benefit plan"
as that term is defined in Section 3(3) of ERISA, for any current or former
employee, retiree, dependent, spouse, director, independent contractor, or
other beneficiary (collectively, the "Company Benefit Plans"). No Company
Benefit Plan is or has been a "defined benefit plan" (as defined in Section
414(j)) of the Internal Revenue Code) or a multiemployer plan within the
meaning of Section 3(37) of ERISA. A true and correct copy of each of the
Company Benefit Plans and all contracts relating thereto as in effect on
the date hereof has been made available to Parent prior to the execution of
this Agreement, and Parent has been provided an accurate description of any
Company Benefit Plan which is not in written form.
(b) All Company Benefit Plans are in material compliance and have been
administered in all material respects in form and operation in accordance
with their terms and all applicable provisions of ERISA, the Internal
Revenue Code, and any other applicable Laws. Except as disclosed in Section
4.14 of the Company Disclosure Memorandum, each Company Benefit Plan that
is intended to be qualified under Section 401(a) of the Internal Revenue
Code and all amendments thereto (except those for which the remedial
amendment period has not expired) is the subject of a favorable Internal
Revenue Service determination letter, and the Company is not aware of any
event which will or could give rise to disqualification of any such plan or
to a tax under Section 511 of the Internal Revenue Code. No Company Entity
has engaged in a transaction with respect to any Company Benefit Plan that
would subject any Company Entity to a Tax imposed by either Section 4975 of
the Internal Revenue Code or Section 502(i) of ERISA. All contributions
required to be made under the terms of any Company Benefit Plan have been
made and adequate accruals for all obligations under the Company Benefit
Plans are reflected in the Company Financial Statements.
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(c) Except as disclosed in Section 4.14 of the Company Disclosure
Memorandum, or as required by Law, no Company Entity has any Liability for
post-termination or retiree health and life benefits under any of the
Company Benefit Plans.
(d) Except as disclosed in Section 4.14 of the Company Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the Transactions will (i) result in any payment (including
severance, unemployment compensation, golden parachute, or otherwise)
becoming due to any director, any officer or any employee of any Company
Entity from any Company Entity under any Company Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any Company Benefit
Plan, or (iii) result in the acceleration of the time of payment or vesting
of any benefit payable under any Company Benefit Plan.
(e) Except as set forth in Section 4.14 of the Company Disclosure
Memorandum, none of the assets of any Company Benefit Plan are invested in
employer securities or employer real property.
(f) There are no actions, suits or material claims (other than routine
claims for benefits) pending or threatened involving any Company Benefit
Plan.
(g) There has been no act or omission that would impair the ability of
any Company Entity (or any successor thereto) to unilaterally amend or
terminate any Company Benefit Plan.
4.15 MATERIAL CONTRACTS. Except as disclosed in Section 4.15 of the Company
Disclosure Memorandum or otherwise reflected in the Company Financial Statements
filed with the SEC prior to the date hereof, none of the Company Entities, nor
any of their respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $150,000, (ii) any Contract
relating to the borrowing of money by any Company Entity or the guarantee by any
Company Entity of any such obligation (other than Contracts evidencing trade
payables and Contracts relating to borrowings or guarantees made in the ordinary
course of business), (iii) any Contract which prohibits or restricts any Company
Entity or its Affiliates from engaging in any business activities in any
geographic area, line of business or otherwise in competition with any other
Person, (iv) any Contract between or among Company Entities, (v) any other
Contract or amendment thereto that would be required to be filed as an exhibit
to a Form 10-K filed by Company with the SEC as of the date of this Agreement,
(vi) any registration rights agreement, stockholder agreements or agreements
containing rights to register securities, (vii) any Contracts that are material
to the Company Entities and contain a "change of control" or similar provision,
and (viii) any "material contract" (as such term is defined in Item 601(b)(10)
of Regulation S-K of the SEC) (collectively, the "Company Contracts"). With
respect to each Company Contract and except as disclosed in Section 4.15 of the
Company Disclosure Memorandum: (i) the Company Contract is in full force and
effect (unless otherwise expired by its terms or earlier terminated as set forth
in Section 4.15 of the Company Disclosure Memorandum and is valid and binding on
Company (or, to the extent a Company Subsidiary is a party, such Company
Subsidiary) and, to Company's Knowledge, each other party thereto); (ii) no
Company Entity is in Default thereunder, other than Defaults which are not
reasonably likely to have a Company Material Adverse Effect; (iii) no Company
Entity has repudiated or waived any material provision of any such Company
Contract; and (iv) no other party to any such Company Contract is, to the
Knowledge of Company, in Default in any respect, other than Defaults which are
not reasonably likely to have a Company Material Adverse Effect, or has
repudiated or waived any material provision thereunder. Except as disclosed in
Section 4.15 of the Company Disclosure Memorandum, all of the indebtedness of
any Company Entity for money borrowed in excess of $250,000 in any single
instrument is prepayable at any time by such Company Entity without penalty or
premium.
4.16 LEGAL PROCEEDINGS. Except as disclosed in Section 4.16 of the Company
Disclosure Memorandum, there is no Litigation instituted or pending, or, to the
Knowledge of Company, threatened against any Company Entity, or against any
director, employee or employee benefit plan of any Company Entity, or against
any Asset, interest, or right of any of them, that is reasonably likely to have
a Company Material Adverse Effect, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any Company Entity or, to the knowledge of the Company, any director or officer
of any Company Entity, that are reasonably likely to have a Company Material
Adverse Effect.
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4.17 OPINION OF FINANCIAL ADVISOR. Donaldson, Lufkin & Jenrette Securities
Corporation has delivered to the Board of Directors its written opinion, dated
prior to or as of the date of this Agreement, that based on the assumptions,
qualifications and limitations contained therein, the Merger Consideration to be
received by Company's shareholders in the Merger is fair from a financial point
of view to such shareholders. Company has provided a copy of such opinion to
Parent.
4.18 STATE TAKEOVER LAWS. The Company's Board of Directors and each Company
Entity have taken all necessary action to exempt the transactions contemplated
by this Agreement from, or if necessary to challenge the validity or
applicability of, any applicable "moratorium," "fair price," "business
combination," "control share," or other anti-takeover Laws, including the Fair
Price Provision contained in Article IX of the Company's Articles of
Incorporation and Section 607.0902 of the FBCA (collectively, "Takeover Laws").
4.19 CHARTER PROVISIONS. Each Company Entity has taken all action so that
the entering into of this Agreement and the consummation of the Merger and the
Transactions do not and will not result in the grant of any rights to any Person
under the certificate or articles of incorporation, bylaws or other governing
instruments of any Company Entity or restrict or impair the ability of Parent or
any of its Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any Company Entity that may be directly
or indirectly acquired or controlled by them.
4.20 RIGHTS AGREEMENT. Company has taken, or will take prior to the
Effective Time, all necessary action, including, without limitation, amending
the Rights Agreement with respect to all of the outstanding Rights, (a) to
render the Company Rights Agreement inapplicable to the Transaction Agreements,
the Merger and the other Transactions (including the Stock Option Agreement),
(b) to ensure that in connection with the Merger, and the Transactions that (i)
Parent and Purchaser, or either of them, are not deemed to be an Acquiring
Person (as defined in the Company Rights Agreement) pursuant to the Company
Rights Agreement and (ii) no "Stock Acquisition Date," "Flip-in Date" or
"Flip-Over Transaction or Event" (as such terms are defined in the Company
Rights Agreement) occurs by reason of the execution and delivery of the
Transaction Agreements or the consummation of the Merger or other Transactions,
including the purchase of any Company Common Stock by Parent pursuant to the
Stock Option Agreement and (c) so that Company will have no obligations under
the Company Rights or the Company Rights Agreement in connection with the Merger
or the Transactions (including any purchase of Company Common Stock pursuant to
the Stock Option Agreement) and the holders of Shares and the associated Company
Rights will have no rights under the Company Rights or the Company Rights
Agreement in connection with the Merger or the Transactions (including any
purchase of Company Common Stock pursuant to the Stock Option Agreement). Except
for the foregoing, there have been no amendments or modifications to the Company
Rights Agreement since April 20, 1998. Copies of all such amendments to the
Company Rights Agreement (or drafts of amendments to be made in connection with
the execution of this Agreement) have been previously provided to Purchaser.
4.21 TAX REORGANIZATION. No Company Entity or, to Company's knowledge, any
Affiliate thereof, has taken or agreed to take any action that will prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code.
4.22 CUSTOMERS AND SUPPLIERS. Since December 31, 1999, there has been no
adverse change that is material to the Company in the relationship of any
Company Entity with its customers or suppliers and no such customer or supplier
has indicated that it intends to seek such a change.
4.23 ERP ROLLOUT. The implementation by the Company of J.D. Edwards &
Company's One World ERP System (the "ERP System"), and the conversion of the
Company's current systems to the ERP System have proceeded, and as of the
Effective Time will have proceeded, substantially in accordance with the
roll-out schedule set forth in Schedule 4.23, and there is no indication that
would lead the Company to reasonably believe that such implementation and
conversion has adversely affected or will adversely affect in any material
respect the Company's business and operations.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby jointly and severally represent and warrant to
Company as follows:
5.1 ORGANIZATION, STANDING AND POWER. Parent is a company duly organized,
validly existing and in good standing under the Laws of the State of Delaware,
and has the corporate power and authority to carry on its business as now
conducted and to own lease and operate its material Assets. Parent is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature of conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have a Parent
Material Adverse Effect.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Parent has the corporate power and authority necessary to execute,
deliver and perform its obligations under the Transaction Agreements and to
consummate the Transactions, subject to the approval by a majority of the
shares of Parent Common Stock of the issuance of shares of Parent Common
Stock in the Merger (the "Parent Share Issuance"). The execution, delivery
and performance of the Transaction Agreements and the consummation of the
Transactions have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Parent, except for the
approval of the Parent Share Issuance by a majority of the holders of
Parent Common Stock. Each of the Transaction Agreements represents a legal,
valid, and binding obligation of Parent, enforceable against Parent in
accordance with its terms (except in all cases as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
receivership, conservatorship, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding may be
brought).
(b) Neither the execution and delivery of the Transaction Agreements
by Parent, nor the consummation by Parent of the Transactions, nor
compliance by Parent with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of Parent's organizational
documents, or (ii) constitute or result in a Default under, or require any
Consent pursuant to, or result in the creation of any Lien on any Asset of
any Parent Entity under, any Contract or Permit of any Parent Entity, where
such Default or Lien, or any failure to obtain such Consent, would prevent
or materially delay the consummation of the Merger, or, (iii) subject to
the receipt of the consents referred to in Section 5.2(c), constitute or
result in a Default under, or require any Consent pursuant to, any Law or
Order applicable to any Parent Entity or any of their respective material
Assets where such Default, or any failure to obtain such Consent would
prevent or materially delay the consummation of the Merger.
(c) No notice to, filing with, or Consent of, any public body or
authority by Parent or any of its Subsidiaries is necessary for the
consummation by Parent of the Transactions other than (i) in connection or
compliance with the provisions of the Securities Laws and applicable state
corporate and securities Laws and the rules of the NYSE, (ii) notices to or
filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, or under the HSR
Act, and (iii) Consents, filings, or notifications (including Consents
required from Regulatory Authorities) which, if not obtained or made, would
not prevent or materially delay the consummation of the Merger.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of Parent consists solely of (i) 100
million authorized shares of common stock, $0.01 par value per share, of
which as of June 12, 2000, 40,094,979 shares were issued and outstanding
and (ii) 15 million shares of preferred stock, $0.01 par value per share,
none of which are issued and outstanding. Of the common stock issued and
outstanding as of June 12, 2000, (A) 27,059,689 were shares of Parent
Common Stock, (B) 4,035,290 shares were Non-Voting Common Stock, and (C)
9,000,000 shares were Series B Non-Voting Common Stock. The Non-Voting
Common Stock and the Series B Non-Voting Common Stock have no rights to
vote except as required by applicable Law and each share of
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Non-Voting Common Stock and Series B Non-Voting Common Stock is convertible
into one share of Parent Common Stock. All of the issued and outstanding
shares of capital stock of Parent are, and all of the shares of Parent
Common Stock to be issued in exchange for the Shares upon consummation of
the Merger will be, duly authorized, validly issued and outstanding and are
fully paid and nonassessable under the Delaware General Corporation Law,
free of pre-emptive rights and issued in compliance, in all material
respects, with the Delaware General Corporation Law and all applicable
Securities Laws.
(b) Section 5.3 of the Parent Disclosure Memorandum sets forth a
complete and correct list, as of June 12, 2000, of the total number of
shares of Parent Common Stock, Parent Non-Voting Common Stock and Parent
Series B Non-Voting Common Stock subject to Equity Rights, and the range of
exercise prices thereof. Except as set forth in Section 5.3(a) or under the
Parent Stock Plans, or as disclosed in Section 5.3 of the Parent Disclosure
Memorandum, (i) there are no shares of capital stock or other equity
securities of Parent outstanding and no outstanding Equity Rights relating
to the capital stock of Parent, (ii) since June 12, 2000, no Parent Entity
has issued or granted, or authorized the issuance or grant of any Equity
Right relating to the capital stock of Parent, and (iii) no Parent Entity
has any obligation or commitment to repurchase, redeem or otherwise acquire
any shares of capital stock of the Parent or any Equity Right relating to
the capital stock of Parent.
5.4 PARENT SUBSIDIARIES. Except as disclosed in Section 5.4 of the Parent
Disclosure Memorandum, Parent or one of its Subsidiaries owns all of the issued
and outstanding shares of capital stock (or other equity interests), and Equity
Rights related to capital stock, of each Parent Subsidiary. Except as disclosed
in Section 5.4 of the Parent Disclosure Memorandum, no capital stock (or other
equity interest) of any Parent Subsidiary is or may become required to be issued
(other than to another Parent Entity) by reason of any Equity Rights, and there
are no Contracts by which any Parent Subsidiary is bound to issue (other than to
another Parent Entity) additional shares of its capital stock (or other equity
interests) or Equity Rights or by which any Parent Entity is or may be bound to
transfer, sell, purchase, redeem, or otherwise acquire any shares of the capital
stock (or other equity interests) of any Parent Subsidiary or any Equity Rights
relating to any such capital stock (other than to or from another Parent
Entity). Except as disclosed in Section 5.4 of the Parent Disclosure Memorandum,
there are no Contracts relating to the rights of any Parent Entity to vote or to
dispose of any shares of the capital stock (or other equity interests) of any
Parent Subsidiary. Except as disclosed in Section 5.4 of the Parent Disclosure
Memorandum, all of the shares of capital stock (or other equity interests) of
each Parent Subsidiary held by a Parent Entity are duly authorized, validly
issued and outstanding and are fully paid, nonassessable, free of pre-emptive
rights and were issued in compliance with the applicable corporation Law of the
jurisdiction in which such Subsidiary is incorporated and are owned by a Parent
Entity free and clear of any Lien. Each Parent Subsidiary is a corporation, and
each such Subsidiary is validly existing and in good standing under the Laws of
the jurisdiction in which it is incorporated, has the corporate power and
authority necessary for it to own, lease, and operate its material Assets and to
carry on its business as now conducted, and is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of the
United States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such failures which are not reasonably likely to have a Parent
Material Adverse Effect.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has timely filed and made available to Company all SEC
Documents required to be filed by Parent since December 31, 1998 (the
"Parent SEC Reports"). The Parent SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Laws and other applicable Laws and (ii) did not, at the time
they were filed (or, if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to
be stated in such Parent SEC Reports or necessary in order to make the
statements in such Parent SEC Reports, in light of the circumstances under
which they were made, not misleading; provided, that any pro forma
financial statements contained in the Parent SEC Reports are not
necessarily indicative of the consolidated financial position of the Parent
Entities as of the respective dates thereof and the consolidated results of
operations and cash flows of the Parent Entities for the periods indicated.
No Parent Subsidiary is required to file any SEC Documents.
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(b) Each of the Parent Financial Statements (including, in each case,
any related notes) contained in the Parent SEC Reports, including any
Parent SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto,
was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to
such financial statements or, in the case of unaudited interim statements,
as permitted by Form 10-Q of the SEC), and fairly presented in all material
respects the consolidated financial position of Parent and its Subsidiaries
as at the respective dates and the consolidated results of operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount or
effect and that any pro forma financial statements contained in the Parent
SEC Reports are not necessarily indicative of the consolidated financial
position of the Parent Entities as of the respective dates thereof and the
consolidated results of operations and cash flows of the Parent Entities
for the periods indicated.
(c) None of the information supplied or to be supplied by Parent for
inclusion or incorporation by reference in the Proxy Statement/Prospectus
will, on the date it is first mailed to Company stockholders or Parent
stockholders or at the time of the Company Stockholders Meeting or the
Parent Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy
Statement/Prospectus will comply as to form in all material respects with
the requirements of the 1934 Act and the 1933 Act and the rules and
regulations of the SEC thereunder. Notwithstanding the provisions of this
Section 5.5(c), no representation or warranty is made by Parent with
respect to statements made or incorporated by reference in the Proxy
Statement/Prospectus based on information supplied by Company for inclusion
or incorporation by reference therein.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Parent Entity has any
Liabilities that are reasonably likely to have a Parent Material Adverse Effect,
other than Liabilities or allowances which are disclosed or accrued or reserved
against in the consolidated balance sheet of Parent as of March 31, 2000 or
December 31, 1999 included in the Parent Financial Statements delivered prior to
the date of this Agreement or reflected in the notes thereto. No Parent Entity
has incurred or paid any Liability since December 31, 1999, except as disclosed
in the Parent Financial Statements and for such Liabilities incurred or paid in
the ordinary course of business consistent with past business practice and which
are not reasonably likely to have a Parent Material Adverse Effect.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999, there
have been no events, changes or occurrences which have had, or are reasonably
likely to have a Parent Material Adverse Effect, except (i) as disclosed in the
Parent Financial Statements delivered prior to the date of this Agreement, or
(ii) as disclosed in Section 5.7 of the Parent Disclosure Memorandum.
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any of the
Parent Entities on or before the Effective Time have been or will be timely
filed or requests for extensions have been or will be timely filed,
granted, and shall not have expired, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a
Parent Material Adverse Effect, and all Tax Returns filed are complete and
accurate in all material respects, except as disclosed in Section 5.8 of
the Parent Disclosure Memorandum. All Taxes shown on filed Tax Returns have
been paid. There is no audit, examination, notice of deficiency, or refund
Litigation with respect to any Taxes, except as reserved against in the
Parent Financial Statements delivered prior to the date of this Agreement
or as disclosed in Section 5.8 of the Parent Disclosure Memorandum or
except for audits, examinations or notices of deficiency that are not
reasonably likely to have a Parent Material Adverse Effect. There are no
Liens with respect to Taxes upon any of the Assets of the Parent Entities,
except for any such Liens which are not reasonably likely to have a Parent
Material Adverse Effect.
(b) Except as disclosed in Section 5.8 of the Parent Disclosure
Memorandum, none of the Parent Entities has executed an extension or waiver
of any statute of limitations on the assessment or collection of
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any Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) The provision for any Taxes due or to become due for any of the
Parent Entities for the period or periods through and including the date of
the respective Parent Financial Statements that has been made and is
reflected on such Parent Financial Statements is sufficient to cover all
such Taxes.
(d) Deferred Taxes of the Parent Entities have been provided for in
the Parent Financial Statements in accordance with GAAP.
(e) Except as disclosed in Section 5.8 of the Parent Disclosure
Memorandum, none of the Parent Entities is a party to any Tax allocation,
indemnification or sharing agreement and none of the Parent Entities has
been a member of an affiliated group filing a consolidated federal income
Tax Return, has any Liability for Taxes of any Person (other than Parent
and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign Law) or as a transferee or
successor or by Contract or otherwise.
(f) Except as disclosed in Section 5.8 of the Parent Disclosure
Memorandum, no Parent Entity is required to include any amount in income
pursuant to Section 481 of the Internal Revenue Code.
(g) Except as disclosed in Section 5.8 of the Parent Disclosure
Memorandum, each Parent Entity has withheld all Taxes required to be
withheld and has paid all such withholdings to the proper governmental
entity.
5.9 ENVIRONMENTAL MATTERS. Except as set forth in Section 5.9 of the Parent
Disclosure Memorandum:
(a) Each Parent Entity, and its Operating Properties are, and have
been, in material compliance with all Environmental Laws.
(b) There is no Litigation pending or, to the Knowledge of Parent,
threatened before any court, governmental agency, or authority or other
forum in which any Parent Entity or any of its Operating Properties (or
Parent in respect of such Operating Property) has been or, with respect to
threatened Litigation, may be named (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating
to the release, discharge, spillage, or disposal into the environment of
any Hazardous Material, whether or not occurring at, on, under, adjacent
to, or affecting (or potentially affecting) a site currently or formerly
owned, leased, or, operated or used by any Parent Entity.
(c) To the Knowledge of Parent, there have been no releases,
discharges, spillages, or disposals of Hazardous Material in, on, under,
adjacent to, or affecting (or potentially affecting) any property currently
or formerly owned, operated or used by a Parent Entity, except such as are
not reasonably likely to have a Parent Material Adverse Effect.
5.10 COMPLIANCE WITH LAWS. Each Parent Entity has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, except for those Permits the absence of which are
not reasonably likely to have a Parent Material Adverse Effect. Except as
disclosed in Section 5.10 of the Parent Disclosure Memorandum, the business of
the Parent Companies as currently operated does not violate any applicable Law,
Order or Permit, other than violations which are not reasonably likely to have a
Company Material Adverse Effect. None of the Company Entities is currently
subject to any fine or penalty as the result of a failure to comply with any
requirement of Law nor has the Company received any notice from any Regulatory
Authorities of such non-compliance.
5.11 LEGAL PROCEEDINGS. Except as disclosed in Section 5.11 of the Parent
Disclosure Memorandum, there is no Litigation instituted or pending, or, to the
Knowledge of Parent, threatened against any Parent Entity or Purchaser or
against any director, employee or employee benefit plan of any Parent Entity or
Purchaser or against any Asset, interest, or right of any of them, that would
prevent or materially delay the consummation of the Merger, nor are there any
Orders of any Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any Parent Entity or Purchaser or any director
or officer of a Parent Entity, that are reasonably likely to have a Parent
Material Adverse Effect.
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5.12 AUTHORITY OF PURCHASER.
(a) Purchaser is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Florida and is a wholly owned
Subsidiary of Parent. The authorized capital stock of Purchaser consists of
1,000 shares of common stock ("Purchaser Common Stock"), all of which
shares are validly issued and outstanding, fully paid and nonassessable and
are owned by Parent free and clear of any Lien. Purchaser has the corporate
power and authority necessary to execute, deliver and perform its
obligations under the Transaction Agreements and to consummate the
Transactions. The execution, delivery and performance of the Transaction
Agreements and the consummation of the Transactions have been duly and
validly authorized by all necessary corporate action in respect thereof on
the part of Purchaser. Each of the Transaction Agreements represents a
legal, valid, and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the
equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
Parent, as the sole shareholder of Purchaser, has irrevocably caused the
shares of Purchaser Common Stock to be voted in favor of approval of this
Agreement, as and to the extent required by applicable Law.
(b) Neither the execution and delivery of the Transaction Agreements
by Purchaser, nor compliance by Purchaser with any of the provisions
thereof, will (i) conflict with or result in a breach of any provision of
Purchaser's Articles of Incorporation or Bylaws, or (ii) subject to the
receipt of the consents referred to in Section 5.12(c), constitute or
result in a Default under, or require any Consent pursuant to, or result in
the creation of any Lien on any Asset of Purchaser under, any Contract or
Permit of Purchaser or any Subsidiary or Affiliate of Purchaser, where such
Default or Lien, or any failure to obtain such Consent, would prevent or
materially delay the consummation of the Merger, or, (iii) constitute or
result in a Default under, or require any Consent pursuant to, any Law or
Order applicable to Purchaser or any Subsidiary or Affiliate of Purchaser
or any of its material Assets where such Default, or any failure to obtain
such Consent would prevent or materially delay the consummation of the
Merger.
(c) No notice to, filing with, or Consent of, any public body or
authority by Purchaser or any of its Subsidiaries is necessary for the
consummation by Purchaser of the Transactions other than (i) in connection
or compliance with the provisions of the Securities Laws and applicable
state corporate and securities Laws, (ii) notices to or filings with the
Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, or under the HSR Act, and (iii)
Consents, filings, or notifications (including Consents required from
Regulatory Authorities) which, if not obtained or made, would not prevent
or materially delay the consummation of the Merger.
5.13 TAX REORGANIZATION. No Parent Entity or, to Parent's knowledge, any
Affiliate thereof, has taken or agreed to take any action that will prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code.
ARTICLE VI
CONDUCT OF BUSINESS PENDING CONSUMMATION
6.1 AFFIRMATIVE COVENANTS OF COMPANY. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, unless
the prior written consent of Parent shall have been obtained (which consent
shall not be unreasonably withheld), and except as otherwise expressly
contemplated herein, Company shall and shall cause each of its Subsidiaries to
(i) operate its business only in the usual, regular, and ordinary course, (ii)
use reasonable efforts to preserve intact its business organization and Assets
and maintain its rights and franchises, (iii) comply in all material respects
with all Laws applicable to it or any of its Assets or businesses, (iv) continue
to use its reasonable efforts to continue the implementation and conversion the
Company's current systems to the J.D. Edwards & Company's OneWorld ERP System,
and (iv) take no affirmative action which would (x) materially adversely affect
the ability of any Party to obtain any Consents
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required for the transactions contemplated hereby, or (y) materially adversely
affect the ability of any Party to perform its covenants and agreements under
this Agreement.
6.2 NEGATIVE COVENANTS OF COMPANY. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, unless
the prior written consent of Parent shall have been obtained (which consent
shall not be unreasonably withheld), and except as otherwise expressly
contemplated herein, or as disclosed in Section 6.2 of the Company Disclosure
Memorandum, Company covenants and agrees that it will not do or agree or commit
to do, or permit any of its Subsidiaries to do or agree or commit to do, any of
the following:
(a) amend the Company Articles of Incorporation or the Company Bylaws
or articles of incorporation or bylaws or other organizational documents of
any Company Entity; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Company Entity to another
Company Entity) in excess of an aggregate of $250,000 (for the Company
Entities on a consolidated basis), except in the ordinary course of
business consistent with past practices, or impose, or suffer the
imposition, on any Asset of any Company Entity of any Lien or permit any
such Lien to exist (other than in connection with Liens in effect as of the
date hereof securing indebtedness which is disclosed in the Company
Financial Statements); or
(c) repurchase, redeem, or otherwise acquire or exchange, directly or
indirectly, any shares, or any securities convertible into any shares, of
the capital stock of any Company Entity, or declare or pay any dividend or
make any other distribution in respect of Company's capital stock; or
(d) except as provided in this Agreement, or pursuant to the exercise
of stock options outstanding as of the date hereof and pursuant to the
terms thereof in existence on the date hereof, or pursuant to the Company
Rights Agreement, or issue, sell, pledge, encumber, authorize the issuance
of, enter into any Contract to issue, sell, pledge, encumber, or authorize
the issuance of, or otherwise permit to become outstanding, any additional
Shares or any other capital stock of any Company Entity, or any stock
appreciation rights, or any option, warrant, or other Equity Right
(including but not limited to stock appreciation rights, phantom stock or
stock based performance awards); or
(e) adjust, split, combine or reclassify any capital stock of any
Company Entity or issue or authorize the issuance of any other securities
in respect of or in substitution for Shares, or sell, lease, mortgage or
otherwise dispose of or otherwise encumber any shares of capital stock of
any Company Entity (unless any such shares of stock are sold or otherwise
transferred to another Company Entity) or any Assets having a book value in
excess of $250,000 other than in the ordinary course of business for
reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any material investment,
either by purchase of stock or securities, contributions to capital, Asset
transfers, or purchase of any Assets, in any Person other than a wholly
owned Company Subsidiary, or otherwise acquire direct or indirect control
over any Person or business, other than in connection with (i) the creation
of new wholly owned Subsidiaries organized to conduct or continue
activities being conducted on the date hereof and otherwise permitted by
this Agreement, or (ii) investments in connection with cash management
activities consistent with past practices; or
(g) grant any increase in compensation or benefits to the employees or
officers of any Company Entity, except as disclosed in Section 6.2(g) of
the Company Disclosure Memorandum or as required by Law; accelerate the
vesting of any Company Option (other than by its terms); enter into or
amend any severance agreements with directors or officers of any Company
Entity; or grant any increase in fees or other increases in compensation or
other benefits to directors of any Company Entity, except as disclosed in
Section 6.2(g) of the Company Disclosure Memorandum; or
(h) enter into or amend any employment Contract between any Company
Entity and any Person providing for total compensation thereunder in excess
of $100,000 per year (unless such amendment is
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required by Law) that the Company Entity does not have the unconditional
right to terminate without Liability (other than Liability for services
already rendered), at any time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any Company Entity or
terminate or withdraw from (other than completing the termination of plans
that are in various stages of termination and that are associated with
various stock acquisitions and mergers that occurred in recent years), or
make any material change in or to, any existing employee benefit plans of
any Company Entity other than any such change that is required by Law or
that, in the opinion of counsel, is necessary or advisable to maintain the
tax qualified status of any such plan, or make any distributions from such
employee benefit plans, except as required by Law or the terms of such
plans; or
(j) make any material tax election or significant change in any Tax or
accounting methods or systems of internal accounting controls, except as
may be appropriate to conform to changes in Tax Laws or GAAP, file any
amended Tax Returns that may have a material adverse effect on the tax
position of Company or any Company Subsidiary or settle or compromise any
material federal, state, local or foreign Tax liability or refund; or
(k) except for the settlement of any suit, action or claim disclosed
in Section 6.2(k) of the Company Disclosure Memorandum, settle or
compromise any pending suit, action, audit or claim (A) against Company or
any Company Subsidiary by any Regulatory Authority, or (B) which is
material to Company and the Company Subsidiaries, taken as a whole, or
which relates to the Transactions; or
(l) amend, modify or waive any provision of the Company Rights
Agreement, or take any action to redeem the Company Rights, or render the
Company Rights inapplicable to any transaction, other than to permit
another transaction that the Company's Board of Directors has determined is
a Superior Proposal in accordance with Section 7.9 hereof and which will be
consummated after the termination of this Agreement.
(m) take, or propose to take, or agree to take in writing or
otherwise, any of the actions described in Section 6.2 (a) through 6.2(l),
or any action that would cause any of the conditions set forth in Article 8
not to be satisfied.
6.3 COVENANTS OF PARENT AND PURCHASER. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
unless the prior written consent of Company shall have been obtained (which
consent shall not be unreasonably withheld), and except as otherwise expressly
contemplated herein, Parent and Purchaser shall and shall cause each of its
Subsidiaries to take no action which would (i) materially adversely affect the
ability of any Party to obtain any Consents required for the transactions
contemplated hereby, (ii) cause any of the conditions set forth in Article 8 not
to be satisfied, (iii) materially adversely affect the ability of any Party to
perform its covenants and agreements under this Agreement or (iv) amend the
Parent Certificate of Incorporation or bylaws except as contemplated by this
Agreement (except for amendments to the Parent Certificate of Incorporation
necessary to increase the number of authorized share capital of Parent).
6.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have a Company Material Adverse
Effect or a Parent Material Adverse Effect, as applicable, or to prevent or
materially delay the obligation of Parent and Purchaser to consummate the
Merger, as applicable, or (ii) would cause or constitute a material breach of
any of its representations, warranties, or covenants contained herein, and to
use its reasonable efforts to prevent or promptly to remedy the same; provided,
however, that the delivery of any notice pursuant to this Section 6.4 shall not
limit or otherwise affect the remedies available to Parent or Company hereunder.
Each Party shall give prompt notice to the other Parties of any written notice
or other written communication from any third party alleging that the consent of
such third party is or may be required in connection with the Transactions.
6.5 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time. If financial statements are contained in any
such reports filed with the SEC, such financial statements will fairly present
the consolidated financial position of the entity filing such statements as of
the dates indicated and the consolidated results of operations,
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changes in shareholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material). As of their
respective dates, all SEC Reports filed by any Party between the date hereof and
the Effective will comply in all material respects with the Securities Laws and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Any financial statements contained in any other reports to
another Regulatory Authority shall be prepared in accordance with Laws
applicable to such reports.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL.
(a) As promptly as reasonably practicable following the date hereof,
Parent shall prepare and file with the SEC the Proxy Statement/Prospectus,
and Parent shall prepare and file the Registration Statement. The Proxy
Statement/Prospectus will be included in and will constitute a part of the
Registration Statement as Parent's prospectus. The Company shall cooperate
with Parent and provide to Parent all such information as may be necessary
or appropriate with respect to the preparation and filing of the Proxy
Statement/ Prospectus. The Registration Statement and the Proxy
Statement/Prospectus shall comply as to form in all material respects with
the applicable provisions of the 1933 Act and the 1934 Act and the rules
and regulations thereunder. Parent shall use its reasonable best efforts to
have the Registration Statement declared effective by the SEC as promptly
as reasonably practicable after filing with the SEC and to keep the
Registration Statement effective as long as is necessary to consummate the
Merger and the transactions contemplated thereby. Company and Parent shall,
as promptly as practicable after receipt thereof, provide the other party
copies of any written comments and advise the other party of any oral
comments, with respect to the Proxy Statement/Prospectus received from the
SEC. Each party will advise the other party, promptly after it receives
notice thereof, of the time when the Registration Statement has become
effective, the issuance of any stop order, the suspension of the
qualification of the Parent Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Proxy Statement/Prospectus or the Registration
Statement. If at any time prior to the Effective Time any information
relating to Company and Parent, or any of their respective affiliates,
officers or directors, should be discovered by Company or Parent, which
should be set forth in an amendment or supplement to any of the
Registration Statement or the Proxy Statement/Prospectus so that any of
such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
the party which discovers such information shall promptly notify the other
party hereto and, to the extent required by Law, an appropriate amendment
or supplement describing such information shall be promptly filed with the
SEC and disseminated to the stockholders of Company and Parent.
(b) Company shall call a Company Shareholders' Meeting, to be held as
soon as reasonably practicable after the Registration Statement is declared
effective by the SEC, for the purpose of voting upon approval of this
Agreement and the Merger and such other related matters as it deems
appropriate. Parent shall call a Parent Shareholders' Meeting, to be held
as soon as reasonably practicable after the Registration Statement is
declared effective by the SEC, for the purpose of voting upon approval of
this Agreement and the Merger and such other related matters as it deems
appropriate. In connection with the Company and Parent Shareholders'
Meetings, (i) Parent and Company shall mail such Proxy Statement/Prospectus
to their respective shareholders, (ii) the Parties shall furnish to each
other all information concerning them that they may reasonably request in
connection with such Proxy Statement/Prospectus, (iii) the Board of
Directors of Company and Parent shall recommend to their respective
shareholders the approval of the Merger and the transactions contemplated
by this Agreement, and (iv) the Board of Directors and officers of the
Company and Parent shall use its commercially reasonable efforts to obtain
the approval of their respective
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shareholders Board of Directors of Company. Parent and Company shall make
all necessary filings with respect to the Merger under the Securities Laws.
7.2 NYSE LISTING. Parent shall use its reasonable best efforts to cause to
be listed on the NYSE, subject to official notice of issuance, prior to the
Effective Time the shares of Parent Common Stock to be issued to the holders of
Company Common Stock and Equity Rights pursuant to the Merger. Parent shall give
all notices and make all filings with the NYSE required in connection with the
transactions contemplated herein.
7.3 PURCHASER COMPLIANCE. Parent shall cause Purchaser to comply with all
of its obligations under or related to this Agreement and hereby guarantees
Purchaser's performance hereunder.
7.4 APPLICATIONS; ANTITRUST NOTIFICATION. Each of the Parties shall
promptly prepare and file, and shall cooperate with the other in the preparation
and, where appropriate, filing of, applications with all Regulatory Authorities
having jurisdiction over the transactions contemplated by this Agreement seeking
the requisite Consents necessary to consummate the transactions contemplated by
this Agreement. To the extent required by the HSR Act, each of the Parties will
promptly file with the United States Federal Trade Commission and the United
States Department of Justice the notification and report form required for the
Transactions and any supplemental or additional information which may reasonably
be requested in connection therewith pursuant to the HSR Act and will comply in
all material respects with the requirements of the HSR Act.
7.5 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Company shall execute and file the Articles of
Merger with the Secretary of State of the State of Florida in connection with
the Closing.
7.6 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the Transactions,
including using its reasonable efforts to lift or rescind any Order adversely
affecting its ability to consummate the Transactions and to cause to be
satisfied the conditions referred to Article 8; provided, that nothing herein
shall preclude either Party from exercising its rights under this Agreement.
Each Party shall use, and shall cause each of its Subsidiaries to use, its
reasonable efforts to obtain all Consents necessary or desirable for the
consummation of the Transactions. Each Party undertakes and agrees to use its
reasonable efforts to cause the Merger, and to take no action which would cause
the Merger not, to qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes.
7.7 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each of Company and Parent shall keep
the other advised of all material developments relevant to its business and
to consummation of the Merger and, subject to the limitations set forth
below, shall permit the other Party to make or cause to be made such
investigation of the business and properties of such Party and its
Subsidiaries and of their respective financial and legal conditions as the
other Party reasonably requests, provided that such investigation shall not
interfere unnecessarily with normal operations. In furtherance of such
investigation, Company shall afford Parent and its Representatives with
access to its property, books and records and officers and employees,
furnish Parent and its Representatives with all financial and operating
data and other information regarding Company, its Subsidiaries and their
businesses, and shall instruct their officers, employees and
Representatives to reasonably cooperate with Parent and its Representatives
in their investigation of Company's business and properties. In furtherance
of such investigation, Parent shall, to the extent required by Company to
ensure the continuing accuracy of the representations, warranties and
covenants of Parent under the Transaction Agreements, afford Company and
its Representatives with access to its property, books and records and
officers and employees, furnish Parent and its Representatives with
financial and operating data and other information regarding Parent, its
Subsidiaries and their businesses, and shall instruct their officers,
employees and Representatives to reasonably cooperate with Company and its
Representatives in any such investigation of Parent's business and
properties.
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(b) In addition to each Party's respective obligations under the
Confidentiality Agreements, which are hereby reaffirmed and adopted, and
incorporated by reference herein, each Party shall, and shall cause its
advisers and agents to, maintain the confidentiality of all confidential
information furnished to it by the other Party concerning the businesses,
operations, and financial positions of the other Party and shall not use
such information for any purpose except in furtherance of the Transactions.
If this Agreement is terminated prior to the Effective Time, each Party
shall promptly return or certify the destruction of all documents and
copies thereof, and all work papers containing confidential information
received from the other Party. The Confidentiality Agreement shall not
prohibit Parent or Purchaser from responding to the Board of Directors of
Company (and no other Person) regarding an Acquisition Proposal by a third
party prior to the termination of this Agreement.
7.8 PRESS RELEASES. Prior to the Effective Time, Company and Parent shall
consult with each other and provide each other a reasonable opportunity to
review and comment upon as to the form and substance of any press release or
other public statement related to this Agreement or any of the other
Transactions contemplated hereby, and, except as may be required by Law or any
listing agreement with any securities exchange or quotation system, will not
issue any such press release of make any such public statement prior to
obtaining such other Party's consent to any such release or public statement.
7.9 NO SOLICITATION; ACQUISITION PROPOSALS.
(a) Except with respect to this Agreement and the Transactions, no
Company Entity nor any Affiliate thereof nor any Representatives thereof
shall directly or indirectly (1) solicit, initiate, encourage or knowingly
facilitate (including by way of furnishing information) any inquiries
relating to, or the making of, any Acquisition Proposal by any Person, (2)
have any discussion with or furnish any confidential information or data to
any Person relating to an Acquisition Proposal, or engage in any
negotiations concerning an Acquisition Proposal, or knowingly facilitate
any effort or attempt to make or implement an Acquisition Proposal or (3)
accept an Acquisition Proposal. Notwithstanding anything herein to the
contrary (including the foregoing sentence), Company and its Board of
Directors shall be permitted (i) to the extent applicable, to comply with
Rule 14d-9 and Rule 14e-2 promulgated under the 1934 Act with regard to an
Acquisition Proposal, and (ii) to engage in any discussions or negotiations
with, or provide any information to, any Person in response to an
unsolicited bona fide written Acquisition Proposal by any such Person, if
and only to the extent (in the case of clause (ii) only) that (A) Company's
Board of Directors concludes in good faith (x) after consulting with its
independent financial advisors, that such Person is reasonably capable of
consummating such Acquisition Proposal, taking into account the legal,
financial, regulatory and other aspects of such Acquisition Proposal and
the Person making such Acquisition Proposal, and that such Acquisition
Proposal could reasonably be expected to result in a Superior Proposal and
(y) (after consultation with its outside legal counsel) that the failure to
take such action would be inconsistent with its fiduciary duties under
applicable Law, (B) prior to providing any information or data to any
Person in connection with an Acquisition Proposal by any such Person,
Company's Board of Directors receives from such Person an executed
confidentiality agreement containing customary confidentiality and
standstill provisions (and in any event no more favorable in any material
respects to such Person than the terms of the Confidentiality Agreement),
and (C) prior to providing any information or data to any Person or
entering into discussions or negotiations with any Person, Company's Board
of Directors notifies Parent promptly (and in any event not later than 24
hours after receipt thereof) of the receipt of the Acquisition Proposal and
shall in such notice indicate in reasonable detail the identity of the
offer or and the material terms and conditions of any proposal and shall
keep Parent promptly advised of the status and material terms of any such
inquiry, offer or proposal. Company agrees that it will, and will cause its
officers, directors and Representatives to, immediately cease and cause to
be terminated any activities, discussions or negotiations existing as of
the date of this Agreement with any parties conducted heretofore with
respect to any Acquisition Proposal. Company agrees that it will use
reasonable efforts to promptly inform its directors, officers, key
employees, agents and Representatives of the obligations undertaken in this
Section 7.9.
(b) Except as provided in the following sentence, neither Company nor
its Board of Directors shall withdraw or modify or qualify in a manner
adverse to Parent or Purchaser or following the public announcement of an
Acquisition Proposal fail at Parent's request to publicly reaffirm the
approval by such
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Board of Directors of this Agreement, the Merger or the favorable
recommendation of the Board with respect thereto. Notwithstanding the
foregoing, in the event that, after Company has received an Acquisition
Proposal not solicited in violation of this Agreement, the Board of
Directors determines (after consultation with its outside legal counsel),
that the failure to take the following action would be inconsistent with
its fiduciary duties under applicable Law, the Board may (x) withdraw or
modify its approval or recommendation of this Agreement and the Merger and
disclose to Company's shareholders a position contemplated by Rule 14d-9 or
Rule 14e-2(a) promulgated under the 1934 Act or otherwise make disclosure
to them, or (y) approve or recommend such an Acquisition Proposal that is a
Superior Proposal; provided, however, that in no event may the Board of
Directors take either such action earlier than the conclusion of the third
full business day following Parent's receipt of written notice of the
intention of the Board of Directors to do so.
(c) Company and the Board of Directors shall not (i) redeem the
Company Rights under the Company Rights Agreement, or (ii) waive or amend
any provision of the Company Rights Agreement, in any such case to permit
or facilitate the consummation of any Acquisition Proposal (other than the
Acquisition Proposal contemplated by this Agreement), unless this Agreement
has been terminated in accordance with its terms.
(d) Company shall not release any third party from the confidentiality
and standstill provisions of any agreement to which Company is a party,
unless this Agreement has been terminated in accordance with its terms.
7.10 STATE TAKEOVER LAWS. Each Company Entity shall promptly take all
necessary steps to exempt the transactions contemplated by this Agreement from,
or if necessary to challenge the applicability of, any applicable Takeover Law.
7.11 EMPLOYEE BENEFITS AND CONTRACTS.
(a) For the first year following the Effective Time, each person who
is an employee of the Company Entities at the Effective Time and who
continues in such employment (a "Continuing Employee") shall be eligible
for employee benefits which in the aggregate are no less favorable than the
employee benefits available to such employee under the Company Benefit
Plans as in effect immediately prior to the Effective Time. For purposes of
any benefit plans, programs, policies and arrangements made available to
such Continuing Employees, Parent shall treat the prior service of such
Continuing Employees with Company and its ERISA Affiliates, including all
periods of service recognized under the Company's Employee Stock Ownership
and Savings Plan (the "Company 401(k) Plan"), as service rendered to Parent
or its ERISA Affiliate for eligibility and vesting purposes and, solely
with regard to vacation and sick leave programs, for benefit accrual
purposes thereunder.
(b) No employee of any Company Entity (or eligible dependent thereof)
who is eligible for and elects to be covered under any medical or
disability insurance plan of Parent or its ERISA Affiliates shall be
excluded from coverage under such plan on the basis of a pre-existing
condition that was not also excluded under the comparable Company Benefit
Plan. To the extent that a Continuing Employee has satisfied in whole or in
part any annual deductible or paid any out-of-pocket or co-payment expenses
under any Company Benefit Plan for the current plan year, such individual
shall be credited for the current plan year under the corresponding
provisions of the corresponding plan in which such individual participates
after the Effective Time.
(c) In the event of any termination of the Company 401(k) Plan during
the first year following the Effective Time, Parent or its ERISA Affiliate
shall maintain a tax-qualified retirement plan that, at the request of an
employee of a Company Entity, accepts a rollover of such employee's account
from the Company 401(k) Plan to the extent that such distribution and
rollover is permitted under applicable Law.
(d) Parent shall honor, and shall cause the Surviving Corporation and
its Subsidiaries to honor in accordance with their terms, all employment,
severance, consulting and other compensation contracts between Company and
its Subsidiaries and any current or former director, officer, or employee
thereof that are disclosed in Section 4.14 of the Company Disclosure
Memorandum, and all provisions for vested amounts earned or accrued through
the Effective Time under the Company Benefit Plans.
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7.12 INDEMNIFICATION.
(a) The articles of incorporation and bylaws of the Surviving
Corporation shall contain provisions with respect to indemnification
substantially to the same effect as those set forth in the Company Articles
of Incorporation and the Company Bylaws on the date hereof, which
provisions shall not be amended, modified or otherwise repealed for a
period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder as of the Effective Time of
individuals who at the Effective Time were directors, officers, employees
or agents of Company, unless such modification is required after the
Effective Time by Law.
(b) After the Effective Time, Parent shall cause the Surviving
Corporation to indemnify, defend and hold harmless the present and former
directors, officers, employees and agents of the Company Entities (each, an
"Indemnified Party") against all Liabilities arising out of actions or
omissions arising out of the Indemnified Party's service or services as
directors, officers, employees or agents of Company or, at Company's
request, of another Company Entity occurring at or prior to the Effective
Time (including the transactions contemplated by this Agreement) to the
fullest extent such persons are entitled to indemnification as of the date
hereof and permitted under Florida Law and by the Company Articles of
Incorporation and the Company Bylaws as in effect on the date hereof, and
any applicable indemnification Contracts, including provisions relating to
advances of expenses incurred in the defense of any Litigation and whether
or not any Parent Entity is insured against any such matter. Without
limiting the foregoing, in any case in which approval by the Surviving
Corporation is required to effectuate any indemnification, the Surviving
Corporation shall direct, at the election of the Indemnified Party, that
the determination of any such approval shall be made by independent counsel
mutually agreed upon between Parent and such Indemnified Party.
(c) Prior to the Effective Time, Parent shall purchase (i) a new
insurance policy or (ii) an endorsement under Company's existing directors,
officers and corporate liability insurance policy in a form acceptable to
Company, which shall provide the Indemnified Parties with coverage for six
years following the Effective Time of not less than the existing coverage
under, and have other terms not materially less favorable to, the
directors, officers and corporate liability insurance coverage presently
maintained by Company; provided, however, that Parent and the Surviving
Corporation shall not be required to pay an annual premium for such
insurance in excess of 200% of the annual premiums on the Company's current
policy in effect as of the date of this Agreement, but in such case shall
purchase as much such coverage as possible for such amount. The provisions
of this Section 7.12(c) shall be deemed to have been satisfied if prepaid
policies have been obtained by Parent prior to the Effective Time, which
policies provide such directors and officers with coverage as described in
the preceding sentence for an aggregate period of six years with respect to
claims arising from facts or events that occurred on or before the
Effective Time, including, without limitation, in respect of the
transactions contemplated by this Agreement.
(d) If Parent or the Surviving Corporation or any successors or
assigns shall consolidate with or merge into any other Person and shall not
be the continuing or surviving Person of such consolidation or merger or
shall transfer all or substantially all of its assets to any Person, then
and in each case, proper provision shall be made so that the successors and
assigns of Parent or the Surviving Corporation shall assume the obligations
set forth in this Section 7.12.
(e) The provisions of this Section 7.12 shall survive the Effective
Time, are irrevocable and intended expressly to be for the benefit of and
shall be enforceable by, each Indemnified Party and their respective heirs
and representatives. Parent hereby guarantees the payment and performance
by the Surviving Corporation of the indemnification obligations of the
Surviving Corporation pursuant to this Section 7.12.
7.13 REPAYMENT OF CERTAIN INDEBTEDNESS. At the Effective Time, Parent and
Purchaser shall repay or cause to be repaid in full all of the obligations of
the Company Entities (including all outstanding loans) under Company's Amended
and Restated Credit Agreement (the "Credit Agreement") dated February 11, 1999,
as further amended on October 20, 1999, with Bank of America, N.A., successor in
interest to NationsBank, N.A., as lender, and Bank of America, N.A., successor
in interest to NationsBank, N.A., as administrative agent for the lenders, and
the lenders party thereto (the "Existing Facility"), and terminate such
facility; provided, however, that Parent and Purchaser shall have the right from
and after the date of this Agreement to negotiate with the
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lenders under such facility to seek their approval for postponing such repayment
and termination and that such repayment and termination shall not be necessary
if the lenders under such facility agree such repayment and termination is not
necessary.
7.14 SENIOR SUBORDINATED NOTES DUE 2007. As soon as practicable, but in any
event within thirty days, following the Effective Time, Parent shall cause the
Surviving Corporation to make a Change in Control Offer in accordance with
Section 4.15(f) of the Company's Indenture (the "Indenture") dated October 7,
1997, with SunTrust Bank, Central Florida, National Association, as Trustee,
offering to repurchase the Senior Subordinated Notes and discharge all of the
obligations of the Company Entities (including all guarantees of the Senior
Subordinated Notes) under the Indenture. In the event a holder of Senior
Subordinated Notes does not accept the offer to repurchase the Senior
Subordinated Notes, Parent and Purchaser shall expressly assume, by supplemental
indenture, all obligations related to such Senior Subordinated Notes
7.15 SECTION 16 MATTERS. Prior to the Closing Date, Parent and Company
shall take all such steps as may be required to cause any dispositions of
Company Common Stock (including Equity Rights with respect to Company Common
Stock) or acquisitions of Parent Common Stock (including Equity Rights with
respect to Parent Common Stock) resulting from the transactions contemplated by
this Agreement by each individual who is subject to the reporting requirements
of Section 16(a) of the 1934 Act with respect to the Company, to be exempt under
Rule 16b-3 promulgated under the 1934 Act.
7.16 AFFILIATES. Exhibit 7.16 contains a list of all persons who, in the
opinion of the Company, may be deemed at the time this Agreement is submitted
for adoption by the stockholders of the Company, "affiliates" of the Company for
purposes of Rule 145 under the 1933 Act and such list shall be updated as
necessary to reflect changes from the date thereof. Company shall use reasonable
efforts to cause each person identified on such list to deliver to Parent not
less than 30 days prior to the Effective Time, a written agreement in a form
reasonably satisfactory to Parent, acknowledging that such person is subject to
the provisions of Rule 145(d) under the 1933 Act (an "Affiliate Agreement").
Notwithstanding anything to the contrary herein, no shares of Parent Common
Stock or cash shall be delivered to a Person who may be deemed an "affiliate" of
Company in accordance with this Section 7.16 for purposes of Rule 145 under the
1933 Act until such Person has executed and delivered an Affiliate Agreement to
Parent.
7.17 EMPLOYMENT AND NON-COMPETE AGREEMENTS. Simultaneous with the execution
and delivery of this Agreement, Company shall enter into an employment agreement
and a restrictive covenants agreement with Patrick Kelly, the Chief Executive
Officer of the Company, and a restrictive covenants agreement with each Level 2
and Level 3 officer of the Company, each having such terms and conditions as
agreed to by Parent and Company on or prior to the date hereof and each being
automatically effective immediately upon consummation of the Merger. None of
such agreements, or any other arrangements with respect to the employment of
such persons may be modified, supplemented or restated without the prior written
consent of Parent and such employees.
7.18 VOTING AGREEMENT. Simultaneous with the execution and delivery of this
Agreement, Company shall enter into the Voting Agreements with those persons and
representing the number of shares of Parent Common Stock set forth in Exhibit
7.18(a), in substantially the form attached hereto as Exhibit 7.18(b).
7.19 ACCOUNTANT'S LETTERS. Parent shall use its reasonable best efforts to
cause to be delivered to Company two letters from Parent's independent public
accountants, one dated a date within two business days of the date on which the
Registration Statement shall become effective and one dated a date within two
business days of the Closing, addressed to Company, in form and substance
reasonably satisfactory to Company and customary in scope and substance for
comfort letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement. Company shall use
its reasonable best efforts to cause to be delivered to Parent two letters from
Company's independent public accountants, one dated a date within two business
days of the date on which the Registration Statement shall become effective and
one dated a date within two business days of the Closing, addressed to Company
and Parent, in form and substance reasonably satisfactory to Parent and
customary in scope and substance for comfort letters delivered by independent
public accountants in connection with registration statements similar to the
Registration Statement.
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7.20 WAIVER OR DECLINATION OF PREEMPTIVE RIGHTS. Parent shall use its best
efforts to cause each party to the Amended and Restated Investors' Agreement
dated March 29, 1999 among Fisher Scientific International, Inc. and certain
shareholders of Parent as set forth therein (the "Investors' Agreement") to
waive or decline to exercise the preemptive rights of such parties contained in
Section IV.3 of the Investors' Agreement with respect to the Parent Share
Issuance.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of
each Party to perform this Agreement and consummate the Merger are subject to
the satisfaction of the following conditions, unless waived by both Parties
pursuant to Section 10.6:
(a) SHAREHOLDER APPROVAL. The shareholders of Company shall have
approved this Agreement, and the consummation of the transactions
contemplated hereby, as and to the extent required by applicable Law. The
shareholders of Parent shall have approved the issuance of the shares of
Parent Common Stock pursuant to the Merger, as and to the extent required
by applicable Law and the rules of the NYSE.
(b) LEGAL PROCEEDINGS. No court or Regulatory Authority of competent
jurisdiction shall be seeking or have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes
illegal consummation of the Transactions.
(c) REGULATORY APPROVALS. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger (other than Consents and filing, registration
and notice requirements which if not obtained, made or complied with are
not reasonably likely to have a Company Material Adverse Effect or a Parent
Material Adverse Effect, as applicable) shall have been obtained or made
and shall be in full force and effect and all waiting periods required by
Law shall have expired or been earlier terminated (other than waiting
periods the failure to comply with is not reasonably likely to have a
Company Material Adverse Effect or a Parent Material Adverse Effect, as
applicable).
(d) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals
under state securities Laws or the 1933 Act or 1934 Act relating to the
issuance or trading of the shares of Parent Common Stock issuable pursuant
to the Merger shall have been received.
(e) NYSE LISTING. The shares of Parent Common Stock to be issued in
the Merger and such other shares to be reserved for issuance in connection
with the Merger shall have been approved for listing on the NYSE, subject
to official notice of issuance.
8.2 CONDITIONS TO OBLIGATIONS OF PARENT AND PURCHASER. The obligations of
Parent and Purchaser to perform this Agreement and consummate the Merger are
subject to the satisfaction of the following conditions, unless waived by Parent
pursuant to Section 10.6:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Company contained in this Agreement shall be true and correct in all
material respects at and as of the Effective Time with the same force and
effect as if made at and as of such time, except for (i) changes
contemplated by this Agreement and (ii) those representations and
warranties which address matters only as of a particular date (which shall
be true and correct as of such date).
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Company to be performed and complied with
pursuant to this Agreement and the other agreements
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contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all material respects.
(c) CERTIFICATES. Company shall have delivered to Parent (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions set forth in Section 8.1 as relates to the Company and in
Sections 8.2(a) and 8.2(b) have been satisfied, and (ii) certified copies
of resolutions duly adopted by Company's Board of Directors and
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated hereby, all in such
reasonable detail as Parent and its counsel shall request.
(d) TAX OPINION. Parent shall have received from Debevoise & Plimpton,
special tax counsel to Parent, on or about the date the Proxy
Statement/Prospectus is mailed to shareholders and, subsequently, on the
Closing Date, a written opinion in form reasonably satisfactory to it
substantially to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. In rendering such tax opinion, such counsel shall be entitled to rely
upon information, representations and assumptions provided by Parent and
Company substantially in the form of Exhibits 8.2(d) and 8.3(e) (allowing
for such amendments to the representations as counsel to Parent reasonably
deems necessary).
(e) 2000 FIRST QUARTER. The amount of the Company 2000 First Quarter
EBITDA (as defined in the following sentence) shall have been in excess of
$23.0 million. The "Company 2000 First Quarter EBITDA" means the Company's
EBITDA (earnings before interest expense, income taxes, depreciation and
amortization) for the quarter ended June 30, 2000 as reported in Company's
Quarterly Report on Form 10-Q for such quarter, which shall be calculated
by (i) taking the Company's operating income for such period, calculated on
a basis consistent with the calculation of the Company's operating income
for prior periods reflected in the Company Financial Statements and Company
SEC Reports, and without including any reversal of reserves or provisions,
and (ii) adding back one-time merger and restructuring charges relating to
existing mergers and restructuring plans (including those related to the
transactions contemplated by this Agreement), financing income relating to
trade accounts, and depreciation and amortization expenses during such
period accounted for on a basis consistent with past practice to the extent
reported in the Company Financial Statements and Company SEC Reports. This
condition shall expire 15 business days after the Company files its
Quarterly Report on Form 10-Q for such quarter and provides the Parent with
its calculation of the Company 2000 First Quarter EBITDA in reasonable
detail, unless Parent terminates this Agreement by reason of the
non-satisfaction of the condition in this Section 8.2(e) within such 15
business day period.
8.3 CONDITIONS TO OBLIGATIONS OF COMPANY. The obligations of Company to
perform this Agreement and consummate the Merger are subject to the satisfaction
of the following conditions, unless waived by Company pursuant to Section 10.6:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Purchaser contained in this Agreement shall be true and
correct in all material respects at and as of the Effective Time with the
same force and effect as if made at and as of such time, except for (i)
changes contemplated by this Agreement and (ii) those representations and
warranties which address matters only as of a particular date (which shall
be true and correct as of such date).
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Parent and Purchaser to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all material respects.
(c) CERTIFICATES. Parent and Purchaser shall have delivered to Company
(i) a certificate, dated as of the Effective Time and signed on its behalf
by its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 8.1 as relates to Parent
and Purchaser and in Sections 8.3(a) and 8.3(b) have been satisfied, and
(ii) certified copies of resolutions duly adopted by Parent's Board of
Directors and Purchaser's Board of Directors and shareholders evidencing
the taking of all corporate action necessary
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to authorize the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated hereby, all in such
reasonable detail as Company and its counsel shall request.
(d) TAX OPINION. The Company shall have received from Alston & Bird
LIP, special tax counsel to the Company, on or about the date the Proxy
Statement/Prospectus is mailed to shareholders and, subsequently, on the
Closing Date, a written opinion in form reasonably satisfactory to it
substantially to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. In rendering such tax opinion, such counsel shall be entitled to rely
upon information, representations and assumptions provided by Parent and
Company substantially in the form of Exhibits 8.2(d) and 8.3(e) (allowing
for such amendments to the representations as counsel to the Company
reasonably deems necessary).
(e) PREEMPTIVE RIGHTS. Each party to the Investors' Agreement shall
have waived or declined to exercise the preemptive rights of such parties
contained in Section IV.3 of the Investors' Agreement with respect to the
Parent Share Issuance, except for any non-waivers or exercises of
preemptive rights with respect to an immaterial number of shares of Parent
Common Stock; and Parent shall have delivered to Company a certificate,
dated as of the Effective Time and signed by an executive officer of
Parent, setting forth the number of shares of Parent Common Stock with
respect to which such preemptive rights have lapsed or been waived or not
exercised and stating that such non-waivers and exercises are valid and
preclude a subsequent exercise of preemptive rights regarding the Parent
Share Issuance.
ARTICLE IX
TERMINATION
9.1 TERMINATION. Notwithstanding any other provision of this Agreement and
notwithstanding the approval of this Agreement by the shareholders of Company,
this Agreement may be terminated and the Merger abandoned at any time prior to
the Effective Time:
(a) By mutual consent of Parent and Company; or
(b) By either of Company or Parent:
(i) if the Merger shall not have occurred on or prior to (x)
January 15, 2001, if the SEC shall have declared effective the
Registration Statement by December 1, 2000, and (y) March 31, 2001, if
the SEC shall not have declared effective the Registration Statement by
December 1, 2000; provided, however, that the right to terminate this
Agreement under this Section 9.1(b)(i) shall not be available to any
Party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the consummation of
the Merger on or prior to such date; or
(ii) if any court or Regulatory Authority of competent jurisdiction
shall have issued any Order or taken any other action (which Order or
other action the Parties shall use their reasonable efforts to lift),
which permanently restrains, enjoins or otherwise prohibits the
acceptance for payment of, or payment for, Shares pursuant to the
Merger, and such Order or other action shall have become final and non-
appealable;
(iii) if the conditions precedent to the obligations of such Party
to consummate the Merger cannot be satisfied or fulfilled by the date
specified in Section 9.1(b)(i); provided that the terminating Party is
not then in material breach of any representation, warranty, covenant or
other agreement contained in this Agreement; or
(c) By Company:
(i) if Parent or Purchaser shall have breached any of its
representations or warranties which breach would give rise to the
failure of the conditions set forth in Section 8.3(a) hereof to be
satisfied or if Parent or Purchaser shall have failed to perform its
covenants or other agreements contained in this Agreement which failure
to perform would give rise to the failure of the conditions set forth in
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Section 8.3(b) to be satisfied, which breach or failure to perform is
incapable of being cured or has not been cured by the date that is 15
business days following written notice thereof to Parent or Purchaser
from Company; or
(ii) if the Board of Directors of Company shall have finally
determined to approve, endorse or recommend an Acquisition Proposal
(other than the Acquisition Proposal contemplated by this Agreement) to
Company's shareholders after complying with Section 7.9; provided that
such termination shall not be effective unless concurrently with or
prior to such termination, Company or its designee has made payment of
the Termination Fee set forth in Section 10.2(b); provided, that
notwithstanding anything in this Agreement to the contrary, the
termination of this Agreement pursuant to and in compliance with this
Section 9.1(c)(ii) shall not be deemed to violate or breach other
obligations of Company under this Agreement so long as the Company has
complied with its obligations under Section 7.9; or
(d) By Parent or Purchaser:
(i) if the Company Board of Directors or any committee thereto
shall have withdrawn, or modified or changed or qualified, or publicly
proposed to withdraw, modify or change or qualify, in a manner adverse
to Parent or Purchaser its approval or recommendations of this Agreement
or the Merger or shall have approved, endorsed or recommended or
publicly proposed to approve, endorse or recommend an Acquisition
Proposal, or if the Company Board of Directors or any committee thereof
fails to reaffirm publicly and unconditionally its recommendation to
Company's shareholders of the Merger, which public reaffirmation must be
made within five business days after Parent's written request to do so
(which request may be made at any time that a publicly announced
Acquisition Proposal is pending and not withdrawn); or
(ii) if Company shall have breached any of its representations or
warranties which breach would give rise to the failure of the conditions
set forth in Section 8.2(a) hereof to be satisfied or if Company shall
have failed to perform its covenants or other agreements contained in
this Agreement which failure to perform would give rise to the failure
of the conditions set forth in Section 8.2(b) to be satisfied, which
breach or failure to perform is incapable of being cured or has not been
cured by the date that is 15 business days following written notice
thereof to Company from Parent or Purchaser; or
(iii) pursuant to and as contemplated by Section 8.2(e).
9.2 EFFECT OF TERMINATION. In the event of the termination and abandonment
of this Agreement pursuant to Section 9.1, this Agreement shall become void and
have no effect, without any Liability on the part of any Party or its
Affiliates, agents, advisors or shareholders, except that (i) the provisions of
this Section 9.2 and Article 10 and Section 7.7(b) shall survive any such
termination and abandonment, and (ii) except as otherwise provided herein, a
termination shall not relieve the breaching Party from Liability for a material
breach of this Agreement.
9.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except for this Section 9.3,
Articles 1, 2, 3 and 10 and Sections 7.11, 7.12, 7.13 and 7.14.
ARTICLE X
MISCELLANEOUS
10.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
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"ACQUISITION PROPOSAL" shall mean any proposal or offer (in each
case, whether or not in writing and whether or not delivered to the
shareholders of Company generally) to acquire in any manner, directly or
indirectly, all or a substantial portion of the Assets of Company or a
greater than 30% equity interest in Company or any of its Subsidiaries,
whether by merger, tender offer, exchange offer, sale of assets or
similar transactions involving Company or any Subsidiary, division or
operating or principal business unit of Company, other than pursuant to
the transactions contemplated by this Agreement.
"AFFILIATE" of a Person shall mean: (i) any other Person directly,
or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person, (ii) any
officer, director, partner, employer, or direct or indirect beneficial
owner of any 10% or greater equity or voting interest of such Person; or
(iii) any other Person for which a Person described in clause (ii) acts
in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger, including
the Exhibits and Company Disclosure Memorandum and Parent Disclosure
Memorandum delivered pursuant hereto and incorporated herein by
reference.
"ARTICLES OF MERGER" shall mean the Articles of Merger to be
executed by the Company and filed with the Secretary of State of the
State of Florida relating to the Merger as contemplated by Section 2.1.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character
and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of such
Person and wherever located.
"AVERAGE STOCK PRICE" shall mean the average of the daily closing
prices of Parent Common Stock on the NYSE Composite Transaction Tape for
the ten consecutive trading days ending on the second trading day
immediately prior to the Closing Date.
"BOARD OF DIRECTORS" shall mean the board of directors of Company.
"COMPANY COMMON STOCK" shall mean the $0.01 par value common stock
of the Company.
"COMPANY DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Company, Inc. Disclosure Memorandum" delivered on or prior to
the date of this Agreement to Parent describing in reasonable detail the
matters contained therein. Information disclosed with respect to one
Section shall be deemed to be disclosed for purposes of all other
Sections not specifically referenced with respect thereto.
"COMPANY ENTITIES" shall mean, collectively, Company and all
Company Subsidiaries.
"COMPANY FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of
Company as of December 31, 1999 and as of April 2, 1999 and April 3,
1998, and the related statements of income, changes in shareholders'
equity, and cash flows (including related notes and schedules, if any)
for the nine months ended December 31, 1999 and for each of the three
fiscal years ended April 2, 1999, April 3, 1998 and March 31, 1997, each
as included in Company SEC Reports filed prior to the date hereof, and
(ii) the consolidated balance sheets of Company (including related notes
and schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in Company SEC Reports filed with respect to
periods ended subsequent to December 31, 1999.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean a material adverse
impact on (i) the results of operations, financial condition or business
of the Company and its Subsidiaries, taken as a whole, or (ii) the
ability of Company to perform its obligations under this Agreement or to
consummate the Merger or the other transactions contemplated by this
Agreement; provided that "Material Adverse Effect" shall not be deemed
to include the impact of (a) actions and omissions of Company (or any of
its Subsidiaries) taken with the prior informed written Consent of
Parent in contemplation of the
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transactions contemplated hereby, (b) changes in Laws of general
applicability or interpretations thereof by courts or governmental
authorities, (c) changes in generally accepted accounting principles,
(d) the expenses incurred by Company in consummating the transactions
contemplated by this Agreement, and (e) any adverse change in the price
of Company Common Stock, as quoted on the Nasdaq National Market, and
(f) items disclosed in the Company Disclosure Memorandum.
"COMPANY RIGHTS" shall mean the preferred stock purchase rights or
other securities issued pursuant to the Company Rights Agreement.
"COMPANY RIGHTS AGREEMENT" shall mean that certain Shareholder
Protection Rights Agreement, dated as of April 20, 1998, between Company
and Continental Stock Transfer & Trust Company, as Rights Agent.
"COMPANY SENIOR NOTES" shall mean the 8 1/2% Senior Subordinated
Notes due 2007 issued by the Company.
"COMPANY STOCK PLANS" shall mean the existing stock option and
other stock-based compensation plans of Company designated as follows:
PSS World Medical, Inc. Employee Stock Ownership and Savings Plan; PSS
World/Taylor Medical Profit Sharing 401(k) Plan; PSS World Medical, Inc.
1986 Incentive Stock Option Plan; PSS World Medical, Inc. Amended and
Restated 1994 Long-Term Stock Plan; PSS World Medical, Inc. Amended and
Restated 1994 Long Term Incentive Plan; PSS World Medical, Inc. Fourth
Amended and Restated Directors' Stock Plan; PSS World Medical, Inc. 1999
Long-Term Incentive Plan; PSS World Medical, Inc. 1999 Broad-Based
Employee Stock Plan; Gulf South Medical Supply, Inc. 1992 Stock Plan;
Gulf South Medical Supply, Inc. 1997 Stock Plan; Elite Stock Option
Grant Program; Officer Stock Option Grant Program; and Leader's Stock
Option Grant Program.
"COMPANY SUBSIDIARIES" shall mean the direct and indirect
Subsidiaries of Company, which shall include the Company Subsidiaries
described in Section 4.4 and any corporation or other organization
acquired as a direct or indirect Subsidiary of Company in the future and
held as a direct or indirect Subsidiary by Company at the Effective
Time.
"CONFIDENTIALITY AGREEMENTS" shall mean those certain
Confidentiality Agreements, one dated March 3, 2000 and another dated
May 12, 2000, between Company and Parent.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking
of any kind or character, or other document to which any Person is a
party or that is binding on any Person or its capital stock, Assets or
business.
"DEFAULT" shall mean (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit,
(ii) any occurrence of any event that with the passage of time or the
giving of notice or both would constitute a breach or violation of,
default under, contravention of, or conflict with, any Contract, Law,
Order, or Permit, or (iii) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to a
right of any Person to exercise any remedy or obtain any relief under,
terminate or revoke, suspend, cancel, or modify or change the current
terms of, or renegotiate, or to accelerate the maturity or performance
of, or to increase or impose any Liability under, any Contract, Law,
Order, or Permit.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and
which are administered, interpreted, or enforced by the United States
Environmental Protection Agency and foreign, federal, state and local
agencies with jurisdiction over, and including common law in respect of,
pollution or protection of human health and safety and the environment,
including the Comprehensive Environmental Response Compensation and
Liability Act, as amended,
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42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other
Laws relating to emissions, discharges, releases, or threatened releases
of any Hazardous Material, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of any Hazardous Material.
"EQUITY RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is or
may be bound to issue additional shares of its capital stock or other
Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall mean, with respect to any Person, any
corporation, trade or business, which, together with such Person, is a
member of a controlled group of corporations or a group of trades or
businesses under common control within the meaning of Section 414 of the
Internal Revenue Code.
"EXHIBITS" shall mean each Exhibit as so marked, a copy of which is
attached to this Agreement. Each Exhibit is hereby incorporated by
reference herein and made a part hereof, and may be referred to in this
Agreement and any other related instrument or document without being
attached hereto.
"FBCA" shall mean the Florida Business Corporation Act.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by
Title 11 of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"INTELLECTUAL PROPERTY" shall mean copyrights, patents, trademarks,
service marks, service names, trade names, applications therefor,
technology rights and licenses, computer software (including any source
or object codes therefor or documentation relating thereto), trade
secrets, franchises, know-how, inventions, and other intellectual
property rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to any Person (including
references to any such Person being aware of a particular matter) shall
mean the knowledge after reasonable inquiry of senior management of such
Person, including senior management of any divisions or businesses of
such Person operated through its Subsidiaries.
"LAW" shall mean any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute
applicable to a Person or its Assets, Liabilities, or business,
including those promulgated, interpreted or enforced by any Regulatory
Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
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whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for
current Taxes not yet due and payable, and (ii) Liens which do not
materially impair the value or use of or title to the Assets subject to
such Lien.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other
proceeding relating to or affecting a Party, its business, its Assets
(including Contracts related to it), or the Transactions.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"NASDAQ NATIONAL MARKET" shall mean the National Market System of
the National Association of Securities Dealers Automated Quotation
System.
"NYSE" shall mean the New York Stock Exchange, Inc..
"OPERATING PROPERTY" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries, and,
where required by the context, includes the owner or operator of such
property, but only with respect to such property.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency, or Regulatory
Authority.
"PARENT COMMON STOCK" shall mean the $0.01 par value voting common
stock of Parent.
"PARENT DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Parent, Inc. Disclosure Memorandum" delivered on or prior to
the date of this Agreement to Parent describing in reasonable detail the
matters contained therein. Information disclosed with respect to one
Section shall be deemed to be disclosed for purposes of all other
Sections not specifically referenced with respect thereto.
"PARENT ENTITIES" shall mean, collectively, Parent and all Parent
Subsidiaries.
"PARENT FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of
Company as of March 31, 2000 and as of December 31, 1999 and 1998, and
the related statements of income, changes in shareholders' equity, and
cash flows (including related notes and schedules, if any) for the three
months ended March 31, 2000 and 1999 and for each of the three fiscal
years ended December 31, 1999, 1998 and 1997, as filed by Company in SEC
Documents prior to the date hereof, and (ii) the consolidated balance
sheets of Company (including related notes and schedules, if any) and
related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) included in SEC
Documents filed with respect to periods ended subsequent to March 31,
2000.
"PARENT MATERIAL ADVERSE EFFECT" shall mean a material adverse
impact on (i) the results of operations, financial condition or business
of Parent and its Subsidiaries, taken as a whole, or (ii) the ability of
Parent to perform its obligations under this Agreement or to consummate
the Merger or the other transactions contemplated by this Agreement;
provided that "Material Adverse Effect" shall not be deemed to include
the impact of (a) actions and omissions of Parent (or any of its
Subsidiaries) taken with the prior informed written Consent of Company
in contemplation of the transactions contemplated hereby, (b) changes in
Laws of general applicability or interpretations thereof by courts or
governmental authorities, (c) changes in generally accepted accounting
principles, (d) the expenses incurred by Parent in consummating the
transactions contemplated by this Agreement, and (e) any adverse change
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in the price of Parent Common Stock, as quoted on the NYSE, and (f)
items disclosed in the Parent Disclosure Memorandum.
"PARENT SUBSIDIARIES" shall mean the Subsidiaries of Parent, which
shall include any corporation or other organization acquired as a
Subsidiary of Parent in the future and held as a Subsidiary by Parent at
the Effective Time.
"PARTY" shall mean, on the one hand, Parent and Purchaser and,
Company on the other hand, and "Parties" shall mean all of Company,
Parent and Purchaser.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability
company, trust, business association, group acting in concert, or any
person acting in a representative capacity.
"PROXY STATEMENT/PROSPECTUS" shall mean (i) the proxy statement
used by Company to solicit the approval of its stockholders of the
transactions contemplated by this Agreement, (ii) the proxy statement
used by Parent to solicit the approval of its stockholders of the Parent
Share Issuance, and (iii) the prospectus of Parent relating to the
issuance of Parent Common Stock to holders of Company Common Stock.
"REGISTRATION STATEMENT" shall mean the Registration Statement on
Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
Parent under the 1933 Act with respect to the shares of Parent Common
Stock to be issued to the shareholders of Company in connection with the
transactions contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the SEC, the
NASD, the Federal Trade Commission, the United States Department of
Justice, and all other international, federal, state, county, local or
other governmental or regulatory agencies, authorities (including
self-regulatory authorities), instrumentalities, commissions, boards or
bodies having jurisdiction over the Parties and their respective
Subsidiaries.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative
engaged by a Person.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended, and
the rules and regulations of any Regulatory Authority promulgated
thereunder.
"SHARE" shall mean each share of Company Common Stock, together
with the associated Company Rights.
"SUBSIDIARIES" shall mean all those corporations, associations, or
other business entities of which the entity in question either (i) owns
or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
50% or more of the outstanding equity securities is owned directly or
indirectly by its parent (provided, there shall not be included any such
entity the equity securities of which are owned or controlled solely in
a fiduciary capacity), (ii) in the case of partnerships, serves as a
general partner, (iii) in the case of a limited liability company,
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serves as a managing member, or (iv) otherwise has the ability to elect
a majority of the directors, trustees or managing members thereof.
"SUPERIOR PROPOSAL" shall mean with respect to Company or its
Subsidiaries, any Acquisition Proposal made by a Person other than
Parent, Purchaser or any of their respective Affiliates which is on
terms which the Board of Directors of Company in good faith concludes
(a) would, if consummated, result in a transaction that is more
favorable to its shareholders than the transactions contemplated by this
Agreement and (b) is reasonably capable of being completed.
"SURVIVING CORPORATION" shall mean Company as the surviving
corporation resulting from the Merger.
"TAX RETURN" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined
or unitary group that includes a Party or its Subsidiaries.
"TAX" or "TAXES" shall mean all federal, state, county, local, or
foreign taxes, fees, escheat or other similar governmental assessments,
including, income, excise, sales, use, transfer, payroll, franchise,
real property, personal property and other taxes, together with any
interest and penalties thereon or with respect thereto.
"TRANSACTION AGREEMENTS" shall mean this Agreement, the Stock
Option Agreement, the Voting Agreements and the Employment Agreements,
if such Party is a party thereto.
"TRANSACTIONS" shall mean the Merger and the other transactions
contemplated by this Agreement.
(b) The terms set forth below shall have the meanings ascribed thereto
in the referenced sections:
<TABLE>
<S> <C>
2000 Financial Statements Section 4.5(c)
Certificates Section 3.1(a)
Closing Section 1.3
Company 401(k) Plan Section 7.11
Company Articles of Incorporation Section 4.1(a)
Company Benefit Plans Section 4.14(a)
Company Bylaws Section 4.1(b)
Company Contracts Section 4.15
Company SEC Reports Section 4.5(a)
Company Stockholders Meeting Section 7.1
Continuing Employee Section 7.11(a)
Credit Agreement Section 7.13
Effective Time Section 1.2
Exchange Ratio Section 2.1(b)
Exchange Agent Section 3.1(a)
Exchange Fund Section 3.1(a)
Indemnified Party Section 7.12(b)
Indenture Section 7.14
Investors Agreement Section 7.20
Merger Section 1.1
Merger Consideration Section 2.1(b)
Parent SEC Reports Section 5.5(a)
Parent Share Issuance Section 5.2(a)
Parent Stockholders Meeting Section 7.1
Shareholders Preamble
Takeover Laws Section 4.19
Termination Fee Section 10.2(b)
</TABLE>
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
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10.2 EXPENSES.
(a) Except as otherwise provided in this Section 10.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and
fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel.
(b) If:
(A) Parent or Purchaser terminates this Agreement under Section
9.1(d)(i), or Company terminates this Agreement pursuant to Section
9.1(c)(ii) or
(B) Parent or Purchaser terminates this Agreement pursuant to
Section 9.1(d)(ii) (but only as a result of a knowing or willful breach
by the Company of any of its representations or warranties or knowing or
willful failure of the Company to perform its covenants or other
agreements contained in this Agreement) or pursuant to Section
9.1(b)(iii) (but only on the basis of the failure of the Company to
satisfy any of the conditions enumerated in Section 8.2 as a result of a
knowing or willful breach by the Company of any of its representations
or warranties or knowing or willful failure of the Company to perform
its covenants or other agreements contained in this Agreement), and in
the case of a termination described in this clause (B), (x) at any time
after the date of this Agreement and prior to such termination, an
Acquisition Proposal (other than the Acquisition Proposal contemplated
by this Agreement) shall have been publicly announced or otherwise
publicly communicated to the shareholders of Company generally and (y)
prior to the first anniversary of such termination, Company shall enter
into a definitive agreement with respect to an Acquisition Proposal or
an Acquisition Proposal is consummated,
then, Company shall pay to Purchaser, or cause to be paid, (1) in the case
of a termination of this Agreement by Parent or Purchaser pursuant to
Section 9.1(d)(i), not later than one business day following such
termination, (2) in the case of a termination by Company pursuant to
Section 9.1(c)(ii), prior to or concurrently with such termination, or (3)
in the case of a termination of this Agreement described in clause (B) of
this Section 10.2(b), not later than one business day following the earlier
of the entering into of a definitive agreement with respect to, or the
consummation of, an Acquisition Proposal prior to the first anniversary of
such termination, as applicable, a termination fee, in cash, by wire
transfer of immediately available funds to an account designated by
Purchaser, in an amount equal to the sum of (x) $28,500,000 plus (y)
out-of-pocket expenses incurred by Parent or Purchaser exclusively in
connection with the transactions contemplated by this Agreement not to
exceed $4,500,000 in the aggregate (such sum is referred to herein as the
"Termination Fee"). Except for nonpayment of the amount set forth in this
Section 10.2(b) and except as provided below, Parent and Purchaser hereby
agree that, upon any termination of this Agreement pursuant to Section
9.1(c)(ii) or 9.1(d)(i), in no event shall Parent or Purchaser be entitled
to seek or to obtain any recovery or judgment against Company or any of the
Company Entities or any of their respective Assets, or against any of their
respective Affiliates, agents, advisors or shareholders relating to the
Transactions, and in no event shall Parent or Purchaser be entitled to seek
or obtain any other amount relating to the Transactions; provided, however,
that neither the termination of this Agreement pursuant to Section
9.1(c)(ii) or 9.1(d)(i) nor receipt of the fee set forth in this Section
10.2(b) shall preclude any remedy in favor of Parent or Purchaser against
Company relating to a material breach of Section 7.9 of this Agreement by
Company.
(c) If Parent, Purchaser or Company terminates this Agreement on the
basis of the failure of the shareholders of the Company to approve the
Merger and in the absence of a publicly announced Acquisition Proposal
pending which has not been withdrawn at the time of the Company
Shareholders' Meeting and if the Company has complied with all its
obligations under Section 7.9, then Company shall pay to Purchaser, or
cause to be paid, prior to or concurrently with such termination the
out-of-pocket expenses incurred by Parent or Purchaser exclusively in
connection with the transactions contemplated by this Agreement not to
exceed $4,500,000 in the aggregate. Except for nonpayment of the amount set
forth in this Section 10.2(c), Parent and Purchaser hereby agree that, upon
any termination of this Agreement due to the failure of the shareholders of
the Company to approve the Merger (in the absence of a publicly announced
Acquisition
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<PAGE> 151
Proposal pending which has not been withdrawn at the time of the Company
Shareholders' Meeting and if the Company has complied with all its
obligations under Section 7.9), in no event shall Parent or Purchaser be
entitled to seek or to obtain any recovery or judgment against Company or
any of the Company Entities or any of their respective Assets, or against
any of their respective Affiliates, agents, advisors or shareholders
relating to the Transactions, and in no event shall Parent or Purchaser be
entitled to seek or obtain any other amount relating to the Transactions.
10.3 BROKERS AND FINDERS. Except for Donaldson, Lufkin & Jenrette
Securities Corporation and as disclosed in Section 10.3 of the Company
Disclosure Memorandum as to Company and except for Lazard Freres & Co LLC as to
Parent and Purchaser, each of the Parties represents and warrants that neither
it nor any of its officers, directors, employees, or Affiliates has employed any
broker or finder or incurred any Liability for any financial advisory fees,
investment bankers' fees, brokerage fees, commissions, or finders' fees in
connection with this Agreement or the Transactions. In the event of a claim by
any broker or finder based upon his or its representing or being retained by or
allegedly representing or being retained by Company or by Parent or Purchaser,
each of Company, Parent and Purchaser, as the case may be, agrees to indemnify
and hold the other Party harmless of and from any Liability in respect of any
such claim.
10.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein, this
Agreement constitutes the entire agreement between the Parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except for the
Confidentiality Agreement). Nothing in this Agreement expressed or implied, is
intended to confer upon any Person, other than the Parties or their respective
successors, any rights, remedies, obligations, or liabilities under or by reason
of this Agreement, other than as provided in Sections 7.11(d) and 7.12.
10.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of each of the Parties, whether before or after shareholder approval of this
Agreement has been obtained, provided, that after any such approval by the
holders of Company Common Stock, there shall be made no amendment that pursuant
to the FBCA requires further approval by such shareholders, unless such an
amendment is approved by such shareholders.
10.6 WAIVERS.
(a) Prior to or at the Effective Time, Parent and Purchaser, acting
through their respective Boards of Directors, chief executive officers or
other authorized officers, shall have the right to waive any Default in the
performance of any term of this Agreement by Company, to waive or extend
the time for the compliance or fulfillment by Company of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Parent or Purchaser, as the case may be,
under this Agreement, except any condition which, if not satisfied, would
result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of Parent or
Purchaser, as the case may be.
(b) Prior to or at the Effective Time, Company, acting through its
Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of
this Agreement by Parent or Purchaser, to waive or extend the time for the
compliance or fulfillment by Parent or Purchaser of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Company under this Agreement, except any
condition which, if not satisfied, would result in the violation of any
Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Company.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of
such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be
or construed as a further or continuing waiver of such condition or breach
or a waiver of any other condition or of the breach of any other term of
this Agreement.
10.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement
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will be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and assigns.
10.8 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
<TABLE>
<S> <C>
Company: PSS World Medical, Inc.
4345 Southpoint Boulevard
Jacksonville, Florida 32216
Telecopy Number: (904) 332-3000
Attention: Chief Executive Officer
Copy to Counsel: Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telephone Number: (404) 881-7000
Telecopy Number: (404) 881-7777
Attention: J. Vaughan Curtis
Parent or Purchaser: Fisher Scientific International Inc.
Liberty Lane
Hampton, New Hampshire 03842
Telecopy Number: (603) 929-2703
Attention: Vice President and General Counsel
Copy to Counsel: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy Number: (212) 909-6836
Attention: Paul H. Wilson, Jr.
</TABLE>
10.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Florida, without regard to any
applicable conflicts of Laws.
10.10 COUNTERPARTS. This Agreement may be executed in two or, more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10.11 CAPTIONS; ARTICLES AND SECTIONS. The captions contained in this
Agreement are for reference purposes only and are not part of this Agreement.
Unless otherwise indicated, all references to particular Articles or Sections
shall mean and refer to the referenced Articles and Sections of this Agreement.
10.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
10.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with the specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the Unites States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
10.14 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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<PAGE> 153
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
FISHER SCIENTIFIC INTERNATIONAL INC.
By: /s/ Todd M. DuChene
-----------------------------------------
Name: Todd M. DuChene
Title: Vice-President
FSI MERGER CORPORATION
By: /s/ Todd M. DuChene
-----------------------------------------
Name: Todd M. DuChene
Title: Vice-President
PSS WORLD MEDICAL, INC.
By: /s/ Patrick Kelly
-----------------------------------------
Name: Patrick Kelly
Title: Chief Executive Officer
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<PAGE> 154
EXHIBIT 1.6
OFFICERS
<TABLE>
<S> <C>
Paul Meister........................................... Vice President
Todd DuChene........................................... Vice President
Carrie Kane............................................ Assistant Secretary
Lee Ann Ward........................................... Assistant Secretary
</TABLE>
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<PAGE> 155
EXHIBIT 1.7
STOCK OPTION AGREEMENT
SEE ANNEX B.
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<PAGE> 156
EXHIBIT 4.23
ERP SYSTEM ROLL-OUT SCHEDULE
PSS WORLD MEDICAL
JDEDWARDS DISTRIBUTION PROJECT (PSS DIVISION)
ROLLOUT SCHEDULE
<TABLE>
<CAPTION>
BRANCH CONVERSION DATE
------ ---------------
<S> <C>
1001-PSS Jacksonville May 2000
1004-PSS Tallahassee July 2000
1006-PSS Orlando July 2000
1008-PSS South Florida August 2000
1002-PSS St. Petersburg August 2000
1014-PSS Columbia August 2000
1011-PSS Atlanta September 2000
1039-PSS Norfolk September 2000
1071-PSS Roanoke September 2000
1045-PSS Richmond September 2000
1032-PSS Raleigh October 2000
1041-PSS Baltimore October 2000
1031-PSS Charlotte October 2000
1076-PSS Hudson Valley October 2000
1063-PSS Rochester November 2000
1052-PSS Philadelphia November 2000
1086-PSS Eastern Region Pharmacy November 2000
1058-PSS New Jersey November 2000
1067-PSS Metro New York December 2000
1058-PSS New England December 2000
1054-PSS Omaha January 2001
1047-PSS Kansas City January 2001
1060-PSS Pittsburgh January 2001
1056-PSS Louisville January 2001
1048-PSS St. Louis February 2001
1057-PSS Minneapolis February 2001
1043-PSS Cincinnati February 2001
1053-PSS Chicago February 2001
1072-PSS Cleveland March 2001
1023-PSS Knoxville March 2001
1020-PSS Jackson March 2001
1021-PSS Memphis March 2001
1067-PSS Central Region Pharmacy April 2001
1022-PSS Little Rock April 2001
1018-PSS Chattanooga April 2001
1016-PSS New Orleans April 2001
1015-PSS Birmingham May 2001
1073-PSS Lafayette May 2001
1069-PSS Seattle May 2001
1080-PSS Hawaii May 2001
1038-PSS Portland June 2001
</TABLE>
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<PAGE> 157
<TABLE>
<CAPTION>
BRANCH CONVERSION DATE
------ ---------------
<S> <C>
1085-PSS Western Region Pharmacy June 2001
1049-PSS San Francisco June 2001
1055-PSS San Diego June 2001
1064-PSS North LA July 2001
1028-PSS South LA July 2001
1033-PSS Phoenix July 2001
1066-PSS Salt Lake City July 2001
1050-PSS Denver August 2001
1034-PSS Tulsa August 2001
2070-PSS West Texas August 2001
2028-PSS San Antonio September 2001
2027-PSS Houston September 2001
2025-PSS Dallas September 2001
</TABLE>
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<PAGE> 158
SECTION 7.16
RULE 145 AFFILIATES OF COMPANY
Patrick C. Kelly
David A. Smith
John F. Sasen, Sr.
Frederick E. Dell
Kirk A. Zambetti
Doug Harper
Gary A. Corless
Hugh M. Brown
Melvin L. Hecktman
Clark Johnson
Delores P. Kesler
Donna C.E. Williamson
Charles R. Scott
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<PAGE> 159
EXHIBIT 7.18(a)
PARTIES AND SHARES OF PARENT COMMON STOCK
SUBJECT TO VOTING AGREEMENT
<TABLE>
<S> <C>
Thomas H. Lee Equity Fund III, L.P. 6,652,027
THL FSI Equity Investors L.P. 3,342,094
THL Foreign Fund III 411,607
THL-CCI Limited Partnership 409,667
Fisher Scientific International Inc. Trust Amended and
Restated as of August 1, 1996, with Mellon Bank, N.A., as
Trustee 634,000
Fisher Scientific International Inc. Trust dated as of
January 21, 1998 with Mellon Bank, N.A., as Trustee 2,930,771
</TABLE>
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<PAGE> 160
SECTION 7.18(b)
VOTING AGREEMENT
See Annex C.
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<PAGE> 161
EXHIBIT 8.2(d)
Tax Representations
Letter of Parent
, 2000
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
AGREEMENT AND PLAN OF MERGER AMONG
FISHER SCIENTIFIC INTERNATIONAL INC., FSI MERGER CORPORATION
AND PSS WORLD MEDICAL, INC.
Ladies and Gentlemen:
The following facts and representations are being furnished to each of you
in connection with the preparation of your respective tax opinions regarding the
merger (the "Merger") of FSI Merger Corporation ("Merger Sub") with and into PSS
World Medical, Inc. ("Company") pursuant to the Agreement and Plan of Merger,
dated as of June 21, 2000, by and among Fisher Scientific International Inc.
("Parent"), Merger Sub and Company (the "Merger Agreement"). We understand that
you will be relying on such facts and representations in delivering your
opinions. Unless otherwise defined herein, capitalized terms shall have the
meanings ascribed to them in the Merger Agreement.
The terms of the Merger are contained in (i) the Merger Agreement, (ii) the
Articles of Merger of Merger Sub with and into Company, advance copies of which
have been provided to you for approval prior to filing (the "Articles of
Merger"), and (iii) [insert any other pertinent agreements]. The Merger
Agreement, the Articles of Merger, and [insert any other pertinent agreements]
are collectively referred to as the "Agreements".
This letter provides you with the facts, representations and other
information on which you should rely in rendering your opinions. Specifically,
in preparing your opinions, you should assume that (1) the Merger will be
consummated in accordance with the terms, conditions and other provisions of the
Agreements (and that none of the terms and conditions contained therein has been
or will be waived or modified in any respect), and (2) all of the factual
information, descriptions, representations and assumptions set forth or referred
to in this letter, in the letter to you from Company dated , 2000,
in the Agreements, and in the Proxy Statement/Prospectus are accurate and
complete and will be accurate and complete at the Effective Time.
In preparing your opinions, you may also rely on the following
representations:
1. The fair market value of Parent Common Stock and any other consideration
received by each shareholder of Company in the Merger will be approximately
equal to the fair market value of Company Common Stock surrendered by such
shareholder in the Merger. No shareholder of Company Common Stock will receive
in exchange for such stock, in connection with the Merger, any consideration
other than Parent Common Stock and cash paid in lieu of a fractional share of
Parent Common Stock.
2. Assuming that representation 2 in the Company representation letter is
accurate, following the Merger, Company will hold at least 90% of the fair
market value of the net assets and at least 70% of the fair market value of the
gross assets held by Company and Merger Sub, as the case may be, immediately
prior to the Merger. For purposes of this representation, (i) amounts paid by
Company or Merger Sub to shareholders of Company who receive cash or other
property, (ii) assets used by Company or Merger Sub to pay expenses incurred in
connection
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<PAGE> 162
Alston & Bird LLP
Debevoise & Plimpton - 2 - , 2000
with the Merger and (iii) all redemptions and distributions (except for regular,
normal dividends) made by Company immediately prior to the Merger or otherwise
in connection with the Merger will be considered assets held by Company or
Merger Sub, as the case may be, immediately prior to the Merger.
3. Neither Parent nor any corporation related to Parent (within the meaning
of Treas. Reg. sec. 1.368-1(e)(3)) (i) will be under any obligation or will have
entered into any agreement or understanding to redeem or repurchase any of
Parent Common Stock issued to shareholders of Company in the Merger or to make
any extraordinary distributions in respect of such Parent Common Stock or (ii)
has any plan or intention to reacquire any of Parent Common Stock issued in the
Merger.
4. Parent has no plan or intention to (i) liquidate Company, (ii) merge
Company with or into another corporation, (iii) sell or otherwise dispose of the
stock of Company, except for transfers described in Section 368(a)(2)(C) of the
Internal Revenue Code of 1986, as amended (the "Code"), or (iv) cause Company to
sell or otherwise dispose of any of its assets, or any assets that it acquired
from Merger Sub, except for dispositions in the ordinary course of its business.
5. Assuming that representation 4 in the Company representation letter is
accurate, following the Merger, Parent will continue Company's historic business
and use a significant portion of its historic business assets in a business.
6. Prior to the Merger, Parent will own directly all of the outstanding
stock of Merger Sub.
7. Merger Sub is being formed solely to effect the Merger and it will not
conduct any business or other activities prior to the Merger. Merger Sub will
have no liabilities that will be assumed by Company and it will not transfer any
assets to Company in the Merger that are subject to any liabilities.
8. To the knowledge of Parent, at the Effective Time, Company's outstanding
capital stock will consist solely of Company Common Stock. Pursuant to the
Merger, at least 80% of the outstanding Company Common Stock will be exchanged
solely for Parent Common Stock.
9. To the knowledge of Parent, at the Effective Time, Company will not have
any warrants, options, convertible securities or any other type of right
pursuant to which any person could acquire any stock of Company.
10. Neither Parent nor any subsidiary or affiliate of Parent owns, or has
owned during the past five years, any stock of Company.
11. Parent has no plan or intention to cause Company to issue any
additional shares of stock that would cause Parent to own less than (i) 80% of
the total combined voting power of all classes of Company stock entitled to vote
or (ii) 80% of any other class of Company stock.
12. Parent, Merger Sub, Company and the shareholders of Company will pay
their respective expenses, if any, incurred in connection with the Merger.
13. There will be no intercorporate indebtedness existing between Parent or
its subsidiaries, on the one hand, and Company or its subsidiaries, on the other
hand, that was issued, acquired or will be settled at a discount.
14. Neither Parent nor Merger Sub will (i) elect, or have in effect an
election, to be treated as a "regulated investment company" or as a "real
investment trust" or file any tax return consistent with such treatment or (ii)
be an investment company within the meaning of Section 368(a)(2)(F)(ii) of the
Code.
15. Neither Parent nor Merger Sub is, or at the Effective Time will be,
under the jurisdiction of a court in a Title 11 or similar case within the
meaning of Section 368(a)(3)(A) of the Code.
16. The payment of cash in lieu of fractional shares of Parent Common Stock
is solely for the purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately
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bargained-for consideration. The fractional share interests of each shareholder
of Company will be aggregated, and no shareholder of Company will receive cash
in an amount equal to or greater than the value of one full share of Parent
Common Stock.
17. After the Merger, no dividends or distributions will be made to the
former Company shareholders by Parent, other than dividends and distributions
made with respect to all shares of Parent Common Stock.
18. The Merger is being effected for bona fide non-tax business reasons.
The information in this letter is provided in connection with the
preparation of your opinion. We understand that your opinion will be premised on
the basis that all of the facts, representations and assumptions on which you
are relying, whether contained herein or in the documents described herein, are
accurate and complete and will be accurate and complete at the Effective Time.
We further understand that your opinion will be subject to the qualifications
and limitations set forth in your opinion letter.
Very truly yours,
FISHER SCIENTIFIC INTERNATIONAL INC.
--------------------------------------
By:
Title:
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EXHIBIT 8.3(e)
TAX REPRESENTATIONS
LETTER OF COMPANY
, 2000
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
AGREEMENT AND PLAN OF MERGER AMONG
FISHER SCIENTIFIC INTERNATIONAL INC., FSI MERGER CORPORATION AND
PSS WORLD MEDICAL, INC.
Ladies and Gentlemen:
The following facts and representations are being furnished to each of you
in connection with the preparation of your respective tax opinions regarding the
merger (the "Merger") of FSI Merger Corporation ("Merger Sub") with and into PSS
World Medical, Inc. ("Company") pursuant to the Agreement and Plan of Merger,
dated as of June 21, 2000, by and among Fisher Scientific International Inc.
("Parent"), Merger Sub and Company (the "Merger Agreement"). We understand that
you will be relying on such facts and representations in delivering your
opinions. Unless otherwise defined herein, capitalized terms shall have the
meanings ascribed to them in the Merger Agreement.
The terms of the Merger are contained in (i) the Merger Agreement, (ii) the
Articles of Merger of Merger Sub with and into Company, advance copies of which
have been provided to you for approval prior to filing (the "Articles of
Merger"), and (iii) [insert any other pertinent agreements]. The Merger
Agreement, the Articles of Merger, and [insert any other pertinent agreements]
are collectively referred to as the "Agreements".
This letter provides you with the facts, representations and other
information on which you should rely in rendering your opinions. Specifically,
in preparing your opinions, you should assume that (1) the Merger will be
consummated in accordance with the terms, conditions and other provisions of the
Agreements (and that none of the terms and conditions contained therein has been
or will be waived or modified in any respect), and (2) all of the factual
information, descriptions, representations and assumptions set forth or referred
to in this letter, in the letter to you from Parent dated ,
2000, in the Agreements, and in the Proxy Statement/ Prospectus are accurate and
complete and will be accurate and complete at the Effective Time.
In preparing your opinions, you may also rely on the following
representations:
1. The fair market value of Parent Common Stock and any other consideration
received by each shareholder of Company in the Merger will be approximately
equal to the fair market value of Company Common Stock surrendered by such
shareholder in the Merger. No shareholder of Company Common Stock will receive
in exchange for such stock, in connection with the Merger, any consideration
other than Parent Common Stock and cash paid in lieu of a fractional share of
Parent Common Stock.
2. Following the Merger, Company will hold at least 90% of the fair market
value of the net assets and at least 70% of the fair market value of the gross
assets held by Company and Merger Sub, as the case may be, immediately prior to
the Merger. For purposes of this representation, (i) amounts paid by Company to
shareholders who receive cash or other property, (ii) assets used by Company to
pay expenses incurred in connection with the Merger and (iii) all redemptions
and distributions (except for regular, normal dividends)
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made by Company immediately prior to the Merger or otherwise in connection with
the Merger will be considered assets held by Company immediately prior to the
Merger.
3. Neither Company nor any Company Related Party has or will have redeemed
or acquired any Company Common Stock during the three (3) year period prior to
the Merger. For purposes hereof, Company Related Party means any corporation in
which at least fifty percent (50%) of the total combined voting power of all
classes of stock entitled to vote or at least fifty percent (50%) of the value
of all classes of stock is or was owned directly or indirectly by Company.
During the three (3) year period prior to the Merger, neither Company nor any
Company Related Party has or will have made any distribution with respect to the
outstanding Company Common Stock other than periodic dividends consistent with
Company's historic dividend practice.
4. Prior to the Merger, Company will be engaged in one or more businesses
and will use a significant portion of its assets in such businesses.
5. Company's outstanding capital stock consists solely of Company Common
Stock. Pursuant to the Merger, at least 80% of the outstanding Company Common
Stock will be exchanged solely for Parent Common Stock. For purposes of this
representation, shares of Company Common Stock exchanged for cash or other
property originating with Parent will be treated as outstanding Company Common
Stock at the Effective Time.
6. At the Effective Time, Company will not have any warrants, options,
convertible securities or any other type of right pursuant to which any person
could acquire any stock of Company
7. Company has no plan or intention to issue any additional shares of stock
that would cause Parent to own less than (i) 80% of the total combined voting
power of all classes of Company stock entitled to vote or (ii) 80% of any other
class of Company stock.
8. Parent, Merger Sub, Company and the shareholders of Company will pay
their respective expenses, if any, incurred in connection with the Merger.
9. There will be no intercorporate indebtedness existing between Parent or
its subsidiaries, on the one hand, and Company or its subsidiaries, on the other
hand, that was issued, acquired or will be settled at a discount.
10. Company is not an investment company. For purposes of the foregoing, an
"investment company" is a corporation that is a regulated investment company, a
real estate investment trust, or a corporation fifty percent (50%) or more of
the value of whose total assets are stock and securities and eighty percent
(80%) or more of the value of whose total assets are assets held for investment.
In making the fifty percent (50%) and eighty percent (80%) determination under
the preceding sentence, stock and securities in any subsidiary corporation shall
be disregarded and the parent corporation shall be deemed to own its ratable
share of the subsidiary's assets, and a corporation shall be considered a
subsidiary if the parent owns fifty percent (50%) or more of the combined voting
power of all classes of stock entitled to vote or fifty percent (50%) or more of
the total value of shares of all classes of stock outstanding.
11. Company is not, or at the Effective Time will not be, under the
jurisdiction of a court in a Title 11 of the U. S. Code bankruptcy case or a
receivership, foreclosure or similar proceeding in a federal or state court.
12. At the Effective Time, the fair market value of the assets of Company
will equal or exceed the sum of its liabilities plus the amount of liabilities,
if any, to which such assets will be subject.
13. The payment of cash in lieu of fractional shares of Parent Common Stock
is solely for the purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately bargained-for
consideration. The fractional share interests of each shareholder of Company
will be aggregated, and no shareholder of Company will receive cash in an amount
equal to or greater than the value of one full share of Parent Common Stock.
14. None of the compensation to be received by any shareholders of Company
who are also employees of Company or a subsidiary or affiliate of Company will
be separate consideration for, or allocable to, any of their
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shares of Company Common Stock; none of the Parent Common Stock to be received
by any shareholder-employees of Company will be separate consideration for, or
allocable to, any employment agreement; and the compensation paid to any
shareholder-employees of Company will be for services actually rendered (or to
be rendered) and will be commensurate with amounts paid to third parties
bargaining at arm's-length for similar services.
15. Since the date of the Merger Agreement through the Effective Time, no
dividends or distributions have been or will be made with respect to any Company
Common Stock other than dividends in the normal course of business consistent
with recent past dividend practices.
16. The Merger is being effected for bona fide non-tax business reasons.
The information in this letter is provided in connection with the
preparation of your opinion. We understand that your opinion will be premised on
the basis that all of the facts, representations and assumptions on which you
are relying, whether contained herein or in the documents described herein, are
accurate and complete and will be accurate and complete at the Effective Time.
We further understand that your opinion will be subject to the qualifications
and limitations set forth in your opinion letter.
Very truly yours,
PSS WORLD MEDICAL, INC.
--------------------------------------
By:
Title:
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ANNEX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 21, 2000, between Fisher
Scientific International Inc., a Delaware corporation ("Grantee"), and PSS World
Medical, Inc., a Florida corporation ("Issuer").
RECITALS
A. Concurrently with the execution and delivery of this Agreement, Grantee,
Issuer and FSI Merger Corporation, a Florida corporation and a wholly owned
subsidiary of Grantee ("Merger Sub"), are entering into an Agreement and Plan of
Merger, dated as of the date hereof (as the same may from time to time be
modified, supplemented or restated, the "Merger Agreement"), pursuant to which
the Merger Sub will merge with and into the Issuer (the "Merger"), all upon the
terms and conditions set forth in the Merger Agreement.
B. As a condition to its willingness to enter into the Merger Agreement,
Grantee has required that Issuer agree, and believing it to be in the best
interests of Issuer, Issuer has agreed, among other things, to grant to Grantee
the Option (as hereinafter defined) to purchase shares of common stock, par
value $.01 per share, of Issuer ("Issuer Common Stock") at a price per share
equal to the Exercise Price (as hereinafter defined).
NOW THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
OPTION TO PURCHASE SHARES
1.1 Grant of Option. (a) Subject to the terms and conditions of this
Agreement, Issuer hereby grants to Grantee an irrevocable option (the "Option")
to purchase, in whole or in part, an aggregate of up to 14,142,672 duly
authorized, validly issued, fully paid and nonassessable shares of Issuer Common
Stock (representing 19.9% of the outstanding shares of Issuer Common Stock as of
July 18, 2000); provided that in no event shall the number of shares of Issuer
Common Stock for which this Option is exercisable exceed 19.9% of the issued and
outstanding shares of Issuer Common Stock at the time of exercise without giving
effect to the issuance of any Option Shares (as hereinafter defined). The number
of shares of Issuer Common Stock that may be received upon the exercise of the
Option and the Exercise Price are subject to adjustment as provided in this
Agreement.
(b) In the event that any additional shares of Issuer Common Stock are
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement and other than pursuant to an event described in
Section 3.1), the number of shares of Issuer Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Issuer Common Stock previously issued pursuant hereto, equals 19.9% of
the number of shares of Issuer Common Stock then issued and outstanding without
giving effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section 1.1(b) or elsewhere in this Agreement shall be deemed
to authorize Issuer to breach or fail to comply with any provision of the Merger
Agreement. As used in this Agreement, the term "Option Shares" means the shares
of Issuer Common Stock issuable pursuant to the Option, as the number of such
shares shall be adjusted pursuant to the terms of this Agreement.
1.2 Exercise of Option. (a) The Option may be exercised by Grantee, in
whole or in part, at any time, or from time to time, commencing upon the
Exercise Date and prior to the Expiration Date; provided that the Option may be
exercised only if (i) Grantee shall not be in breach of its agreements or
covenants contained in this Agreement or the Merger Agreement and (ii) no
preliminary or permanent injunction or order against the delivery of shares
covered by the Option issued by any court of competent jurisdiction in the
United States shall be in effect, and (iii) the waiting period under the HSR Act
shall have expired or been terminated. In the event the exercise of this Option
or the Option Closing is delayed pursuant to clause (ii) or (iii) of the
previous sentence, the exercise of this Option or the Option Closing shall be
within ten Business Days following cessation of the
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injunction or the expiration or early termination of the waiting period under
the HSR Act (so long as the Option Notice was delivered prior to the Expiration
Date). As used herein:
(A) the term "Exercise Date" means the first to occur of: (i) the date on
which Grantee becomes entitled to receive, pursuant to Section 10.2(b)
of the Merger Agreement, that portion of the Termination Fee which does
not relate to the reimbursement of Grantee's expenses; (ii) the
authorization, recommendation, public proposal or public announcement
by Issuer of an intention to authorize, recommend, propose or enter
into an agreement with any Person with respect to an Acquisition
Proposal; (iii) any acquisition by any Person of beneficial ownership
(as such term is defined in Rule 13d-3 promulgated under the Exchange
Act) of or the right to acquire beneficial ownership of, or any "group"
(as such term is defined under the Exchange Act) shall have been formed
which beneficially owns or has the right to acquire beneficial
ownership of, more than 30% of the then outstanding shares of Issuer
Common Stock; and (iv) any Person (other than Grantee and its
Subsidiaries) shall have commenced, or shall have filed a registration
statement under the Securities Act with respect to, a tender or
exchange offer to purchase any shares of Issuer Common Stock such that,
upon consummation of such offer, such Person would own or control 30%
or more of the then outstanding shares of Issuer Common Stock.
(B) the term "Expiration Date" means the first to occur prior to Grantee's
exercise of the Option pursuant to Section 1.2(b) of: (i) the Effective
Time; (ii) written notice of termination of this Agreement by Grantee
to Issuer; (iii)180 days after the first occurrence of an Exercise
Date; or (iv) the date of termination of the Merger Agreement, unless,
in the case of this clause (iv), Grantee has the right to receive the
Termination Fee, in which case the Option will not terminate until the
later of 30 business days following the time the Termination Fee
becomes due and payable.
Notwithstanding the expiration of the Option, Grantee shall be entitled to
purchase those Option Shares with respect to which it may have exercised the
Option by delivery of an Option Notice (as defined below) prior to the
Expiration Date, and the expiration of the Option will not affect any rights
under this Agreement which by their terms do not terminate or expire prior to or
at the Expiration Date.
(b) In the event Grantee wishes to exercise the Option, Grantee shall send
a written notice to Issuer of its intention to so exercise the Option (an
"Option Notice"), specifying the number of Option Shares to be purchased (and
the denominations of the certificates, if more than one), whether the aggregate
Exercise Price will be paid in cash or by surrendering a portion of the Option
in accordance with Section 1.3(b) or a combination thereof, and the place in the
United States, time and date of the closing of such purchase (the "Option
Closing" and the date of such Closing, the "Option Closing Date"), which date
shall not be less than two Business Days nor more than ten Business Days from
the date on which an Option Notice is delivered. Notwithstanding anything to the
contrary in this Agreement, Grantee shall be entitled to rescind any Option
Notice and shall not be obligated to purchase any Option Shares in connection
with such exercise upon written notice to such effect to Issuer.
(c) At any Option Closing, (i) Issuer shall deliver to Grantee all of the
Option Shares to be purchased by delivery of a certificate or certificates
evidencing such Option Shares in the denominations designated by Grantee in the
Option Notice, which Option Shares shall be free and clear of all Liens, and
(ii) (A) if the Option is exercised in part and/or surrendered in part to pay
the aggregate Exercise Price pursuant to Section 1.3(b), Issuer and Grantee
shall execute and deliver an amendment to this Agreement reflecting the Option
Shares for which the Option has not been exercised and/or surrendered and (B) if
the Grantee is not paying the Exercise Price pursuant to Section 1.3(b), Grantee
shall pay to Issuer, by wire transfer of immediately available funds to an
account specified by Issuer to Grantee in writing at least two business days
prior to the Option Closing Date, an amount equal to the Exercise Price
multiplied by the number of Option Shares to be purchased for cash pursuant to
this Article I (it being understood that the failure or refusal of Issuer to
specify an account shall not affect Issuer's obligation to issue the Option
Shares). If at the time of issuance of any Option Shares pursuant to an exercise
of all or part of the Option hereunder, Issuer shall have issued any rights or
other securities which are attached to or otherwise associated with the Issuer
Common Stock, then each Option Share issued pursuant to such exercise shall also
represent such rights or other securities with terms substantially the same as
and at least as favorable to Grantee as are provided under any shareholder
rights agreement or similar agreement of Issuer then in effect.
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(d) Upon the delivery by Grantee to Issuer of the Option Notice and the
tender of the applicable aggregate Exercise Price in immediately available funds
or the requisite portion of the Option in accordance with Section 1.3, Grantee
shall be deemed to be the holder of record of the Option Shares issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer may then
be closed, that certificates representing such Option Shares may not then have
been actually delivered to Grantee, or Issuer may have failed or refused to take
any action required of it hereunder. Issuer shall pay all expenses that may be
payable in connection with the preparation, issuance and delivery of stock
certificates or an amendment to this Agreement under this Section 1.2 and any
filing fees and other expenses arising from the performance of the transactions
contemplated hereby.
1.3 Payments. (a) The purchase and sale of the Option Shares pursuant to
Section 1.2 of this Agreement shall be at a purchase price equal to $11.00 per
Share (as such amount may be adjusted pursuant to the terms hereof, the
"Exercise Price"), payable at Grantee's option in cash, by surrender of a
portion of the Option in accordance with Section 1.3(b), or a combination
thereof.
(b) Grantee may elect to purchase Option Shares issuable, and pay some or
all of the aggregate Exercise Price payable, upon an exercise of the Option by
surrendering a portion of the Option with respect to such number of Option
Shares as is determined by dividing (i) the aggregate Exercise Price payable in
respect of the number of Option Shares being purchased in such manner by (ii)
the excess of the Fair Market Value (as defined below) per share of Issuer
Common Stock as of the last trading day preceding the date Grantee delivers its
Option Notice (such date, the "Option Exercise Date") over the per share
Exercise Price. The "Fair Market Value" per share of Issuer Common Stock shall
be the average of last reported sale price for a share of Issuer Common Stock on
the Nasdaq National Market for the ten trading days commencing on the 12th
trading day immediately preceding the Option Exercise Date. That portion of the
Option so surrendered under this Section 1.3(b) shall be canceled and shall
thereafter be of no further force and effect.
(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Option Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF
JUNE 18, 2000. A COPY OF SUCH AGREEMENT WILL BE
PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that any Option Shares or other securities acquired by
Grantee upon exercise of the Option will not be taken with a view to the public
distribution thereof and will not be transferred or otherwise disposed of except
in a transaction registered or exempt from registration under the Securities
Act.
2.2 Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly
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authorized by all necessary corporate action on the part of Issuer. This
Agreement has been duly executed and delivered by Issuer. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and compliance by Issuer with any of the provisions hereof will not
conflict with or result in a breach or default of or under (i) any provision of
Issuer's Certificate of Incorporation or Bylaws, (ii) any of the terms,
conditions or provisions of any note, bond, debenture, mortgage, indenture,
license, material agreement or other material instrument or obligation to which
Issuer is bound, or (iii) any order, writ, injunction, decree, statute, rule or
regulation applicable to Issuer or any of its properties or assets, except (A)
in the case of clause (ii) or (iii), for such conflict, breach or default as,
individually or in the aggregate, would not have a Company Material Adverse
Effect, and (B) in the case of clause (ii), for any limitations contained in
agreements or instruments relating to indebtedness of Issuer that are filed as
exhibits to Company SEC Reports prior to the date hereof ("Company Debt
Documents"). No Consent by any governmental or regulatory agency or authority,
other than compliance with Securities Laws or the filing of a notification under
the HSR Act, is required of Issuer in connection with the execution and delivery
by Issuer of this Agreement or the consummation by Issuer of the transactions
contemplated hereby.
(b) Issuer has taken all necessary corporate and other action to authorize
and reserve and to permit it to issue, and, at all times from the date hereof
until the obligation to deliver Issuer Common Stock upon the exercise of the
Option terminates, will have reserved for issuance, upon exercise of the Option,
the number of shares of Issuer Common Stock necessary for Grantee to exercise
the Option, and Issuer will take all necessary corporate action to authorize and
reserve for issuance all additional shares of Issuer Common Stock or other
securities which may be issued pursuant to Section 3.1 upon exercise of the
Option. The shares of Issuer Common Stock to be issued upon due exercise of the
Option, including all additional shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 3.1, upon issuance pursuant
hereto, shall be duly and validly issued, fully paid, and nonassessable, and
shall be delivered free and clear of all liens, claims, charges, and
encumbrances for any kind or nature whatsoever, including any preemptive rights
for any stockholder of Issuer (other than any rights in the Issuer's Stock
Purchase Agreement with Abbott Laboratories filed as an exhibit to Company SEC
Reports prior to the date hereof).
ARTICLE III
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
3.1 Adjustment Upon Changes in Capitalization. In addition to the
adjustment in the number of shares of Issuer Common Stock that may be purchased
upon exercise of the Option pursuant to Section 1.1 of this Agreement, the
number of shares of Issuer Common Stock that may be purchased upon the exercise
of the Option and the Exercise Price shall be subject to adjustment from time to
time as provided in this Section 3.1. In the event of any change in the number
of issued and outstanding shares of Issuer Common Stock by reason of any stock
dividend, split-up, merger, recapitalization, combination, conversion, exchange
of shares, spin-off or other change in the corporate or capital structure of
Issuer which would have the effect of diluting or otherwise diminishing
Grantee's rights hereunder, the number and kind of Option Shares or other
securities subject to the Option and the Exercise Price therefor shall be
appropriately adjusted so that Grantee shall receive upon exercise of the Option
(or, if such a change occurs between exercise and the Option Closing, upon the
Option Closing) the number and kind of shares or other securities or property
that Grantee would have received in respect of the Option Shares that Grantee is
entitled to purchase upon exercise of the Option if the Option had been
exercised (or the purchase thereunder had been consummated, as the case may be)
immediately prior to such event or the record date for such event, as
applicable. The rights of Grantee under this Section shall be in addition to,
and shall not limit, its rights against Issuer for breach of or the failure to
perform any provision of the Merger Agreement.
ARTICLE IV
REGISTRATION RIGHTS
4.1 Registration of Option Shares Under the Securities Act. (a) If
requested by Grantee at any time and from time to time prior to the second
anniversary of receipt by Grantee of Option Shares (the "Registration Period"),
Issuer shall use its reasonable best efforts, as promptly as practicable, to
effect the registration under the
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Securities Act and any applicable state law (a "Demand Registration") of such
number of Option Shares or such other Issuer securities owned by or issuable to
Grantee in accordance with the method of sale or other disposition contemplated
by Grantee, including a "shelf" registration statement under Rule 415 of the
Securities Act or any successor provision, and to obtain all consents or waivers
of other parties that are required therefor. Except with respect to such a
"shelf" registration, Issuer shall keep such Demand Registration effective for a
period of not less than 90 days, unless, in the written opinion of counsel to
Issuer, which opinion shall be delivered to Grantee and which shall be
satisfactory in form and substance to Grantee and its counsel, such registration
under the Securities Act is not required in order to lawfully sell and
distribute such Option Shares or other Issuer securities in the manner
contemplated by Grantee. Issuer shall only have the obligation to effect two
Demand Registrations pursuant to this Section 4.1(a); provided that only
requests relating to a registration statement that has become effective under
the Securities Act shall be counted for purposes of determining the number of
Demand Registrations made. Issuer shall be entitled to postpone for up to 90
days from receipt of Grantee's request for a Demand Registration the filing of
any registration statement in connection therewith if the Board of Directors of
Issuer determines in its good faith reasonable judgment that such registration
would materially interfere with or require premature disclosure of, any material
acquisition, reorganization, pending or proposed offering of Issuer Securities
or other transaction involving Issuer or any other material contract under
active negotiation by Issuer; provided further that Issuer shall not have
postponed any Demand Registration pursuant to this sentence during the twelve
month period immediately preceding the date of delivery of Grantee's request for
a Demand Registration.
(b) If Issuer effects a registration under the Securities Act of Issuer
Common Stock for its own account or for any other stockholders of Issuer (other
than on Form S-4 or Form S-8, or any successor form), Grantee shall have the
right to participate in such registration and include in such registration the
number of shares of Issuer Common Stock or such other Issuer securities as
Grantee shall designate by notice to Issuer (an "Incidental Registration" and,
together with a Demand Registration, a "Registration"); provided that, if the
managing underwriters of such offering advise Issuer in writing that in their
opinion the number of shares of Issuer Common Stock or other securities
requested to be included in such Incidental Registration exceeds the number
which can be sold in such offering, Issuer shall include therein (i) first, all
shares proposed to be included therein by Issuer, (ii) second, subject to the
rights of any other holders of registration rights in effect as of the date
hereof, the shares requested to be included therein by Grantee and (iii) third,
shares proposed to be included therein by any other stockholder of Issuer.
Participation by Grantee in any Incidental Registration shall not affect the
obligation of Issuer to effect Demand Registrations under this Section 4.1.
Issuer may withdraw any registration under the Securities Act that gives rise to
an Incidental Registration without the consent of Grantee.
(c) In connection with any Registration pursuant to this Section 4.1, (i)
Issuer shall provide the Grantee and any underwriter of the offering with
customary representations, warranties, covenants, indemnification and
contribution obligations in connection with such Registration, and (ii) Issuer
shall use reasonable best efforts to cause any Option Shares included in such
Registration to be included for quotation on the Nasdaq National Market or any
other nationally recognized exchange or trading system upon which Issuer's
securities are then listed, subject to official notice of issuance, which notice
shall be given by Issuer upon issuance. Grantee will provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. The costs and expenses incurred by Issuer in connection with
any Registration pursuant to this Section 4.1 (including any fees related to
qualifications under blue sky laws and SEC filing fees) (the "Registration
Expenses") shall be borne by Issuer, excluding legal fees of Grantee's counsel
and underwriting discounts or commissions with respect to Option Shares to be
sold by Grantee included in a Registration.
ARTICLE V
REPURCHASE RIGHTS; SUBSTITUTE OPTIONS
5.1 Repurchase Rights. (a) Subject to Section 6.1, at any time on or after
the Exercise Date and prior to the Expiration Date, Grantee shall have the right
(the "Repurchase Right") to require Issuer to repurchase from Grantee (i) the
Option or any part thereof as Grantee shall designate at a price (the "Option
Repurchase Price") equal to the amount by which (A) the Market/Offer Price (as
defined below) exceeds (B) the Exercise Price, multiplied by the number of
Option Shares as to which the Option is to be repurchased and (ii) such number
of
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Option Shares as Grantee shall designate at a price (the "Option Share
Repurchase Price") equal to the Market/ Offer Price multiplied by the number of
Option Shares so designated; provided that the aggregate amount of the Option
Repurchase Price and the Option Share Repurchase Price pursuant to the exercise
by the Grantee of its Repurchase Right shall not exceed (1) the Maximum Amount
(as defined in Section 6.1) minus the amount of the Termination Fee received by
Grantee under the Merger Agreement plus (2) the Exercise Price for the Option
Shares sold pursuant to the Repurchase Right. The term "Market/Offer Price"
shall mean the higher of (i) the highest price per share of Issuer Common Stock
offered or paid in any Acquisition Proposal, and (ii) the Fair Market Value. In
determining the Market/Offer Price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by Grantee and reasonably acceptable to Issuer, which determination, absent
manifest error, shall be conclusive for all purposes of this Agreement.
Notwithstanding anything in this Section 5.1 to the contrary, the Repurchase
Right may be exercised only if (A) Grantee shall not be in breach of its
agreements or covenants contained in this Agreement or the Merger Agreement, and
(B) no preliminary or permanent injunction or order against the delivery of
shares covered by the Option issued by any court of competent jurisdiction in
the United States shall be in effect.
(b) Grantee shall exercise its Repurchase Right by delivering to Issuer
written notice (a "Repurchase Notice") stating that Grantee elects to require
Issuer to repurchase all or a portion of the Option and/or the Option Shares as
specified therein. The closing of the Repurchase Right (the "Repurchase
Closing") shall take place in the United States at the place, time and date
specified in the Repurchase Notice, which date shall not be less than two
business days nor more than ten business days from the date on which the
Repurchase Notice is delivered. At the Repurchase Closing, subject to the
receipt of a writing evidencing the surrender of the Option and/or certificates
representing Option Shares, as the case may be, Issuer shall deliver to Grantee
the Option Repurchase Price therefor or the Option Share Repurchase Price
therefor, as the case may be, or the portion thereof that Issuer is not then
prohibited under Applicable Law from so delivering. At the Repurchase Closing,
(i) Issuer shall pay to Grantee the Option Repurchase Price for the portion of
the Option which is to be repurchased or the Option Shares Repurchase Price for
the number of Option Shares to be repurchased, as the case may be, by wire
transfer of immediately available funds to an account specified by Grantee at
least two business days prior to the Repurchase Closing, and (ii) if the Option
is repurchased only in part, Issuer and Grantee shall execute and deliver an
amendment to this Agreement reflecting the Option Shares for which the Option is
not being repurchased.
(c) To the extent that Issuer is prohibited under applicable Law or Company
Debt Documents from repurchasing the portion of the Option or the Option Shares
designated in such Repurchase Notice, Issuer shall immediately so notify Grantee
and thereafter deliver, from time to time, to Grantee the portion of the Option
Repurchase Price and the Option Share Repurchase Price, respectively, that it is
no longer prohibited from delivering, within five business days after the date
on which Issuer is no longer so prohibited; provided that if Issuer at any time
after delivery of a Repurchase Notice is prohibited under applicable Law or
Company Debt Documents from delivering to Grantee the full amount of the Option
Repurchase Price and the Option Share Repurchase Price for the Option or Option
Shares to be repurchased, respectively, Grantee may rescind the exercise of the
Repurchase Right, whether in whole, in part or to the extent of the prohibition,
and, to the extent rescinded, no part of the amounts, terms or the rights with
respect to the Option or Repurchase Right shall be changed or affected as if
such Repurchase Right were not exercised. Issuer shall use its reasonable best
efforts to obtain all required Regulatory Approvals and to file any required
notices to permit Grantee to exercise its Repurchase Right and shall use its
reasonable best efforts to avoid or cause to be rescinded or rendered
inapplicable any prohibition on Issuer's repurchase of the Option or the Option
Shares.
5.2 Substitute Option. (a) In the event that Issuer enters into an
agreement (i) to consolidate with or merge into any Person, other than Grantee
or any Subsidiary of Grantee (each, an "Excluded Person"), and Issuer is not the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any Person, other than an Excluded Person, to merge into Issuer and
Issuer shall be the continuing or surviving or acquiring corporation, or (iii)
to sell or otherwise transfer all or substantially all of its assets to any
Person, other than an Excluded Person, then, and in each such case, the
agreement governing such transaction shall make proper provision so that, unless
earlier exercised by Grantee, the Option shall, upon the consummation of any
such transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option with identical terms appropriately
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adjusted to acquire the number and class of shares or other securities or
property that Grantee would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such consolidation, merger,
sale, or transfer, or the record date therefor, as applicable and make any other
necessary adjustments; provided that if such a conversion or exchange cannot,
because of Applicable Law be the same as the Option, such terms shall be as
similar as possible and in no event less advantageous to Grantee than the
Option.
(b) In addition to any other restrictions or covenants, Issuer agrees that
it shall not enter or agree to enter into any transaction described in Section
5.2(a) unless the Acquiring Corporation (as hereinafter defined) and any Person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and agree for the benefit of Grantee to comply with this
Article V.
(c) For purposes of this Section 5.2, the term "Acquiring Corporation"
shall mean (i) the continuing or surviving Person of a consolidation or merger
with Issuer (if other than Issuer), (ii) Issuer in a consolidation or merger in
which Issuer is the continuing or surviving or acquiring Person, and (iii) the
transferee of all or substantially all of Issuer's assets.
ARTICLE VI
MISCELLANEOUS
6.1 Total Profit. Notwithstanding any other provision of this Agreement to
the contrary, in no event may Grantee purchase under this Agreement that number
of Option Shares whose Spread Value plus the amount of the Termination Fee
received by Grantee under the Merger Agreement (less any amount paid to Grantee
under the Merger Agreement as reimbursement of Grantee's expenses) exceeds $29.0
million (the "Maximum Amount"). For purposes of this Agreement, "Spread Value"
shall mean the difference between (i) the product of (A) the sum of the total
number of Option Shares that Grantee (x) intends to purchase at the Option
Closing Date pursuant to the exercise of the Option and (y) previously purchased
pursuant to the prior exercise of the Option, and (B) the average of the last
reported sales price of Issuer Common Stock on the Nasdaq National Market for
the ten trading days commencing on the 12th trading day immediately preceding
the Option Closing Date, and (ii) the product of (A) the total number of Option
Shares that Grantee (x) intends to purchase at the Option Closing Date pursuant
to the exercise of the Option and (y) previously purchased pursuant to the prior
exercise of the Option and (B) the applicable Exercise Price of such Option
Shares. In the event the Spread Value exceeds the Maximum Amount, the number of
Option Shares which Grantee is entitled to purchase at the Closing Date shall be
reduced to that number of shares necessary such that the Spread Value equals or
is less than the Maximum Amount.
6.2 Further Assurances. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be necessary or
desirable to consummate the transactions contemplated by this Agreement,
including, without limitation, to vest in Grantee good and marketable title,
free and clear of all Liens, to any Option Shares purchased hereunder. Issuer
agrees not to avoid or seek to avoid (whether by charter amendment or through
reorganization, consolidation, merger, issuance of rights or securities, the
Company Rights Agreement or similar agreement, dissolution or sale of assets, or
by any other voluntary act) the observance or performance of any of the
covenants, agreements or conditions to be observed or performed hereunder by it.
6.3 Quotation. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market or any other securities
exchange, Issuer, upon the request of Grantee, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the Nasdaq National Market or any other securities exchange and
will use its best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
6.4 Division of Option. The Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling Grantee to
purchase, on the same terms and subject to the same conditions as are set forth
herein, in the aggregate the same number of Option
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Shares purchasable hereunder. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft or destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new agreement of like
tenor and date.
6.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without regard to the conflict
of laws principles or rules thereof.
6.6 Specific Performance. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
6.7 Amendment, Assignment, No Third Party Beneficiaries, Waivers, etc. (a)
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by an instrument in writing, signed by the party against
which enforcement of such amendment, discharge, waiver or termination is sought.
(b) This Agreement shall not be assignable or otherwise transferable by a
party without the prior consent of the other parties, and any attempt to so
assign or otherwise transfer this Agreement without such consent shall be void
and of no effect. This Agreement shall be binding upon the respective successors
and assigns of the parties hereto. Nothing in this Agreement shall be construed
as giving to any Person, other than the parties hereto and their successors and
permitted assigns, any right, remedy or claim under or in respect of this
Agreement or any provision hereof.
(c) No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided herein shall be cumulative and not exclusive of any rights or
remedies provided by law.
6.8 Notices. All notices, consents, requests, instructions, approvals and
other communications provided for in this Agreement shall be in writing and
shall be deemed validly given upon personal delivery or one day after being sent
by overnight courier service or by telecopy (so long as for notices or other
communications sent by telecopy, the transmitting telecopy machine records
electronic conformation of the due transmission of the notice and a copy of the
notice or other communication is also sent on the same day by registered letter,
acknowledgment of receipt requested), at the following address or telecopy
number, or at such other address or telecopy number as a party may designate to
the other parties: (i) if to Grantee, at Fisher Scientific International Inc.,
Liberty Lane, Hampton, New Hampshire 03842, telecopy: 1-603-929-2703, attention:
Vice President and General Counsel, with a copy to Debevoise & Plimpton, 875
Third Avenue, New York, New York 10017, telecopy: 1-212-909-6836, attention:
Paul H. Wilson, Jr.; and (ii) if to Issuer, at PSS World Medical, Inc., 4345
Southpoint Boulevard, Jacksonville, Florida 32216, telecopy: 1-904-332-3000,
attention: Chief Executive Officer, with a copy to Alston & Bird, One Atlantic
Center, 1201 West Peachtree Street, Atlanta, Georgia 30309, telecopy:
1-404-881-7777, attention: J. Vaughan Curtis.
6.9 Severability. If any provision of this Agreement is held to be invalid
or unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties hereto to the maximum
extent possible. In any event, the invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other jurisdiction.
6.10 Integration. This Agreement and the other agreements of the parties
referred to in this Agreement constitute the full and entire understanding and
agreement of the parties and supersede any and all prior agreements,
arrangements and understandings relating to the subject matters hereof and
thereof.
6.11 Section Headings. The article and section headings of this Agreement
are for convenience of reference only and are not to be considered in construing
this Agreement.
6.12 Counterparts. This Agreement may be executed in several counterparts,
each of which will be deemed an original and all of which will together
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and date above written.
FISHER SCIENTIFIC INTERNATIONAL INC.
By: /s/ Todd M. DuChene
--------------------------------------
Name: Todd M. DuChene
Title: Vice-President
PSS WORLD MEDICAL, INC.
By: /s/ Patrick C. Kelly
--------------------------------------
Name: Patrick C. Kelly
Title: Chief Executive Officer
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ANNEX C
VOTING AGREEMENT
THIS VOTING AGREEMENT, dated as of June 21, 2000 (this "Agreement"), is
made and entered into by and among PSS World Medical, Inc., a Florida
corporation ("PSS") and each of the persons listed on the signature pages hereof
(each a "Stockholder" and collectively, "Stockholders").
PREAMBLE
WHEREAS, each Stockholder is the record and beneficial owner of the number
of shares of Common Stock, par value $0.01 per share (the "FSI Common Stock"),
of Fisher Scientific International, Inc., a Delaware corporation ("FSI"), set
forth on Schedule 1 hereto opposite the name of such Stockholder (with respect
to each Stockholder, such "Stockholder's Existing Shares" and together with any
shares of FSI Common Stock or other voting capital stock of FSI acquired after
the date hereof, whether upon the exercise of warrants or options, the
conversion of Non-Voting Common Stock or otherwise, such "Stockholders'
Shares");
WHEREAS, each Stockholder desires that PSS, FSI Merger Corporation, a
wholly owned subsidiary of FSI ("Merger Corp."), and FSI enter into an Agreement
and Plan of Merger dated the date hereof (as the same may be amended or
supplemented, the "Merger Agreement") with respect to the merger of Merger Corp.
with and into PSS (the "Merger"), with the result that PSS becomes a wholly
owned subsidiary of FSI all upon the terms and conditions set forth in the
Merger Agreement; and
WHEREAS, the Stockholders are executing this Agreement as an inducement to
PSS to enter into and execute the Merger Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by PSS of
the Merger Agreement and the mutual covenants, conditions and agreements
contained herein and therein, the parties agree as follows:
1. Representations and Warranties. (a) Each Stockholder severally and not
jointly represents and warrants to PSS as follows:
(i) Set forth on Schedule 1 are the number of such Stockholder's
Existing Shares; each of which Existing Shares are beneficially owned by
such Stockholder. Such Stockholder's Existing Shares constitute all of
the shares of FSI Common Stock owned of record or beneficially by such
Stockholder. Such Stockholder holds, and during the term hereof, will
continue to hold, such Stockholder's Shares free and clear of all liens,
claims, security interests and encumbrances and has, and during the term
hereof, will continue to have, sole voting power, sole power of
disposition, sole power to issue instructions with respect to the
matters set forth in this Agreement, and sole power to agree to all the
matters set forth in this Agreement, in each case with respect to all
such Stockholder's Existing Shares and with respect to all such
Stockholder's Shares as of the Effective Time, subject to applicable
securities laws and the terms of this Agreement.
(ii) Such Stockholder has the power and authority necessary to
execute, deliver and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement have been duly and
validly authorized by all necessary action in respect thereof on the
part of such Stockholder. This Agreement represents a legal, valid and
binding obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws and subject to general principles of equity).
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, will not conflict with or result in a
breach of any provisions of the organizational documents of such
Stockholder, if applicable, or a breach or default (or give rise to any
right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any trust, note, bond, debenture,
mortgage, indenture, license, material agreement or other material
instrument or obligation to which such Stockholder is bound, except for
such conflict, breach or default as would not adversely affect the
ability of such Stockholder to perform its obligations hereunder.
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Performance by such Stockholder of its obligations hereunder will not
violate, or require any consent, approval, or notice under, any
provision of any judgment, order, decree, statute, law, rule or
regulation applicable to such Stockholder or such Stockholder's Shares,
except for such violations, consents, approvals or notices as would not
adversely affect the ability of Stockholder to perform its obligations
hereunder.
(iii) Such Stockholder understands and acknowledges that PSS is
entering the Merger Agreement in reliance upon such Stockholder's
execution and delivery of this Agreement.
(b) PSS represents and warrants to each Stockholder that this
Agreement has been duly authorized, executed and delivered by and
constitutes a valid and binding agreement of, PSS, enforceable in
accordance with its terms except as enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors
rights generally or the availability of equitable remedies, and the
execution and delivery of this Agreement will not violate or result in a
default under any agreement to which PSS is a party.
2. Voting Agreement. Each Stockholder severally agrees with, and covenants
to, PSS that at any meeting of stockholders of FSI called to vote upon the
issuance of shares of FSI Common Stock pursuant to the Merger Agreement and any
other matters related to the Merger Agreement, or at any adjournment thereof or
in any other circumstances upon which a vote, consent or other approval with
respect to the transactions contemplated by the Merger Agreement is sought, such
Stockholder shall vote (or cause to be voted) the Stockholder's Shares in favor
of the issuance of the shares of FSI Common Stock pursuant to the Merger
Agreement and approval of any other matters related to the Merger Agreement.
Such Stockholder, as a holder of FSI Common Stock, shall be present in person or
by proxy at all meetings of stockholders of FSI so that all such Stockholder's
Shares are counted for purposes of determining the presence of a quorum at such
meetings.
3. Covenants. Each Stockholder severally agrees with, and covenants to, PSS
that, prior the termination of this Agreement, such Stockholder shall not (i)
transfer (which term shall include, without limitation, for the purposes of this
Agreement, any sale, gift, pledge, or consent to any transfer of), any or all of
such Stockholder's Shares, such Stockholder's Non-Voting Common Stock, Series B
Non-Voting Common Stock, or warrants or options for the purchase of FSI Common
Stock, shares of FSI Common Stock issued upon exercise of such Stockholder's
warrant or options or upon conversion of such Stockholder's Non-Voting Common
Stock or Series B Non-Voting Common Stock (such "Stockholder's Equity Rights")
or any interest in any of the foregoing; (ii) enter into any contract, option or
other agreement or understanding with respect to any transfer of any or all of
such Stockholder's Equity Rights or any interest therein, (iii) grant any proxy,
power of attorney or other authorization in or with respect to such
Stockholder's Equity Rights, except for this Agreement or (iv) deposit such
Stockholder's Equity Rights into a voting trust or enter into a voting agreement
or arrangement with respect to such Stockholder's Equity Rights. Notwithstanding
the foregoing, PSS may in its discretion consent to any such transfer if the
transferee agrees in writing to be bound by the provisions of this Agreement.
4. Delivery of Proxy. Not later than 10 days after the date of any proxy
statement in connection with any meeting of stockholders of FSI to vote upon the
issuance of shares of common stock of FSI pursuant to the Merger Agreement,
Stockholder agrees to execute and return to the Company a proxy and to vote in
favor of the issuance of such shares. Stockholder further agrees not to revoke
such proxy prior to any such meeting of stockholders held for such purpose.
5. Certain Events. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Stockholder's Shares shall pass, whether by operation of law or otherwise,
including without limitation the Stockholder's successors or assigns. In the
event of any stock split, stock dividend, merger, reorganization,
recapitalization or other change in the capital structure of FSI, or the
acquisition of additional shares of FSI Common Stock or other voting securities
of FSI by such Stockholder, the number of such Stockholder's Shares subject to
the terms of this Agreement shall be adjusted appropriately and this Agreement
and the obligations hereunder shall attach to any additional shares of FSI
Common Stock or other voting securities of FSI issued to or acquired by such
Stockholder.
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6. Further Assurances. Each Stockholder shall, upon request of PSS, execute
and deliver any additional documents and take such further actions as may
reasonably be deemed by PSS to be necessary or desirable to carry out the
provisions hereof.
7. Termination. This Agreement, and all rights and obligations of the
parties hereunder shall terminate upon the first to occur of (i) the Effective
Time of the Merger or (ii) the date upon which the Merger Agreement is
terminated in accordance with its terms.
8. Miscellaneous.
(a) All capitalized terms used herein which are not defined herein
shall have the same meanings as ascribed to them in the Merger Agreement.
(b) This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement.
(c) This Agreement (including the documents and instruments referred
to herein) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
(d) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
(e) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior
written consent of the other parties. Any assignment in violation of the
foregoing shall be void.
(f) The Stockholder agrees that irreparable damage would occur and
that PSS would not have any adequate remedy at law in the event that any of
the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed
that PSS shall be entitled to an injunction or injunctions to prevent
breaches by the Stockholder of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any
other remedy to which they are entitled at law or in equity.
(g) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, such
term, provision, covenant or restriction shall be modified or voided, as
may be necessary to achieve the intent of the parties to the extent
possible, and the remainder of the terms, provisions, covenants and
restrictions herein and the application thereof to any other circumstances,
shall remain in full force and effect, shall not in any way be affected,
impaired or invalidated, and shall be enforced to the fullest extent
permitted by law.
(h) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and
signed by such party.
(i) If the Stockholder is an individual and is married and the
Stockholder's Shares constitute community property, this Agreement has been
duly executed and delivered by, and constitutes a valid and binding
agreement of, the Stockholder's spouse, enforceable against such person in
accordance with its terms.
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IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Voting Agreement as of the day and year first above written.
PSS WORLD MEDICAL, INC.
By: /s/ Patrick Kelly
---------------------------------------
Name: Patrick Kelly
Title: Chief Executive Officer
THOMAS H. LEE EQUITY FUND III, L.P.
By: /s/ Anthony J. DiNovi
---------------------------------------
Name: Anthony J. DiNovi
Title:
THL FSI EQUITY INVESTORS L.P.
By: /s/ Anthony J. DiNovi
---------------------------------------
Name: Anthony J. DiNovi
Title:
THL FOREIGN FUND III
By: /s/ Anthony J. DiNovi
---------------------------------------
Name: Anthony J. DiNovi
Title:
THL-CCI LIMITED PARTNERSHIP
By: /s/ Anthony J. DiNovi
---------------------------------------
Name: Anthony J. DiNovi
Title:
MELLON BANK, N.A., SOLELY IN ITS CAPACITY
AS TRUSTEE FOR THE FISHER SCIENTIFIC
INTERNATIONAL INC. TRUST AMENDED AND
RESTATED AS OF AUGUST 1, 1996 (AS DIRECTED
BY FISHER SCIENTIFIC INTERNATIONAL INC.),
AND NOT IN ITS INDIVIDUAL CAPACITY
By: /s/ Bernadette Rist
---------------------------------------
Name: Bernadette Rist
Title: Authorized Signatory
MELLON BANK, N.A., SOLELY IN ITS CAPACITY
AS TRUSTEE FOR FISHER SCIENTIFIC
INTERNATIONAL, INC. TRUST DATED AS OF
JANUARY 21, 1998 (AS DIRECTED BY FISHER
SCIENTIFIC INTERNATIONAL INC.), AND NOT IN
ITS INDIVIDUAL CAPACITY
By: /s/ Bernadette Rist
---------------------------------------
Name: Bernadette Rist
Title: Authorized Signatory
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SCHEDULE 1
<TABLE>
<CAPTION>
STOCKHOLDER NAME CLASS NUMBER OF SHARES HELD
---------------- ------------------- ---------------------
<S> <C> <C>
Thomas H. Lee Equity Fund III,
L.P. Voting Common Stock 6,652,027
THL FSI Equity Investors L.P. Voting Common Stock 3,342,094
THL Foreign Fund III Voting Common Stock 411,607
THL-CCI Limited Partnership Voting Common Stock 409,667
Mellon Bank, N.A., solely in its
capacity as Trustee for the
Fisher Scientific International
Inc. Trust Amended and Restated
as of August 1, 1996 (as
directed by Fisher Scientific
International Inc.), and not in
its individual capacity Voting Common Stock 634,000
Mellon Bank, N.A., solely in its
capacity as Trustee for Fisher
Scientific International, Inc.
Trust dated as of January 21,
1998 (as directed by Fisher
Scientific International Inc.),
and not in its individual
capacity Voting Common Stock 2,930,771
</TABLE>
C-5
<PAGE> 181
ANNEX D
[LAZARD FRERES & CO. LLC LETTERHEAD]
June 21, 2000
The Board of Directors
Fisher Scientific International Inc.
1 Liberty Lane
Hampton, NH 03842-1808
Dear Members of the Board:
We understand that Fisher Scientific International Inc. ("Fisher") and PSS
World Medical Inc. (the "Subject Company") have entered into an Agreement dated
June 21, 2000 (the "Agreement"), pursuant to which Fisher will acquire the
Subject Company in a transaction (the "Merger") in which (i) each issued and
outstanding share of the Subject Company's common stock will be converted into
the right to receive .3121 of a share of Fisher common stock (the "Exchange
Ratio") and (ii) each outstanding option to purchase shares of the Subject
Company's common stock will be converted into an option, whose economic terms
reflect the Exchange Ratio, to purchase shares of Fisher's common stock. The
terms and conditions of the Merger are more fully set forth in the Agreement.
Pursuant to our engagement letter dated as of May 19, 2000, you have
requested our opinion as to the fairness to Fisher, from a financial point of
view, of the Exchange Ratio. In connection with this opinion, we have:
(i) Reviewed the financial terms and conditions of the Agreement;
(ii) Analyzed certain historical publicly available business and
financial information relating to Fisher and the Subject Company;
(iii) Reviewed various financial forecasts and other data provided to
us by Fisher and the Subject Company relating to their
respective businesses;
(iv) Held discussions with members of the senior managements of the
Company and the Subject Company with respect to the businesses
and prospects of the Company and the Subject Company,
respectively, the strategic objectives of each, and possible
benefits which might be realized following the Merger;
(v) Reviewed the synergistic savings and benefits and the timing of
their occurrence as projected by Fisher to be realized by the
combined entities in connection with the Merger;
(vi) Reviewed public information with respect to certain other
companies in lines of businesses we believe to be generally
comparable to the businesses of Fisher and the Subject Company;
(vii) Reviewed the financial terms of certain significant business
combinations involving companies in lines of businesses we
believe to be generally comparable to those of Fisher and the
Subject Company;
(viii) Reviewed the historical trading prices and trading volumes of
Fisher's and the Subject Company's common stock; and
(ix) Conducted such other financial studies, analyses and
investigations as we deemed appropriate.
We have relied upon the accuracy and completeness of the foregoing
information. We have not assumed any responsibility for any independent
verification of such information or any independent valuation or appraisal of
any of the assets or liabilities of Fisher or the Subject Company, or concerning
the solvency of or issues relating to solvency concerning either of the
foregoing entities. With respect to financial forecasts, including the
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[LAZARD FRERES & CO. LLC ]
synergistic savings and benefits projected to be realized following the Merger.
and the timing thereof, we have assumed that they have been reasonably prepared
on bases reflecting the best currently available estimates and judgments of
management of Fisher and the Subject Company as to the future financial
performance of Fisher and of the Subject Company, respectively. We assume no
responsibility for and express no view as to such forecasts or the assumptions
on which they are based.
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof.
In rendering our opinion, we have assumed that the Merger will be
consummated on the terms described in the Agreement, without any waiver or
modification of any material terms or conditions by Fisher, that obtaining the
necessary regulatory approvals for the Acquisition will not have an adverse
effect on Fisher or the Subject Company and that the synergistic savings and
benefits of the Merger projected by the management of Fisher will be realized
both in scope and timing.
Lazard Freres & Co. LLC is acting as an investment banker to Fisher in
connection with the Merger and will receive a fee for our services, a
substantial portion of which is payable upon the closing of the Merger. We have
in the past provided investment banking services to Fisher for which we have
received customary fees.
Our engagement and the opinion expressed herein are solely for the benefit
of Fisher's Board of Directors. Our opinion does not address the merits of the
underlying decision by Fisher to engage in the Merger and does not constitute a
recommendation to any stockholder of Fisher as to how such stockholder should
vote on the Merger. It is understood that this letter may not be disclosed or
otherwise referred to without our prior consent, except as may otherwise be
required by law or by a court of competent jurisdiction.
Based on and subject to the foregoing, we are of the opinion that the
Exchange Ratio is fair to Fisher from a financial point of view.
Very truly yours,
LAZARD FRERES & CO. LLC
By: /s/ Steven J. Golub
--------------------------------------
Managing Director
D-2
<PAGE> 183
ANNEX E
[DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION LETTERHEAD]
W. Patrick McMullan, III
Managing Director
Investment Banking
(212) 892-3605 - Fax (212) 892-7272 June 21, 2000
Board of Directors
PSS World Medical, Inc.
4345 Southpoint Blvd.
Jacksonville, FL 32216
Dear Sirs/Madame:
You have requested our opinion as to the fairness from a financial point of
view to the holders of common stock, par value $0.01 per share ("Company Common
Stock"), of PSS World Medical, Inc. (the "Company") of the consideration to be
received by such holders pursuant to the terms of the proposed Agreement and
Plan of Merger (the "Agreement"), by and among the Company, Fisher Scientific
International, Inc., ("Fisher"), and FSI Merger Corporation, a wholly owned
subsidiary of Fisher ("Purchaser"), pursuant to which Purchaser will be merged
(the "Merger") with and into the Company.
Pursuant to the Agreement, each share of Company Common Stock, other than
shares held by the Company, Fisher or any subsidiary of the Company or Fisher,
will be converted into the right to receive a fraction of a share (the "Exchange
Ratio") of voting common stock, par value $0.01 per share, of Fisher ("Fisher
Common Stock"), equal to 0.3121 shares of Fisher Common Stock.
In arriving at our opinion, we have reviewed the draft dated June 21, 2000
of the Agreement, and the exhibits thereto, and the draft dated June 21, 2000 of
the Stock Option Agreement between Fisher and the Company to be entered into
concurrently with the Agreement (the "Stock Option Agreement"). We also have
reviewed financial and other information that was publicly available or
furnished to us by the Company and Fisher including information provided during
discussions with their respective managements. Included in the information
provided during discussions with the respective managements were certain
financial projections of the Company for the period beginning April 1, 2000 and
ending March 31, 2005 prepared by the management of the Company and certain
financial projections for the period beginning January 1, 2000 and ending
December 31, 2003 prepared by the management of Fisher. In addition, we have
compared certain financial and securities data of the Company and Fisher with
various other companies whose securities are traded in public markets, reviewed
the historical stock prices and trading volumes of the common stock of the
Company and Fisher, reviewed prices and premiums paid in certain other business
combinations and conducted such other financial studies, analyses and
investigations as we deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company and Fisher or
their respective representatives, or that was otherwise reviewed by us. In
particular, we have relied upon the estimates of the managements of the Company
and Fisher of the operating synergies achievable as a result of the Merger and
upon our discussion of such synergies with the managements of the Company and
Fisher. With respect to the financial projections supplied to us, we have relied
on representations that they have been reasonably prepared on bases reflecting
the best currently available estimates and judgments of the managements of the
Company and Fisher as to the future operating and financial performance of the
Company and Fisher, respectively. We have not assumed any responsibility for
making an independent evaluation
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<PAGE> 184
PSS World Medical, Inc.
Page 2 June 21, 2000
of any assets or liabilities or for making any independent verification of any
of the information reviewed by us. We have relied as to certain legal matters on
advice of counsel to the Company, including that the Merger will qualify as a
tax free "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code. We have also assumed the final forms of the Agreement and the
Stock Option Agreement are substantially similar to the last drafts reviewed by
us.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect the conclusion reached in this opinion, we do not have
any obligation to update, revise or reaffirm this opinion. Our opinion does not
address the relative merits of the Merger and the other business strategies
being considered by the Company's Board of Directors, nor does it address the
Board's decision to proceed with the Merger. We are expressing no opinion herein
as to the prices at which the Company Common Stock or the Fisher Common Stock
will actually trade at any time. Our opinion does not constitute a
recommendation to any stockholder as to how such stockholder should vote on the
proposed Merger.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes.
DLJ has performed investment banking and other services for Fisher in the
past and has been compensated for such services, including acting as its
co-manager in two high yield financings totaling nearly $600 million in 1998,
and earning a commitment fee for a Bridge Loan. In addition, DLJ Merchant
Banking Partners II, L.P. and associated entities, which are affiliated with
DLJ, collectively own approximately 16% of the outstanding capital stock of
Fisher and approximately 24% of the voting stock of Fisher and have the right to
designate one member of the Board of Fisher. Currently, there is no such
designee serving on Fisher's Board.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be received by the holders of Company
Common Stock pursuant to the Agreement is fair from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ W. Patrick McMullan
------------------------------------
W. Patrick McMullan
Managing Director
E-2
<PAGE> 185
ANNEX F
RESTATED CERTIFICATE OF INCORPORATION
OF
FISHER SCIENTIFIC INTERNATIONAL INC.
FISHER SCIENTIFIC INTERNATIONAL, INC., a corporation organized and existing
by virtue of the General Corporation Law of the State of Delaware (the "Law"),
DOES HEREBY CERTIFY:
1. That the name of the Corporation is Fisher Scientific International Inc.
and its Certificate of Incorporation was filed with the Secretary of State of
the State of Delaware on September 19, 1991 and amended on October 28, 1991.
2. That this Restated Certificate of Incorporation restates and integrates
and also further amends the Certificate of Incorporation of the Corporation.
3. That this Restated Certificate of Incorporation and the amendments to
the Certificate of Incorporation contained herein were declared advisable and
adopted on December 10, 1991 by the unanimous written consent of the Board of
Directors pursuant to Section 141(f) of the Law, filed with the minutes of the
proceedings of the Board, and were approved by the unanimous written consent of
the stockholders pursuant to Section 228 of the Law, filed with minutes of the
proceedings of the stockholders, and have thereby been duly adopted in
accordance with the provisions of Sections 242(b) and 245 of the Law.
4. The text of the Certificate of Incorporation of this Corporation is
hereby restated, integrated and amended to read in its entirety as follows:
F-1
<PAGE> 186
FIRST: The name of the corporation is Fisher Scientific International Inc.
(the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 32 Loockerman Square, Ste. L-100 in the City of Dover,
County of Kent. The name of its registered agent at that address is The
Prentice-Hall Corporation System. Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of which the Corporation shall have
authority to issue is 65,000,000 shares, of which 50,000,000 shares shall be
Common Stock, par value $0.01 per share (the "Common Stock), and 15,000,000
shares shall be Preferred Stock, par value $0.01 per share (the "Preferred
Stock").
FIFTH: (a) Subject to the provisions of Article Fifth (b) hereof, the
Corporation may issue Common Stock from time to time in one or more series or
classes as the Board of Directors may establish by the adoption of a resolution
or resolutions relating thereto, each series or class to have such voting
powers, full or limited, or no voting power, and such designations, preferences
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, as shall be stated in the
resolution or resolutions providing for the issue of such series or class
adopted by the Board of Directors pursuant to authority to do so, which
authority is hereby granted to the Board of Directors.
(b) The Common Stock initially authorized for issuance by the Corporation
shall consist of 50,000,000 shares of Common Stock. The designations
and the powers, preferences and rights, and the qualifications,
limitations or restrictions thereof, of such shares of Common Stock
shall be governed by the following provisions:
(i) Identical Rights. Except as otherwise provided herein, all shares of
Common Stock shall be identical and shall entitle the holders
thereof to the same rights and privileges.
(ii) Voting Rights. Except as otherwise required by law or as otherwise
provided herein, on all matters submitted to the Corporation's
stockholders, the holders of Common Stock shall be entitled to one
vote per share.
(iii) Dividend Rights. When and as dividends or other distributions are
declared, whether payable in cash, in property or in securities of
the Corporation, the holders of shares of Common Stock shall be
entitled to share equally, share for share, in such dividends or
other distributions, provided that if dividends or other
distributions are declared which are payable in shares of Common
Stock, such dividends or other distributions shall be declared
payable at the same rate for all holders of Common Stock, and the
dividends payable in shares of Common Stock will be payable to
holders of Common Stock.
(iv) No Closing of Transfer Books. The Corporation shall not close its
books against the transfer of any share of Common Stock.
SIXTH: The Corporation may issue Preferred Stock from time to time in one
or more series as the Board of Directors may establish by the adoption of a
resolution or resolutions relating thereto, each series to have such voting
powers, full or limited, or no voting powers, and such designations, preferences
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions providing for the issue of such
series adopted by the Board of Directors pursuant to authority to do so, which
authority is hereby granted to the Board of Directors.
SEVENTH: The duration of the Corporation is to be perpetual.
EIGHTH: (a) Except as may be provided pursuant to resolutions of the Board
of Directors, adopted pursuant to the provisions of this Certificate of
Incorporation, establishing any series or class of Common Stock or Preferred
Stock and granting to holders of shares of such series or class of Common Stock
or Preferred Stock rights to elect additional directors under specified
circumstances, the number of directors of the Corporation shall be determined
from time to time in the manner described in the Bylaws. The directors, other
than those who may be elected by the holders of Common Stock or Preferred Stock
pursuant to such resolutions, shall be classified
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<PAGE> 187
with respect to the time for which they severally hold office into three
classes, as nearly equal in number as possible, as shall be provided in the
manner specified in the Bylaws, one class initially to be elected for a term
expiring at the annual meeting of stockholders to be held in 1992 another class
initially to be elected for a term expiring at the annual meeting of
stockholders to be held in 1993 and another class initially to be elected for a
term expiring at the annual meeting of stockholders to be held in 1994 with the
members of each class to hold office until their successors have been elected
and qualified. At each annual meeting of stockholders, the successors of the
class of directors whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual meeting of stockholders held in the
third year following the year of their election. No director need be a
stockholder.
(b) Except as otherwise provided in a resolution of the Board of Directors,
adopted pursuant to the provisions of this Certificate of
Incorporation, establishing a series or class of Common Stock or
Preferred Stock and creating in the holders of shares of such series or
class rights to elect directors under specified circumstances, newly
created directorships resulting from any increase in the number of
directors and any vacancies on the Board of Directors resulting from
death, resignation, disqualification, removal or other cause shall be
filled by the affirmative vote of a majority of the remaining directors
then in office, even if less than a quorum of the Board of Directors,
or by a sole remaining director. Any director elected in accordance
with the preceding sentence shall hold office until the annual meeting
of stockholders at which the term of office of the class to which such
director has been elected expires, and until such director's successor
shall have been duly elected and qualified. No decrease in the number
of directors constituting the Board of Directors shall shorten the term
of any incumbent director.
(c) Subject to the rights of holders of Common Stock or Preferred Stock to
elect directors under circumstances specified in a resolution of the
Board of Directors, adopted pursuant to the provisions of this
Certificate of Incorporation establishing such series or class, any
director may be removed from office only for cause by the affirmative
vote of the holders of at least 80% of the voting power of the then
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (the "Voting Stock"), voting
together as a single class.
(d) Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least 80% of
the voting power of the Voting Stock, voting together as a single
class, shall be required to amend or repeal, or adopt any provision
inconsistent with, any provision of this Article EIGHTH.
NINTH: Except as required by law and subject to the rights of the holders
of any series of Preferred Stock established pursuant to the provisions of this
Certificate of Incorporation, special meetings of stockholders may be called
only by the Board of Directors [or by the Chief Executive Officer] pursuant to a
resolution approved by a majority of the entire Board of Directors of the
Corporation (as determined in accordance with the Bylaws). Notwithstanding
anything contained in this Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 80% of the voting power of the
Voting Stock, voting together as a single class, shall be required to amend or
repeal, or adopt any provision inconsistent with, any provision of this Article
NINTH.
TENTH: No stockholder action may be taken except as an annual or special
meeting of stockholders of the Corporation, and stockholders may not take any
action by written consent in lieu of a meeting. Notwithstanding anything
contained in this Certificate of Incorporation to the contrary, the affirmative
vote of the holders of at least 80% of the voting power of the voting Stock,
voting together as a single class, shall be required to amend or repeal, or
adopt any provision inconsistent with, any provision of this Article TENTH.
ELEVENTH: Unless and except to the extent that the Bylaws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot.
TWELFTH: No contract or other transaction of the Corporation shall be void,
voidable, fraudulent or otherwise invalidated, impaired or affected, in any
respect, by reason of the fact that any one or more of the officers, directors
or stockholders of the Corporation shall individually be party or parties
thereto or otherwise interested therein, or shall be officers, directors or
stockholders of any other corporation or corporations which shall be party or
parties thereto or otherwise interested therein; provided that such contract or
other transactions
F-3
<PAGE> 188
be duly authorized or ratified by the Board of Directors, with the assenting
vote of a majority of the disinterested directors then present, or, if only one
such is present, with his assenting vote.
THIRTEENTH: The Board of Directors may from time to time make, amend,
supplement or repeal the By-laws; PROVIDED, HOWEVER, that the stockholders may
change or repeal any Bylaw adopted by the Board of Directors; and PROVIDED,
FURTHER, that no amendment or supplement to the Bylaws adopted by the Board of
Directors shall vary or conflict with any amendment or supplement adopted by the
stockholders. Notwithstanding the foregoing and anything contained in this
Certificate of Incorporation to the contrary, Section 3 ("Special Meetings") of
Article II ("Meetings of Stockholders") of the Bylaws, Section 2 ("Number,
Election and Terms") or Section 10 ("Removal of Directors") of Article III
("Directors") of the Bylaws, or the final sentence of Article XI ("Amendments")
of the Bylaws shall not be amended or repealed, and no provision inconsistent
with any thereof shall be adopted, without the affirmative vote of the holders
of at least 80% of the voting power of the Voting Stock, voting together as a
single class. Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
80% of the voting power of the Voting Stock, voting together as a single class,
shall be required to amend or repeal, or adopt any provision inconsistent with,
any provision of this Article THIRTEENTH.
FOURTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statue, and all rights conferred upon
stockholders herein are granted subject to this reservation.
FIFTEENTH: (a) A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any 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 law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
(b)(1) Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or the
person of whom he or she is the legal representative, is or was a director
or officer of the corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether the basis of such
proceeding is alleged action or inaction in an official capacity as a
director, officer, employee or agent or in any other capacity while serving
as a director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment),
against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of his or her heirs, executors and administrators; PROVIDED,
HOWEVER, that, except as provided in this paragraph (b), the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this paragraph (b)
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; PROVIDED, HOWEVER, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer of the
Corporation (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that
such director or officer is not entitled to be
F-4
<PAGE> 189
indemnified under this Section or otherwise. The Corporation may, by action
of its Board of Directors, provide indemnification to employees and agents
of the Corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
(2) Right of claimant to Bring Suit. If a claim under subparagraph (b)(1) is
not paid in full by the Corporation within 30 days after a written claim has
been received by the Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim
and, if successful in whole or in part, the claimant shall be entitled to be
paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceedings in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law
for the Corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination prior to
the commencement of such action that indemnification or the claimant is
proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor
an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
(3) Non-Exclusivity of Rights. The right to indemnification and the payment
of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this paragraph (b) shall not be exclusive of any
other right which any person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, bylaw, agreement,
vote of stockholders or disinterested directors or otherwise.
(4) Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under the Delaware General Corporation Law.
SIXTEENTH: The Corporation expressly elects not to be governed by Section
203 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, FISHER SCIENTIFIC INTERNATIONAL INC. has caused this
Restated Certificate of Incorporation to be signed by Paul M. Meister, its
Senior Vice President -- Chief Financial Officer, and attested to by Allison G.
Pellegrino, its Assistant Secretary, this 16th day of December, 1991.
FISHER SCIENTIFIC INTERNATIONAL INC.
By: /s/ Paul M. Meister
------------------------------------
Senior Vice President
Chief Financial Officer
Attest:
By: /s/ Allison G. Pellegrino
----------------------------------
Allison G. Pellegrino
Assistant Secretary
F-5
<PAGE> 190
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
FISHER SCIENTIFIC INTERNATIONAL INC.
FISHER SCIENTIFIC INTERNATIONAL INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware (the "DGCL"), DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation in accordance with
the provision of Section 242 of the DGCL, by the unanimous vote of its members
on March 16, 1998, filed with the minutes of the Board of Directors, duly
adopted resolutions setting forth a proposed amendment to the Certificate of
Incorporation of the Corporation declaring such amendment to be advisable and
directing that such amendment be submitted to and be considered by the
stockholders of the Corporation for approval at the 1998 Annual Meeting of
Stockholders. The resolution setting forth the proposed amendment is as follows:
RESOLVED, That the Certificate of Incorporation of the Corporation be
amended by changing the Fourth Article thereof so that, as amended, such
Article shall be and read as follows:
"The total number of shares of stock which the Corporation shall have
authority to issue is 115,000,000 shares, of which 100,000,000 shall be
Common Stock, par value $0.01 per share (the "Common Stock"), and
15,000,000 shares shall be Preferred Stock, par value $0.01 per share (the
"Preferred Stock").
SECOND: That thereafter, the foregoing amendment to the Corporation's
Certificate of Incorporation was duly adopted by the holders of a majority of
the outstanding shares of Common Stock of the Corporation at the Annual Meeting
of Stockholders on May 12, 1998 in accordance with the provisions of Section 242
of the DGCL and the terms of the Certificate of Incorporation.
IN WITNESS WHEREOF, FISHER SCIENTIFIC INTERNATIONAL INC. has caused this
Certificate of Amendment to be signed by Paul M. Meister, its Executive Vice
President, and attested by Todd M. DuChene, its Vice President and Secretary,
this 18th day of May, 1998.
FISHER SCIENTIFIC INTERNATIONAL INC .
By: /s/ Paul M. Meister
------------------------------------
Paul M. Meister
Executive Vice President
Attest:
By: /s/ Todd M. DuChene
----------------------------------
Todd M. DuChene
Vice President and Secretary
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ANNEX G
FISHER SCIENTIFIC INTERNATIONAL INC.
BYLAWS
OF
ARTICLE I
OFFICES
SECTION 1. DELAWARE OFFICE. The office of (the "Corporation") within the
State of Delaware shall be in the City of Dover, County of Kent.
SECTION 2. OTHER OFFICES. The Corporation may also have an office or
offices and keep the books and records of the Corporation, except as otherwise
may be required by law, in such other place or places, either within or without
the State of Delaware, as the Board of Directors of the Corporation (the
"Board") may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of holders of shares of capital
stock of the Corporation shall be held at the office of the Corporation in the
State of Delaware or at such other place, within or without the State of
Delaware, as may from time to time be fixed by the Board or specified or fixed
in the respective notices or waivers of notice thereof.
SECTION 2. ANNUAL MEETINGS. An annual meeting of stockholders of the
Corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting (an "Annual Meeting") shall be
held at 9:00 a.m. on the first Wednesday of May of each year (the first Annual
Meeting to be held in May 1991), or on such other date and at such other time as
may be fixed by the Board. If the Annual Meeting shall not be held on the day
designated, the Board shall call a special meeting of stockholders as soon as
practicable for the election of directors.
SECTION 3. SPECIAL MEETINGS. Special meetings of stockholders, unless
otherwise provided by law, may be called at any time by the Board pursuant to a
resolution adopted by a majority of the then authorized number of directors (as
determined in accordance with Section 2 of Article III of these Bylaws) or by
the Chief Executive Officer. Any such call must specify the matter or matters to
be acted upon at such meeting and only such matter or matters shall be acted
upon thereat.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise may be required by law,
notice of each meeting of stockholders, whether an Annual Meeting or a special
meeting, shall be in writing, shall state the purpose or purposes of the
meeting, the place, date and hour of the meeting and, unless it is an Annual
Meeting, shall indicate that the notice is being issued by or at the direction
of the person or persons calling the meeting, and a copy thereof shall be
delivered or sent by mail, not less than 10 or more than 60 days before the date
of said meeting, to each stockholder entitled to vote at such meeting. If
mailed, such notice shall be directed to such stockholder at his address as it
appears on the stock records of the Corporation, unless he shall have filed with
the Secretary a written request that notices to him be mailed to some other
address, in which case it shall be directed to him at such other address. Notice
of an adjourned meeting need not be given if the time and place to which the
meeting is to be adjourned was announced at the meeting at which the adjournment
was taken, unless (i) the adjournment is for more than 30 days, or (ii) the
Board shall fix a new record date for such adjourned meeting after the
adjournment.
SECTION 5. QUORUM. At each meeting of stockholders of the Corporation, the
holders of shares having a majority of the voting power of the capital stock of
the Corporation issued and outstanding and entitled to vote thereat shall be
present or represented by proxy to constitute a quorum for the transaction of
business, except as otherwise provided by law.
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SECTION 6. ADJOURNMENTS. In the absence of a quorum at any meeting of
stockholders or any adjournment or adjournments thereof, holders of shares
having a majority of the voting power of the capital stock present or
represented by proxy at the meeting may adjourn the meeting from time to time
until a quorum shall be present or represented by proxy. At any such adjourned
meeting at which a quorum shall be present or represented by proxy, any business
may be transacted which might have been transacted at the meeting as originally
called if a quorum had been present or represented by proxy thereat.
SECTION 7. ORDER OF BUSINESS. (a) At any Annual Meeting, only such business
shall be conducted as shall have been brought before the Annual Meeting (i) by
or at the direction of the Board of Directors, or (ii) by any stockholder who
complies with the procedures set forth in this Section 7.
(b) For business properly to be brought before an Annual Meeting by a
stockholder, the stockholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation not less than 30 days nor more than 60 days prior to
the Annual Meeting; PROVIDED, HOWEVER, that in the event that less than 40 days'
notice or prior public disclosure of the date of the Annual Meeting is given or
made to stockholders, notice by the stockholder to be timely must be received
not later than the close of business on the tenth day following the day on which
such notice of the date of the Annual Meeting was mailed or such public
disclosure was made. To be in proper written form, a stockholder's notice to the
Secretary shall set forth in writing as to each matter the stockholder proposes
to bring before the Annual Meeting: (i) a brief description of the business
desired to be brought before the Annual Meeting and the reasons for conducting
such business at the Annual Meeting; (ii) the name and address, as they appear
on the Corporation's books, of the stockholder proposing such business; (iii)
the class and number of shares of the Corporation which are beneficially owned
by the stockholder; and (iv) any material interest of the stockholder in such
business. Notwithstanding anything in these Bylaws to the contrary, no business
shall be conducted at an Annual Meeting except in accordance with the procedures
set forth in this Section 7. The chairman of an Annual Meeting shall, if the
facts warrant, determine and declare to the Annual Meeting that business was not
properly brought before the Annual Meeting in accordance with the provisions of
this Section 7 and, if he should so determine, he shall so declare to the Annual
Meeting and any such business not properly brought before the Annual Meeting
shall not be transacted.
SECTION 8. VOTING. Except as otherwise provided in the Certificate of
Incorporation or in a resolution of the Board of Directors adopted pursuant to
the Certificate of Incorporation establishing a series of Preferred Stock of the
Corporation ("Preferred Stock"), at each meeting of stockholders, every
stockholder of the Corporation shall be entitled to one vote for every share of
capital stock standing in his name on the stock records of the Corporation (i)
at the time fixed pursuant to Section 6 of Article VII of these Bylaws as the
record date for the determination of stockholders entitled to vote at such
meeting, or (ii) if no such record date shall have been fixed, then at the close
of business on the day next preceding the day on which notice thereof shall be
given. At each meeting of stockholders, all matters (except as otherwise
provided in Section 3 of Article III of these By-laws and except in cases where
a larger vote is required by law or by the Certificate of Incorporation of the
Corporation or these Bylaws) shall be decided by a majority of the votes cast at
such meeting by the holders of shares of capital stock present or represented by
proxy and entitled to vote thereon, a quorum being present.
SECTION 9. INSPECTORS. For each election of directors by the stockholders
and in any other case in which it shall be advisable, in the opinion of the
Board, that the voting upon any matter shall be conducted by inspectors of
election, the Board shall appoint two inspectors of election. If, for any such
election of directors or the voting upon any such other matter, any inspector
appointed by the Board shall be unwilling or unable to serve, or if the Board
shall fail to appoint inspectors, the chairman of the meeting shall appoint the
necessary inspector or inspectors. The inspectors so appointed, before entering
upon the discharge of their duties, shall be sworn faithfully to execute the
duties of inspectors with strict impartiality, and according to the best of
their ability, and the oath so taken shall be subscribed by them. Such
inspectors shall determine the number of shares of capital stock of the
Corporation outstanding and the voting power of each of the shares represented
at the meeting, the existence of a quorum, and the validity and effect of
proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the chairman of the meeting or any stockholder entitled to vote
thereat,
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the inspectors shall make a report in writing of any challenge, question or
matter determined by them and shall execute a certificate of any fact found by
them. No director or candidate for the office of director shall act as an
inspector of election of directors. Inspectors need not be stockholders.
ARTICLE III
DIRECTORS
SECTION 1. POWERS. The business of the Corporation shall be managed under
the direction of the Board. The Board may exercise all such authority and powers
of the Corporation and do all such lawful acts and things as are not by law or
otherwise directed or required to be exercised or done by the stockholders.
SECTION 2. NUMBER, ELECTION AND TERMS. The authorized number of directors
may be determined from time to time by a vote of a majority of the then
authorized number of directors or by the affirmative vote of the holders of at
least 80% of the voting power of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors, voting
together as a single class; PROVIDED, HOWEVER, that such number initially shall
not be less than three nor more than 15; and PROVIDED, FURTHER, that such number
and such minimum and maximum may be increased pursuant to resolution of the
Board, adopted pursuant to the Certificate of Incorporation, establishing any
series of Preferred Stock or any class of Common Stock. The directors, other
than those who may be elected by the holders of any series of the Preferred
Stock or any class of Common Stock pursuant to a resolution of the Board adopted
pursuant to the Certificate of Incorporation establishing such series or class,
shall be classified, with respect to the time for which they severally hold
office, into three classes, as nearly equal in number as possible, as determined
by the Board, one class initially to be elected for a term expiring at the
Annual Meeting to be held in 1992, and another class initially to be elected for
a term expiring at the Annual Meeting to be held in 1993, and another class
initially to be elected for a term expiring at the Annual Meeting to be held in
1994, with the members of each class to hold office until their successors have
been elected and qualified. At each Annual Meeting, the successors of the class
of directors whose term expires at the Annual Meeting shall be elected to hold
office for a term expiring at the Annual Meeting held in the third year
following the year of their election. Except as otherwise provided in the
Certificate of Incorporation, newly created directorships resulting from any
increase in the number of directors and any vacancies on the Board resulting
from death, resignation, disqualification, removal or other cause shall be
filled by the affirmative vote of a majority of the remaining directors then in
office, even if less than a quorum of the Board, or by a sole remaining
director. Any director elected in accordance with the preceding sentence shall
hold office until the Annual Meeting at which the term of office of the class to
which such director has been elected expires and until such director's successor
shall have been duly elected and qualified. No decrease in the number of
directors constituting the Board shall shorten the term of any incumbent
director.
SECTION 3. NOMINATIONS OF DIRECTORS; ELECTION. Nominations for the election
of directors may be made by the Board or a committee appointed by the Board, or
by any stockholder entitled to vote generally in the election of directors who
complies with the procedures set forth in this Section 3. Directors shall be at
least 21 years of age. Directors need not be stockholders. At each meeting of
stockholders for the election of directors at which a quorum is present, the
persons receiving a plurality of the votes cast shall be elected directors. All
nominations by stockholders shall be made pursuant to timely notice in proper
written form to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation not less than 30 days nor more than 60 days prior to
the meeting; provided, however, that in the event that less than 40 days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. To be in proper written form, such stockholder's notice shall set forth in
writing (i) as to each person whom the stockholder proposes to nominate for
election or reelection as a director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, including, without
limitation, such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected; and (ii) as to the
stockholder giving the notice, the (x) name and address, as they appear on the
Corporation's books, of such stockholder and (y) the class and
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number of shares of the Corporation which are beneficially owned by such
stockholder. At the request of the Board of Directors, any person nominated by
the Board of Directors for election as a director shall furnish to the Secretary
of the Corporation the information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. In the event that a
stockholder seeks to nominate one or more directors, the Secretary shall appoint
two inspectors, who shall not be affiliated with the Corporation, to determine
whether a stockholder has complied with this Section 3. If the inspectors shall
determine that a stockholder has not complied with this Section 3, the
inspectors shall direct the chairman of the meeting to declare to the meeting
that a nomination was not made in accordance with the procedures prescribed by
the Bylaws of the Corporation, and the chairman shall so declare to the meeting
and the defective nomination shall be disregarded.
SECTION 4. PLACE OF MEETINGS. Meetings of the Board shall be held at the
Corporation's office in the State of Delaware or at such other place, within or
without such State, as the Board may from time to time determine or as shall be
specified or fixed in the notice or waiver of notice of any such meeting.
SECTION 5. REGULAR MEETINGS. Regular meetings of the Board shall be held in
accordance with a yearly meeting schedule as determined by the Board; or such
meetings may be held on such other days and at such other times as the Board may
from time to time determine. Notice of regular meetings of the Board need not be
given except as otherwise required by these Bylaws.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board may be called by
the Chief Executive Officer and shall be called by the Secretary at the request
of any two of the other directors.
SECTION 7. NOTICE OF MEETINGS. Notice of each special meeting of the Board
(and of each regular meeting for which notice shall be required), stating the
time, place and purposes thereof, shall be mailed to each director, addressed to
him at his residence or usual place of business, or shall be sent to him by
telex, cable or telegram so addressed, or shall be given personally or by
telephone, on 24 hours' notice.
SECTION 8. QUORUM AND MANNER OF ACTING. The presence of at least a majority
of the authorized number of directors shall be necessary and sufficient to
constitute a quorum for the transaction of business at any meeting of the Board.
If a quorum shall not be present at any meeting of the Board, a majority of the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Except where a different vote is required or permitted by law or these Bylaws or
otherwise, the act of a majority of the directors present at any meeting at
which a quorum shall be present shall be the act of the Board. Any action
required or permitted to be taken by the Board may be taken without a meeting if
all the directors consent in writing to the adoption of a resolution authorizing
the action. The resolution and the written consents thereto by the directors
shall be filed with the minutes of the proceedings of the Board. Any one or more
directors may participate in any meeting of the Board by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall be deemed to constitute presence in person at a meeting of the Board.
SECTION 9. RESIGNATION. Any director may resign at any time by giving
written notice to the Corporation; PROVIDED, HOWEVER, that written notice to the
Board, the Chairman of the Board, the Chief Executive Officer or the Secretary
shall be deemed to constitute notice to the Corporation. Such resignation shall
take effect upon receipt of such notice or at any later time specified therein
and, unless otherwise specified therein, acceptance of such resignation shall
not be necessary to make it effective.
SECTION 10. REMOVAL OF DIRECTORS. Subject to the rights of the holders of
any series of Preferred Stock, any director may be removed from office only for
cause by the affirmative vote of the holders of at least 80% of the voting power
of all shares of the Corporation entitled to vote generally in the election of
directors, voting together as a single class.
SECTION 11. COMPENSATION OF DIRECTORS. The Board may provide for the
payment to any of the directors, other than officers or employees of the
Corporation, of a specified amount for services as director or member of a
committee of the Board, or of a specified amount for attendance at each regular
or special Board meeting or committee meeting, or of both, and all directors
shall be reimbursed for expenses of attendance at any
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such meeting; PROVIDED, HOWEVER, that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
ARTICLE IV
COMMITTEES OF THE BOARD
SECTION 1. APPOINTMENT AND POWERS OF EXECUTIVE COMMITTEE. The Board may, by
resolution adopted by the affirmative vote of a majority of the authorized
number of directors, designate an Executive Committee of the Board which shall
consist of such number of members as the Board shall determine. Except as
provided by Delaware law, during the interval between the meetings of the Board,
the Executive Committee shall possess and may exercise all the powers of the
Board in the management and direction of all the business and affairs of the
Corporation (except the matters hereinafter assigned to any other Committee of
the Board), in such manner as the Executive Committee shall deem in the best
interests of the Corporation in all cases in which specific directions shall not
have been given by the Board. A majority of the members of the Executive
Committee shall constitute a quorum for the transaction of business by the
committee and the act of a majority of the members of the committee present at a
meeting at which a quorum shall be present shall be the act of the committee.
Either the Chief Executive Officer or the Chairman of the Executive Committee
may call the meetings of the Executive Committee.
SECTION 2. APPOINTMENT AND POWERS OF AUDIT COMMITTEE. The Board may, by
resolution adopted by the affirmative vote of a majority of the authorized
number of directors, designate an Audit Committee of the Board, which shall
consist of such number of members as the Board shall determine. The Audit
Committee shall (i) make recommendations to the Board as to the independent
accountants to be appointed by the Board; (ii) review with the independent
accountants the scope of their examination; (iii) receive the reports of the
independent accountants and meet with representatives of such accountants for
the purpose of reviewing and considering questions relating to their examination
and such reports; (iv) review, either directly or through the independent
accountants, the internal accounting and auditing procedures of the Corporation;
and (v) perform such other functions as may be assigned to it from time to time
by the Board. The Audit Committee may determine its manner of acting and fix the
time and place of its meetings, unless the Board shall otherwise provide. A
majority of the members of the Audit Committee shall constitute a quorum for the
transaction of business by the committee and the act of a majority of the
members of the committee present at a meeting at which a quorum shall be present
shall be the act of the committee.
SECTION 3. COMPENSATION COMMITTEE; OTHER COMMITTEES. The Board may, by
resolution adopted by the affirmative vote of a majority of the authorized
number of directors, designate members of the Board to constitute a Compensation
Committee and such other committees of the Board as the Board may determine.
Such committees shall in each case consist of such number of directors as the
Board may determine, and shall have and may exercise, to the extent permitted by
law, such powers as the Board may delegate to them, in the respective
resolutions appointing them. Each such committee may determine its manner of
acting and fix the time and place of its meetings, unless the Board shall
otherwise provide. A majority of the members of any such committee shall
constitute a quorum for the transaction of business by the committee and the act
of a majority of the members of such committee present at a meeting at which a
quorum shall be present shall be the act of the committee.
SECTION 4. ACTION BY CONSENT; PARTICIPATION BY TELEPHONE OR SIMILAR
EQUIPMENT. Unless the Board shall otherwise provide, any action required or
permitted to be taken by any committee may be taken without a meeting if all
members of the committee consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written consents thereto by the
members of the committee shall be filed with the minutes of the proceedings of
the committee. Unless the Board shall otherwise provide, any one or more members
of any such committee may participate in any meeting of the committee by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other. Participation by
such means shall constitute presence in person at a meeting of the committee.
SECTION 5. CHANGES IN COMMITTEES; RESIGNATIONS; REMOVALS. The Board shall
have power, by the affirmative vote of a majority of the authorized number of
directors, at any time to change the members of, to fill vacancies in, and to
discharge any committee of the Board. Any member of any such committee may
resign at
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any time by giving notice to the Corporation; PROVIDED, HOWEVER, that notice to
the Board, the Chairman of the Board, the Chief Executive Officer, the chairman
of such committee or the Secretary shall be deemed to constitute notice to the
Corporation. Such resignation shall take effect upon receipt of such notice or
at any later time specified therein; and, unless otherwise specified therein,
acceptance of such resignation shall not be necessary to make it effective. Any
member of any such committee may be removed at any time, either with or without
cause, by the affirmative vote of a majority of the authorized number of
directors at any meeting of the Board called for that purpose.
ARTICLE V
OFFICERS
SECTION 1. NUMBER AND QUALIFICATION. The Corporation shall have such
officers as may be necessary or desirable for the business of the Corporation.
Each officer of the Corporation shall have the title of Managing Director and
shall also have the title of Vice President (in addition to any other title as
set forth below or as may be prescribed by the Board) and shall hold his office
for such term as may be prescribed by the Board. There shall be elected from
among the Managing Directors, persons having the titles and exercising the
duties (as prescribed by the Bylaws or by the Board) of the Chairman of the
Board, Chief Executive Officer, Treasurer and Secretary, and such other persons
having such other titles and such other duties as the Board may prescribe. The
same person may hold more than one office. The Chairman of the Board and the
Chief Executive Officer shall be elected from among the directors. The Chief
Executive Officer may appoint one or more deputies, associates or assistant
officers or such other agents as may be necessary or desirable for the business
of the Corporation. In case one or more deputies, associates or assistant
officers shall be appointed, the officer such appointee assists may delegate to
the appointee the authority to perform such of the officer's duties as the
officer may determine.
SECTION 2. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Corporation; PROVIDED HOWEVER, that notice to the Board,
Chairman of the Board, the Chief Executive Officer or the Secretary shall be
deemed to constitute notice to the Corporation. Such resignation shall take
effect upon receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 3. REMOVAL. Any officer or agent may be removed, either with or
without cause, at any time, by the Board at any meeting called for that purpose;
PROVIDED, HOWEVER, that the Chief Executive Officer and President may remove any
agent appointed by him.
SECTION 4. VACANCIES. Any vacancy among the officers, whether caused by
death, resignation, removal or any other cause, shall be filled in the manner
prescribed for election or appointment to such office.
SECTION 5. CHAIRMAN OF THE BOARD. The Chairman of the Board shall, if
present, preside at all meetings of the Board and, in the absence of the Chief
Executive Officer, at all meetings of the stockholders. He shall perform the
duties incident to the office of the Chairman of the Board and all such other
duties as are specified in these Bylaws or as shall be assigned to him from time
to time by the Board.
SECTION 6. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall, if
present, preside at all meetings of the stockholders. He shall have, under the
control of the Board, general supervision and direction of the business and
affairs of the Corporation. He shall at all times see that all resolutions or
determinations of the Board are carried into effect. He may from time to time
appoint, remove or change members of and discharge one or more advisory
committees, each of which shall consist of such number of persons (who may, but
need not, be directors or officers of the Corporation), and have such advisory
duties, as he shall determine. He shall perform the duties incident to the
office of the Chief Executive Officer and all such other duties as are specified
in these Bylaws or as shall be assigned to him from time to time by the Board.
SECTION 7. TREASURER. The Treasurer shall have charge and custody of, and
be responsible for, all funds and securities of the Corporation, shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
Corporation, shall deposit all moneys and other valuables to the credit of the
Corporation in such depositories as may be designated pursuant to these Bylaws,
shall receive, and give receipts for, moneys due and payable to the Corporation
from any source whatsoever, shall disburse the funds of the Corporation and
shall
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render to all regular meetings of the Board, or whenever the Board may require,
an account of all his transactions as Treasurer. He shall, in general, perform
all the duties incident to the office of Treasurer and all such other duties as
may be assigned to him from time to time by the Chief Executive Officer or such
other officer to whom the Treasurer reports.
SECTION 8. SECRETARY. The Secretary shall, if present, act as secretary of,
and keep the minutes of, all meetings of the Board, the Executive Committee and
other committees of the Board and the stockholders in one or more books provided
for that purpose, shall see that all notices are duly given in accordance with
these By-laws and as required by law, shall be custodian of the seal of the
Corporation and shall affix and attest the seal to all documents to be executed
on behalf of the Corporation under its seal. He shall, in general, perform all
the duties incident to the office of Secretary and all such other duties as may
be assigned to him from time to time by the Chief Executive Officer or such
other officer to whom the Secretary reports.
SECTION 9. BONDS OF OFFICERS. If required by the Board, any officer of the
Corporation shall give a bond for the faithful discharge of his duties in such
amount and with such surety or sureties as the Board may require.
SECTION 10. COMPENSATION. The salaries of the officers shall be fixed from
time to time by the Compensation Committee of the Board; PROVIDED, HOWEVER, that
the Chief Executive Officer may fix or delegate to others the authority to fix
the salaries of any agents appointed by the Chief Executive Officer.
SECTION 11. OFFICERS OF OPERATING COMPANIES OR DIVISIONS. The Chief
Executive Officer shall have the power to appoint, remove, and prescribe the
terms of office, responsibilities, duties and salaries of, the officers of the
operating companies or divisions, other than those who are officers of the
Corporation.
ARTICLE VI
CONTRACTS, CHECKS, LOANS, DEPOSITS, ETC.
SECTION 1. CONTRACTS. The Board may authorize any officer or officers,
agent or agents, in the name and on behalf of the Corporation, to enter into any
contract or to execute and deliver any instrument, which authorization may be
general or confined to specific instances; and, unless so authorized by the
Board, no officer, agent or employee shall have any power or authority to bind
the Corporation by any contract or engagement or to pledge its credit or to
render it liable pecuniarily for any purpose or for any amount.
SECTION 2. CHECKS, ETC. All checks, drafts, bills of exchange or other
orders for the payment of money out of the funds of the Corporation, and all
notes or other evidences of indebtedness of the Corporation, shall be signed in
the name and on behalf of the Corporation in such manner as shall from time to
time be authorized by the Board, which authorization may be general or confined
to specific instances.
SECTION 3. LOANS. No loan shall be contracted on behalf of the Corporation,
and no negotiable paper shall be issued in its name, unless authorized by the
Board, which authorization may be general or confined to specific instances. All
bonds, debentures, notes and other obligations or evidences of indebtedness of
the Corporation issued for such loans shall be made, executed and delivered as
the Board shall authorize.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as may be selected by or in the
manner designated by the Board. The Board or its designees may make such special
rules and regulations with respect to such bank accounts, not inconsistent with
the provisions of the Certificate of Incorporation or these Bylaws, as them may
deem advisable.
ARTICLE VII
CAPITAL STOCK
SECTION 1. STOCK CERTIFICATES. Each stockholder shall be entitled to have,
in such form as shall be approved by the Board, a certificate or certificates
signed by the Chairman of the Board or Chief Executive Officer and by either the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
(except that, when any such certificate is countersigned by a transfer agent or
registered by a registrar other than the
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Corporation or an employee of the Corporation, the signatures of any such
officers may be facsimiles, engraved or printed), which may be sealed with the
seal of the Corporation (which seal may be a facsimile, engraved or printed),
certifying the number of shares of capital stock of the Corporation owned by
such stockholder. In the event any officer who has signed or whose facsimile
signature has been placed upon any such certificate shall have ceased to be such
officer before such certificate is issued, such certificate may be issued by the
Corporation with the same effect as if he were such officer at the date of its
issue.
SECTION 2. LISTS OF STOCKHOLDERS ENTITLED TO VOTE. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make or cause to be prepared or made, at least 10 days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares of capital stock registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least 10 days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting for the duration thereof, and may be inspected by any stockholder of
the Corporation who is present.
SECTION 3. STOCK LEDGER. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 2 of this Article VII or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
SECTION 4. TRANSFERS OF CAPITAL STOCK. Transfers of shares of capital stock
of the Corporation shall be made only on the stock ledger of the Corporation by
the holder of record thereof, by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation, or by
the transfer agent of the Corporation, and only on surrender of the certificate
or certificates representing such shares, properly endorsed or accompanied by a
duly executed stock transfer power. The Board may make such additional rules and
regulations as it may deem advisable concerning the issue and transfer of
certificates representing shares of the capital stock of the Corporation.
SECTION 5. LOST CERTIFICATES. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
SECTION 6. FIXING OF RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive payment of any
dividends or other distributions or allotments of any rights, or entitled to
exercise any rights in respect to any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board may fix, in advance, a
record date, which shall not be more than 60 days nor less than 10 days before
the date of such meeting, nor more than 60 days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; PROVIDED,
HOWEVER, that the Board of Directors may fix a new record date for the adjourned
meeting.
SECTION 7. BENEFICIAL OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of shares,
and shall not be bound to recognize any equitable or other claim to or interest
in such shares on the part of any other person, whether or not the Corporation
shall have express or other notice thereof, except as otherwise provided by law.
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ARTICLE VIII
FISCAL YEAR
The Corporation's fiscal year shall coincide with the calendar year.
ARTICLE IX
SEAL
The Corporation's seal shall be circular in form and shall include the
words "Delaware, 1991, Seal."
ARTICLE X
WAIVER OF NOTICE
Whenever any notice is required by law, the Certificate of Incorporation or
these Bylaws to be given to any director, member of a committee or stockholder,
a waiver thereof in writing, signed by the person or persons entitled to such
notice, whether signed before or after the time stated in such written waiver,
shall be deemed equivalent to such notice. Attendance of a person at a meeting
shall constitute a waiver of notice of such meeting, except when such person
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the grounds that the meeting is
not lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
ARTICLE XI
AMENDMENTS
These Bylaws or any of them may be amended or supplemented in any respect
at any time, either (i) at any meeting of stockholders, provided that any
amendment or supplement proposed to be acted upon at any such meeting shall have
been described or referred to in the notice of such meeting; or (ii) at any
meeting of the Board, provided that any amendment or supplement proposed to be
acted upon at any such meeting shall have been described or referred to in the
notice of such meeting or an announcement with respect thereto shall have been
made at the last previous Board meeting, and provided further that no amendment
or supplement adopted by the Board shall vary or conflict with any amendment or
supplement adopted by the stockholders. Notwithstanding the preceding sentence,
the affirmative vote of holders of at least 80% of the voting power of the then
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to amend or repeal, or adopt any provisions inconsistent with,
Section 3 of Article II of these Bylaws, Section 2 or Section 10 of Article III
of these Bylaws, or this sentence.
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ANNEX H
FISHER SCIENTIFIC INTERNATIONAL INC.
2000 EQUITY AND INCENTIVE PLAN
1. PURPOSE; TYPES OF AWARDS; CONSTRUCTION. The purposes of the 2000 Equity
and Incentive Plan of Fisher Scientific International Inc. (the "Plan") are to
afford an incentive to selected employees and independent contractors of Fisher
Scientific International Inc. (the "Company") or any Subsidiary or Affiliate
that now exists or hereafter is organized or acquired, to continue as employees
or independent contractors, as the case may be, to increase their efforts on
behalf of the Company and to promote the success of the Company's business.
Pursuant to the Long-Term Incentive Program described herein, there may be
granted stock options (including "incentive stock options" and "nonqualified
stock options"), stock appreciation rights (either in connection with stock
options granted under the Plan or independently of stock options), restricted
stock, restricted stock units, dividend equivalents and other long-term stock-
or cash-based Awards, and pursuant to the Annual Incentive Bonus Program
described herein, there may be granted short-term stock-or cash-based Awards.
The Plan is designed so that Awards granted hereunder intended to comply with
the requirements for "performance-based compensation" under Section 162(m) of
the Code may comply with such requirements and insofar as may be applicable to
such Awards, the Plan shall be interpreted in a manner consistent with such
requirements.
2. DEFINITIONS. For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) "Affiliate" means an affiliate of the Company, as defined in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
(b) "Award" means any Option, SAR, Restricted Stock, Restricted Stock Unit,
Dividend Equivalent or Other Stock-Based Award or Other Cash-Based Award granted
under the Plan.
(c) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(d) "Board" means the Board of Directors of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(f) "Committee" means the committee established by the Board to administer
the Plan, the composition of which shall at all times satisfy the provisions
Section 162(m) of the Code. Each member of the Committee shall be a Non-Employee
Director as defined in Rule 16b-3 under the Exchange Act.
(g) "Company" means Fisher Scientific International Inc., a corporation
organized under the laws of the State of Delaware, or any successor corporation.
(h) "Dividend Equivalent" means a right, granted to a Grantee under Section
6(b)(v), to receive cash, Stock, or other property equal in value to dividends
paid with respect to a specified number of shares of Stock. Dividend Equivalents
may be awarded on a free-standing basis or in connection with another Award, and
may be paid currently or on a deferred basis.
(i) "Effective Date" means the date that the Plan was adopted by the Board.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and as now or hereafter construed, interpreted and applied by
regulations, rulings and cases.
(k) "Fair Market Value" means, with respect to Stock or other property, the
fair market value of such Stock or other property determined by such methods or
procedures as shall be established from time to time by the Committee. Unless
otherwise determined by the Committee in good faith, the per share Fair Market
Value of Stock as of a particular date shall mean, (i) the closing sales price
per share of Stock on the national securities exchange on which the Stock is
principally traded, for the last preceding date on which there was a sale of
such Stock on such exchange, or (ii) if the shares of Stock are then traded in
an over-the-counter market, the average of the closing bid and asked prices for
the shares of Stock in such over-the-counter market for the last preceding date
on which there was a sale of such Stock in such market, or if the shares of
Stock are not then listed on a
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national securities exchange or traded in an over-the-counter market, such value
as the Committee, in its sole discretion, shall determine in good faith.
(l) "Grantee" means a person who, as an employee of or independent
contractor or non-employee director with respect to the Company, a Subsidiary or
an Affiliate, has been granted an Award under the Plan.
(m) "ISO" means any Option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.
(n) "NQSO" means any Option that is designated as a nonqualified stock
option.
(o) "Option" means a right, granted to a Grantee under Section 6(b)(i), to
purchase shares of Stock. An Option may be either an ISO or an NQSO; provided
that ISOs may be granted only to employees of the Company or a Subsidiary.
(p) "Other Cash-Based Award" means an Award under the Annual Incentive
Bonus Program or the Long-Term Incentive Program, which Award is not denominated
or valued by reference to Stock, including an Award which is subject to the
attainment of Performance Goals or otherwise as permitted under the Plan.
(q) "Other Stock-Based Award" means an Award under the Long-Term Incentive
Program that is denominated or valued in whole or in part by reference to Stock,
including, but not limited to (i) restricted or unrestricted Stock awarded
subject to the attainment of Performance Goals or otherwise as permitted under
the Plan, and (ii) a right granted to a Grantee to acquire Stock from the
Company for cash.
(r) "Performance Goals" means performance goals based on one or more of the
following criteria: (i) pre-tax income or after-tax income, (ii) operating
profit, (iii) return on equity, assets, capital or investment, (iv) earnings or
book value per share, (v) sales or revenues, (vi) operating expenses, (vii)
Stock price appreciation and (viii) implementation or completion of critical
projects or processes. Where applicable, the Performance Goals may be expressed
in terms of attaining a specified level of the particular criteria or the
attainment of a percentage increase or decrease in the particular criteria, and
may be applied to one or more of the Company, a Subsidiary or Affiliate, or a
division or strategic business unit of the Company, or may be applied to the
performance of the Company relative to a market index, a group of other
companies or a combination thereof, all as determined by the Committee. The
Performance Goals may include a threshold level of performance below which no
payment will be made (or no vesting will occur), levels of performance at which
specified payments will be made (or specified vesting will occur), and a maximum
level of performance above which no additional payment will be made (or at which
full vesting will occur). Each of the foregoing Performance Goals shall be
determined in accordance with generally accepted accounting principles and shall
be subject to certification by the Committee; provided that the Committee shall
have the authority to make equitable adjustments to the Performance Goals in
recognition of unusual or non-recurring events affecting the Company or any
Subsidiary or Affiliate or the financial statements of the Company or any
Subsidiary or Affiliate, in response to changes in applicable laws or
regulations, or to account for items of gain, loss or expense determined to be
extraordinary or unusual in nature or infrequent in occurrence or related to the
disposal of a segment of a business or related to a change in accounting
principles.
(s) "Plan" means this Fisher Scientific International Inc. 2000 Equity and
Incentive Plan, as amended from time to time.
(t) "Plan Year" means a calendar year.
(u) "Restricted Stock" means an Award of shares of Stock to a Grantee under
Section 6(b)(iii) that may be subject to certain transferability and other
restrictions and to a risk of forfeiture (including by reason of not satisfying
certain Performance Goals).
(v) "Restricted Stock Unit" means a right granted to a Grantee under
Section 6(b)(iv) to receive Stock or cash at the end of a specified deferral
period, which right may be conditioned on the satisfaction of certain
requirements (including the satisfaction of certain Performance Goals).
(w) "Rule 16b-3" means Rule 16b-3, as from time to time in effect
promulgated by the Securities and Exchange Commission under Section 16 of the
Exchange Act, including any successor to such Rule.
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(x) "Stock" means shares of the common stock, par value $0.01 per share, of
the Company.
(y) "SAR" or "Stock Appreciation Right" means the right, granted to a
Grantee under Section 6(b)(ii), to be paid an amount measured by the
appreciation in the Fair Market Value of Stock from the date of grant to the
date of exercise of the right, with payment to be made in cash, Stock, or
property as specified in the Award Agreement or determined by the Committee.
(z) "Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Company if, at the time of granting of an Award, each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
3. ADMINISTRATION. At the discretion of the Board, the Plan shall be
administered either (i) by the Board or (ii) by the Committee. In the event the
Board is the administrator of the Plan, references herein to the Committee shall
be deemed to include the Board. The Board may from time to time appoint a member
or members of the Committee in substitution for or in addition to the member or
members then in office and may fill vacancies on the Committee however caused.
The Committee shall choose one of its members as Chairman and shall hold
meetings at such times and places as it shall deem advisable. A majority of the
members of the Committee shall constitute a quorum and any action may be taken
by a majority of those present and voting at any meeting.
Any action may also be taken without the necessity of a meeting by a
written instrument signed by a majority of the Committee. The decision of the
Committee as to all questions of interpretation and application of the Plan
shall be final, binding and conclusive on all persons. The Committee shall have
the authority in its discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including without
limitation, the authority to grant Awards to determine the persons to whom and
the time or times at which Awards shall be granted to determine the type and
number of Awards to be granted the number of shares of Stock to which an Award
may relate and the terms, conditions, restrictions and Performance Goals
relating to any Award; to determine Performance Goals no later than such time as
is required to ensure that an underlying Award which is intended to comply with
the requirements of Section 162(m) of the Code so complies; to determine
whether, to what extent, and under what circumstances an Award may be settled,
cancelled, forfeited, exchanged, or surrendered; to make adjustments in the
terms and conditions (including Performance Goals) applicable to Awards; to
construe and interpret the Plan and any Award; to prescribe, amend and rescind
rules and regulations relating to the Plan; to determine the terms and
provisions of the Award Agreements (which need not be identical for each
Grantee); and to make all other determinations deemed necessary or advisable for
the administration of the Plan. The Committee may correct any defect or supply
any omission or reconcile any inconsistency in the Plan or in any Award
Agreement granted hereunder in the manner and to the extent it shall deem
expedient to carry the Plan into effect and shall be the sole and final judge of
such expediency. No Committee member shall be liable for any action or
determination made in good faith.
4. ELIGIBILITY. ISOs shall be granted only to key employees (including
officers and directors who are also employees) of the Company, its parent or any
of its Subsidiaries. All other Awards may be granted to officers, independent
contractors, key employees and non-employee directors of the Company or of any
of its Subsidiaries and Affiliates.
No ISO shall be granted to any employee of the Company, its parent or any
of its Subsidiaries if such employee owns, immediately prior to the grant of the
ISO, stock representing more than 10% of the voting power or more than 10% of
the value of all classes of stock of the Company or a parent or a Subsidiary,
unless the purchase price for the stock under such ISO shall be at least 110% of
its Fair Market Value at the time such ISO is granted and the ISO, by its terms,
shall not be exercisable more than five years from the date it is granted. In
determining the stock ownership under this paragraph, the provisions of Section
424(d) of the code shall be controlling.
5. STOCK SUBJECT TO THE PLAN. The maximum number of shares of Stock
reserved for the grant or settlement of Awards under the Plan shall be subject
to adjustment as provided herein. Notwithstanding the
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foregoing, the total number of shares of stock that may be transferred or issued
hereunder as Restricted Stock, Restricted Stock Units or other Stock-Based
Awards shall not exceed shares of stock. No more than shares
of Stock may be awarded in respect of Options and SARs and no more than
shares of Stock may be awarded in respect of Restricted Stock,
Restricted Stock Units or other Stock-Based Awards to a single individual over
the term of the Plan, which number shall be subject to adjustment as provided
herein. Determinations made in respect of the limitation set forth in the
preceding sentence shall be made in a manner consistent with Section 162(m) of
the Code. Such shares may, in whole or in part, be authorized but unissued
shares or shares that shall have been or may be reacquired by the Company in the
open market, in private transactions or otherwise. If any shares subject to an
Award are forfeited, cancelled, exchanged or surrendered or if an Award
otherwise terminates or expires without a distribution of shares to the Grantee,
the shares of stock with respect to such Award shall, to the extent of any such
forfeiture, cancellation, exchange, surrender, termination or expiration, again
be available for Awards under the Plan. Upon the exercise of any Award granted
in tandem with any other Awards, such related Awards shall be cancelled to the
extent of the number of shares of Stock as to which the Award is exercised and,
notwithstanding the foregoing, such number of shares shall no longer be
available for Awards under the Plan.
Except as provided in an Award Agreement, in the event that the Committee
shall determine that any dividend or other distribution (whether in the form of
cash, Stock, or other property), recapitalization, Stock split, reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange, or other similar corporate transaction or event, affects the
Stock such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Grantees under the Plan, then the Committee shall
make such equitable changes or adjustments as it deems necessary or appropriate
to any or all of (i) the number and kind of shares of Stock or other property
(including cash) that may thereafter be issued in connection with Awards, (ii)
the number and kind of shares of Stock or other property (including cash) issued
or issuable in respect of outstanding Awards, (iii) the exercise price, grant
price or purchase price relating to any Award; provided that, with respect to
ISOs, such adjustment shall be made in accordance with Section 424(h) of the
Code, (iv) the Performance Goals and (v) the individual limitations applicable
to Awards.
6. SPECIFIC TERMS OF AWARDS.
(A) GENERAL. The term of each Award shall be for such period as may be
determined by the Committee. Subject to the terms of the Plan and any applicable
Award Agreement, payments to be made by the Company or a Subsidiary or Affiliate
upon the grant, maturation, or exercise of an Award may be made in such forms as
the Committee shall determine at the date of grant or thereafter, including,
without limitation, cash, Stock, or other property, and may be made in a single
payment or transfer, in installments, or on a deferred basis. The Committee may
make rules relating to installment or deferred payments with respect to Awards,
including the rate of interest to be credited with respect to such payments. In
addition to the foregoing, the Committee may impose on any Award or the exercise
thereof, at the date of grant or thereafter, such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine.
(B) AWARDS. The Committee is authorized to grant to Grantees the following
Awards, as deemed by the Committee to be consistent with the purposes of the
Plan. The Committee shall determine the terms and conditions of such Awards at
the date of grant or thereafter.
(i) OPTIONS. The Committee is authorized to grant Options to
Grantees on the following terms and conditions:
(A) TYPE OF AWARD. The Award Agreement evidencing the grant of an
Option under the Plan shall designate the Option as an ISO or an NQSO.
(B) EXERCISE PRICE. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee, but in
no event shall the exercise price of an Option per share of Stock be
less than the Fair Market Value of a share of Stock as of the date of
grant of such Option. The purchase price of the Stock as to which an
Option is exercised shall be paid in full at the time of exercise;
payment may be made in cash, which may be paid by check, or other
instrument acceptable to the Company, or, with the consent of the
Committee, in shares of Stock, valued at the Fair Market
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Value on the date of exercise, or if there were no sales on such date,
on the next preceding day on which there were sales or (if permitted by
the Committee and subject to such terms and conditions as it may
determine) by surrender of outstanding Awards under the Plan. In
addition, any amount necessary to satisfy applicable federal, state or
local tax withholding requirements shall be paid promptly upon
notification of the amount due. The Committee may permit such amount of
tax withholding to be paid in shares of Stock previously owned by the
employee, or a portion of the shares of Stock that otherwise would be
distributed to such employee upon exercise of the Option, or a
combination of cash and shares of such Stock.
(C) TERM AND EXERCISABILITY OF OPTIONS. Options shall be
exercisable over the exercise period (which shall not exceed ten years
from the date of grant), at such times and upon such conditions as the
Committee may determine, as reflected in the Award Agreement; provided
that, the Committee shall have the authority to accelerate the
exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate. An
Option may be exercised to the extent of any or all full shares of Stock
as to which the Option has become exercisable, by giving written notice
of such exercise to the Committee or its designated agent. No partial
exercise may be made for less than one hundred (100) full shares of
Stock.
(D) TERMINATION OF EMPLOYMENT, ETC. Unless provided to the contrary
in the applicable Award Agreement;
(I) Except as set forth herein or in II or III below, an Option
may not be exercised unless the Grantee is then in the employ of,
maintains an independent contractor relationship with, or is a
director of, the Company or a Subsidiary or an Affiliate (or a
company or a parent or subsidiary company of such company issuing or
assuming the Option in a transaction to which Section 424(a) of the
Code applies), and unless the Grantee has remained continuously so
employed, or continuously maintained such relationship, since the
date of grant of the Option; provided that, (i) the Award Agreement
may contain provisions extending the exercisability of Options, in
the event of specified terminations, to a date not later than the
expiration date of such Option, and (ii) the Committee may determine,
in its sole discretion, to allow the exercise of any Option in any
individual case after the termination of the employment or other
relationship, but in any event, such exercise shall not be allowed
after the expiration date of such Option.
(II) If the Grantee's employment or service terminates because
the Grantee has died, retired from the Company at or after any early
retirement date under any Company qualified retirement plan in which
he participates or become permanently disabled (within the meaning of
Section 22(e)(3) of the Code), all of such Grantee's Options
(regardless of the extent to which such Options are then exercisable)
shall be exercisable as of such date of termination and remain
outstanding until the earlier of (i) three years from the date
Grantee's employment or service terminates, and (ii) expiration of
the term of the Option.
(III) If the Grantee's employment or service terminates other
than for cause, such Grantee's Options (to the extent then
exercisable) shall remain outstanding until the earlier of (i) three
months from the date Grantee's employment or service terminates, and
(ii) expiration of the term of the Option.
(E) OTHER PROVISIONS. Options may be subject to such other
conditions including, but not limited to, restrictions on
transferability of the shares acquired upon exercise of such Options, as
the Committee may prescribe in its discretion or as may be required by
applicable law.
(ii) SARS. The Committee is authorized to grant SARs to Grantees
on the following terms and conditions:
(A) IN GENERAL. Unless the Committee determines otherwise, a SAR
(1) granted in tandem with a NQSO may be granted at the time of grant of
the related NQSO or at any time thereafter or (2) granted in tandem with
an ISO may only be granted at the time of grant of the related ISO. A
SAR granted in tandem with an Option shall be exercisable only to the
extent the underlying Option is
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exercisable. Notwithstanding the foregoing, SARs may be granted on a
free-standing basis and not in tandem with an Option, but shall, unless
the Committee shall otherwise determine have terms and conditions
substantially comparable to those applicable to Options granted under
the Plan.
(B) SARS. A SAR shall confer on the Grantee a right to receive an
amount with respect to each share subject thereto, upon exercise
thereof, equal to the excess of (1) the Fair Market Value of one share
of Stock on the date of exercise over (2) the grant price of the SAR
(which in the case of a SAR granted in tandem with an Option shall be
equal to the exercise price of the underlying Option, and which in the
case of any other SAR shall be such price as the Committee may
determine, but in no event less than the Fair Market Value on the date
of the grant).
(iii) RESTRICTED STOCK. The Committee is authorized to grant
Restricted Stock to Grantees on the following terms and conditions:
(A) ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, if any, as
the Committee may impose at the date of grant or thereafter, which
restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, or otherwise, as the Committee
may determine. The Committee may place restrictions on Restricted Stock
that shall lapse, in whole or in part, upon the attainment of
Performance Goals. Except to the extent restricted under the Award
Agreement relating to the Restricted Stock, a Grantee granted Restricted
Stock shall have all of the rights of a stockholder including, without
limitation, the right to vote Restricted Stock and the right to receive
dividends thereon.
(B) FORFEITURE. Upon termination of employment or service during
the applicable restriction period, Restricted Stock and any accrued but
unpaid dividends or Dividend Equivalents that are at that time subject
to restrictions shall be forfeited; provided that, the Committee may
provide, by rule or regulation or in any Award Agreement, or may
determine in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock will be waived in whole or in
part in the event of terminations resulting from specified causes, and
the Committee may in other cases waive in whole or in part the
forfeiture of Restricted Stock.
(C) CERTIFICATES FOR STOCK. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Grantee, such certificates shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company shall retain physical possession of
the certificate.
(D) DIVIDENDS. Dividends paid on Restricted Stock shall be either
paid at the dividend payment date, or deferred for payment to such date
as determined by the Committee, in cash or in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends.
Stock distributed in connection with a stock split or stock dividend,
and other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other property has
been distributed.
(iv) RESTRICTED STOCK UNITS. The Committee is authorized to
grant Restricted Stock Units to Grantees, subject to the following
terms and conditions:
(A) AWARD AND RESTRICTIONS. Delivery of Stock or cash, as
determined by the Committee, will occur upon expiration of the deferral
period specified for Restricted Stock Units by the Committee. The
Committee may condition the vesting and/or payment of Restricted Stock
Units, in whole or in part, upon the attainment of Performance Goals.
(B) FORFEITURE. Upon termination of employment or service during
the applicable deferral period or portion thereof to which forfeiture
conditions apply, or upon failure to satisfy any other conditions
precedent to the delivery of Stock or cash to which such Restricted
Stock Units relate, all Restricted Stock Units that are then subject to
deferral or restriction shall be forfeited; provided that, the Committee
may provide, by rule or regulation or in any Award Agreement, or may
determine in any
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individual case, that restrictions or forfeiture conditions relating to
Restricted Stock Units will be waived in whole or in part in the event
of termination resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of Restricted Stock
Units.
(v) Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Grantees. The Committee may provide, at the date
of grant or thereafter, that Dividend Equivalents shall be paid or
distributed when accrued or shall be deemed to have been reinvested in
additional Stock, or other investment vehicles as the Committee may
specify, provided that Dividend Equivalents (other than freestanding
Dividend Equivalents) shall be subject to all conditions and
restrictions of the underlying Awards to which they relate.
(vi) Other Stock- or Cash-Based Awards. The Committee is authorized
to grant Awards to Grantees in the form of Other Stock-Based Awards or
Other Cash-Based Awards, as deemed by the Committee to be consistent
with the purposes of the Plan. Awards granted pursuant to this paragraph
may be granted with value and payment contingent upon the attainment of
certain Performance Goals, so long as such goals relate to periods of
performance in excess of one calendar year. The Committee shall
determine the terms and conditions of such Awards at the date of grant
or thereafter. The maximum payment that any Grantee may receive pursuant
to Cash-Based Award granted under this paragraph in respect of any
performance period shall be $2,000,000. Payments earned hereunder may be
decreased or, with respect to any Grantee who is not a "covered
employee" within the meaning of Section 162(m) of the Code (a "covered
Employee"), increased in the sole discretion of the Committee based on
such factors as it deems appropriate. No payment shall be made prior to
the certification by the Committee that any applicable Performance Goals
have been attained. The Committee may establish such other rules
applicable to the Other Stock-or Cash-Based Awards to the extent not
inconsistent with Section 162(m) of the Code with respect to any Award
intended to comply therewith.
7. CHANGE IN CONTROL PROVISIONS.
(a) Except as set forth in an Award Agreement, upon the occurrence of a
Change of Control (as hereinafter defined), any Award carrying a right to
exercise that was not previously exercisable and vested shall become fully
exercisable and vested and the restrictions, and forfeiture conditions
applicable to any other Award granted under the Plan shall lapse and such Award
shall be deemed fully vested, and any Performance Goals imposed with respect to
Awards shall be deemed to be fully achieved. Notwithstanding anything in the
Plan to the contrary, upon the occurrence of a Change in Control, the
purchaser(s) of the Company's assets or stock may, in his, her, or its
discretion, deliver to the Grantee the same kind of consideration that is
delivered to the shareholders of the Company as a result of such sale,
conveyance or Change in Control, or the Board may cancel all outstanding Options
in exchange for consideration in cash or in kind which consideration in both
cases shall be equal in value to the higher of (i) the Fair Market Value of
those shares of stock or other securities the Grantee would have received had
the Option been exercised and no disposition of the shares acquired upon such
exercise been made prior to such sale, conveyance or Change in Control, less the
exercise price therefore, and (ii) the Fair Market Value of those shares of
stock or other securities the Grantee would have received had the Option been
exercised and a disposition of the shares acquired upon such exercise had been
made immediately following such sale, conveyance or Change in Control, less the
exercise price therefore. A "Change in Control" shall be deemed to have occurred
if (i) any person, or any two or more persons acting as a group, and all
affiliates of such person or persons (other than any person or group, or any of
their affiliates, who on the Effective Date owns at least 10% of the Company's
Common Stock and who at no time after the Effective Date owns less than 10% of
such Common Stock) shall acquire, whether by purchase, exchange, tender offer,
merger, consolidation or otherwise, such additional shares of the Company's
Common Stock in one or more transactions, or series of transactions, such that
following such transaction or transactions, such person or group and affiliates
beneficially own fifty percent (50%) or more of the Company's Common Stock
outstanding, or (ii) on any date, the individuals who were serving as the
members of the Board at the beginning of the two year period ending on such date
cease for any reason to constitute a majority of the number of directors then
serving, provided that any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company) elected in such period whose appointment
or election by the Board or nomination for election by the Company's
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stockholders was approved or recommended by a vote of at least two-thirds ( 2/3)
of the directors then still in office who either were directors on the first day
of such two year period or whose appointment, election or nomination for
election was previously so approved or recommended in accordance with this
proviso.
(b) Upon dissolution or liquidation of the Company, all Options and other
Awards granted under this Plan shall terminate, but each Grantee shall have the
right, immediately prior to such dissolution or liquidation, to exercise his or
her Option to the extent then exercisable.
8. GENERAL PROVISIONS.
(a) Nontransferability. Unless otherwise determined by the Committee or
provided in an Award Agreement, Awards shall not be transferable by a Grantee
except by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined under the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, and shall be
exercisable during the lifetime of a Grantee only by such Grantee or his
guardian or legal representative. Any Award shall be null and void and without
effect upon the bankruptcy of the Grantee to whom the Award is granted, or upon
any attempted assignment or transfer, except as herein provided, including
without limitation any purported assignment, whether voluntary or by operation
of law, pledge, hypothecation or other disposition, attachment, divorce, trustee
process or similar process, whether legal or equitable, upon such Award.
(b) No Right to Continued Employment, etc. Nothing in the Plan or in any
Award granted or any Award Agreement, promissory note or other agreement entered
into pursuant hereto shall confer upon any Grantee the right to continue in the
employ or service of the Company, any Subsidiary or any Affiliate or to be
entitled to any remuneration or benefits not set forth in the Plan or such Award
Agreement, promissory note or other agreement or to interfere with or limit in
any way the right of the Company or any such Subsidiary or Affiliate to
terminate such Grantee's employment or service.
(c) Taxes. The Company or any Subsidiary or Affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any other payment to a Grantee,
amounts of withholding and other taxes due in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Grantees to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other
property with a Fair Market Value not in excess of the minimum amount required
to be withheld and to make cash payments in respect thereof in satisfaction of a
Grantee's tax obligations.
(d) Stockholder Approval; Amendment and Termination. The Plan shall take
effect on the Effective Date but the Plan (and any grants of Awards made prior
to the stockholder approval mentioned herein) shall be subject to the requisite
approval of the stockholders of the Company, which approval must occur within
twelve (12) months of the date that the Plan is adopted by the Board. In the
event that the stockholders of the Company do not ratify the Plan at a meeting
of the stockholders at which such issue is considered and voted upon, then upon
such event the Plan and all rights hereunder shall immediately terminate and no
Grantee (or any permitted transferee thereof) shall have any remaining rights
under the Plan or any Award Agreement entered into in connection herewith. The
Board may at any time and from time to time alter, amend, suspend, or terminate
the Plan or any Award Agreement in whole or in part. Notwithstanding the
foregoing, no amendment shall affect adversely any of the rights of any Grantee,
without such Grantee's consent, under any Award theretofore granted under the
Plan. Unless earlier terminated by the Board pursuant to the provisions of the
Plan, the Plan shall terminate on the tenth anniversary of its Effective Date.
No Awards shall be granted under the Plan after such termination date.
(e) No Rights to Awards; No Stockholder Rights. No Grantee shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Grantees. Except as provided specifically herein, a
Grantee or a transferee of an Award shall have no rights as a stockholder with
respect to any shares covered by the Award until the date of the issuance of a
stock certificate to him for such shares.
(f) Unfunded Status of Awards. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Grantee pursuant to an Award, nothing
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contained in the Plan or any Award shall give any such Grantee any rights that
are greater than those of a general creditor of the Company.
(g) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(h) Regulations and Other Approvals.
(i) The obligation of the Company to sell or deliver Stock with
respect to any Award granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal
and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Committee.
(ii) Each Award is subject to the requirement that, if at any time the
Committee determines, in its absolute discretion, that the listing,
registration or qualification of Stock issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Award
or the issuance of Stock, no such Award shall be granted or payment made or
Stock issued, in whole or in part, unless listing, registration,
qualification, consent or approval has been effected or obtained free of
any conditions not acceptable to the Committee.
(iii) In the event that the disposition of Common Stock acquired
pursuant to the Plan is not covered by a then current registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), and is not otherwise exempt from such registration, such Stock shall
be restricted against transfer to the extent required by the Securities Act
or regulations thereunder, and the Committee may require a Grantee
receiving Stock pursuant to the Plan, as a condition precedent to receipt
of such Stock, to represent to the Company in writing that the Stock
acquired by such Grantee is acquired for investment only and not with a
view to distribution.
(i) Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Delaware without
giving effect to the conflict of laws principles thereof.
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ANNEX I
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
FISHER SCIENTIFIC INTERNATIONAL INC.
FISHER SCIENTIFIC INTERNATIONAL INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware (the "DGCL"), DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation in accordance with
the DGCL, at a meeting held on , 2000, duly adopted resolutions
setting forth a proposed amendment to the Certificate of Incorporation of the
Corporation, declaring such amendment to be advisable and directing that such
amendment be submitted to and be considered by the stockholders of the
Corporation for approval. The resolution setting forth the proposed amendment is
as follows:
RESOLVED, That the Certificate of Incorporation of the
Corporation be amended by changing the Fourth Article thereof so that,
as amended, such Article shall be and read as follows:
"The total number of shares of stock which the Corporation shall
have authority to issue shall be 515,000,000 shares, of which
500,000,000 shall be Common Stock, par value $0.01 per share (the
"Common Stock"), and 15,000,000 shares shall be Preferred Stock, par
value $0.01 per share (the "Preferred Stock").
SECOND: That thereafter, the foregoing amendment to the Corporation's
Certificate of Incorporation was duly adopted by the holders of a majority of
the outstanding shares of Common Stock of the Corporation at the special meeting
of stockholders held on , 2000 in accordance with the DGCL and the
Certificate of Incorporation.
IN WITNESS WHEREOF, FISHER SCIENTIFIC INTERNATIONAL INC. has caused this
Certificate of Amendment to be signed by , its ,
and attested by , its , this day of
, 2000.
FISHER SCIENTIFIC INTERNATIONAL INC.
By:
----------------------------------
Name:
Title:
ATTEST:
By:
--------------------------------
Name:
Title:
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
INDEMNIFICATION OF DIRECTORS AND OFFICERS OF FISHER.
Section 145 of the Delaware Corporation Law, as amended, provides in
regards to indemnification of directors and officers as follows:
"145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE.--(a) A corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that the person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in
a manner the person reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made,
with respect to a person who is a director or officer at the time of such
determination (1) by a majority vote of the directors who are not parties
to such action, suit or proceeding, even though less than a quorum, or (2)
by a committee of such directors designated by majority vote of such
directors, even though less than a quorum, or (3) if there are no such
directors, or if such directors so direct, by independent legal counsel in
a written opinion, or (4) by the stockholders.
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(e) Expenses (including attorney's fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the corporation as authorized in this
section. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon
such terms and conditions, if any, as the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in such person's official capacity and as to action in another capacity
while holding such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against such person and incurred by such person in
any such capacity, or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify such person
against such liability under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner such person reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, 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."
ARTICLE FIFTEENTH of Fisher's Certificate of Incorporation provides as
follows:
FIFTEENTH: (a) A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any 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 law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
(b)(1) Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or the
person of whom he or she is the legal
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representative, is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action or inaction in an official
capacity as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee, or agent, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; PROVIDED, HOWEVER, that, except
as provided in this paragraph (b), the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred in
this paragraph (b) shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer of the
Corporation (and not in any other capacity in which service was or is rendered
by such person while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it shall ultimately be determined that such director or officer
is not entitled to be indemnified under this Section or otherwise. The
Corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(2) Right of Claimant to Bring Suit. If a claim under subparagraph (b)(1)
is not paid in full by the Corporation within 30 days after a written claim has
been received by the Corporation, the claimant may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceedings in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification or
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard or
conduct.
(3) Non-Exclusivity of Rights. The right to indemnification and the payment
of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this paragraph (b) shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
(4) Insurance. The Corporation may maintain insurance, at its expense, to
project itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
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ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
2.1 Agreement and Plan of Merger by and among Fisher Scientific
International Inc., FSI Merger Corporation and PSS World
medical, Inc. dated as of June 21, 2000 (included as Annex A
to the joint proxy statement/prospectus filed as part of
this registration statement and incorporated herein by
reference)
3.1 Restated Certificate of Incorporation of Fisher Scientific
International Inc., as amended (included as Annex F to the
joint proxy statement/prospectus filed as part of this
registration statement and incorporated herein by reference)
3.2 Bylaws of Fisher Scientific International Inc. (included as
Annex G to the joint proxy statement/ prospectus filed as
part of this registration statement and incorporated herein
by reference)
3.3 Form of Certificate of Amendment to the Restated Certificate
of Incorporation of Fisher Scientific International Inc.
(included as Annex I to the joint proxy statement/prospectus
filed as part of this registration statement and
incorporated herein by reference)
4.1 Rights Agreement dated as of June 9, 1997, between Fisher
Scientific International Inc. and ChaseMellon Shareholder
Services L.L.C., as Rights Agent, which includes the form of
Right Certificate as Exhibit A and the Summary of Rights to
Purchase Common Stock as Exhibit B (included as an exhibit
to the Registration Statement on Form 8-A of Fisher
Scientific International Inc. filed with the Securities and
Exchange Commission on June 9, 1997 and incorporated herein
by reference)
4.2 First Amendment to Rights Agreement dated as of August 7,
1997 between Fisher Scientific International Inc. and
ChaseMellon Shareholder Services L.L.C. (included as an
exhibit to the Current Report on Form 8-K of Fisher
Scientific International Inc. dated August 7, 1997 filed
with the Securities and Exchange Commission on August 8,
1997 and incorporated herein by reference)
*5.1 Opinion of Debevoise & Plimpton regarding the validity of
the securities being registered
*8.1 Opinion of Debevoise & Plimpton regarding certain tax
matters
*8.2 Opinion of Alston & Bird LLP regarding certain tax matters
10.1 Form of Fisher Scientific International Inc. 2000 Equity and
Incentive Plan (included as Annex H to the joint proxy
statement/prospectus filed as part of this registration
statement and incorporated herein by reference)
10.2 Voting Agreement by and among PSS World Medical, Inc. and
the persons listed on the signature pages thereto, dated as
of June 21, 2000 (included as Annex C to the joint proxy
statement/prospectus filed as part of this registration
statement and incorporated herein by reference)
10.3 Stock Option Agreement between Fisher Scientific
International Inc. and PSS World Medical, Inc., dated as of
June 21, 2000 (included as Annex B to the joint proxy
statement/prospectus filed as part of this registration
statement and incorporated herein by reference)
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.4 Investors Agreement dated January 21, 1998 as amended March
29, 1999 among Fisher Scientific International Inc. and (i)
Thomas H. Lee Equity Fund III, L.P. ("THL"), certain
individuals associated with THL, THL-CCI Limited
Partnership, THL Foreign Fund III, L.P., and THL FSI Equity
Investors, L.P., (ii) DLJ Merchant Banking Partners II,
L.P., DLJ Offshore Partners II, C.V., DLJ Diversified
Partners, L.P., DLJMB Funding II, Inc., DLJ Merchant Banking
Partners II-A, L.P., DLJ Diversified Partners-A, L.P., DLJ
Millennium Partners, L.P., DLJ Millennium Partners-A, L.P.,
UK Investment Plan 1997 Partners, DLJ EAB Partners, L.P.,
DLJ ESC II, L.P. and DLJ First ESC, L.P., (iii) Chase Equity
Associates, L.P. ("Chase Equity") and (iv) Merrill Lynch
KECALP L.P. 1997, KECALP Inc., and ML IBK Positions, Inc.
(filed as an exhibit to the Form 10-K of Fisher Scientific
International Inc. for the year ended December 31, 1998, and
filed on March 31, 1999, and incorporated herein by
reference)
21.1 Subsidiaries of Fisher Scientific International Inc. (filed
as an exhibit to the Form 10-K/A of Fisher Scientific
International Inc. for the year ended December 31, 1999, and
filed on March 23, 2000, and incorporated herein by
reference)
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Arthur Andersen LLP
*23.3 Consent of Debevoise & Plimpton
*23.4 Consent of Alston & Bird LLP
23.5 Consent of Lazard Freres & Co. LLC
23.6 Consent of Donaldson, Lufkin & Jenrette Securities
Corporation
24.1 Powers of Attorney
*99.1 Form of proxy card for Fisher Scientific International Inc.
*99.2 Form of proxy card for PSS World Medical, Inc.
99.3 Consent of Patrick C. Kelly to be named a director
99.4 Consent of Hugh M. Brown to be named a director
99.5 Opinion of Lazard, Freres & Co. LLC (included as Annex D to
the joint proxy statement/prospectus filed as part of this
registration statement and incorporated herein by reference)
99.6 Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation (included as Annex E to the joint proxy
statement/prospectus filed as part of this registration
statement and incorporated herein by reference)
</TABLE>
---------------
* To be filed by amendment.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the SEC pursuant to
II-5
<PAGE> 215
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering;
(4) For purposes of determining any liability under the Securities Act of
1933, each filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offering therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof;
(5) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form;
(6) That every prospectus: (i) that is filed pursuant to the immediately
preceding paragraph, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof;
(7) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue;
(8) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request; and
(9) To supply by means of post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
II-6
<PAGE> 216
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
following persons have signed on August 24, 2000 this Registration Statement on
Form S-4, in the capacities indicated.
FISHER SCIENTIFIC INTERNATIONAL INC.
By: /s/ PAUL M. MEISTER
------------------------------------
Name: Paul M. Meister
Title: Executive Vice President and
Chief Financial Officer
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Director, Chairman and Chief Executive Officer
------------------------------------------------
Paul M. Montrone
* Director, Vice Chairman, Executive Vice President
------------------------------------------------ and Chief Financial Officer
Paul M. Meister
* Director
------------------------------------------------
Mitchell J. Blutt, M.D.
* Director
------------------------------------------------
Robert A. Day
* Director
------------------------------------------------
Michael D. Dingman
* Director
------------------------------------------------
Anthony J. DiNovi
* Director
------------------------------------------------
David V. Harkins
* Director
------------------------------------------------
Scott M. Sperling
* Director
------------------------------------------------
Kent R. Weldon
*By: /s/ TODD M. DUCHENE
---------------------------------------------
Todd M. DuChene
Attorney-In-Fact
</TABLE>
II-7
<PAGE> 217
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
2.1 Agreement and Plan of Merger by and among Fisher Scientific
International Inc., FSI Merger Corporation and PSS World
medical, Inc. dated as of June 21, 2000 (included as Annex A
to the joint proxy statement/prospectus filed as part of
this registration statement and incorporated herein by
reference)
3.1 Restated Certificate of Incorporation of Fisher Scientific
International Inc., as amended (included as Annex F to the
joint proxy statement/prospectus filed as part of this
registration statement and incorporated herein by reference)
3.2 Bylaws of Fisher Scientific International Inc. (included as
Annex G to the joint proxy statement/ prospectus filed as
part of this registration statement and incorporated herein
by reference)
3.3 Form of Certificate of Amendment to the Restated Certificate
of Incorporation of Fisher Scientific International Inc.
(included as Annex I to the joint proxy statement/prospectus
filed as part of this registration statement and
incorporated herein by reference)
4.1 Rights Agreement dated as of June 9, 1997, between Fisher
Scientific International Inc. and ChaseMellon Shareholder
Services L.L.C., as Rights Agent, which includes the form of
Right Certificate as Exhibit A and the Summary of Rights to
Purchase Common Stock as Exhibit B (included as an exhibit
to the Registration Statement on Form 8-A of Fisher
Scientific International Inc. filed with the Securities and
Exchange Commission on June 9, 1997 and incorporated herein
by reference)
4.2 First Amendment to Rights Agreement dated as of August 7,
1997 between Fisher Scientific International Inc. and
ChaseMellon Shareholder Services L.L.C. (included as an
exhibit to the Current Report on Form 8-K of Fisher
Scientific International Inc. dated August 7, 1997 filed
with the Securities and Exchange Commission on August 8,
1997 and incorporated herein by reference)
*5.1 Opinion of Debevoise & Plimpton regarding the validity of
the securities being registered
*8.1 Opinion of Debevoise & Plimpton regarding certain tax
matters
*8.2 Opinion of Alston & Bird LLP regarding certain tax matters
10.1 Form of Fisher Scientific International Inc. 2000 Equity and
Incentive Plan (included as Annex H to the joint proxy
statement/prospectus filed as part of this registration
statement and incorporated herein by reference)
10.2 Voting Agreement by and among PSS World Medical, Inc. and
the persons listed on the signature pages thereto, dated as
of June 21, 2000 (included as Annex C to the joint proxy
statement/prospectus filed as part of this registration
statement and incorporated herein by reference)
10.3 Stock Option Agreement between Fisher Scientific
International Inc. and PSS World Medical, Inc., dated as of
June 21, 2000 (included as Annex B to the joint proxy
statement/prospectus filed as part of this registration
statement and incorporated herein by reference)
</TABLE>
<PAGE> 218
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.4 Investors Agreement dated January 21, 1998 as amended March
29, 1999 among Fisher Scientific International Inc. and (i)
Thomas H. Lee Equity Fund III, L.P. ("THL"), certain
individuals associated with THL, THL-CCI Limited
Partnership, THL Foreign Fund III, L.P., and THL FSI Equity
Investors, L.P., (ii) DLJ Merchant Banking Partners II,
L.P., DLJ Offshore Partners II, C.V., DLJ Diversified
Partners, L.P., DLJMB Funding II, Inc., DLJ Merchant Banking
Partners II-A, L.P., DLJ Diversified Partners-A, L.P., DLJ
Millennium Partners, L.P., DLJ Millennium Partners-A, L.P.,
UK Investment Plan 1997 Partners, DLJ EAB Partners, L.P.,
DLJ ESC II, L.P. and DLJ First ESC, L.P., (iii) Chase Equity
Associates, L.P. ("Chase Equity") and (iv) Merrill Lynch
KECALP L.P. 1997, KECALP Inc., and ML IBK Positions, Inc.
(filed as an exhibit to the Form 10-K of Fisher Scientific
International Inc. for the year ended December 31, 1998, and
filed on March 31, 1999, and incorporated herein by
reference)
21.1 Subsidiaries of Fisher Scientific International Inc. (filed
as an exhibit to the Form 10-K/A of Fisher Scientific
International Inc. for the year ended December 31, 1999, and
filed on March 23, 2000, and incorporated herein by
reference)
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Arthur Andersen LLP
*23.3 Consent of Debevoise & Plimpton
*23.4 Consent of Alston & Bird LLP
23.5 Consent of Lazard Freres & Co. LLC
23.6 Consent of Donaldson, Lufkin & Jenrette Securities
Corporation
24.1 Powers of Attorney
*99.1 Form of proxy card for Fisher Scientific International Inc.
*99.2 Form of proxy card for PSS World Medical, Inc.
99.3 Consent of Patrick C. Kelly to be named a director
99.4 Consent of Hugh M. Brown to be named a director
99.5 Opinion of Lazard, Freres & Co. LLC (included as Annex D to
the joint proxy statement/prospectus filed as part of this
registration statement and incorporated herein by reference)
99.6 Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation (included as Annex E to the joint proxy
statement/prospectus filed as part of this registration
statement and incorporated herein by reference)
</TABLE>
---------------
* To be filed by amendment.
