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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
AMERICAN MEDICAL RESPONSE, INC.
(Name of Subject Company)
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AMERICAN MEDICAL RESPONSE, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
027446 10 3
(CUSIP Number of Class of Securities)
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WILLIAM GEORGE
VICE PRESIDENT AND GENERAL COUNSEL
AMERICAN MEDICAL RESPONSE, INC.
2821 SOUTH PARKER ROAD
10TH FLOOR
AURORA, COLORADO 80014
(303) 614-8500
(303) 614-8549 (FAX)
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of
the Person Filing Statement)
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WITH A COPY TO
KEITH F. HIGGINS, ESQ.
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
(617) 951-7000
(617) 951-7050 (FAX)
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is American Medical Response, Inc., a
Delaware corporation (the "Company"). The address of the principal executive
offices of the Company is 2821 South Parker Road, 10th Floor, Aurora, Colorado
80014. The title of the class of equity securities to which this Statement
relates is the shares of common stock, par value $.01 per share, of the Company
(the "Common Stock").
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to a tender offer by MedTrans Acquisition Co., a
Delaware corporation (the "Purchaser") and an indirect wholly owned subsidiary
of Laidlaw Inc., a Canadian corporation (the "Parent" or "Laidlaw"), disclosed
in a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") dated
January 10, 1997 to purchase all outstanding shares (the "Shares") of the Common
Stock at a price of $40.00 per Share, net to the seller in cash, without
interest thereon upon the terms and subject to the conditions set forth in the
Offer to Purchase dated January 10, 1997 (the "Offer to Purchase") and the
related Letter of Transmittal (which together constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of January 6, 1997 (the "Merger Agreement") among the Parent, the Purchaser and
the Company. The Merger Agreement provides that, among other things, as soon as
practicable after the consummation of the Offer and satisfaction or, if
permissible, waiver of the conditions to the Merger, the Purchaser shall be
merged with and into the Company (the "Merger"), the separate corporate
existence of the Purchaser shall cease, and the Company shall continue as the
surviving corporation (the "Surviving Corporation"). A copy of the Merger
Agreement is filed as Exhibit 1 to this Statement and is incorporated herein by
reference.
According to the Offer to Purchase, the principal executive offices of the
Parent are located at 3221 North Service Road, Burlington, Ontario L7R 3Y8. The
Purchaser's principal executive office is 669 Airport Freeway, Suite 400, Hurst,
Texas 76503.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
Statement, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements or understandings between
the Company and its executive officers, directors and affiliates are described
on pages 11-12, 16 and 18 of the Company's Proxy Statement dated May 9, 1996 for
its 1996 Annual Meeting of Stockholders (the "1996 Proxy Statement"). Pages
11-12, 16 and 18 are filed as Exhibit 2 to this Statement and are incorporated
herein by reference.
In April 1996, David C. Colby entered into an employment agreement with the
Company that entitles him to receive an annual base salary as well as such
bonuses as may be authorized from time to time by the Board of Directors. The
agreement has an initial term of three years, with automatic extensions of one
year added annually unless terminated, and with a covenant-not-to-compete with
the Company for a period of two years following termination of employment. Under
Mr. Colby's employment agreement, if the Company terminates Mr. Colby's
employment agreement other than for cause or if Mr. Colby terminates his
employment for Good Reason (as defined), Mr. Colby will be entitled to a
termination payment approximately equal to his base salary, plus 1.5 times the
greater of (i) any bonus or incentive compensation paid to him for an eighteen
month period or (ii) 50% of his base salary. In addition, all options to
purchase Common Stock which were previously granted to Mr. Colby shall
immediately vest. Annual base salary currently in effect for Mr. Colby is
$283,250.
In December 1996, the Company and one of its wholly-owned subsidiaries, STAT
Healthcare, Inc. ("STAT"), entered into an employment agreement with Russell D.
Schneider, who became a director of the Company in December 1996. Mr.
Schneider's annual base salary is currently $150,000. Mr. Schneider's
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employment agreement has a term of three years and provides that if his
employment with STAT is terminated other than for cause by STAT within the three
years after December 1996, he will receive his base compensation in effect on
the date prior to termination for an additional period of twelve months and
continuation of coverage and participation in current medical and dental
insurance plans for such twelve month period. In addition, Mr. Schneider's
employment agreement also provides that if Mr. Schneider sells or otherwise
disposes of his shares of Common Stock received by Mr. Schneider in the
acquisition of STAT before the dates specified in the agreement, he is required
to pay to STAT the difference between the average selling price of such shares
and the closing price of the Common Stock on the first date such shares are not
subject to such provisions. The Company expects to release Mr. Schneider from
these provisions in connection with the Offer and the Merger.
David C. Colby and George B. DeHuff have each entered into an agreement with
the Company and Parent relating to his employment with the Company following
consummation of the Offer. Under the terms of these agreements, as an inducement
to remain in their respective positions with the Company following the Offer and
the Merger, Messrs. and DeHuff will each be paid an amount ($841,500 in the case
of Mr. Colby and $817,000 in the case of Mr. DeHuff) on August 31, 1997 if he is
still employed by the Company on that date, provided that if he is terminated
without cause (as defined in the Company's Executive Separation Allowance Plan
(the "Separation Plan")) prior to August 31, 1997 or if he terminates his
employment following the occurrence of certain specified events he will receive
such amount upon such termination and will be entitled to receive certain
specified benefits. In addition, the agreements amend the respective employment
agreements with Messrs. Colby and DeHuff effective upon consummation of the
Offer to (i) increase the annual base salary of each of Messrs. Colby and DeHuff
to $325,000, (ii) provide that each is eligible for an annual performance bonus
with a target of 50% of his base salary, based on quantitative and qualitative
performance factors to be established by the Company, and that he will
participate in any other bonus program that Parent or the Company makes
available for senior executives of the Company, (iii) amend the provisions
relating to severance benefits to be provided under his existing employment
agreements to provide that in the event that he is terminated without cause by
the Company or by him for Good Reason (as defined) he will be entitled to
receive his cash compensation earned to the date of termination plus the greater
of the pro rata portion of his target bonus for the preceding twelve months or
the pro rata portion of 50% of his then current base salary, and, in respect of
any other bonus plan in which he is then participating, an amount that reflects
his achievement of any performance goals under such plan to the date of
termination. The agreements also provide that each of Messrs. Colby and DeHuff
will be granted, effective January 6, 1997, the date the Merger Agreement was
executed, an option to purchase 30,000 shares of Parent's Class B Nonvoting
Shares at an exercise price equal to the closing price of the shares on January
3, 1997, the date preceding the date on which the Merger Agreement was executed
and will be granted, in May 1997, an option to purchase an additional 30,000
shares of Parent's Class B Nonvoting Shares at an exercise price equal to the
fair market value of such shares on the date of grant. Such options will vest in
five equal annual installments commencing on the first anniversary of the date
of grant. Under the agreements, effective upon consummation of the Offer, each
of Messrs. Colby and DeHuff waives his rights under the Separation Plan, except
as otherwise provided in the agreement with respect to continuation of certain
employee benefits following termination of the executive's employment with the
Company without cause or for Good Reason prior to August 31, 1997.
At a meeting of the Board of Directors of the Company held on January 5,
1997, the Board accelerated the vesting of all options to purchase Common Stock,
including options held by executive officers, directors and affiliates of the
Company, effective on the date on which Purchaser purchases shares of Common
Stock pursuant to the Offer. Under the terms of the Merger Agreement, each
holder of an option to purchase Common Stock who executes an agreement to cancel
such option shall be entitled to receive as soon as practicable thereafter from
the Company in consideration for such cancellation an amount in cash (less
applicable withholding taxes) equal to the product of (i) the number of shares
of Common Stock previously subject to such option MULTIPLIED BY (ii) the excess,
if any, of the per share
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amount paid to holders tendering their shares in the Offer over the exercise
price per share of the Common Stock previously subject to such option.
(c) Except as described below or incorporated herein, to the knowledge of
the Company, as of the date hereof, there exists no material contract,
agreement, arrangement or understanding and no actual or potential conflict of
interest between the Company or its affiliates and (i) the Company, its
executive officers, directors or affiliates or (ii) the Purchaser or its
executive officers, directors or affiliates.
INDEMNIFICATION UNDER DELAWARE LAW, THE COMPANY'S CERTIFICATE OF INCORPORATION
AND BY-LAWS AND THE MERGER AGREEMENT
The Company is a Delaware corporation. Under Delaware law, indemnification
of directors and officers is generally permitted for expenses incurred by them
by reason of their position with the corporation, if the director or officer has
acted in good faith and with the reasonable belief that his conduct was in the
best interest of the corporation. However, Delaware law does not permit a
corporation to indemnify persons against judgments in actions brought by or in
the right of the corporation (although it does permit indemnification in such
situations if approved by the Delaware Court of Chancery and for expenses of
such actions). Article X of the Company's Certificate of Incorporation, as
amended, provides that the Company shall, to the maximum extent permitted under
Delaware law, indemnify and advance expenses to any person who is or was a party
or is threatened to be made a party to any action, suit, proceeding or claim, by
reason of being a director or officer of the Company.
The Company maintains insurance policies that provide for the
indemnification of directors and officers pursuant to the provisions described
above.
The Merger Agreement provides that Parent will cause the Surviving
Corporation to keep in effect the provisions in its Certificate of Incorporation
and By-Laws containing the provisions with respect to indemnification and
exculpation set forth in the Certificate of Incorporation and the By-Laws of the
Company on the date of the Merger Agreement to the fullest extent permitted
under applicable law. These provisions may not be amended, repealed or otherwise
modified for a period of three years from the date of the Merger in any manner
that would adversely affect the rights of those who were directors, officers,
employees or agents of the Company at the date of the Merger, unless such
modification is required by law.
The Merger Agreement provides that the Company shall, to the fullest extent
permitted under applicable law or under the Company's Certificate of
Incorporation or By-Laws, and, after the date of the Merger, the Surviving
Corporation shall, to the fullest extent permitted under applicable law or under
the Surviving Corporation's Certificate of Incorporation or By-Laws, indemnify
and hold harmless, each present and former director, officer or employee of the
Company or any of its subsidiaries (collectively, the "Indemnified Parties")
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to the transactions contemplated by the Merger Agreement, or otherwise with
respect to any acts or omissions occurring at or prior to the date of the
Merger, to the same extent as provided in the Company's Certificate of
Incorporation or By-Laws or any applicable contract or agreement as in effect on
the date of the Merger Agreement, in each case for a period of three years after
the date of the Merger Agreement. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the date of the
Merger), (i) any counsel retained by the Indemnified Parties for any period
after the date of the Merger shall be reasonably satisfactory to the Surviving
Corporation, (ii) after the date of the Merger, the Surviving Corporation shall
pay the reasonable fees and expenses of such counsel, promptly after statements
therefor are received, and (iii) the Surviving Corporation will cooperate in the
defense of any such matter; PROVIDED, HOWEVER, that the Surviving Corporation
shall not be liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld); and
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PROVIDED, FURTHER, that, in the event that any claim or claims for
indemnification are asserted or made within such three-year period, all rights
to indemnification in respect of any such claim or claims shall continue until
the disposition of any and all such claims. The Indemnified Parties as a group
may retain only one law firm to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties. Such indemnity agreements of Parent and the Surviving Corporation shall
extend, on the same terms to, and shall inure to the benefit of and shall be
enforceable by, each person or entity who controls, or in the past controlled,
any present or former director, officer or employee of the Company or any of its
subsidiaries.
The Merger Agreement provides that the Surviving Corporation shall honor and
fulfill in all respects the obligations of the Company pursuant to
indemnification agreements with the Company's directors and officers existing at
or before the date of the Merger.
Pursuant to the Merger Agreement, for a period of five years after the date
of the Merger, Parent shall cause the Surviving Corporation to maintain in
effect, if available, directors' and officers' liability insurance covering
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy on terms (including the amounts of coverage
and the amounts of deductibles, if any) that are comparable to the terms now
applicable to directors and officers of Parent, or, if more favorable to the
Company's directors and officers, the terms now applicable to them under the
Company's current policies; PROVIDED, HOWEVER, that in no event shall Parent or
the Surviving Corporation be required to expend in excess of 300% of the annual
premium currently paid by the Company for such coverage; and provided further,
that if the premium for such coverage exceeds such amount, Parent or the
Surviving Corporation shall purchase a policy with the greatest coverage
available for such 300% of the annual premium.
Under the Merger Agreement, from and after the Merger, Parent is
guaranteeing the obligations of the Surviving Corporation under the provisions
of the Merger Agreement relating to indemnification and directors' and officers'
liability insurance.
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
Such summary is qualified in its entirety by reference to the Merger Agreement,
a copy of which is filed herewith as Exhibit 1 and is incorporated herein by
reference. Capitalized terms not otherwise defined in the following summary of
certain provisions of the Merger Agreement have the respective meanings ascribed
to them in the Merger Agreement. In particular, when the term material adverse
effect is used herein it has the meaning as defined in the Merger Agreement.
THE OFFER. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, the Purchaser will purchase all Shares
validly tendered pursuant to the Offer. The Merger Agreement provides that the
Purchaser may in its sole discretion waive, in whole or in part, at any time or
from time to time, any condition (other than the Minimum Condition, which may
not be waived without the prior written consent of the Company), increase the
price per Share payable in the Offer or make any other changes in the terms and
conditions of the Offer; provided that, unless previously approved by the
Company in writing, no change may be made that decreases the price per Share
payable in the Offer, changes the form of consideration payable in the Offer,
reduces the maximum number of Shares to be purchased in the Offer or imposes
conditions to the Offer in addition to those set forth herein. As of December
31, 1996, there were 21,047,345 Shares issued and outstanding, 1,999,180 shares
of Common Stock reserved for issuance under the Company's stock option plans and
agreements and stock purchase plan, 3,311,258 shares of Common Stock reserved
for issuance upon conversion of the Notes, and 3,919,900 shares of Common Stock
issuable in connection with the acquistion of STAT Healthcare, Inc., and that,
except as otherwise
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disclosed in the Merger Agreement, no other stock of the Company is outstanding
or committed to be issued. Based on this information and assuming all holders of
outstanding options to purchase shares of Common Stock will have entered into
agreements to cancel such options on or prior to the date Purchaser purchases
the Shares pursuant to the Offer, the Company believes that the Minimum
Condition will be satisfied if the Purchaser acquires at least 18,852,335 Shares
in the Offer. Laidlaw has informed the Company that it directly or indirectly
holds 480,000 shares which will not be tendered but will count toward the
satisfaction of the Minimum Condition. Certain other conditions to the Offer are
described in the Offer to Purchase.
THE MERGER. The Merger Agreement provides that, subject to the terms and
conditions thereof, and in accordance with Delaware Law, the Purchaser shall be
merged with and into the Company as soon as practicable after satisfaction or
waiver of the conditions set forth in the Merger Agreement (the "Effective
Time"). The Merger shall become effective upon the filing of a Certificate of
Merger with the Secretary of State of the State of Delaware (or such later date
as is specified in the Certificate of Merger). As a result of the Merger, the
separate corporate existence of the Purchaser will cease and the Company will
continue as the surviving corporation (the "Surviving Corporation"). In the
Merger, each issued and outstanding Share (other than Shares owned directly or
indirectly by Laidlaw or any of its subsidiaries or by the Company as treasury
stock, and other than Shares owned by stockholders who have properly exercised
rights of appraisal under Delaware Law) will be converted into the right to
receive $40.00 per Share, without interest, and each issued and outstanding
share of common stock of the Purchaser will be converted into one fully paid and
non-assessable share of common stock of the Surviving Corporation.
The Merger Agreement provides that the certificate of incorporation and
by-laws of the Purchaser at the Effective Time will be the certificate of
incorporation and by-laws of the Surviving Corporation until amended in
accordance with applicable law. The Merger Agreement also provides that the
directors of the Purchaser at the Effective Time will be the directors of the
Surviving Corporation, and the officers of the Purchaser at the Effective Time
will be the officers of the Surviving Corporation.
THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that,
commencing upon the purchase of Shares pursuant to the Offer, and from time to
time thereafter, Purchaser will be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as will give Purchaser representation on the Board equal to the product
of (i) the total number of directors on the Board and (ii) the percentage that
the number of Shares owned by the Purchaser and its affiliates (including Shares
purchased pursuant to the Offer) bears to the total number of outstanding
Shares, and the Company has agreed, upon request of the Purchaser, promptly
either to increase the size of the Board (and, if necessary, amend the Company's
by-laws to permit such an increase) or to use its reasonable best efforts to
secure the resignations of such number of directors as is necessary to enable
the Purchaser's designees to be elected to the Board and to cause the
Purchaser's designees to be so elected. The Merger Agreement also provides that
following the election or appointment of Purchaser's designees to the Company's
Board of Directors any amendment of the Merger Agreement or any amendment to the
Restated Certificate of Incorporation or Bylaws of the Company inconsistent with
the Merger Agreement, any termination of the Merger Agreement by the Company,
any extension of time for performance of any of the obligations or other acts of
Laidlaw or Purchaser or any waiver of any of the Company's rights under the
Merger Agreement will require the concurrence of a majority of the directors of
the Company then in office who are not designees of the Purchaser or employees
of the Company. The Company's obligation to appoint the Purchaser's designees to
the Board of Directors is subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder.
STOCKHOLDERS MEETING. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, duly call and
hold a special meeting of its stockholders (the "Special Meeting") as promptly
as practicable following the acceptance for payment and purchase of Shares by
the Purchaser pursuant to the Offer for the purpose of voting upon the Merger
Agreement, the
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Merger and related matters. The Board shall recommend approval and adoption of
the Merger Agreement by the Company's stockholders.
INTERIM OPERATIONS. In the Merger Agreement, the Company has agreed that,
except as otherwise agreed in writing by Laidlaw, prior to the time Purchaser's
designees are elected as directors, the businesses of the Company and its
subsidiaries shall be conducted only in the ordinary course of business
consistent with past practice, the Company will use its reasonable commercial
efforts to preserve substantially intact its business organization, keep
available the services of the present officers, employees and consultants of the
Company and its subsidiaries, and preserve the present relationships of the
Company and it subsidiaries with customers, suppliers, and other persons with
which the Company or any of its subsidiaries has significant business relations.
In addition, except as expressly contemplated by the Merger Agreement or without
the prior written consent of Laidlaw, each of the Company and its subsidiaries
will not:
(a) amend or otherwise change the Certificate of Incorporation or By-
Laws of the Company or any of its subsidiaries;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class of the Company or any of the Company's subsidiaries, or
any options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock, or any other ownership interest
(including, without limitation, any phantom interest) in the Company or any
of its subsidiaries or affiliates (except for (i) the issuance of shares of
Company Common Stock issuable pursuant to certain stock options; (ii) the
grant of options under the Company's stock option plans consistent with past
practice to purchase up to 50,000 shares of Company Common Stock at the
market value on the date of grant to newly hired employees (excluding
executive officers), and the issuance of shares upon exercise thereof, (iii)
the issuance of shares of Company Common Stock issuable upon conversion of
the Notes, (iv) the issuance of shares of Company Common Stock issuable to
participants in the Company's Employee Stock Purchase Plan pursuant to the
terms thereof, (v) the issuance of shares of Company Common Stock at not
less than the fair market value thereof in connection with certain permitted
acquisitions, and (vi) the issuance of shares of Company Common Stock to
former holders of shares of capital stock of STAT Healthcare, Inc.);
(c) sell, pledge, dispose of or encumber any assets of the Company or
any of its subsidiaries (except for (i) sales of assets in the ordinary
course of business and in a manner consistent with past practice, (ii)
disposition of obsolete or worthless assets, (iii) sales of immaterial
assets not in excess of $500,000, and (iv) encumbrances on assets to secure
purchase money financings of equipment and capital improvements and in
connection with the financing of permitted acquisitions);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof)
in respect of any of its capital stock, except that a wholly-owned
subsidiary of the Company may declare and pay a dividend or make advances to
its parent or the Company, (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, or
permit any subsidiary to purchase, repurchase, redeem or otherwise acquire,
any of its securities or any securities of its subsidiaries, including,
without limitation, shares of Company Stock or any option, warrant or right,
directly or indirectly, to acquire shares of Company Common Stock, or
propose to do any of the foregoing; except for the acceleration of options
pursuant to the terms of the Company stock option plans and the net exercise
of such options and the repurchase of Notes as required by the terms
thereof;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof other than (A) those approved in the
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Merger Agreement and (B) ambulance service providers and other health care
providers in the continental United States and Hawaii, whether acquired
solely for cash, promissory notes that are subordinated as required by the
Company's lenders, or Company Common Stock issued at fair market value, or
any combination thereof, provided that the total consideration paid for all
such acquisitions described in this clause (B) consummated prior to March
31, 1997 shall not exceed $50 million and the total consideration paid for
all such acquisitions described in this clause (B) consummated prior to July
15, 1997 shall not exceed $100 million; (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or endorse
or otherwise as an accommodation become responsible for, the obligations of
any person or, except in the ordinary course of business consistent with
past practice or in connection with purchases of equipment or capital
improvements or in permitted acquisitions, make any loans or advances (other
than loans or advances to or from direct or indirect wholly owned
subsidiaries), (iii) enter into or amend any material contract or agreement
other than in the ordinary course of business or where such contract or
amendment would not have a material adverse effect; (iv) authorize any
capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of the amounts approved in the Merger Agreement; or (v)
enter into or amend any contract, agreement, commitment or arrangement to
effect any of the matters prohibited by this provision;
(f) except as approved in the Merger Agreement, increase the
compensation payable or to become payable to its officers or employees,
except for increases in salary or wages of employees of the Company or its
subsidiaries in accordance with past practice and in amounts that are in the
aggregate reflected in the budgets previously provided to Laidlaw or, except
in the ordinary course of business, grant any severance or termination pay
to, or enter into any employment or severance agreement with any director,
officer or other employee of the Company or any of its subsidiaries, or
establish, adopt, enter into or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any current or former directors, officers or employees,
except, in each case, as may be required by law;
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable);
(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax
liability or agree to an extension of a statute of limitations, except to
the extent the amount of any such settlement has been reserved for in the
financial statements contained in the Company's SEC reports filed prior to
the date of the Merger Agreement;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities reflected or
reserved against in the financial statements contained in the Company's SEC
reports filed prior to the date of the Merger Agreement or incurred in the
ordinary course of business and consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the actions
described above, or any action which would make any of the representations
or warranties of the Company contained in the Merger Agreement untrue or
incorrect or prevent the Company from performing or cause the Company not to
perform its covenants under the Merger Agreement.
NO SOLICITATION. In the Merger Agreement, the Company has agreed not to
directly or indirectly, through any officer, director, employee, representative
or agent of the Company or any of its subsidiaries, (i) solicit, initiate or
encourage the initiation of any inquiries or proposals regarding any merger,
sale of substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer, but not in connection with permitted
acquisitions) or similar transactions involving the Company or any
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subsidiaries of the Company other than the Merger (any of the foregoing
inquiries or proposals being referred to herein as an "Acquisition Proposal"),
(ii) engage in negotiations or discussions concerning, or provide any nonpublic
information to any person relating to, any Acquisition Proposal or (iii) agree
to approve or recommend any Acquisition Proposal. Nothing contained in the
Merger Agreement prevents the Board of Directors of the Company from
considering, negotiating, approving and recommending to the stockholders of the
Company, or under certain circumstances providing nonpublic information with
respect to, a bona fide Acquisition Proposal not solicited in violation of the
Merger Agreement, provided the Board of Directors of the Company determines in
good faith (upon written advice of independent counsel) that it is required to
do so in order to discharge properly its fiduciary duties.
DIRECTORS' AND OFFICERS' INSURANCE; INDEMNIFICATION. The Merger Agreement's
provisions relating to indemnification and insurance are described above in Item
3.
EMPLOYMENT AGREEMENTS. Employment agreements between David C. Colby, the
Company and Laidlaw and between George B. DeHuff III, the Company and Laidlaw,
entered into in connection with the Merger Agreement, are described above in
Item 3.
COMPANY STOCK OPTIONS. On the date Purchaser purchases Shares pursuant to
the Offer, each outstanding option to purchase Company Common Stock (a "Company
Stock Option"), whether or not exercisable, shall become exercisable and each
holder of a Company Stock Option who executes an agreement to cancel such
Company Stock Option shall be entitled to receive from the Company, in
consideration for such cancellation, an amount in cash (less applicable
withholding taxes) equal to the product of (i) the number of shares previously
subject to such Company Stock Option multiplied by (ii) the excess, if any, of
the Per Share Amount over the exercise price per share of the Company Common
Stock previously subject to such Company Stock Option. Each Company Stock Option
that is not so canceled will expire upon the Merger.
EMPLOYEE STOCK PURCHASE PLAN. On the date Purchaser purchases Shares
pursuant to the Offer, all rights under the Company's 1992 Employee Stock
Purchase Plan with respect to amounts previously deducted shall be accelerated
and shall be exercised automatically for shares of Company Common Stock as if
January 6, 1997 were the end of an "Option Period" (as defined in the Plan)
unless a participant withdraws from the Plan. Payroll deductions under the Plan
not used to purchase shares will be returned to the participants.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the respective
obligations of the Company, Laidlaw and the Purchaser to consummate the Merger
are subject to the satisfaction of the following conditions: (i) the Purchaser
shall have purchased shares pursuant to the Offer; (ii) any waiting period
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated; (iii) no temporary restraining order, preliminary or
permanent injunction or other order or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by any governmental authority seeking any of the foregoing be
pending; and there shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger which makes the consummation of the Merger illegal; and (iv) there shall
not have been instituted, pending or threatened any action or proceeding (or any
investigation or other inquiry that might result in such an action or
proceeding) by any governmental authority, nor shall there be in effect any
judgment, decree or order seeking to prohibit or limit Laidlaw from exercising
all material rights and privileges pertaining to its ownership of the Surviving
Corporation or the ownership or operation by Laidlaw or any of its subsidiaries
of all or a material portion of the business or assets of Laidlaw or any of its
subsidiaries, or seeking to compel Laidlaw or any of its subsidiaries to dispose
of or hold separate all or any material portion of the business or assets of
Laidlaw or any of its subsidiaries (including the Surviving Corporation and its
subsidiaries), as a result of the Merger or the transactions contemplated by the
Merger Agreement.
8
<PAGE>
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has
made customary representations and warranties to Laidlaw and the Purchaser with
respect to, among other things, its organization, capitalization, financial
statements, public filings, labor relations, employee benefit plans, insurance,
compliance with laws, litigation, environmental matters, tax matters,
intellectual property, consents and approvals and undisclosed liabilities.
TERMINATION; FEES. The Merger Agreement may be terminated and the
transaction abandoned at any time prior to the Effective Time, notwithstanding
the approval by the stockholders of the Company, (i) by mutual written consent
of the Company, the Purchaser and Laidlaw; (ii) by either Laidlaw or the Company
if a court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued a nonappealable final
order, decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger (provided
that the right to terminate the Merger Agreement under this provision is not
available to any party who has not complied with its obligations and such
noncompliance materially contributed to the issuance of any such order, decree
or ruling or the taking of such action); (iii) by either Laidlaw or the Company
if the Purchaser shall have (A) terminated the Offer or (B) failed to accept for
purchase and pay for Shares pursuant to the Offer by April 15, 1997 unless the
Purchaser's actions are a result of the receipt by the Company of an Acquisition
Proposal or a request for additional information under the HSR Act or the
failure to obtain any necessary governmental or regulatory approval, in which
case if the Purchaser shall have failed to accept for purchase and pay for
Shares by July 15, 1997 (provided that the right to terminate the Merger
Agreement under this provision is not available to any party whose failure to
fulfill any obligation under the Merger Agreement has been the cause of or
resulted in any of the circumstances described in clauses (A) and (B) before
such date); or (iv) by Laidlaw or the Company, prior to the purchase of Shares
pursuant to the Offer, if the Board of Directors of the Company shall withdraw,
modify or change its approval or recommendation of the Offer, the Merger
Agreement or the Merger in a manner adverse to Laidlaw; (v) by Laidlaw or the
Company, prior to the purchase of Shares pursuant to the Offer, (A) if any
representation or warranty of the Company or Laidlaw, respectively, set forth in
the Merger Agreement shall be untrue when made, or (B) upon a breach in any
material respect of any covenant or agreement on the part of the Company or
Laidlaw, respectively, set forth in the Merger Agreement, in each case where
such untruth or breach would have a material adverse effect on the Company or
Laidlaw, as the case may be (either (A) or (B) above being a "Terminating
Breach"), PROVIDED, THAT, if such Terminating Breach is curable by the Company
or Laidlaw, as the case may be, through the exercise of its reasonable best
efforts and for so long as the Company or Laidlaw, as the case may be, continues
to exercise such reasonable best efforts, neither Laidlaw nor the Company,
respectively, may terminate the Merger Agreement under this provision.
If the Merger Agreement is terminated by Laidlaw pursuant to its rights
described in clauses (iv) or (v) of the preceding paragraph, to compensate
Laidlaw and the Purchaser for entering into the Merger Agreement, their taking
action to consummate the transactions hereunder and incurring the costs and
expenses related thereto and other losses and expenses, including the foregoing
by Laidlaw of other opportunities, the Company will pay Laidlaw a fee of $17.5
million.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
RECOMMENDATION OF THE BOARD OF DIRECTORS.
At a special meeting held on January 5, 1997, the Board of Directors of the
Company (the "Board") approved the Merger Agreement and the transactions
contemplated thereby and determined that the Merger and the Offer, taken
together, are fair to, and in the best interests of, the Company and its
stockholders. THE BOARD UNANIMOUSLY RECOMMENDS THAT HOLDERS OF SHARES ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. Copies of a letter to the
Company's stockholders and a press release communicating such approval and
recommendation are filed as Exhibits 3 and 4, respectively, to this Statement
and are incorporated herein by reference.
9
<PAGE>
BACKGROUND OF THE MERGER AND THE OFFER.
On October 29, 1996, Paul T. Shirley, the President and Chief Executive
Officer of the Company, and James R. Bullock, the President and Chief Executive
Officer of Laidlaw, met in Denver, Colorado. The two had not previously met, and
the purpose of the meeting was to discuss generally the healthcare
transportation industry and its future. There was no discussion about a
potential transaction between the parties at that time. Subsequent to the
meeting in Denver, during the first week of November, 1996, Laidlaw engaged
Merrill Lynch & Co. to provide advice to it on a prospective transaction with
the Company. During the third week of November, 1996, Merrill Lynch reported to
Laidlaw on the results of its analysis of the publicly available information on
the Company. Thereafter, Laidlaw determined that it was in the best interests of
its stockholders to acquire Shares prior to any discussion with respect to a
potential transaction. 480,000 Shares were purchased by Laidlaw between November
21, 1996 and December 5, 1996 at an aggregated purchase price of $14.4 million.
In December, 1996, Mr. Bullock contacted Mr. Shirley and asked to meet
again. They met on December 13, 1996 in Denver, and Mr. Bullock advised Mr.
Shirley that Laidlaw had completed an extensive analysis of the Company and felt
that it was a good fit with Laidlaw's MedTrans business. Mr. Bullock told Mr.
Shirley that Laidlaw was interested in acquiring the Company. He suggested that
Laidlaw would be willing to make a cash offer or, if some or all of the
Company's stockholders wanted to receive Laidlaw securities, a combination of
cash and preferred stock. Mr. Bullock and Mr. Shirley discussed the
opportunities for the two combined businesses. Although Mr. Bullock suggested
that Mr. Shirley could have a role in the combined business, Mr. Shirley
deferred those discussions until after all other terms of the proposed
combination were fully determined. Mr. Bullock advised Mr. Shirley that
Laidlaw's analysis suggested that a fair price for the Company would be in the
range of $37.00 to $38.00 per share. Mr. Shirley suggested that a price closer
to $44.00 per share would be appropriate.
On December 16, 1996, the Company's Board of Directors held a special
meeting by conference telephone to discuss the negotiations with Laidlaw. At the
meeting, Mr. Shirley described his conversations with representatives of Laidlaw
and informed the Board that Laidlaw would possibly be willing to pay $40 per
share for the Company's outstanding shares. The Board instructed Mr. Shirley to
continue discussions with Laidlaw.
On December 16, 1996, Mr. Shirley advised Mr. Bullock that while there was a
genuine interest in pursuing a merger with Laidlaw, the purchase price would
need to be in the range of $42.00 to $44.00. Mr. Bullock advised Mr. Shirley
that the absolute "top price" Laidlaw was willing to pay was $40.00 per share.
On December 17 and 18, 1996, the Company's Board of Directors held special
meetings by conference telephone. At the meetings, Mr. Shirley informed the
Board as to the status of negotiations with Mr. Bullock. Mr. Shirley indicated
that he had been informed by Mr. Bullock $40.00 per share was the highest price
Laidlaw was willing to pay. The Board instructed Mr. Shirley to continue
discussions with Laidlaw. There were various conversations between Mr. Bullock
and Mr. Shirley in which they discussed their valuation issues and attempted to
agree upon a per share price. Ultimately these discussions led to an agreement
of $40.00 per share, subject to satisfactory resolution of the other significant
transaction issues.
Also as a result of this discussion between Mr. Bullock and Mr. Shirley,
Laidlaw and the Company entered into a confidentiality agreement on December 23,
1996. The confidentiality agreement also provided for a one-year standstill on
purchases of Company stock and similar transactions, with certain exceptions.
Pursuant to that confidentiality agreement Laidlaw and its advisors were
provided access to various due diligence materials and Laidlaw performed
diligence to confirm its prior analysis of the Company. On December 20, 1996,
counsel for the Company distributed a draft Agreement and Plan of Merger to
Laidlaw.
On January 3, 1997, the Company's Board of Directors met at a special
meeting. At the meeting, the Board received presentations from management and
from the Company's legal and financial advisors. The Company's management
reviewed the status of negotiations with Laidlaw with respect to the proposed
10
<PAGE>
transaction. Ropes & Gray, counsel to the Company, reviewed the Board's
fiduciary duties, and Smith Barney presented its analysis of the proposed
consideration to be received by the Company's stockholders. Ropes & Gray also
reviewed the terms and conditions of the proposed Agreement and Plan of Merger.
Following the presentations of the Board, management and the Company's advisors
discussed the proposed transaction.
In the evening of January 5, 1997, after completion of the negotiations over
the proposed Agreement and Plan of Merger, the Board of Directors of the Company
held a special meeting by conference phone to review, with the advice and
assistance of the Company's financial and legal advisors, the proposed Agreement
and Plan of Merger, and the transaction contemplated thereby, including the
Offer and the Merger. At the meeting, Mr. Shirley described the outcome to the
Board of the final negotiations with Laidlaw with respect to the substantive
terms of the proposed Agreement and Plan of Merger. Smith Barney updated its
analysis presented to the Board at the January 3 meeting of the Board and
delivered its oral opinion to the Board (which was subsequently confirmed by
delivery of a written opinion dated January 6, 1997) to the effect that, as of
such date and based upon and subject to certain matters stated in such opinion,
the cash consideration of $40.00 per share to be received by holders of shares
(other than Laidlaw and its affiliates) in the Offer and the Merger, taken
together, was fair, from a financial point of view, to such holders. Following a
number of questions from, and discussions among, the directors, the Company's
Board of Directors (i) approved the Merger Agreement and the transactions
contemplated thereby and authorized the execution and delivery thereof, (ii)
determined that the Offer and the Merger, taken together, are fair to, and in
the best interests of, the Company and its stockholders, and (iii) recommended
that the Company's stockholders accept the Offer and tender their shares to
Purchaser.
During the period from December 30, 1996, through January 6, 1997, the
Company and Laidlaw negotiated the Merger Agreement and the terms of the Offer.
The Board of Directors of Laidlaw approved the transaction on January 6,
1997, and the Board of Directors of the Company, after discussing the
transaction on several occasions, approved the transaction on January 5, 1997.
On Sunday, January 5, 1997, representatives of the Company and Laidlaw
completed their negotiations of all substantive terms of the Merger Agreement.
On January 5, 1997, the Board of Directors of the Company met and approved the
Offer, the Merger Agreement and related matters. On January 6, 1997, the Boards
of Directors of Laidlaw and Purchaser also took the steps required under the
corporate and securities laws to approve the Offer, the Merger and the Merger
Agreement. Laidlaw, the Purchaser and the Company executed the Merger Agreement
in the afternoon on January 6, 1997. On January 6, 1997, after the closing of
trading, Laidlaw and the Company separately announced the transaction. On
January 10, 1997, Purchaser commenced the Offer.
To the extent any of the foregoing background information describes events
to which the Company was not a party, it is based upon information provided by
Laidlaw.
The Company issued the following press release on January 6, 1997:
11
<PAGE>
[American Medical Response, Inc. Letterhead]
Contact: Anna Marie Dunlap
V.P. Investor Relations
(303) 614-8570
FOR IMMEDIATE RELEASE
LAIDLAW TO ACQUIRE
AMERICAN MEDICAL RESPONSE, INC.
MERGER WILL COMBINE TOP TWO AMBULANCE COMPANIES IN U.S.
JANUARY 6, 1997 -- AURORA, COLORADO -- American Medical Response, Inc.
(NYSE:EMT) announced today that it had signed a definitive agreement through
which Laidlaw Inc. (NYSE:LDWB) will acquire American Medical Response.
According to the terms of the merger agreement, Laidlaw will commence a tender
offer to acquire 100 percent of American Medical Response's outstanding shares
for $40 per share, or an equity value of approximately of $1.12 billion. The
transaction is expected to close in February, subject to a tender of a minimum
of two-thirds of American Medical Response's outstanding shares, required
regulatory approvals, and other customary conditions. American Medical Response
currently has approximately 28 million fully diluted common shares outstanding.
Laidlaw plans to merge its San Diego, California-based MedTrans ambulance
services unit with American Medical Response. The combined entity will operate
as American Medical Response, Inc. and will remain headquartered in Aurora,
Colorado. Paul T. Shirley, currently Chief Executive Officer of American Medical
Response, will continue in that role.
"This transaction represents a significant realization of value for our
shareholders," said Paul T. Shirley, Chief Executive Officer. "American Medical
Response and MedTrans are two highly successful medical transportation providers
sharing a common view of the future of emergency medical services. The
combination will create an organization with even greater operating efficiencies
and improved service for our patients. As a combined entity, we will be well
positioned to expand the scope of emergency and urgent care services offered to
municipalities and health care payors."
"We have known and respected the management of MedTrans for the past several
years," Mr. Shirley continued. "We plan to capitalize on the experience of both
executive teams as we grow the new company."
Since its initial public offering in 1992, American Medical Response has
acquired more than 70 ambulance providers. MedTrans, acquired by Laidlaw in
mid-1993, has acquired 80 ambulance companies and currently operates in 23
states. Both companies provide a variety of emergency and non-emergency medical
transportation and related services to municipalities, health care payors, and
individuals. Upon completion of the merger, approximately 40% of Laidlaw's total
revenue will be derived from medical transportation and related services.
American Medical Response's Board of Directors received a fairness opinion
regarding the merger from Smith Barney. Merrill Lynch & Co. is acting as the
financial advisor to Laidlaw for the transaction.
American Medical Response is the nation's leading provider of emergency and
non-emergency medical transportation services, with operations in 28 states and
over 12,000 employees. Laidlaw, Inc. is a major provider of transportation and
environmental services to municipalities and industries through the United
States and Canada.
NOTE: THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS MAY
VARY. FOR MORE IMPORTANT INFORMATION REGARDING THE ASSUMPTIONS UPON WHICH THESE
STATEMENTS ARE MADE, AND IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY, REFER TO EXHIBIT 99 FILED WITH THE COMPANY'S 1995 10-K.
##
* * *
12
<PAGE>
The Purchaser commenced the Offer on January 10, 1997.
REASONS FOR THE RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS.
In light of the Board's review of the Company's competitive and financial
position, recent operating results and prospects, the Board determined that the
Offer and the Merger, taken together, are fair to, and in the best interests of,
the Company and its stockholders. In making such recommendation and in approving
the Merger Agreement and the transactions contemplated thereby, the Board
considered a number of factors, including, but not limited to, the following:
(i) the terms and conditions of the Merger Agreement;
(ii) the views expressed by management of the Company (at the Board meetings
on January 3, 1997 and January 5, 1997 and at several previous Board meetings)
regarding the financial condition, results of operations, business and prospects
of the Company, including the prospects of the Company if the Company were to
remain independent;
(iii) the recent trading price of the shares of Common Stock and that the
$40.00 per Share to be paid in the Offer and as the consideration in the Merger
represents a premium of approximately 19% over the $33.625 closing sale price
for the Shares on the New York Stock Exchange on January 3, 1997, the last
trading day prior to the public announcement of the execution of the Merger
Agreement, and a premium of approximately 36% over the $29.50 closing sale price
for the Shares on the New York Stock Exchange one month prior to January 6,
1997;
(iv) the views expressed by management and the Board's conclusion that it
was not likely that any other party would consider a transaction that was more
favorable to the Company and its stockholders;
(v) the financial presentations of Smith Barney at the January 3 and January
5, 1997 Board meetings and the oral opinion of Smith Barney delivered to the
Board at the January 5, 1997 Board meeting (which opinion was subsequently
confirmed by delivery of a written opinion dated January 6, 1997) to the effect
that, as of such date and based upon and subject to certain matters stated in
such opinion, the cash consideration of $40.00 per Share to be received by
holders of Shares (other than Parent and its affiliates) in the Offer and the
Merger, taken together, was fair, from a financial point of view, to such
holders. Smith Barney's opinion is directed only to the fairness, from a
financial point of view, of the cash consideration to be received in the Offer
and the Merger to holders of Shares (other than Parent and its affiliates) and
is not intended to constitute, and does not constitute, a recommendation as to
whether any stockholder should tender Shares pursuant to the Offer. A copy of
the opinion of Smith Barney is attached hereto as Annex II to this Schedule
14D-9 and is incorporated herein by reference. STOCKHOLDERS ARE URGED TO READ
THE OPINION OF SMITH BARNEY CAREFULLY AND IN ITS ENTIRETY;
(vi) the Merger Agreement permits the Board, in the exercise of its
fiduciary duties, to furnish nonpublic information and data, and enter into
discussions and negotiations, in connection with an unsolicited acquisition
proposal and recommend an unsolicited acquisition proposal to the Company's
stockholders;
(vii) the Merger Agreement permits the Board, in the exercise of its
fiduciary duties, to terminate the Merger Agreement in favor of an alternative
acquisition proposals; upon such termination, the Company shall pay Parent a fee
of $17,500,000 (representing approximately 1.46% of the total value of the
consideration to be paid in the Offer and the Merger); and
(viii) the transactions contemplated by the Merger Agreement provided for an
all cash payment to shareholders, with no financing condition.
13
<PAGE>
The Board did not assign relative weights to the above factors or determine
that any factor was of particular importance. Rather, the Board viewed its
position and recommendations as being based on the totality of the information
presented to and considered by it.
The Board recognized that, while the consummation of the Offer gives the
Company's stockholders the opportunity to realize a significant premium over the
price at which the Shares were traded prior to the public announcement of the
Offer, tendering in the Offer would eliminate the opportunity for such
stockholders to participate in the future growth and profits of the Company. The
Board believes that the loss of the opportunity to participate in the growth and
profits of the Surviving Corporation was reflected in the Offer price of $40.00
per Share. The Board also recognized that there can be no assurance as to the
level of growth or profits to be attained by the Surviving Corporation in the
future.
It is expected that, if the Shares are not purchased by Parent in accordance
with the terms of the Offer or if the Merger is not consummated, the Company's
current management, under the general direction of the Board, will continue to
manage the Company as an ongoing business.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company has retained Smith Barney as its financial advisor in connection
with the Offer and the Merger. Pursuant to the terms of Smith Barney's
engagement, the Company has agreed to pay Smith Barney for its services an
aggregate financial advisory fee of $1.5 million. The Company also has agreed to
reimburse Smith Barney for reasonable travel and other out-of-pocket expenses,
including reasonable legal fees and expenses, and to indemnify Smith Barney and
certain related parties against certain liabilities, including liabilities under
the federal securities laws, arising out of Smith Barney's engagement. In the
ordinary course of business, Smith Barney and its affiliates may actively trade
or hold the securities of the Company and Parent for their own account or for
the account of customers and, accordingly, may at any time hold a long or short
position in such securities.
Neither the company nor any person acting on its behalf has employed,
retained or agreed to compensate any person to make solicitations or
recommendations to the stockholders concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Except as set forth below, no transactions in the Shares have been
effected during the past 60 days by the Company or, to the best of the Company's
knowledge, by any executive officer, director or affiliate of the Company:
(1) On December 10, 1996, Russell D. Schneider, a Director of the
Company, acquired 706,231 shares of Common Stock in connection with the
acquisition of STAT Healthcare, Inc. by the Company.
(2) On November 12, 1996, David C. Colby, a Director of the Company,
purchased 3,300 shares of Common Stock at $30.00 per share on the open
market.
(b) Although David C. Colby, the Company's Chief Financial Officer and a
director of the Company, and Russell D. Schneider, a director of the Company,
have indicated to the Company that they presently do not intend to tender
pursuant to the Offer shares of Common Stock beneficially owned by them, they
both voted to approve the Offer and the Merger. To the best knowledge of the
Company, all of the other executive officers, directors, affiliates and
subsidiaries currently intend to tender pursuant to the Offer all Shares which
are owned beneficially by such persons, subject to and consistent with any
fiduciary obligations of such person.
14
<PAGE>
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth above, the Company is not engaged in any negotiation
in response to the Offer which relates to or would result in (i) an
extraordinary transaction, such as a merger or reorganization, involving the
Company; (ii) a purchase, sale or transfer of material amount of assets by the
Company; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as described in Item 3 or 4 above, there are no transactions,
Board resolutions, agreements in principle or signed contracts in response to
the Offer that relate to or would result in one or more of the events referred
to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The Information Statement attached hereto as Annex I is being furnished in
connection with the contemplated designation by Purchaser, pursuant to the
Merger Agreement, of certain persons to be appointed to the Board of Directors
of the Company other than at a meeting of the Company's stockholders following
the purchase by Purchaser of the number of Shares pursuant to the Offer
necessary to satisfy the Minimum Condition.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO.
- ----------
<S> <C>
Exhibit 1 Agreement and Plan of Merger dated as of January 6, 1997 among the Parent, the Purchaser and the
Company.
Exhibit 2 Pages 11-12, 16 and 18 of the Company's Proxy Statement dated May 9, 1996.
Exhibit 3 Letter to stockholders of the Company dated January 10, 1997.*
Exhibit 4 Press release issued by the Company dated January 6, 1997.
Exhibit 5 Opinion of Smith Barney dated January 6, 1997 (included as Annex II to this Statement).*
Exhibit 6 Employment Agreement between David C. Colby and the Company dated April 1, 1996.
Exhibit 7 Employment Agreement between Russell D. Schneider, STAT Healthcare, Inc. and the Company dated
December 10, 1996.
Exhibit 8 Agreement between David C. Colby, Parent and the Company dated January 6, 1997.
Exhibit 9 Agreement between George B. DeHuff III, Parent and the Company dated January 6, 1997.
</TABLE>
- ------------------------
* Included with Schedule 14D-9 mailed to stockholders of the Company.
15
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
AMERICAN MEDICAL RESPONSE, INC.
By: /s/ William George
--------------------------------------
Name: William George
Title: Vice President
Dated: January 9, 1997
16
<PAGE>
ANNEX I
AMERICAN MEDICAL RESPONSE, INC.
2821 SOUTH PARKER ROAD
10TH FLOOR
AURORA, COLORADO 80014
------------------------
INFORMATION STATEMENT PURSUANT
TO SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
------------------------
This Information Statement, which is being mailed on or about January 10,
1997 to the holders of shares of the common stock, par value $.01 per share (the
"Common Stock") of American Medical Response, Inc., a Delaware corporation (the
"Company"), is being furnished in connection with the designation by MedTrans
Acquisition, Inc., a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of Laidlaw Inc., a Canadian corporation (the "Parent"), of persons
(the "Purchaser Designees") to the Board of Directors of the Company (the
"Board"). Such designation is to be made pursuant to an Agreement and Plan of
Merger dated as of January 6, 1997 (the "Merger Agreement") among the Company,
the Parent and the Purchaser.
Pursuant to the Merger Agreement, among other things, the Purchaser
commenced a cash tender offer on January 10, 1997 to purchase all of the issued
and outstanding shares (the "Shares") of Company Stock at a price of $40.00 per
Share, net to the seller in cash, as described in the Purchaser's Offer to
Purchase dated January 10, 1997 and the related Letter of Transmittal (which
Offer to Purchase and related Letter of Transmittal together constitute the
"Offer"). The Offer is scheduled to expire at 12:00 midnight on Friday, February
7, 1997, unless extended. The Offer is subject to, among other things, the
condition that a number of Shares representing not less than two-thirds of the
Company's outstanding voting power on a fully diluted basis being validly
tendered prior to the expiration of the Offer and not withdrawn (the "Minimum
Condition"). The Merger Agreement also provides for the merger (the "Merger") of
the Purchaser with and into the Company as soon as practicable after
consummation of the Offer. Following the consummation of the Merger (the
"Effective Time"), the Company will be the surviving corporation (the "Surviving
Corporation") and a wholly owned subsidiary of the Parent. In the Merger, each
Share issued and outstanding immediately prior to the Effective Time (other than
Shares held in the treasury of the Company or by the Parent, the Purchaser, or
any indirect or direct wholly owned subsidiary of the Parent or the Company, all
of which will be canceled) will be converted into the right to receive cash in
an amount of $40.00.
Following the election or appointment of the Purchaser Designees and prior
to the Effective Time, any amendment of the Merger Agreement or any amendment to
the Restated Certificate of Incorporation or By-laws of the Company inconsistent
with the Merger Agreement, any termination of the Merger Agreement by the
Company, any extension by the Company of the time for the performance of any of
the obligations or other acts of Parent or Purchaser or any waiver of any of the
Company's rights thereunder shall require the concurrence of a majority of the
directors of the Company then in office who are not designees of Purchaser or
employees of the Company.
I-1
<PAGE>
The terms of the Merger Agreement, a summary of the events leading up to the
Offer and the execution of the Merger Agreement and other information concerning
the Offer and the Merger are contained in the Offer to Purchase and in the
Solicitation/Recommendation Statement on Schedule 14D-9 of the Company (the
"Schedule 14D-9") with respect to the Offer, copies of which are being delivered
to stockholders of the Company contemporaneously herewith. Certain other
documents (including the Merger Agreement) were filed with the Securities and
Exchange Commission (the "SEC") as exhibits to the Schedule 14D-9 and as
exhibits to the Tender Offer Statement on Schedule 14D-1 of the Purchaser and
Parent (the "Schedule 14D-1"). The exhibits to the Schedule 14D-9 and the
Schedule 14D-1 may be examined at, and copies thereof may be obtained from, the
regional offices of and public reference facilities maintained by the SEC
(except that the exhibits thereto cannot be obtained from the regional offices
of the SEC) in the manner set forth in Sections 7 and 17 of the Offer to
Purchase.
No action is required by the stockholders of the Company in connection with
the election or appointment of the Purchaser Designees to the Board. However,
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the mailing to the Company's stockholders of the information set
forth in this Information Statement prior to a change in a majority of the
Company's directors otherwise than at a meeting of the Company's stockholders.
The information contained in this Information Statement concerning the
Parent, the Purchaser and the Purchaser Designees has been furnished to the
Company by such persons, and the Company assumes no responsibility for the
accuracy or completeness of such information. The Schedule 14D-1 indicates that
the principal executive office of the Parent is located at 3221 North Service
Road, Burlington, Ontario L7R 3Y8 and the principal executive office of the
Purchaser is located at 669 Airport Freeway, Suite 400, Hurst, Texas 76503.
GENERAL
The shares of Common Stock are the only class of voting securities of the
Company outstanding. Each share of Common Stock is entitled to one vote. As of
December 31, 1996, there were 21,047,345 shares of Common Stock outstanding,
which did not include the 3,919,900 shares of Common Stock issuable in
connection with the Company's acquisition of STAT Healthcare, Inc. The Board of
Directors of the Company currently consists of 12 members. Each director holds
office until his successor is elected and qualified or until his earlier death,
resignation or removal.
RIGHT TO DESIGNATE DIRECTORS; THE PURCHASER DESIGNEES
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer and from time to time thereafter, Purchaser
shall be entitled to designate up to such number of directors, rounded up to the
next whole number, on the Board that equals the product of (i) the total number
of directors on the Board (giving effect to the election of any additional
directors pursuant to the Merger Agreement) and (ii) the percentage that the
number of Shares owned by Purchaser and its affiliates (including any Shares
purchased pursuant to the Offer) bears to the total number of outstanding
Shares, and the Company shall, upon request by Purchaser, promptly either
increase the size of the Board (and shall if necessary, amend the Company's
By-Laws to permit such an increase) or use its reasonable best efforts to secure
the resignation of such number of directors as is necessary to enable
Purchaser's designees to be elected to the Board and shall cause Purchaser's
designees to be so elected. The Merger Agreement also provides that, promptly
upon request by Purchaser, the Company will use its reasonable best efforts to
cause persons designated by Purchaser to constitute the same percentage as the
number of Purchaser's designees to the Board bears to the total number of
directors on the Board on (i) each committee of the Board, (ii) each board of
directors or similar governing body or bodies of each subsidiary of the Company
designated by Purchaser and (iii) each committee of each such board or body.
I-2
<PAGE>
Purchaser has informed the company that each of the Purchaser Designees
listed below has consented to act as a director.
It is expected that the Purchaser Designees may assume office at any time
following the purchase by Purchaser of such number of Shares that satisfies the
Minimum Condition, which purchase cannot be earlier than February 7, 1997, and
that, upon assuming office, the Purchaser Designees will thereafter constitute
at least a majority of the Board.
Biographical information concerning each of the Purchaser Designees,
directors and executive officers is presented on the following pages.
PURCHASER DESIGNEES
James R. Bullock, who is 52 years old, was appointed President and Chief
Executive Officer of Parent on October 13, 1993. For more than two years prior
thereto, he was President and Chief Executive Officer of Cadillac Fairview
Corporation Limited, a property development company.
Ivan R. Cairns, who is 50 years old, has been Senior Vice President and
General Counsel of Parent since October 1990 and, prior thereto, was
Vice-President and General Counsel and Secretary of Parent since November 1981.
John R. Grainger, who is 47 years old, has been President of Laidlaw
Transit, the Company's passenger services group, since May 1992. From February
1990 to that date, he was a Senior Vice-President of Laidlaw Transit.
CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The names of the current directors and executive officers of the Company,
their ages as of December 31, 1996, and certain other information about them are
set forth below. As indicated above, some of the current directors may resign
effective immediately following the purchase of Shares by the Purchaser pursuant
to the Offer.
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------- --- ----------------------------------------------------------------------
<S> <C> <C>
Paul T. Shirley 56 President, Chief Executive Officer and Director
David C. Colby 43 Executive Vice President, Chief Financial Officer and Director
George B. DeHuff III 43 Executive Vice President, Chief Operating Officer and Director
Carol J. Burt 39 Senior Vice President and Treasurer
Michael J. McClymont 53 Senior Vice President
John K. Rester 48 Senior Vice President
William George III 31 Vice President and General Counsel
Paul M. Verrochi 47 Director and Chairman of the Board
Charles D. Baker 67 Director
Michael A. Baker 51 Director
David B. Hammond 51 Director
James E. McGrath 41 Director
Joseph R. Paolella 45 Director
Dominic J. Puopolo 53 Director
Russell D. Schneider 41 Director
John Larkin Thompson 66 Director
</TABLE>
I-3
<PAGE>
The executive officers of the Company are elected annually by the Board of
Directors following the annual meeting of stockholders and serve at the
discretion of the Board of Directors.
Paul T. Shirley has been a director of the Company since August 1992 and has
served as Chief Executive Officer and President of the Company since August
1995. He served as Executive Vice President of the Company from August 1992 to
August 1995 and as Chief Operating Officer of the Company from May 1993 to
August 1995. Mr. Shirley was President and Chief Executive Officer of American
Medical Response West from March 1989 until August 1992 when it was acquired by
the Company. From June 1963 until March 1989, he was President of Santa Cruz
Ambulance Service, which in 1989 became part of a predecessor to American
Medical Response West.
David C. Colby has served as an Executive Vice President, Chief Financial
Officer and Treasurer and as a director of the Company since April 1996. From
February 1995 to April 1996, Mr. Colby served as a Senior Vice President and
Treasurer of Columbia/HCA Healthcare Corporation. He served as Chief Financial
Officer of Columbia/HCA or its predecessor entities from July 1988 to February
1994 and as Treasurer from November 1991 to March 1996.
George B. DeHuff III has been Executive Vice President and Chief Operating
Officer since August 1995. Mr. DeHuff was President and Chief Executive Officer
of American Medical Response West from September 1994 until August 1995. Prior
to joining American Medical Response, Mr. DeHuff had been President and Chief
Operating Officer of Lifefleet, Inc., one of the largest ambulance service
providers in the United States, from July 1991 to July 1994. During his
three-year tenure at Lifefleet, Mr. DeHuff restructured its operations, directed
internal and acquisition driven growth, and led the effort to sell Lifefleet in
1994. From January 1990 until April 1991, Mr. DeHuff was President and Chief
Executive Officer of EECO, Inc., an electronic components manufacturer.
Carol J. Burt has been Senior Vice President and Treasurer since September
1996. Prior to joining American Medical Response, Ms. Burt was Director of the
Health Care Group of Chase Securities from 1992 until 1996. From 1991 to 1992,
Ms. Burt was Senior Vice President of the Corporate Banking Group at Texas
Commerce Bank.
Michael J. McClymont has been a Senior Vice President of the Company since
February 1992 and since July 1995 has served as Chief Executive Officer of the
Company's Northeast Region. Since February 1992, he has been an Associate at
Exel Holdings, Ltd. From 1989 to 1992, Mr. McClymont was President and Chief
Operating Officer of Mycor Services, a food and vending service company.
John K. Rester has been a Senior Vice President of the Company and President
of Mobile Medic Ambulance Service, Inc., a subsidiary of the Company, since
November 1992, and is also Chief Executive Officer of the Company's South
Region. Mr. Rester was President and Chief Executive Officer of Mobile Medic
Ambulance Service, Inc. from 1977 to November 1992 when it was acquired by the
Company.
William George III has been a Vice President and General Counsel of the
Company since October 1995. From September 1992 to September 1995, Mr. George
practiced corporate and antitrust law at the Boston office of Ropes & Gray, a
law firm where he worked extensively with the Company.
Paul M. Verrochi has served as the Company's Chairman of the Board since its
inception in February 1992, and he served as its Chief Executive Officer and
President from February 1992 to August 1995. Mr. Verrochi was named National
Entrepreneur of the Year for Emerging Growth Companies in 1995 in an awards
program sponsored nationally by Inc. Magazine, Ernst & Young, and Merrill Lynch.
Since February 1991, Mr. Verrochi has been a Principal of Exel Holdings, Ltd., a
privately-held investment firm he co-founded with Mr. Puopolo. From April 1989
to December 1990, Mr. Verrochi was President of Allwaste Asbestos Abatement,
Inc., a subsidiary of Allwaste, Inc., a publicly held, national environmental
company. Mr. Verrochi was a founder of American Environmental Group, a regional
asbestos abatement company, and served as Chairman of its Board of Directors
from July 1987 until April 1989 when it was acquired by Allwaste.
I-4
<PAGE>
Charles D. Baker has served as a director of the Company since August 1995.
Mr. Baker has been a Professor of Business Administration at Northeastern
University since 1985. From 1984 to 1985, Mr. Baker served as the Under
Secretary of the United States Department of Health and Human Services. Prior to
1984, Mr. Baker served as Chairman and Chief Executive Officer of Harbridge
House, Inc., an international management consulting and education firm. Mr.
Baker is a director of Millipore Corporation.
Michael A. Baker has served as a director of the Company since February
1992. Since June 1995, he has also been Chairman of Notre Capital Ventures II,
L.L.C., a venture capital firm. From May 1993 to June 1995, Mr. Baker was
President of Notre Capital Ventures, Ltd., a venture capital firm. Mr. Baker was
a co-founder of Sanifill, Inc., a developer and operator of nonhazardous solid
waste landfills, where he held the positions of Co-Chief Executive Officer from
May 1989 through November 1989, Senior Vice President -- Corporate Development
from December 1989 to October 1991, and director from May 1989 to May 1992. Mr.
Baker is a director of Allwaste, Inc., a national environmental company.
David B. Hammond has served as a director of the Company since August 1992.
Mr. Hammond is Deputy Chairman of ADT Limited, Ltd., an international services
company, and has been on ADT's Board of Directors since September 1984.
James E. McGrath has served as a director of the Company since February
1992. Since April 1989, Mr. McGrath has been Chairman and Chief Executive
Officer of Fairfax Capital Partners, Inc., a private investment firm. From June
1987 to April 1989, he was Managing Director of William E. Simon & Sons, Inc., a
private merchant banking company. Prior to that, Mr. McGrath was a Corporate
Senior Vice President of E.F. Hutton & Company where he was President of the
venture capital division and head of the firm's merchant banking activities. Mr.
McGrath is Chairman of the Board and a director of Perceptron, Inc., a
manufacturer of laser-based sensor and image processing systems.
Joseph R. Paolella has served as a director of the Company since August 1992
and has also served as Executive Vice President of the Company from August 1992
to March 1996. Mr. Paolella was President of American Medical Response of
Connecticut, Incorporated, a subsidiary of the Company, from August 1992 to July
1995. Mr. Paolella was an Executive Vice President of New Haven Ambulance, Inc.
from 1974 to August 1992 when it was acquired by the Company. He was a founding
Director of the Connecticut Ambulance Association and served as its President
from 1980 to 1988. Mr. Paolella is currently the chairman of the Government
Affairs Committee for the American Ambulance Association which is responsible
for public relations with Federal government agencies including the Health Care
Finance Administration.
Dominic J. Puopolo has served as a director of the Company since its
inception in February 1992. From February 1992 to April 1996, he served as an
Executive Vice President and Chief Financial Officer of the Company. Since
February 1991, he has also been a Principal of Exel Holdings, Ltd., a privately
held investment firm he co-founded with Mr. Verrochi. From April 1989 to
December 1990, Mr. Puopolo was Vice President and Chief Financial Officer of
Allwaste Asbestos Abatement, Inc., a subsidiary of Allwaste, Inc., a publicly
held, national environmental company. Mr. Puopolo was a founder of American
Environmental Group, a regional asbestos abatement company, and served as its
Chief Financial Officer from July 1987 to April 1989 when it was acquired by
Allwaste.
Russell D. Schneider has served as a director of the Company since December
1996. Mr. Schneider also serves as Chief Executive Officer of STAT Healthcare,
Inc., a subsidiary of the Company. From June 1996 to December 1996, Mr.
Schneider was Chairman of the Board and Chief Executive Officer of STAT
Healthcare, Inc., and had been a director since July 1995. Mr. Schneider
co-founded AmHealth Corporation in October 1992. Mr. Schneider was also a
co-founder of Columbia/HCA Healthcare Corporation in 1988 and served on its
Board of Directors from 1988 to 1993 and as Senior Vice President of Market
Development from 1993 to 1994, overseeing Columbia's involvement in physician
ventures, mergers, acquisitions and business development.
I-5
<PAGE>
John Larkin Thompson has served as a director of the Company since August
1992. Mr. Thompson has been of counsel to the law firm Nutter, McClennen & Fish
since January 1993. Mr. Thompson was a director of Blue Cross and Blue Shield of
Massachusetts, Inc. from 1987 to 1993. From 1987 to September 1992, Mr. Thompson
was President and Chief Executive Officer of Blue Cross and Blue Shield of
Massachusetts, Inc. Mr. Thompson is a director of EG&G, Inc., a diversified
technical service and manufacturing company.
DIRECTORS MEETINGS AND COMMITTEES
During the year ended December 31, 1995, the Board of Directors of the
Company held six meetings. Each director attended at least 75% of the meetings
of the Board and the Committees of which he is a member. Each director who is
not a full-time employee of the Company or one of its subsidiaries and who was
not a stockholder of the Company prior to completion of the Company's initial
public offering receives $2,000 for each board meeting attended and $500 for
each committee meeting attended. Directors are reimbursed for their reasonable
expenses in attending board and committee meetings. Directors who are not
employees of the Company or one of its subsidiaries participate in the 1992
Directors Stock Option Plan. Messrs. Thompson and Hammond were each granted
non-qualified options to acquire 7,500 shares of Common Stock at an exercise
price of $25.125 per share, the closing price on May 11, 1995. Mr. Charles Baker
was granted a non-qualified option to acquire 7,500 shares of Common Stock at an
exercise price of $28.25 per share, the closing price on August 4, 1995, the day
he was elected a director. These options become exercisable on the first
anniversary of the date of grant and expire ten years from the date of grant.
The Audit Committee, which held four meetings during 1995, reviews with
management and the independent public accountants the Company's annual financial
statements, the scope of the audit, any comments made by the independent public
accountants and such other matters as the Committee deems appropriate. In
addition, the Committee reviews the performance and retention of the Company's
independent auditors and reviews with management such matters relating to
compliance with corporate policies as the Committee deems appropriate. Messrs.
Thompson, Hammond and Charles Baker, none of whom is an executive officer or
employee of the Company, currently serve on the Audit Committee.
The Compensation Committee, which held four meetings during 1995,
administers the Company's stock option plans and recommends to the Board of
Directors the compensation of the Company's executive officers. Messrs.
Thompson, Hammond and Michael Baker, none of whom is an executive officer or
employee of the Company, currently serve on the Compensation Committee.
In February 1996, the Board established a Board Organization and Nominating
Committee. Mr. Charles Baker was appointed Chairman of the Board Organization
and Nominating Committee which will have two additional members. The Board
Organization and Nominating Committee will review the organization and structure
of the Board and the committees of the Board, and make recommendations as to
Board and committee functions, appointments, compensation and nominations for
election by stockholders at future annual meetings.
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto set forth certain information with
respect to the beneficial ownership of shares of Common Stock as of December 31,
1996 (i) individually by the chief executive officer of the Company, each of the
four other most highly paid executive officers of the Company in 1995 (the
"Named Executive Officers") and each director of the Company, (ii) by all
executive officers and directors of the Company as a group and (iii) by each
person known to the Company to be the beneficial owner of more than five percent
of the outstanding Common Stock. Except as noted below, each of the
I-6
<PAGE>
persons listed has sole investment and voting power with respect to the shares
indicated and the address of each of the persons listed is c/o the Company:
<TABLE>
<CAPTION>
NUMBER
OF SHARES PERCENT
---------- ------------
<S> <C> <C>
Paul T. Shirley +*(1)(2).................................................................... 553,337 2.6%
Russell D. Schneider (1).................................................................... 708,731 3.4%
Paul M. Verrochi +*(1)(3)................................................................... 92,187 *
Dominic J. Puopolo +*(4).................................................................... 49,756 *
James E. McGrath *.......................................................................... 79,237 *
Joseph R. Paolella *(1)..................................................................... 33,851 *
John K. Rester +(1)......................................................................... 19,460 *
George B. DeHuff +(1)....................................................................... 93,600 *
Michael A. Baker *.......................................................................... 0 *
John Larkin Thompson *(1)................................................................... 38,000 *
David B. Hammond *(1)....................................................................... 30,000 *
Charles Baker *(1).......................................................................... 15,000 *
David C. Colby *(1)......................................................................... 108,300 *
All executive officers and directors as a group (16 persons) (1)(5)......................... 1,905,513 8.9%
Putnam Investments, Inc. (6)................................................................ 1,823,860 8.7%
One Post Office Square
Boston, Massachusetts 02109
Pilgrim, Baxter & Associates (6)............................................................ 1,682,700 8.0%
1255 Drummers Lane
Suite 300
Wayne, Pennsylvania 19087
</TABLE>
- ------------------------
+ Named Executive Officer
* Director of the Company
** Less than one 1%
(1) Includes currently exercisable options and options which have been
accelerated effective upon consummation of the Offer.
(2) Represents shares held by Mr. Shirley and his wife, Patricia Shirley, in a
revocable trust for their benefit.
(3) Includes (i) 7,000 shares held by Junemarie Verrochi, Mr. Verrochi's wife,
as to which he disclaims beneficial ownership, and (ii) 36,400 shares held
by the Verrochi Family Charitable Trust of which Mr. and Mrs. Verrochi are
trustees.
(4) Includes 2,550 shares held by Sonia M. Puopolo, Mr. Puopolo's wife, as to
which he disclaims beneficial ownership.
(5) Includes shares held by spouses and minor children as to which beneficial
ownership is disclaimed.
(6) This information was derived from reports provided to the Company as of
November 30, 1996 by a stock monitoring service.
I-7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information with respect to compensation paid
to or accrued on behalf of the Named Executive Officers in 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
-------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) (1)
- ---------------------------------------------------------- ------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Paul T. Shirley........................................... 1995 258,333 129,167 77,000 5,355
Chief Executive Officer, 1994 223,558 112,500 -- 6,647
President and Director 1993 150,000 -- -- --
Paul M. Verrochi.......................................... 1995 300,000 150,000 66,000 --
Chairman of the Board (2) 1994 250,000 125,000 -- 4,620
1993 155,000 -- -- --
George B. DeHuff.......................................... 1995 195,833 77,500 60,000 --
Executive Vice President
and Chief Operating Officer (3)
Dominic J. Puopolo........................................ 1995 200,000 100,000 62,000 --
Executive Vice President 1994 175,000 87,500 -- 4,620
and Chief Financial Officer 1993 125,000 -- -- --
John K. Rester............................................ 1995 165,000 97,104 8,000 1,096
Senior Vice President 1994 137,500 41,750 -- 2,584
1993 137,500 41,750 -- --
</TABLE>
- ------------------------
(1) Company matching contributions earned under the Company's 401(k) Plan.
(2) Mr. Verrochi served as Chief Executive Officer and President until August
1995, at which time Mr. Shirley was elected to those offices.
(3) Mr. DeHuff became an executive officer of the Company in August 1995 after
having previously served as chief executive officer of a subsidiary of the
Company.
I-8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth (i) the number of shares of Common Stock
subject to options granted to each Named Executive Officer during 1995, (ii) the
percentage such grants represent of the total number of options granted to all
employees of the Company during 1995 and (iii) the expiration date of such
options.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZED
------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF RATES OF STOCK
SECURITIES # OF TOTAL PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
GRANTED (#)(1) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
--------------- ----------------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Paul T. Shirley..................... 12,000 1% 24.50 4/5/05 184,895 468,560
Chief Executive Officer, 65,000 7% 22.75 5/25/05 929,978 2,356,747
President, and Director
Paul M. Verrochi.................... 16,000 2% 24.50 4/5/05 246,527 624,747
Chairman of the Board 50,000 5% 22.75 5/25/05 715,368 1,812,882
George B. DeHuff.................... 10,000 1% 24.50 4/5/05 154,079 390,467
Chief Operating Officer and 50,000 5% 22.75 5/25/05 715,368 1,812,882
Executive Vice President
Dominic J. Puopolo.................. 12,000 1% 24.50 4/5/05 184,895 468,560
Chief Operating Officer and 50,000 5% 22.75 5/25/05 715,368 1,812,882
Executive Vice President
John K. Rester...................... 8,000 1% 24.50 4/5/05 123,263 312,374
Senior Vice President
</TABLE>
- ------------------------
(1) The exercise price of the options is equal to the market value of the
Company's Common Stock on the date of grant. Options become exercisable in
thirds, on the first, second and third anniversaries of the date of the
grant. Options expire at the close of business ten years after the date of
the grant.
I-9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table shows the value of exercisable and unexercisable options
held by each of the Named Executive Officers as of December 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTION SHARES IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1995 (#) AT DECEMBER 31, 1995 ($)
SHARES ACQUIRED VALUE -------------------------- --------------------------
ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul T. Shirley............. -- -- -- 77,000 -- 729,750
Paul M. Verrochi (1)........ -- -- -- -- -- 615,500
George B. DeHuff............ 7,500 48,750 9,166 93,334 95,097 913,340
Dominic J. Puopolo (1)...... -- -- -- 62,000 -- 583,500
John K. Rester.............. -- -- 20,000 18,000 300,000 214,000
</TABLE>
- ------------------------
(1) Each of the named executive officer's options became exercisable in full
subsequent to December 31, 1995. See "Severance and Consulting
Arrangements."
EMPLOYMENT AGREEMENTS
Messrs. Shirley, Colby and DeHuff have each entered into an employment
agreement with the Company that entitles him to receive an annual base salary as
well as such bonuses as may be authorized from time to time by the Board of
Directors. Each agreement has an initial term of three years, with automatic
extensions of one year added annually unless terminated, and with a
covenant-not-to-compete with the Company for a period of two years following
termination of employment. Each agreement requires the executive to devote his
full time, attention and efforts to the business and affairs of the Company. If
the Company terminates Mr. Shirley's employment agreement other than for cause,
Mr. Shirley will be entitled to a termination payment approximately equal to two
times his base salary, plus two times the greater of (i) any bonus or incentive
compensation paid to him during the previous twelve months or (ii) 50% of his
base salary. In addition, all options to purchase Common Stock which were
previously granted to Mr. Shirley shall immediately vest. If the Company
terminates Mr. Colby's employment agreement other than for cause, Mr. Colby will
be entitled to a termination payment approximately equal to his base salary,
plus 1.5 times the greater of (i) any bonus or incentive compensation paid to
him for an eighteen month period or (ii) 50% of his base salary. In addition,
all options to purchase Common Stock which were previously granted to Mr. Colby
shall immediately vest. If the Company terminates Mr. DeHuff's employment
agreement other than for cause, Mr. DeHuff will be entitled to a termination
payment approximately equal to 1.5 times his base salary, plus 1.5 times the
greater of (i) any bonus or incentive compensation paid to him during the
previous twelve months or (ii) 50% of his base salary. In addition, all options
to purchase Common Stock which were previously granted to Mr. DeHuff shall
immediately vest. Base salaries for 1996 are: Mr. Shirley -- $300,000, Mr. Colby
- -- $275,000 and Mr. DeHuff -- $250,000.
CHANGE-IN-CONTROL ARRANGEMENTS
The Company maintains an Executive Separation Allowance Plan (the
"Separation Plan") under which a participating executive is entitled to certain
benefits if, within 90 days following a change in control of the Company, the
executive is terminated other than for cause or if the executive terminates his
employment for good reason. Good reason includes a major reduction in the
executive's responsibilities, a significant reduction in base salary or total
benefits or a relocation outside of 50 miles from the executive's principal
location of employment. The terminated executive is entitled to a cash payment
equal to a designated multiple of the sum of his highest annual base salary
during the last five years and the highest annual bonus during the last three
years. In addition, the executive will receive one year's life insurance
coverage in an amount equal to two times his highest annual base salary during
the previous five years and
I-10
<PAGE>
medical and dental coverage for one year. All stock options held by the
executive will also become exercisable. Messrs. Shirley and DeHuff participate
in the Separation Plan and their designated salary and bonus multiples are 2.99
and 2.00, respectively.
SEVERANCE AND CONSULTING ARRANGEMENTS
Beginning in 1996, Mr. Verrochi ceased being a full-time employee of the
Company. In connection with his change in status and the cancellation of his
then existing employment contract, Mr. Verrochi executed a severance agreement
and the Company agreed to make a lump sum payment to him of $952,000 and to
accelerate the exercisability of stock options covering 96,000 shares of Common
Stock held by Mr. Verrochi. Mr. Verrochi has agreed not to compete with the
Company for a period of two years.
Beginning in April 1996, Mr. Puopolo ceased being a full-time employee of
the Company. In connection with his change in status and the cancellation of his
then existing employment contract, Mr. Puopolo executed a severance agreement
and the Company agreed to make a lump sum payment to him of $802,000 and to
accelerate the exercisability of stock options covering 92,000 shares of Common
Stock held by Mr. Puopolo. Mr. Puopolo has agreed not to compete with the
Company for a period of two years. Mr. Puopolo remains as member of the Board of
Directors.
The Company has also entered into consulting agreements with Exel Holdings
Ltd., a company owned by Messrs. Verrochi and Puopolo, to provide consulting
services in connection with the Company's acquisition program. Payments under
the consulting agreements, each of which has a term of one year, in the
aggregate are $20,000 per acquisition up to a maximum of $200,000.
In connection with Mr. Paolella's termination of active employment with the
Company, the Company entered into a severance arrangement with him under which
the Company agreed to make to him a lump sum payment of $252,700 and to
accelerate the exercisability of stock options covering 8,000 shares of Common
Stock that Mr. Paolella holds. Mr. Paolella has agreed not to compete with the
Company for a period of two years.
Until December 1995 the Company had been paying to James E. McGrath a
monthly consulting retainer of $5,600 in connection with services he performed.
Beginning in 1996 the Company ceased paying the retainer, although Mr. McGrath
will remain available on an hourly basis if requested by the Company. In
connection with this restructuring of this consulting arrangement the Company
agreed to make a lump sum payment to Mr. McGrath of $134,400.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases two ambulance stations in Santa Cruz, California from
Paul T. Shirley. The aggregate amount of lease payments for these properties
incurred by the Company in 1995 was approximately $59,000.
The Company leases its administrative facility in New Haven, Connecticut
from P&J Realty, a partnership in which Joseph R. Paolella is a partner. The
lease and related real estate tax payments paid by the Company to P&J Realty for
this property in 1995 totaled approximately $423,000. On March 31, 1996, the
Company made a payment to P&J Realty of $527,403 which represented the
discounted present value of future payments under the lease in excess of the
fair market value and the then current version of the lease was canceled. The
Company has entered into a new lease which provides for annual base rent of
$290,940 during the initial term with an increase to $339,430 seventeen months
after the commencement of any renewal period. The new lease is for five years
and allows either party to renew for an additional five-year period.
The Company has leased its administrative facility in Gulfport, Mississippi
from Mr. Rester. The Company paid $163,000 in lease payments on this property
during 1995. The lease for this property has a term of five years and expires in
January 1999, with an option for the Company to extend the term for an
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additional five-year period. The lease provides for annual rent of approximately
$131,300. Mr. Rester has expanded the facility at the Company's request and rent
payments when approved for the new facilities will increase the annual rent by
approximately $40,800 annually to annual rent of approximately $172,100.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Thompson, Hammond and Michael A. Baker, none of whom is or was an
executive officer or employee of the Company, served on the Compensation
Committee during 1995. The Company is a party to a consulting agreement with
DECCS, Inc., a company owned by a trust for the benefit of Mr. Baker's children,
pursuant to which Mr. Baker provides certain merger and acquisition advice as
required by the Company. Under that Agreement, DECCS is paid monthly at the rate
of $75,000 per year. During 1995, the Company paid DECCS approximately $90,000
pursuant to the consulting agreement.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater-than-ten-percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, during the fiscal year ended December 31,
1996, all Section 16(a) filing requirements applicable to its officers,
directors and greater-than-ten-percent beneficial owners were complied with.
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ANNEX II
[Letterhead of Smith Barney Inc.]
January 6, 1997
The Board of Directors
American Medical Response, Inc.
2821 South Parker Road
Aurora, Colorado 80014
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the common stock of American Medical Response, Inc.
("AMR") of the consideration to be received by such holders pursuant to the
terms and subject to the conditions set forth in the Agreement and Plan of
Merger, dated as of January 6, 1997 (the "Merger Agreement"), by and among
Laidlaw Inc. ("Laidlaw"), MedTrans Acquisition Co., a wholly owned subsidiary of
Laidlaw ("Acquisition"), and AMR. As more fully described in the Merger
Agreement, (i) Laidlaw and Acquisition will make a tender offer to purchase all
outstanding shares of the common stock, par value $0.01 per share, of AMR (the
"AMR Common Stock") at a purchase price of $40.00 per share, net to the seller
in cash (the "Tender Offer") and (ii) subsequent to the Tender Offer,
Acquisition will be merged with and into AMR (the "Merger" and, together with
the Tender Offer, the "Transaction") and each outstanding share of AMR Common
Stock not previously tendered will be converted into the right to receive $40.00
in cash.
In arriving at our opinion, we reviewed the Merger Agreement and held
discussions with certain senior officers, directors and other representatives
and advisors of AMR concerning the business, operations and prospects of AMR. We
examined certain publicly available business and financial information relating
to AMR as well as certain financial forecasts and other information and data for
AMR which were provided to or otherwise discussed with us by the management of
AMR. We reviewed the financial terms of the Transaction as set forth in the
Merger Agreement in relation to, among other things: current and historical
market prices and trading volumes of AMR Common Stock; the historical and
projected earnings and other operating data of AMR; and the capitalization and
financial condition of AMR. We considered, to the extent publicly available, the
financial terms of similar transactions recently effected which we considered
relevant in evaluating the Transaction and analyzed certain financial, stock
market and other publicly available information relating to the businesses of
other companies whose operations we considered relevant in evaluating those of
AMR. In addition to the foregoing, we conducted such other analyses and
examinations and considered such other financial, economic and market criteria
as we deemed appropriate in arriving at our opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed by
or discussed with us. With respect to financial forecasts and other information
and data provided to or otherwise reviewed by or discussed with us, we have been
advised by the management of AMR that such forecasts and other information and
data were reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management of AMR as to the future financial
performance of AMR. We have not made or been provided with an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of AMR nor have we made any
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physical inspection of the properties or assets of AMR. In connection with our
engagement, we were not requested to, and did not, solicit third party
indications of interest in acquiring all or a part of AMR. Our opinion is
necessarily based upon information available to us, and financial, stock market
and other conditions and circumstances existing and disclosed to us, as of the
date hereof.
Smith Barney has been engaged to render financial advisory services to AMR
in connection with the proposed Transaction and will receive a fee for such
services, a significant portion of which is contingent upon the consummation of
the Transaction. We also will receive a fee upon the delivery of this opinion.
In the ordinary course of our business, we and our affiliates may actively trade
or hold the securities of AMR and Laidlaw for our own account or for the account
of our customers and, accordingly, may at any time hold a long or short position
in such securities. We have in the past provided financial advisory and
investment banking services to AMR unrelated to the proposed Transaction, for
which services we have received compensation. In addition, we and our affiliates
(including Travelers Group Inc. and its affiliates) may maintain relationships
with AMR and Laidlaw.
Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of AMR in its evaluation of the proposed
Transaction, and our opinion is not intended to be and does not constitute a
recommendation to any stockholder as to whether or not such stockholder should
tender shares of AMR Common Stock in the Tender Offer or how such stockholder
should vote on the proposed Merger. Our opinion may not be published or
otherwise used or referred to, nor shall any public reference to Smith Barney be
made, without our prior written consent.
Based upon and subject to the foregoing, our experience as investment
bankers, our work as described above and other factors we deemed relevant, we
are of the opinion that, as of the date hereof, the cash consideration to be
received by the holders of AMR Common Stock (other than Laidlaw and its
affiliates) in the Transaction is fair, from a financial point of view, to such
holders.
Very truly yours,
SMITH BARNEY INC.
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Exhibit 1
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LAIDLAW INC.,
MEDTRANS ACQUISITION CO.
and
AMERICAN MEDICAL RESPONSE, INC.
Dated as of January 6, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE OFFER
SECTION 1.1 The Offer ................................................2
SECTION 1.2 Company Action. ..........................................3
SECTION 1.3 Boards of Directors and Committees; Section 14(f) ........4
ARTICLE II
THE MERGER
SECTION 2.1 The Merger ...............................................5
SECTION 2.2 Effective Time. ..........................................6
SECTION 2.3 Effect of the Merger. ....................................6
SECTION 2.4 Certificate of Incorporation, By-Laws. ...................6
SECTION 2.5 Directors and Officers. ..................................7
SECTION 2.6 Effect on Capital Stock. .................................7
SECTION 2.7 Exchange of Certificates. ................................8
SECTION 2.8 Stock Transfer Books. ....................................9
SECTION 2.9 No Further Ownership Rights in Company Common Stock. .....9
SECTION 2.10 Lost, Stolen or Destroyed Certificates. ................10
SECTION 2.11 Taking of Necessary Action; Further Action. ............10
SECTION 2.12 Stockholders' Meeting ..................................10
SECTION 2.13 Material Adverse Effect. ...............................11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Organization and Qualification; Subsidiaries. ...........11
SECTION 3.2 Certificate of Incorporation and By-Laws. ...............12
SECTION 3.3 Capitalization. .........................................12
SECTION 3.4 Authority Relative to this Agreement. ...................13
SECTION 3.5 No Conflict; Required Filings and Consents. .............13
SECTION 3.6 Compliance, Permits. ....................................14
SECTION 3.7 SEC Filings; Financial Statements. ......................15
SECTION 3.8 Absence of Certain Changes or Events. ...................15
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SECTION 3.9 No Undisclosed Liabilities. .............................16
SECTION 3.10 Absence of Litigation. .................................16
SECTION 3.11 Employee Benefit Plans, Employment Agreements. .........16
SECTION 3.12 Labor Matters. .........................................18
SECTION 3.13 Schedule 14D-9; Offer Documents; Proxy Statement. ......18
SECTION 3.14 Restrictions on Business Activities. ...................19
SECTION 3.15 Title to Property. .....................................19
SECTION 3.16 Taxes. .................................................19
SECTION 3.17 Environmental Matters. .................................20
SECTION 3.18 Intellectual Property. .................................21
SECTION 3.19 Interested Party Transactions. .........................22
SECTION 3.20 Insurance. .........................................22
SECTION 3.21 Healthcare Regulatory Compliance. ......................22
SECTION 3.22 Opinion of Financial Advisor. ..........................23
SECTION 3.23 Brokers. ...............................................23
SECTION 3.24 Section 203 of the Delaware Law Not Applicable .........23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
SECTION 4.1 Organization and Qualification; Subsidiaries ............24
SECTION 4.2 Authority Relative to this Agreement. ...................24
SECTION 4.3 No Conflict, Required Filings and Consents. .............24
SECTION 4.4 Offer Documents; Schedule 14D-9; Proxy Statement. .......25
SECTION 4.5 No Prior Activities; Financing. .........................25
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business by the Company Pending the Merger. ..26
SECTION 5.2 No Solicitation. ........................................29
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 HSR Act .................................................30
SECTION 6.2 Access to Information; Confidentiality. .................30
SECTION 6.3 Consents; Approvals. ....................................30
SECTION 6.4 Indemnification and Insurance. ..........................31
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SECTION 6.5 Notification of Certain Matters. ........................32
SECTION 6.6 Further Action ..........................................33
SECTION 6.7 Public Announcements. ...................................33
SECTION 6.8 Conveyance Taxes. .......................................33
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect
the Merger ...........................................................33
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination .............................................34
SECTION 8.2 Effect of Termination ...................................35
SECTION 8.3 Fees and Expenses .......................................35
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Effectiveness of Representations, Warranties and
Agreements; Knowledge, Etc............................................36
SECTION 9.2 Notices .................................................37
SECTION 9.3 Certain Definitions .....................................37
SECTION 9.4 Amendment ...............................................38
SECTION 9.5 Waiver ..................................................39
SECTION 9.6 Headings ................................................39
SECTION 9.7 Severability.............................................39
SECTION 9.8 Entire Agreement.........................................39
SECTION 9.9 Assignment; Guarantee of Acquisition ....................39
SECTION 9.10 Parties in Interest ....................................39
SECTION 9.11 Failure or Indulgence Not Waiver; Remedies Cumulative ..39
SECTION 9.12 Governing Law ..........................................40
SECTION 9.13 Counterparts ...........................................40
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<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of January 6, 1997, is among
American Medical Response, Inc., a Delaware corporation (the "Company"), Laidlaw
Inc., a Canadian corporation ("Parent") and MedTrans Acquisition Co., a Delaware
corporation and a wholly owned subsidiary of Parent ("Acquisition").
WHEREAS, the Board of Directors of Parent, Acquisition and the Company have
each approved the acquisition of the Company by Parent upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, it is proposed that Acquisition shall make
a tender offer to acquire all outstanding shares (the "Shares") of common stock,
par value $0.01 per share, of the Company (the "Common Stock") for a cash amount
of $40.00 per Share (such amount, or any greater amount per Share paid pursuant
to the tender offer, being hereinafter referred to as the "Per Share Amount") in
accordance with the terms and subject to the conditions provided for herein (the
"Offer");
WHEREAS, the Board of Directors of the Company (the "Board") has (i)
determined that the consideration to be paid for each Share in the Offer and the
Merger (as defined below) is fair to and in the best interests of the
stockholders of the Company and (ii) approved this Agreement and the
transactions contemplated hereby and resolved to recommend acceptance of the
Offer and approval and adoption of this Agreement by the stockholders of the
Company; and
WHEREAS, the Boards of Directors of Parent and Acquisition have each
approved the merger (the "Merger") of Acquisition with and into the Company
following the Offer in accordance with the Delaware General Corporation Law (the
"Delaware Law") upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company, Parent and Acquisition hereby agree as follows:
<PAGE>
ARTICLE I
THE OFFER
SECTION 1.1 The Offer.
(a) Commencement. Provided that this Agreement shall not have been
terminated in accordance with Section 8.1, as promptly as practicable, but in
any event within five business days of the public announcement of the terms of
this Agreement, Acquisition shall commence the Offer. The obligation of
Acquisition to accept for payment and pay for Shares tendered pursuant to the
Offer shall be subject to the condition that a number of Shares representing not
less than two-thirds of the Company's outstanding voting power (assuming the
exercise of all outstanding options to purchase shares of Common Stock the
holders of which have not entered into an agreement to cancel such options as
described in Section 2.6(c)(i) and the conversion of all of the Company's 5 1/4%
Convertible Subordinated Notes due February 1, 2001 (the "Notes")) shall have
been validly tendered and not withdrawn prior to the expiration date of the
Offer (the "Minimum Condition"), and the obligation of Acquisition to accept for
payment and pay for Shares tendered pursuant to the Offer shall be subject to
the other conditions set forth in Annex A hereto. It is agreed that the Minimum
Condition and the other conditions set forth in Annex A hereto are for the sole
benefit of Acquisition and may be asserted by Acquisition regardless of the
circumstances giving rise to any such condition unless Parent, Acquisition or
their affiliates shall have caused the circumstances giving rise to such
condition. Acquisition expressly reserves the right in its sole discretion to
waive, in whole or in part, at any time or from time to time, any such condition
(other than the Minimum Condition, which may not be waived without the prior
written consent of the Company), to increase the price per Share payable in the
Offer or to make any other changes in the terms and conditions of the Offer;
provided that, unless previously approved by the Company in writing, no change
may be made that decreases the price per Share payable in the Offer, changes the
form of consideration payable in the Offer, reduces the maximum number of Shares
to be purchased in the Offer or imposes conditions to the Offer in addition to
those set forth in Annex A hereto. Acquisition covenants and agrees that,
subject to the conditions of the Offer set forth in Annex A hereto, Acquisition
shall accept for payment and pay for Shares which have been validly tendered and
not withdrawn pursuant to the Offer as soon as it is permitted to do so under
applicable law; provided that, if the number of Shares that have been validly
tendered and not withdrawn represent less than 90% of the Company's outstanding
voting power (calculated as described above), Acquisition may extend the Offer
up to the tenth business day following the date on which all conditions to the
Offer shall first have been satisfied or waived. The Per Share Amount payable
in the Offer shall be paid net to the seller in cash, upon the terms and subject
to the conditions of the Offer. Acquisition agrees that if all conditions set
forth in Annex A are not satisfied on the initial expiration date of the Offer,
Acquisition shall extend (and re-extend) the Offer through April 15, 1997 to
provide time to satisfy such conditions; provided that, if Acquisition shall not
have purchased Shares pursuant to the Offer prior to April 15, 1997 as the
result of the receipt by the Company of an
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Acquisition Proposal (as defined below) or as a result of a failure of the
applicable waiting period under the HSR Act (as defined below) to expire or the
failure to obtain any necessary governmental or regulatory approvals,
Acquisition shall extend (and re-extend) the Offer through July 15, 1997.
(b) Filing Offer Documents. As soon as practicable on the date of
commencement of the Offer, Parent and Acquisition shall file with the Securities
and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
with respect to the Offer which will contain the offer to purchase and form of
the related letter of transmittal (together with any supplements or amendments
thereto, the "Offer Documents"). Parent, Acquisition and the Company each
agrees promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that any such information shall have become false
or misleading in any material respect and Parent and Acquisition each further
agrees to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws. The
Company and its counsel shall be given a reasonable opportunity to review and
comment on the Offer Documents prior to their filing with the SEC and shall be
provided with any comments Parent, Acquisition and their counsel may receive
from the SEC or its staff with respect to the Offer Documents promptly after
receipt of such comments.
SECTION 1.2 Company Action.
(a) Board Approval. The Company hereby approves of and consents to the
Offer and represents and warrants that the Board, at a meeting duly called and
held on January 5, 1997, unanimously (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are fair
to and in the best interests of the stockholders of the Company, (ii) approved
this Agreement and the transactions contemplated hereby, including the Offer and
the Merger and (iii) resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares thereunder to Acquisition and, if required
by applicable law, approve and adopt this Agreement and the Merger. The Company
further represents and warrants that Smith Barney Inc. ("Smith Barney") has
delivered to the Board its opinion to the effect that, as of the date of this
Agreement, the Per Share Amount to be received by the holders of Shares (other
than Parent and its affiliates) pursuant to the Offer and the Merger, taken
together, is fair to such holders from a financial point of view. The Company
has been authorized by Smith Barney to permit the inclusion of such opinion in
its entirety in the Offer Documents and the Schedule 14D-9 referred to below and
the Proxy Statement referred to in Section 3.13, so long as such inclusion is in
form and substance reasonably satisfactory to Smith Barney and its counsel.
Subject to the fiduciary duties of the Board under applicable law (as determined
in good faith after consultation with independent counsel), the Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Board described in this Section 1.2(a).
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<PAGE>
(b) Schedule 14D-9. As soon as practicable on the date of commencement of
the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any amendments or supplements
thereto, the "Schedule 14D-9") and shall mail the Schedule 14D-9 to the
stockholders of the Company promptly after the commencement of the Offer. The
Schedule 14D-9 shall, subject to the fiduciary duties of the Board under
applicable law (as determined in good faith after consultation with independent
counsel), at all times contain the determinations, approvals and recommendations
described in Section 1.2(a). Parent, Acquisition and the Company each agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that any such information shall have become false or
misleading in any material respect and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent, Acquisition and
their counsel shall be given a reasonable opportunity to review and comment on
the Schedule 14D-9 prior to its filing with the SEC and shall be provided with
any comments the Company and its counsel may receive from the SEC or its staff
with respect to the Schedule 14D-9 promptly after receipt of such comments.
(c) Dissemination of the Offer. In connection with the Offer, the Company
will promptly furnish Acquisition with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date and shall
furnish Acquisition with such additional information and assistance (including,
without limitation, updated lists of stockholders, mailing labels and lists of
securities positions) as Acquisition or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of Shares. Subject
to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Acquisition and its affiliates and associates shall
hold in confidence the information contained in any such labels, listings and
files, will use such information only in connection with the Offer and the
Merger, and, if this Agreement shall be terminated, will deliver to the Company
all copies of such information then in their possession.
SECTION 1.3 Boards of Directors and Committees; Section 14(f).
(a) Board Representation. Promptly upon the purchase by Acquisition of
Shares pursuant to the Offer and from time to time thereafter, Acquisition shall
be entitled to designate up to such number of directors, rounded up to the next
whole number, on the Board that equals the product of (i) the total number of
directors on the Board (giving effect to the election of any additional
directors pursuant to this Section) and (ii) the percentage that the number of
Shares owned by Acquisition and its affiliates (including any Shares purchased
pursuant to the Offer) bears to the total number of outstanding Shares, and the
Company shall, upon request by Acquisition, subject to the provisions of Section
1.3(b), promptly either
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<PAGE>
increase the size of the Board (and shall, if necessary, amend the Company's By-
Laws to permit such an increase) or use its reasonable best efforts to secure
the resignation of such number of directors as is necessary to enable
Acquisition's designees to be elected to the Board and shall cause Acquisition's
designees to be so elected. Promptly upon request by Acquisition, the Company
will, subject to the provisions of Section 1.3(b), use its reasonable best
efforts to cause persons designated by Acquisition to constitute the same
percentage as the number of Acquisition's designees to the Board bears to the
total number of directors on the Board on (i) each committee of the Board, (ii)
each board of directors or similar governing body or bodies of each subsidiary
of the Company designated by Acquisition and (iii) each committee of each such
board or body.
(b) Compliance with Section 14(f). The Company's obligations to appoint
designees to the Board shall be subject to Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 1.3 and shall include in the Schedule 14D-9 or a separate
Rule 14f-1 Statement provided to shareholders such information with respect to
the Company and its officers and directors as is required under Section 14(f)
and Rule 14f-1. Parent or Acquisition will supply to the Company in writing and
be solely responsible for any information with respect to either of them and
their nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
(c) Action by Disinterested Directors. Following the election or
appointment of Acquisition's designees pursuant to this Section 1.3 and prior to
the Effective Time (as defined below), any amendment of this Agreement or any
amendment to the Restated Certificate of Incorporation or By-Laws of the Company
inconsistent with this Agreement, any termination of this Agreement by the
Company, any extension by the Company of the time for the performance of any of
the obligations or other acts of Parent or Acquisition or any waiver of any of
the Company's rights hereunder will require the concurrence of a majority of the
directors of the Company then in office who are not designees of Acquisition or
employees of the Company.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger.
(a) Effective Time. At the Effective Time (as defined below), and subject
to and upon the terms and conditions of this Agreement and the Delaware Law,
Acquisition shall be merged with and into the Company, the separate corporate
existence of Acquisition shall cease, and the Company shall continue as the
surviving corporation. The Company as the
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surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8.1 and subject to the satisfaction or waiver of the conditions set forth in
Article VII, the consummation of the Merger will take place as promptly as
practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VII, at the offices of Ropes &
Gray, One International Place, Boston, Massachusetts, unless another date, time
or place is agreed to in writing by the parties hereto.
SECTION 2.2 Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger as contemplated by the Delaware Law (the "Certificate of Merger"),
together with any required related certificates, with the Secretary of State of
the State of Delaware, in such form as required by, and executed in accordance
with the relevant provisions of, the Delaware Law (the time of such filing being
the "Effective Time").
SECTION 2.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of the Delaware Law. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Acquisition shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Acquisition shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.4 Certificate of Incorporation, By-Laws.
(a) Certificate of Incorporation. Unless otherwise determined by
Parent prior to the Effective Time, at the Effective Time the Certificate of
Incorporation of Acquisition, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by the Delaware Law and such Certificate
of Incorporation; provided, however, that at the Effective Time Article I of
the Certificate of Incorporation of Acquisition shall be amended to change
its name to "American Medical Response, Inc."
(b) By-Laws. The By-Laws of Acquisition, as in effect immediately prior
to the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by the Delaware Law, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
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SECTION 2.5 Directors and Officers. The directors of Acquisition
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
Acquisition immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified.
SECTION 2.6 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the Parent, Acquisition, the
Company or the holders of any of the following securities:
(a) Conversion of Securities. Each Share issued and outstanding
immediately prior to the Effective Time (excluding any Shares to be canceled
pursuant to Section 2.6(b)) shall be converted into the right to receive the Per
Share Amount (the "Merger Consideration").
(b) Cancellation. Each Share held in the treasury of the Company and each
Share owned by Parent, Acquisition or any direct or indirect wholly owned
subsidiary of the Company or Parent immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, cease to be outstanding, be canceled and retired without payment of any
consideration therefor and cease to exist.
(c) Stock Options and Employee Stock Purchase Plan.
(i) On the date Acquisition purchases Shares pursuant to the
Offer, each outstanding option to purchase Company Common Stock (a "Stock
Option") granted under the Company's 1992 Equity Incentive Plan, the 1992 Stock
Option Plan for Non-Employee Directors and the Acquisition Stock Option Plan and
the 1996 Stock Incentive Plan of STAT Healthcare, Inc. (the "Company Stock
Option Plans") or pursuant to any other employee stock option plan or agreement
entered into by the Company with any employee of the Company or any subsidiary
thereof listed on Section 3.11(c) of the Company Disclosure Schedule, whether or
not then exercisable, shall become exercisable, and each holder of a Stock
Option who executes an agreement to cancel such Stock Option shall be entitled
to receive as soon as practicable thereafter from the Company in consideration
for such cancellation an amount in cash (less applicable withholding taxes)
equal to the product of (i) the number of shares of Company Common Stock
previously subject to such Stock Option multiplied by (ii) the excess, if any,
---------- --
of the Per Share Amount over the exercise price per share of Company Common
Stock previously subject to such Stock Option.
(ii) The Board of Directors of the Company, or an appropriate
committee thereof, shall promptly cause written notice of this Agreement to be
given to persons holding options or other rights to purchase Company Common
Stock ("Purchase Rights") under the Company's 1992 Employee Stock Purchase Plan
(the "Company
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Stock Purchase Plan"). On the date that Acquisition purchases Shares pursuant
to the Offer, all Purchase Rights shall be accelerated and shall be exercised
automatically for shares of Company Common Stock as if the date of this
Agreement were the end of an Option Period (as defined in the Company Stock
Purchase Plan) unless a Participant (as defined in the Company Stock Purchase
Plan) withdraws from the Company Stock Purchase Plan. Payroll deductions under
the Company Stock Purchase Plan not used to purchase shares of Company Common
Stock shall be returned to the Participant.
(d) Capital Stock of Acquisition. Each share of common stock, $.01 par
value, of Acquisition issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, $.01 par value, of the Surviving
Corporation.
SECTION 2.7 Exchange of Certificates.
(a) Exchange Agent and Procedures. Prior to the Effective Time, a bank or
trust company shall be designated by Parent (the "Paying Agent") to act as agent
in connection with the Merger to receive the funds to which holders of Shares
shall become entitled pursuant to Section 2.6(a). Promptly after the Effective
Time, the Surviving Corporation shall cause to be mailed to each record holder,
as of the Effective Time, of a certificate or certificates (the"Certificates")
that, prior to the Effective Time, represented Shares, a form of letter of
transmittal and instructions for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor. Upon the
surrender of each such Certificate formerly representing Shares, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the Paying Agent shall pay the holder of such
Certificate the Merger Consideration multiplied by the number of Shares formerly
represented by such Certificate, in exchange therefor, and such Certificate
shall forthwith be canceled. Until so surrendered and exchanged, each such
Certificate (other than Shares held by Parent, Acquisition or the Company, or
any direct or indirect subsidiary thereof) shall represent solely the right to
receive the Merger Consideration. No interest shall be paid or accrue on the
Merger Consideration. If the Merger Consideration (or any portion thereof) is
to be delivered to any person other than the person in whose name the
Certificate formerly representing Shares surrendered in exchange therefor is
registered, it shall be a condition to such exchange that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such exchange shall pay to the Paying
Agent any transfer or other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Paying
Agent that such tax has been paid or is not applicable.
(b) Consideration. When and as needed, Parent or Acquisition shall
deposit, or cause to be deposited, in trust with the Paying Agent the Merger
Consideration to which holders of Shares shall be entitled at the Effective Time
pursuant to Section 2.6(a) hereof.
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(c) Investment of Merger Consideration. The Merger Consideration shall be
invested by the Paying Agent, as directed by Parent, provided such investments
shall be limited to direct obligations of the United States of America,
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, commercial
paper rated of the highest quality by Moody's Investors Service, Inc. or
Standard & Poor's Corporation, or certificates of deposit issued by a commercial
bank having at least $1,000,000,000 in assets.
(d) Termination of Duties. Promptly following the date which is six
months after the Effective Time, Parent will cause the Paying Agent to deliver
to the Surviving Corporation all cash and documents in its possession relating
to the transactions described in this Agreement, and the Paying Agent's duties
shall terminate. Thereafter, each holder of a Certificate formerly representing
a Share may surrender such Certificate to the Surviving Corporation and (subject
to applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Merger Consideration, without any interest thereon.
(e) No Liability. Neither Parent, Acquisition nor the Company shall be
liable to any holder of Company Common Stock for any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(f) Withholding Rights. Parent or the Exchange Agent shall be entitled
to deduct and withhold from the Merger Consideration otherwise payable pursuant
to this Agreement to any holder of Company Common Stock such amounts as Parent
or the Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was made
by Parent or the Exchange Agent.
SECTION 2.8 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of the Company Common Stock thereafter on the records
of the Company.
SECTION 2.9 No Further Ownership Rights in Company Common Stock. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article II.
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SECTION 2.10 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
deliver in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration such Parent Shares as may be required pursuant to Section 2.6;
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Certificates to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against Parent or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
SECTION 2.11 Taking of Necessary Action; Further Action. Each of Parent,
Acquisition and the Company will take all such reasonable and lawful action as
may be necessary or appropriate in order to effectuate the Merger in accordance
with this Agreement as promptly as possible. If, at any time after the
Effective Time, any such further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Acquisition, the officers and directors of the
Company and Acquisition immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
SECTION 2.12 Stockholders' Meeting. If approval by the Company's
stockholders is required by applicable law to consummate the Merger, the
Company, acting through the Board, shall in accordance with applicable law and
subject to the fiduciary duties of the Board under applicable law (as determined
in good faith after consultation with independent counsel), as soon as
practicable following the consummation of the Offer:
(i) duly call, give notice of, convene and hold an annual or special
meeting of its stockholders (the "Stockholders' Meeting") for the purpose
of considering and taking action upon this Agreement;
(ii) include in the Proxy Statement (as defined in Section 3.13) the
recommendation of the Board that stockholders of the Company vote in favor
of the approval and adoption of this Agreement and the transactions
contemplated hereby; and
(iii) use its reasonable best efforts (A) to obtain and furnish the
information required to be included by it in the Proxy Statement and, after
consultation with Parent, respond promptly to any comments made by the SEC
with respect to the Proxy Statement and any preliminary version thereof and
cause the Proxy Statement to be mailed to its stockholders at the earliest
practicable time following the consummation of the Offer and (B) to obtain
the necessary
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approvals by its stockholders of this Agreement and the transactions
contemplated hereby.
At such meeting, Parent and Acquisition will vote all Shares owned by them in
favor of this Agreement and the transactions contemplated hereby.
SECTION 2.13 Material Adverse Effect. When used in connection with the
Company or any of its subsidiaries, or Parent or any of its subsidiaries, as the
case may be, the term "Material Adverse Effect" means any change, effect or
circumstance that is materially adverse to the business, assets, financial
condition or results of operations of the Company and its subsidiaries, or
Parent and its subsidiaries, as the case may be, in each case taken as a whole,
other than any such changes, effects or circumstances: (i) set forth or
contemplated by the Company Disclosure Schedule or the Parent Disclosure
Schedule, as the case may be; (ii) set forth or described in the Company SEC
Reports or the Parent SEC Reports, as the case may be; or (iii) affecting the
ambulance service industry generally.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Acquisition that,
except as set forth in the written disclosure schedule delivered on or prior to
the date hereof by the Company to Parent that is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
III (the "Company Disclosure Schedule"):
SECTION 3.1 Organization and Qualification; Subsidiaries. Each of the
Company and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("Approvals") necessary
to own, lease and operate the properties it purports to own, operate or lease
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power,
authority and Approvals would not have a Material Adverse Effect. Each of the
Company and each of its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would not
have a Material Adverse Effect. A true and complete list of all of the
Company's subsidiaries, together with the jurisdiction of incorporation of each
subsidiary and the percentage of each subsidiary's outstanding capital stock
owned by the Company or another subsidiary, is set forth in Section 3.1 of the
Company Disclosure Schedule. Except as set forth in Section 3.1 of the Company
Disclosure Schedule,
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the Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for, any
equity or similar interest in, any corporation, partnership, joint venture or
other business association or entity, with respect to which interest the Company
or any of its subsidiaries has invested or is required to invest $500,000 or
more, excluding securities in any publicly traded company held for investment
and comprising less than five percent of the outstanding stock of such company.
SECTION 3.2 Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and By-Laws as most recently restated and subsequently amended to
date, and has furnished or made available to Parent the Certificate of
Incorporation and By-Laws (or equivalent organizational documents) of each of
its subsidiaries (the "Subsidiary Documents"). Such Certificate of
Incorporation, By-Laws and Subsidiary Documents are in full force and effect.
Neither the Company nor any of its subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws or Subsidiary
Documents, except for immaterial violations of the Subsidiary Documents which
may exist.
SECTION 3.3 Capitalization. The authorized capital stock of the Company
consists of (i) 75,000,000 shares of Company Common Stock and (ii) 500,000
shares of preferred stock, $.01 par value per share, none of which is issued and
outstanding and none of which is held in treasury. As of December 31, 1996, (i)
21,047,345 shares of Company Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable, and no shares were held
in treasury, (ii) no shares of Company Common Stock were held by subsidiaries of
the Company, (iii) 1,809,569 shares of Company Common Stock were reserved for
future issuance pursuant to outstanding stock options granted under the Company
Stock Option Plans and agreements listed in Section 3.3 of the Company
Disclosure Schedule, (iv) 189,611 shares of Company Common Stock were reserved
for future issuance under the Company Stock Purchase Plan,(v) 3,311,258 shares
of Company Common Stock were reserved for future issuance pursuant to the
conversion of the Notes and (vi) 3,919,900 shares of Company Common Stock were
issuable connection with the acquisition of STAT Healthcare. No material change
in such capitalization has occurred between December 31, 1996 and the date
hereof. Section 3.3 of the Company Disclosure Schedule sets forth a true and
complete list of all outstanding warrants and other rights for the purchase of
Company Common Stock (other than the Notes, Stock Options and Purchase Rights),
the name of each holder thereof, the number of shares purchasable thereunder or
upon conversion thereof and the per share exercise or conversion price of each
warrant and other right. Except as set forth in this Section 3.3 or Section
3.11 or in the related sections of the Company Disclosure Schedule, and other
than the Notes, there are no options, warrants or other similar rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue or sell any shares of
capital stock of, or other equity interests in, the Company or any of its
subsidiaries. All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments
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<PAGE>
pursuant to which they are issuable, shall be duly authorized, validly issued,
fully paid and nonassessable. Except as disclosed in Section 3.3 of the Company
Disclosure Schedule, there are no obligations, contingent or otherwise, of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any shares of Company Common Stock or the capital stock of any subsidiary or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any such subsidiary or any other entity other than
guarantees of bank obligations of subsidiaries entered into in the ordinary
course of business. Except as set forth in Sections 3.1 and 3.3 of the Company
Disclosure Schedule, all of the outstanding shares of capital stock of each of
the Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and all such shares are owned by the Company or another
subsidiary of the Company free and clear of all security interests, liens,
claims, pledges, agreements, limitations in the Company's voting rights, charges
or other encumbrances of any nature whatsoever.
SECTION 3.4 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action,
and no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated
(other than the adoption of this Agreement by the holders of at least a majority
of the outstanding shares of Company Common Stock entitled to vote in accordance
with the Delaware Law and the Company's Certificate of Incorporation and By-
Laws). The Board of Directors of the Company has determined that the Offer and
the Merger upon the terms and subject to the conditions of this Agreement are
advisable and in the best interest of the Company's stockholders. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and
Acquisition, as applicable, constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms.
SECTION 3.5 No Conflict; Required Filings and Consents.
(a) Section 3.5(a) of the Company Disclosure Schedule includes a list of
all agreements to which the Company or any of its subsidiaries is a party or by
which any of them is bound which, as of the date hereof: (i) are required to be
filed as "material contracts" with the SEC pursuant to the requirements of the
Exchange Act; (ii) under which the consequences of a default, nonrenewal or
termination could have a Material Adverse Effect on the Company; or (iii)
pursuant to which payments might be required or acceleration of benefits may be
required upon a "change of control" of the Company (collectively, the "Material
Contracts").
(b) Except as set forth in Section 3.5(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does not,
and the performance of
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this Agreement by the Company will not, (i) conflict with or violate the
Certificate of Incorporation or By-Laws of the Company, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to the
Company or any of its subsidiaries or by which its or any of their respective
properties is bound or affected, or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or impair the Company's or any of its subsidiaries' rights or
alter the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of any Material
Contract, or result in the creation of a lien or encumbrance on any of the
properties or assets of the Company or any of its subsidiaries pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or affected, except in any
such case for any such conflicts, violations, breaches, defaults or other
occurrences that would not have a Material Adverse Effect.
(c) Except as set forth in Section 3.5(c) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Securities Act, the Exchange Act,
state securities laws ("Blue Sky Laws"), the pre-merger notification
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended ("HSR Act"), and the filing and recordation of appropriate merger or
other documents as required by the Delaware Law, and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the Merger,
or otherwise prevent or delay the Company from performing its obligations under
this Agreement, or would not otherwise have a Material Adverse Effect.
SECTION 3.6 Compliance, Permits.
(a) Except as disclosed in Section 3.6(a) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is in conflict with,
or in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties is bound or affected, except for any such conflicts,
defaults or violations which would not have a Material Adverse Effect.
(b) Except as disclosed in Section 3.6(b) of the Company Disclosure
Schedule, the Company and its subsidiaries hold all permits, licenses,
easements, variances, exemptions,
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consents, certificates, orders and approvals from governmental authorities that
are material to the operation of the business of the Company and its
subsidiaries taken as a whole as it is now being conducted (collectively, the
"Company Permits"), except when the failure to have such Company Permits would
not have a Material Adverse Effect. The Company and its subsidiaries are in
compliance with the terms of the Company Permits, except where the failure to so
comply would not have a Material Adverse Effect.
SECTION 3.7 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents required to be
filed with the SEC and has made available to Parent (i) its Annual Reports on
Form 10-K for the fiscal years ended December 31, 1994 and 1995, respectively,
(ii) its Quarterly Reports on Form 10-Q for the periods ended March 31, 1996,
June 30, 1996 and September 30, 1996, (iii) all proxy statements relating to the
Company's meetings of stockholders (whether annual or special) held since
January 1, 1995, (iv) all other reports or registration statements (other than
Reports on Form 10-Q not referred to in clause (ii) above) filed by the Company
with the SEC since January 1, 1995, and (v) all amendments and supplements to
all such reports and registration statements filed by the Company with the SEC
since January 1, 1995 (collectively, the "Company SEC Reports"). Except as
disclosed in Section 3.7 of the Company Disclosure Schedule, the Company SEC
Reports (i) were prepared in all material respects in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, 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 therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Except for STAT Healthcare, Inc., none of the Company's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports was
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto), and each fairly presents in all material respects the
consolidated financial position of the Company and its subsidiaries as at the
respective dates thereof and the consolidated results of its 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.
SECTION 3.8 Absence of Certain Changes or Events. Except as set forth in
Section 3.8 of the Company Disclosure Schedule or the Company SEC Reports, since
January 1, 1996, the Company has conducted its business in the ordinary course
and there has not occurred: (i) any Material Adverse Effect; (ii) any amendments
or changes in the Certificate of Incorporation or By-laws of the Company; (iii)
any damage to, destruction or loss of any asset
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of the Company (whether or not covered by insurance) that would have a Material
Adverse Effect; (iv) any material change by the Company in its accounting
methods, principles or practices; (v) any material revaluation by the Company of
any of its assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business; (vi) any other action or event that would have required the
consent of Parent pursuant to Section 5.1 had such action or event occurred
after the date of this Agreement; or (vii) any sale of a material amount of
property of the Company or any of its subsidiaries, except in the ordinary
course of business.
SECTION 3.9 No Undisclosed Liabilities. Except as is disclosed in
Section 3.9 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise), except liabilities (a) in the aggregate adequately provided for in
the Company's unaudited balance sheet (including any related notes thereto) as
of September 30, 1996 (the "1996 Company Balance Sheet"), (b) incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected on the 1996 Company Balance Sheet, (c) incurred since
September 30, 1996 in the ordinary course of business consistent with past
practice, (d) incurred in connection with this Agreement, (e) disclosed in the
Company SEC Reports or (f) which would not have a Material Adverse Effect.
SECTION 3.10 Absence of Litigation. Except as set forth in Section 3.10
of the Company Disclosure Schedule, there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
overtly threatened against the Company or any of its subsidiaries, or any
properties or rights of the Company or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that would have a Material Adverse Effect.
SECTION 3.11 Employee Benefit Plans, Employment Agreements.
(a) Section 3.11 (a) of the Company Disclosure Schedule lists all employee
pension plans (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), all material employee welfare plans
(as defined in Section 3(1) of ERISA) and all other material bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar fringe or employee benefit plans,
programs or arrangements, and any material current or former employment,
executive compensation, consulting or severance agreements, written or
otherwise, for the benefit of, or relating to, any employee of or consultant to
the Company, any trade or business (whether or not incorporated) which is a
member of a controlled group including the Company or which is under common
control with the Company (an "ERISA Affiliate") within the meaning of Section
414 of the Code, or any subsidiary of the Company, as well as each plan with
respect to which the Company or an ERISA Affiliate could incur liability under
Section 4069 (if such plan has been or were terminated) or Section 4212(c) of
ERISA (collectively the "Company Employee Plans"). There have been made
available to Parent copies of (i) each such written
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Company Employee Plan (other than those referred to in Section 4(b)(4) of
ERISA), (ii) the most recent annual report on Form 5500 series, with
accompanying schedules and attachments, filed with respect to each Company
Employee Plan required to make such a filing, and (iii) the most recent
actuarial valuation for each Company Employee Plan subject to Title IV of ERISA.
For purposes of this Section 3.11(a), the term "material," used with respect to
any Company Employee Plan, shall mean that the Company or an ERISA Affiliate has
incurred or may incur obligations in an annual amount exceeding $500,000 with
respect to such Company Employee Plan.
(b) (i) Except as set forth in Section 3.11(b) of the Company Disclosure
Schedule, none of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, and none of the Company
Employee Plans is a "multiemployer plan" as such term is defined in Section
3(37) of ERISA; (ii) there has been no "prohibited transaction," as such term is
defined in Section 406 of ERISA and Section 4975 of the Code, with respect to
any Company Employee Plan, which could result in any material liability of the
Company or any of its subsidiaries; (iii) all Company Employee Plans are in
compliance in all material respects with the requirements prescribed by any and
all statutes (including ERISA and the Code), orders, or governmental rules and
regulations currently in effect with respect thereto (including all applicable
requirements for notification to participants or the Department of Labor, the
Pension Benefit Guaranty Corporation (the "PBGC"), Internal Revenue Service (the
"IRS") or Secretary of the Treasury), and the Company and each of its
subsidiaries have performed all material obligations required to be performed by
them under, are not in any material respect in default under or violation of,
and have no knowledge of any default or violation by any other party to, any of
the Company Employee Plans; (iv) each Company Employee Plan intended to qualify
under Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code is the subject of a favorable determination letter
from the IRS, and nothing has occurred which may reasonably be expected to
impair such determination; (v) all contributions required to be made to any
Company Employee Plan pursuant to Section 412 of the Code, or the terms of the
Company Employee Plan or any collective bargaining agreement, have been made on
or before their due dates; (vi) with respect to each Company Employee Plan, no
"reportable event" within the meaning of Section 4043 of ERISA (excluding any
such event for which the 30 day notice requirement has been waived under the
regulations to Section 4043 of ERISA) nor any event described in Section 4062,
4063 or 4041 of ERISA has occurred; and (vii) neither the Company nor any ERISA
Affiliate has incurred, nor reasonably expects to incur, any liability under
Title IV of ERISA (other than liability for premium payments to the PBGC arising
in the ordinary course).
(c) Section 3.11(c) of the Company Disclosure Schedule sets forth a true
and complete list of each current or former employee, officer or director of the
Company or any of its subsidiaries who holds (i) any option to purchase Company
Common Stock as of the date hereof, together with the number of shares of
Company Common Stock subject to such option, the option price of such option (to
the extent determined as of the date hereof), whether such option is intended to
qualify as an incentive stock option within the meaning of Section 422(b)
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of the Code (an "ISO"), and the expiration date of such option; (ii) any other
right, directly or indirectly, to acquire Company Common Stock, together with
the number of shares of Company Common Stock subject to such right. Section
3.11(c) of the Company Disclosure Schedule also sets forth the total number of
such ISOs, such nonqualified options and such other rights.
(d) Section 3.11(d) of the Company Disclosure Schedule sets forth a true
and complete list of (i) all employment agreements with officers of the Company
or any of its subsidiaries; (ii) all agreements with consultants who are
individuals obligating the Company or any of its subsidiaries to make annual
cash payments in an amount exceeding $200,000; (iii) all employees of, or
consultants to, the Company or any of its subsidiaries who have executed a non-
competition agreement with the Company or any of its subsidiaries; (iv) all
severance agreements, programs and policies of the Company or any of its
subsidiaries with or relating to its employees, in each case with outstanding
commitments exceeding $300,000, excluding programs and policies required to be
maintained by law; and (v) all plans, programs, agreements and other
arrangements of the Company or any of its subsidiaries with or relating to its
employees which contain change in control provisions.
SECTION 3.12 Labor Matters. Except as set forth in Section 3.12 of the
Company Disclosure Schedule, (i) there are no controversies pending or, to the
knowledge of the Company or any of its subsidiaries, threatened, between the
Company or any of its subsidiaries and any of their respective employees, which
controversies have had or would have a Material Adverse Effect; (ii) neither the
Company nor any of its subsidiaries is a party to any material collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or its subsidiaries, nor does the Company or any of its
subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (iii) neither the Company nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the Company
or any of its subsidiaries which would have a Material Adverse Effect.
SECTION 3.13 Schedule 14D-9; Offer Documents; Proxy Statement. Neither
the Schedule 14D-9, nor any of the information provided by the Company and/or by
its auditors, legal counsel, financial advisors or other consultants or advisors
specifically for use in the Offer Documents shall, on the respective dates the
Schedule 14D-9, the Offer Documents or any supplements or amendments thereto are
filed with the SEC or on the date first published, sent or given to the
Company's stockholders, as the case may be, 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 or
information statement or similar materials distributed to the Company's
stockholders in connection with the Merger, including any amendments or
supplements thereto (the "Proxy Statement"), shall not, at the time filed with
the SEC, at the time mailed to the Company's stockholders, at the time of the
Stockholders' Meeting or at the
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Effective Time, 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 are made,
not misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information provided by Parent,
Acquisition and/or by their auditors, legal counsel, financial advisors or other
consultants or advisors specifically for use in the Schedule 14D-9 or the Proxy
Statement. The Schedule 14D-9 and the Proxy Statement will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
SECTION 3.14 Restrictions on Business Activities. Except for this
Agreement or as set forth in Section 3.14 of the Company Disclosure Schedule, to
the best of the Company's knowledge, there is no material agreement, judgment,
injunction, order or decree binding upon the Company or any of its subsidiaries
which has or could reasonably be expected to have the effect of prohibiting or
impairing any material business practice of the Company or any of its
subsidiaries, any acquisition of property by the Company or any of its
subsidiaries or the conduct of business by the Company or any of its
subsidiaries as currently conducted or as proposed to be conducted by the
Company, except for any prohibition or impairment as would not have a Material
Adverse Effect.
SECTION 3.15 Title to Property. Except as set forth in Section 3.15 of
the Company Disclosure Schedule, the Company and each of its subsidiaries have
good and defensible title to all of their properties and assets, free and clear
of all liens, charges and encumbrances, except liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby or which would not have a Material Adverse Effect;
and, to the best knowledge of the Company, all leases pursuant to which the
Company or any of its subsidiaries lease from others material amounts of real or
personal property are in good standing, valid and effective in accordance with
their respective terms, and there is not, to the knowledge of the Company, under
any of such leases, any existing material default or event of default (or event
which with notice or lapse of time, or both, would constitute a material
default), except where the lack of such good standing, validity and
effectiveness or the existence of such default or event of default would not
have a Material Adverse Effect.
SECTION 3.16 Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
fees, levies, duties, tariffs, imposts, and governmental impositions or charges
of any kind in the nature of (or similar to) taxes, payable to any federal,
state, local or foreign taxing authority, including (without limitation) (i)
income, franchise, profits, gross receipts, ad valorem, net worth, value added,
sales, use, service, real or personal property, special assessments, capital
stock, license, payroll, withholding, employment, social security, workers'
compensation, unemployment compensation, utility, severance, production, excise,
stamp, occupation,
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premiums, windfall profits, transfer and gains taxes, and (ii) interest,
penalties, additional taxes and additions to tax imposed with respect thereto;
and "Tax Returns" shall mean returns, reports, and information statements with
respect to Taxes required to be filed with the IRS or any other taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.
(b) Other than as disclosed in Section 3.16(b) of the Company Disclosure
Schedule, the Company and its subsidiaries (for such periods as each subsidiary
was owned, directly or indirectly, by the Company) have filed all United States
federal income Tax Returns and all other material Tax Returns required to be
filed by them, and the Company and its subsidiaries have paid and discharged all
Taxes due in connection with or with respect to the periods or transactions
covered by such Tax Returns and have paid all other Taxes as are due, except
such as are being contested in good faith by appropriate proceedings (to the
extent that any such proceedings are required) and except as may be determined
to be owed upon completion of any Tax Return not yet filed based upon an
extension of time to file, and there are no other Taxes that would be due if
asserted by a taxing authority, except with respect to which the Company is
maintaining reserves to the extent currently required except to the extent the
failure to do so would not have a Material Adverse Effect. Except as does not
involve or would not result in liability to the Company or any of its
subsidiaries that would have a Material Adverse Effect, (i) there are no tax
liens on any assets of the Company or any subsidiary thereof; and (ii) neither
the Company nor any of its subsidiaries has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax. The accruals and reserves for Taxes (including deferred taxes)
reflected in the 1996 Company Balance Sheet are in all material respects
adequate to cover all Taxes required to be accrued through the date thereof
(including interest and penalties, if any, thereon and Taxes being contested) in
accordance with generally accepted accounting principles.
(c) Neither the Company nor any of its subsidiaries is, or has been, a
United States real property holding corporation (as defined in Section 897(c)(2)
of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code. To the best knowledge of the Company, neither the Company nor any
of its subsidiaries owns any property of a character, the indirect transfer of
which, pursuant to this Agreement, would give rise to any material documentary,
stamp or other transfer tax.
SECTION 3.17 Environmental Matters. Except as set forth in Section 3.17
of the Company Disclosure Schedule, and except in all cases as, in the
aggregate, have not had and would not have a Material Adverse Effect, the
Company and each of its subsidiaries to the best of the Company's knowledge (i)
have obtained all applicable permits, licenses and other authorizations which
are required to be obtained under all applicable federal, state or local laws or
any regulation, code, plan, order, decree, judgment, notice or demand letter
issued, entered, promulgated or approved thereunder relating to pollution or
protection of the environment, including laws relating to emissions, discharges,
releases or threatened releases
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of pollutants, contaminants, or hazardous or toxic materials or wastes into
ambient air, surface water, ground water, or land or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes ("Environmental Laws") by the Company or its subsidiaries
(or their respective agents); (ii) are in compliance with all terms and
conditions of such required permits, licenses and authorizations, and also are
in compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
applicable Environmental Laws; (iii) as of the date hereof, are not aware of nor
have received notice of any past or present violations of Environmental Laws or
any event, condition, circumstance, activity, practice, incident, action or plan
which is reasonably likely to interfere with or prevent continued compliance
with or which would give rise to any common law or statutory liability, or
otherwise form the basis of any claim, action, suit or proceeding, against the
Company or any of its subsidiaries based on or resulting from the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge or release into the environment, of any
pollutant, contaminant or hazardous or toxic material or waste; and (iv) have
taken all actions necessary under applicable Environmental Laws to register any
products or materials required to be registered by the Company or its
subsidiaries (or any of their respective agents) thereunder.
SECTION 3.18 Intellectual Property.
(a) Except as set forth in Section 3.18(a) of the Company Disclosure
Schedule, the Company and/or each of its subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
technology, know-how, computer software programs or applications, and tangible
or intangible proprietary information or material that are used in the business
of the Company and its subsidiaries as currently conducted, except as would not
have a Material Adverse Effect.
(b) Except as disclosed in Section 3.18(b) of the Company Disclosure
Schedule or as would not have a Material Adverse Effect, the Company is not, nor
will it be as a result of the execution and delivery of this Agreement or the
performance of its obligations hereunder, in violation of any licenses,
sublicenses and other agreements as to which the Company is a party and pursuant
to which the Company is authorized to use any third-party patents, trademarks,
service marks and copyrights ("Third-Party Intellectual Property Rights"). No
claims with respect to the patents, registered and material unregistered
trademarks and service marks, registered copyrights, trade names and any
applications therefor owned by the Company or any of its subsidiaries (the
"Company Intellectual Property Rights"), any trade secret material to the
Company, or Third Party Intellectual Property Rights to the extent arising out
of any use, reproduction or distribution of such Third Party Intellectual
Property Rights by or through the Company or any of its subsidiaries, are
currently pending or, to the knowledge of the Company, are overtly threatened by
any person. The Company does not know of any
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valid grounds for any bona fide claims (i) to the effect that the manufacture,
sale, licensing or use of any product as now used, sold or licensed or proposed
for use, sale or license by Company or any of its subsidiaries, infringes on any
copyright, patent, trademark, service mark or trade secret; (ii) against the use
by the Company or any of its subsidiaries of any trademarks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software programs
and applications used in the business of the Company or any of its subsidiaries
as currently conducted or as proposed to be conducted; (iii) challenging the
ownership, validity or effectiveness of any of the Company Intellectual Property
Rights or other trade secret material to the Company; or (iv) challenging the
license or legally enforceable right to use of the Third Party Intellectual
Rights by the Company or any of its subsidiaries.
(c) To the Company's knowledge, all patents, registered trademarks,
service marks and copyrights held by the Company are valid and subsisting.
Except as set forth in Section 3.18(c) of the Company Disclosure Schedule, to
the Company's knowledge, there is no material unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property by any third party,
including any employee or former employee of the Company or any of its
subsidiaries.
SECTION 3.19 Interested Party Transactions. Except as set forth in
Section 3.19 of the Company Disclosure Schedule or in the Company SEC Reports,
since the date of the Company's proxy statement dated April 9, 1996, no event
has occurred that would be required to be reported as a Certain Relationship or
Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
SECTION 3.20 Insurance. All material fire and casualty, general
liability, business interruption, product liability, professional liability and
sprinkler and water damage insurance policies maintained by the Company or any
of its subsidiaries are with reputable insurance carriers, provide full and
adequate coverage for all normal risks incident to the business of the Company
and its subsidiaries and their respective properties and assets and are in
character and amount at least equivalent to that carried by entities engaged in
similar businesses and subject to the same or similar perils or hazards, except
as would not have a Material Adverse Effect.
SECTION 3.21 Healthcare Regulatory Compliance. To the best knowledge of
the Company, the Company and its subsidiaries have not engaged knowingly and
willfully in any activities which are prohibited under federal Medicare and
Medicaid statutes, including, without limitation, 42 U.S.C. (S) 1320a-7b or
related state or local statutes or regulations or which otherwise constitutes
fraud, including, without limitation, the following: (i) knowingly and
willfully making or causing to be made a false statement or representation of a
material fact in any application for any benefit or payment; (ii) knowingly and
willfully making or causing to be made any false statement or representation of
a material fact for use in determining rights to any benefit or payment; (iii)
failing to disclose knowledge of the
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occurrence of any event affecting the initial or continued right to any benefit
or payment on its behalf or on behalf of another, with intent to secure such
benefit or payment fraudulently; and (iv) knowingly and willfully soliciting or
receiving any remuneration (including any kickback, bribe, or rebate), directly
or indirectly, overtly or covertly, in cash or in kind or offering to pay such
remuneration (A) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medicaid or (B) in return
for purchasing, leasing, or ordering or arranging for or recommending
purchasing, leasing or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or Medicaid.
SECTION 3.22 Opinion of Financial Advisor. The Board of Directors of the
Company has received the opinion of the Company's financial advisor, Smith
Barney, to the effect that, as of the date of this Agreement, the Per Share
Amount to be received by the holders of Shares (other than Parent and its
affiliates) pursuant to the Offer and the Merger, taken together, is fair, from
a financial point of view, to such holders.
SECTION 3.23 Brokers. No broker, finder or investment banker (other than
Smith Barney) is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Parent a complete and correct copy of all agreements between the
Company and Smith Barney pursuant to which such firm would be entitled to any
payment relating to the transactions contemplated hereunder.
SECTION 3.24 Section 203 of the Delaware Law Not Applicable. The Board of
Directors of the Company has taken all actions so that the restrictions
contained in Section 203 of the Delaware applicable to a "business combination"
(as defined in Section 203) will not apply to the execution, delivery or
performance of this Agreement or the respective stockholders agreements dated as
of the date hereof between Parent or the consummation of the Offer or the Merger
or the other transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Parent and Acquisition hereby, jointly and severally, represent and warrant
to the Company that, except as set forth in the written disclosure schedule
delivered on or prior to the date hereof, by Parent to the Company that is
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article III (the "Parent Disclosure Schedule"):
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SECTION 4.1 Organization and Qualification; Subsidiaries. Each of Parent
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority and is in possession of all
Approvals necessary to own, lease and operate the properties it purports to own,
operate or lease and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and Approvals would not have a Material Adverse
Effect. Each of Parent and each of its subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not have a Material Adverse Effect.
SECTION 4.2 Authority Relative to this Agreement. Each of Parent and
Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Acquisition and the consummation by Parent and
Acquisition of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and
Acquisition, and no other corporate proceedings on the part of Parent or
Acquisition are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and Acquisition and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of Parent and Acquisition enforceable against each of
them in accordance with its terms.
SECTION 4.3 No Conflict, Required Filings and Consents.
(a) Except as set forth in Section 4.3(a) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent and Acquisition
do not, and the performance of this Agreement by Parent and Acquisition will
not, (i) conflict with or violate the Articles of Organization (or Certificate
of Incorporation) or By-Laws of Parent or Acquisition, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Parent or any of its subsidiaries or by which its or their respective properties
are bound or affected, or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or impair Parent's or any of its subsidiaries' rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Parent
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective properties
are bound or affected, except in any such case for any such conflicts,
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violations, breaches, defaults or other occurrences that would not have a
Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and
Acquisition does not, and the performance of this Agreement by Parent and
Acquisition will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, the Blue Sky Laws, the pre-merger notification
requirements of the HSR Act, and the filing and recordation of appropriate
merger or other documents as required by the Delaware Law, and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay consummation of
the Offer or the Merger, or otherwise prevent Parent or Acquisition from
performing their respective obligations under this Agreement, and would not have
a Material Adverse Effect.
SECTION 4.4 Offer Documents; Schedule 14D-9; Proxy Statement. Neither
the Offer Documents, nor any of the information provided by Parent or
Acquisition and/or by their auditors, legal counsel, financial advisors or other
consultants or advisors specifically for use in the Schedule 14D-9 shall, on the
respective dates the Offer Documents, the Schedule 14D-9 or any supplements or
amendments thereto are filed with the SEC or on the date first published, sent
or given to the Company's stockholders, as the case may be, 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. Notwithstanding
the foregoing, neither Parent nor Acquisition makes any representation or
warranty with respect to any information provided by the Company and/or by its
auditors, legal counsel, financial advisors or other consultants or advisors
specifically for use in the Offer Documents. None of the information provided
by Parent or Acquisition and/or by their auditors, attorneys, financial advisors
or other consultants or advisors specifically for use in the Proxy Statement
shall, at the time filed with the SEC, at the time mailed to the Company's
stockholders, at the time of the Stockholders' Meeting or at the Effective Time,
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 are made, not
misleading. The Offer Documents will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
SECTION 4.5 No Prior Activities; Financing.
(a) Acquisition was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement. As of the date hereof and the
Effective Time, except for obligations or liabilities incurred in connection
with its incorporation or organization and the transactions contemplated by this
Agreement and except for this Agreement and any other agreements or arrangements
contemplated by this Agreement, Acquisition has not and will not
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have incurred, directly or indirectly, through any subsidiary or affiliate, any
obligations or liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any person.
(b) Acquisition has available to it funds necessary to satisfy its
obligations hereunder including, without limitation, the obligation to pay the
Per Share Amount pursuant to the Offer and the Merger Consideration pursuant to
the Merger and to pay all related fees and expenses in connection with the Offer
and the Merger.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the time Acquisition's designees are elected as directors of the Company
pursuant to Section 1.3, unless Parent shall otherwise agree in writing, which
agreement shall not be unreasonably withheld or delayed, the Company shall
conduct its business and shall cause the businesses of its subsidiaries to be
conducted only in, and the Company and its subsidiaries shall not take any
action except in, the ordinary course of business and in the manner consistent
with past practice; and the Company shall use reasonable commercial efforts to
preserve substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations. By way of amplification and not limitation, except as
contemplated by this Agreement, neither the Company nor any of its subsidiaries
shall, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the time Acquisition's
designees are elected as directors of the Company pursuant to Section 1.3,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of Parent, which consent shall not be unreasonably
withheld or delayed:
(a) amend or otherwise change the Certificate of Incorporation or By-Laws
of the Company or any of its subsidiaries;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company, any of its subsidiaries or affiliates (except for (i) the issuance of
shares of Company Common Stock issuable pursuant to Stock Options listed on
Schedule 3.11 hereto;
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(ii) the grant of options under the Company's Stock Option Plans consistent with
past practice to purchase up to 50,000 shares of Company Common Stock at the
market value on the date of grant to newly hired employees (excluding executive
officers), and the issuance of shares upon exercise thereof, (iii) the issuance
of shares of Company Common Stock issuable upon conversion of the Notes, (iv)
the issuance of shares of Company Common Stock issuable to participants in the
Company's Employee Stock Purchase Plan pursuant to the terms thereof, (v) the
issuance of shares of Company Common Stock at not less than the fair market
value thereof in connection with Permitted Acquisitions (as defined in Section
5.1(e)) and (vi) the issuance of shares of Company Common Stock to former
holders of shares of capital stock of STAT Healthcare, Inc.
(c) sell, pledge, dispose of or encumber any assets of the Company or any
of its subsidiaries (except for (i) sales of assets in the ordinary course of
business and in a manner consistent with past practice, (ii) disposition of
obsolete or worthless assets, (iii) sales of immaterial assets not in excess of
$500,000 and (iv) encumbrances on assets to secure purchase money financings of
equipment and capital improvements and in connection with the financing of
Permitted Acquisitions (as defined in Section 5.1(e))).
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly owned subsidiary of
the Company may declare and pay a dividend or make advances to its parent or the
Company, (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (iii) amend the terms
or change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, or permit any subsidiary to purchase, repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
including, without limitation, shares of Company Common Stock or any option,
warrant or right, directly or indirectly, to acquire shares of Company Common
Stock, or propose to do any of the foregoing; except for the acceleration of
options pursuant to the terms of the Company Common Stock Option Plans and the
net exercise of such options and the repurchase of Notes as required by the
terms thereof;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof other than (A) those listed on Section 5.1(e) of the Company Disclosure
Schedule and (B) ambulance service providers and other health care providers in
the continental United States and Hawaii, whether acquired solely for cash,
promissory notes that are subordinated as required by the Company's lenders, or
Company Common Stock issued at fair market value, or any combination thereof
(together with the acquisitions described in clause (A), "Permitted
Acquisitions"), provided that the total consideration paid for all such
acquisitions described in this clause (B) consummated prior to March 31, 1997
shall not exceed $50 million and the total consideration paid for all such
acquisitions described in this clause (B) consummated prior to July 15, 1997
shall not exceed $100 million; (ii) incur any indebtedness for borrowed money or
issue any
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debt securities or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any person or, except in the ordinary
course of business consistent with past practice or in connection with purchases
of equipment or capital improvements or in Permitted Acquisitions, make any
loans or advances (other than loans or advances to or from direct or indirect
wholly owned subsidiaries), (iii) enter into or amend any material contract or
agreement other than in the ordinary course of business or where such contract
or amendment would not have a Material Adverse Effect; (iv) authorize any
capital expenditures or purchase of fixed assets which are, in the aggregate, in
excess of the amounts set forth in Section 5.1(e)(iv) of the Company Disclosure
Schedule for the Company and its subsidiaries taken as a whole; or (v) enter
into or amend any contract, agreement, commitment or arrangement to effect any
of the matters prohibited by this Section 5.1(e);
(f) except as set forth in Section 5.1(f) of the Company Disclosure
Schedule, increase the compensation payable or to become payable to its officers
or employees, except for increases in salary or wages of employees of the
Company or its subsidiaries in accordance with past practice and in amounts that
are in the aggregate reflected in the budgets previously provided to Parent or,
except in the ordinary course of business, grant any severance or termination
pay to, or enter into any employment or severance agreement with any director,
officer or other employee of the Company or any of its subsidiaries, or
establish, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
current or former directors, officers or employees, except, in each case, as may
be required by law;
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable and collection of accounts receivable);
(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax liability
or agree to an extension of a statute of limitations, except to the extent the
amount of any such settlement has been reserved for in the financial statements
contained in the Company SEC Reports filed prior to the date of this Agreement;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the financial statements contained in the Company SEC Reports filed prior to the
date of this Agreement or incurred in the ordinary course of business and
consistent with past practice; or
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(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.1(a) through (i) above, or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect or prevent the Company from performing or cause
the Company not to perform its covenants hereunder.
SECTION 5.2 No Solicitation.
(a) The Company shall not, directly or indirectly, through any officer,
director, employee, representative or agent of the Company or any of its
subsidiaries, (i) solicit, initiate or encourage the initiation of any inquiries
or proposals regarding any merger, sale of substantial assets, sale of shares of
capital stock (including without limitation by way of a tender offer, but not in
connection with Permitted Acquisitions) or similar transactions involving the
Company or any subsidiaries of the Company other than the Merger (any of the
foregoing inquiries or proposals being referred to herein as an "Acquisition
Proposal"), (ii) engage in negotiations or discussions concerning, or provide
any nonpublic information to any person relating to, any Acquisition Proposal or
(iii) agree to approve or recommend any Acquisition Proposal. Nothing contained
in this Section 5.2(a) shall prevent the Board of Directors of the Company from
considering, negotiating, approving and recommending to the stockholders of the
Company, or taking the actions permitted by Section 5.2(c) with respect to, a
bona fide Acquisition Proposal not solicited in violation of this Agreement,
provided the Board of Directors of the Company determines in good faith (upon
written advice of independent counsel) that it is required to do so in order to
discharge properly its fiduciary duties.
(b) The Company shall immediately notify Parent after receipt of any
Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to the Company or
any of its subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any subsidiary by any
person or entity that informs the Board of Directors of the Company or such
subsidiary that it is considering making, or has made, an Acquisition Proposal.
Such notice to Parent shall be made orally and in writing, and shall indicate
whether the Company is providing or intends to provide the person making the
Acquisition Proposal with access to information concerning the Company as
provided in Section 5.2(c).
(c) If the Board of Directors of the Company receives a request for
material nonpublic information by a person who makes a bona fide Acquisition
Proposal, and the Board of Directors determines in good faith and upon the
written advice of independent counsel that it is required to cause the Company
to act as provided in this Section 5.2(c) in order to discharge properly the
directors' fiduciary duties, then, provided the person making the Acquisition
Proposal has executed a confidentiality agreement similar to the one then in
effect between the Company and Parent, the Company may provide such person with
access to information regarding the Company.
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(d) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any person (other than Parent and
Acquisition) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any third party from the confidentiality
provisions of any confidentiality agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and employees
of the Company and its subsidiaries and any investment banker or other advisor
or representative retained by the Company are aware of the restrictions
described in this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 HSR Act. As promptly as practicable after the date of this
Agreement, the Company and Parent shall file notifications under the HSR Act in
connection with the Merger and the transactions contemplated hereby and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division") for additional information or documentation
and to respond as promptly as practicable to all inquiries and requests received
from any State Attorney General or other governmental authority in connection
with antitrust matters.
SECTION 6.2 Access to Information; Confidentiality. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which such party is subject (from which such party shall use reasonable efforts
to be released), the Company shall (and shall cause each of its subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of Parent of Acquisition reasonable access, during the period to
the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, the Company shall (and shall cause each of its
subsidiaries to) furnish promptly to Parent or Acquisition all information
concerning its business, properties and personnel as such other party may
reasonably request, and each shall make available to the other the appropriate
individuals (including attorneys, accountants and other professionals) for
discussion of the other's business, properties and personnel as either Parent or
the Company may reasonably request. Parent and Acquisition shall keep such
information confidential in accordance with the terms of the confidentiality
letters dated December 23, 1996 (the "Confidentiality Letter"), between Parent
and the Company.
SECTION 6.3 Consents; Approvals. The Company and Parent shall each use
their best efforts to obtain all consents, waivers, approvals, authorizations or
orders (including, without limitation, all United States and foreign
governmental and regulatory rulings and approvals), and the Company and Parent
shall make all filings (including, without limitation,
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all filings with United States and foreign governmental or regulatory agencies)
required in connection with the authorization, execution and delivery of this
Agreement by the Company and Parent and the consummation by them of the
transactions contemplated hereby. The Company and Parent shall furnish all
information required to be included in the Joint Proxy Statement/Prospectus and
the Registration Statement, or for any application or other filing to be made
pursuant to the rules and regulations of any United States or foreign
governmental body in connection with the transactions contemplated by this
Agreement.
SECTION 6.4 Indemnification and Insurance.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification and
exculpation set forth in the Certificate of Incorporation and By-Laws of the
Company, which provisions shall not be amended, repealed or otherwise modified
for a period of three years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at the Effective Time
were directors, officers, employees or agents of the Company, unless such
modification is required by law.
(b) The Company shall, to the fullest extent permitted under applicable
law or under the Company's Certificate of Incorporation or By-Laws and
regardless of whether the Merger becomes effective, indemnify and hold harmless,
and, after the Effective Time, the Surviving Corporation shall, to the fullest
extent permitted under applicable law or under the Surviving Corporation's
Certificate of Incorporation or By-Laws, indemnify and hold harmless, each
present and former director, officer or employee of the Company or any of its
subsidiaries (collectively, the "Indemnified Parties") against any costs or
expenses (including attorneys' fees), judgments, fines, losses, claims, damages
and liabilities incurred in connection with, and amounts paid in settlement of,
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative and wherever asserted, bought or filed, (x)
arising out of or pertaining to the transactions contemplated by this Agreement
or (y) otherwise with respect to any acts or omissions or alleged acts or
omissions occurring at or prior to the Effective Time, to the same extent as
provided in the respective Certificate of Incorporation or By-Laws of the
Company or the subsidiaries or any applicable contract or agreement as in effect
on the date hereof, in each case for a period of three years after the date
hereof. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to the Surviving Corporation, (ii) after
the Effective Time, the Surviving Corporation shall pay the reasonable fees and
expenses of such counsel, promptly after statements therefor are received, and
(iii) the Surviving Corporation will cooperate in the defense of any such
matter; provided, however, that the Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld or delayed); and provided, further, that, in the event
that any claim or claims for indemnification are asserted or made within such
three-year period, all rights to indemnification in respect of any such claim
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or claims shall continue until the disposition of any and all such claims. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to any single action unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnified Parties. The indemnity agreements of Parent and
the Surviving Corporation in this Section 5.7(b) shall extend, on the same terms
to, and shall inure to the benefit of and shall be enforceable by, each person
or entity who controls, or in the past controlled, any present or former
director, officer or employee of the Company or any of its subsidiaries.
(c) The Surviving Corporation shall honor and fulfill in all respects the
obligations of the Company pursuant to indemnification agreements with the
Company's directors and officers existing at or before the Effective Time.
(d) For a period of five years after the Effective Time, Parent shall
cause the Surviving Corporation to maintain in effect, if available, directors'
and officers' liability insurance covering those persons who are currently
covered by the Company's directors' and officers' liability insurance policy (a
copy of which has been made available to Parent) on terms (including the amounts
of coverage and the amounts of deductibles, if any) that are comparable to the
terms now applicable to directors and officers of Parent, or, if more favorable
to the Company's directors and officers, the terms now applicable to them under
the Company's current policies; provided, however, that in no event shall Parent
or the Surviving Corporation be required to expend in excess of 300% of the
annual premium currently paid by the Company for such coverage; and provided
further, that if the premium for such coverage exceeds such amount, Parent or
the Surviving Corporation shall purchase a policy with the greatest coverage
available for such 300% of the annual premium.
(e) From and after the Effective Time, Parent shall guarantee the
obligations of the Surviving Corporation under this Section 6.4.
(f) This Section shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation
and the Indemnified Parties, shall be binding on all successors and assigns of
the Surviving Corporation and shall be enforceable by the Indemnified Parties.
In the event that Parent or Surviving Corporation or any of their successors or
assigns (i) consolidates or merges into any other person or entity and shall not
be the continuing or surviving corporation or entity in such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person or entity, then and in such case, proper provisions shall be made
so that the successors and assigns of Parent or the Surviving Corporation (as
the case may be) assume the obligations of Parent and the Surviving Corporation
set forth in this Section.
SECTION 6.5 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which would be likely to
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cause any representation or warranty contained in this Agreement to be
materially untrue or inaccurate, or (ii) any failure of the Company, Parent or
Acquisition, as the case may be, materially to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
SECTION 6.6 Further Action. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and otherwise to satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement. The
foregoing covenant shall not include any obligations by Parent to agree to
divest, abandon, license or take similar action with respect to any assets of
Parent or the Company except such actions that would not have a Material Adverse
Effect on Parent and its subsidiaries taken as a whole.
SECTION 6.7 Public Announcements. Parent and the Company shall consult
with each other before issuing any press release with respect to the Merger or
this Agreement and shall not issue any such press release or make any such
public statement without the prior consent of the other party, which shall not
be unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party, issue such press release or make such public
statement as may upon the advice of counsel be required by law or the rules and
regulations of the New York Stock Exchange, Inc. ("NYSE"), if it has used all
reasonable efforts to consult with the other party.
SECTION 6.8 Conveyance Taxes. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
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(a) Purchase of Shares. Acquisition shall have purchased Shares pursuant
to the Offer;
(b) HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(c) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect, nor shall any proceeding brought
by any administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending;
and there shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger which makes
the consummation of the Merger illegal;
(d) Governmental Actions. There shall not have been instituted, pending
or threatened any action or proceeding (or any investigation or other inquiry
that might result in such an action or proceeding) by any governmental authority
or administrative agency before any governmental authority, administrative
agency or court of competent jurisdiction, nor shall there be in effect any
judgment, decree or order of any governmental authority, administrative agency
or court of competent jurisdiction, in either case, seeking to prohibit or limit
Parent from exercising all material rights and privileges pertaining to its
ownership of the Surviving Corporation or the ownership or operation by Parent
or any of its subsidiaries of all or a material portion of the business or
assets of Parent or any of its subsidiaries, or seeking to compel Parent or any
of its subsidiaries to dispose of or hold separate all or any material portion
of the business or assets of Parent or any of its subsidiaries (including the
Surviving Corporation and its subsidiaries), as a result of the Merger or the
transactions contemplated by this Agreement.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company or Parent:
(a) by mutual written consent duly authorized by the Boards of Directors
of Parent, Acquisition and the Company; or
(b) by either Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall have
issued a
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nonappealable final order, decree or ruling or taken any other action having the
effect of permanently restraining, enjoining or otherwise prohibiting the Merger
(provided that the right to terminate this Agreement under this Section 8.1(b)
shall not be available to any party who has not complied with its obligations
under Section 6.6 and such noncompliance materially contributed to the issuance
of any such order, decree or ruling or the taking of such action); or
(c) by either Parent or the Company if Acquisition shall have (A)
terminated the Offer or (B) failed to accept for purchase and pay for Shares
pursuant to the Offer by April 15, 1997 unless Acquisition's actions are a
result of the receipt by the Company of an Acquisition Proposal or a request for
additional information under the HSR Act or the failure to obtain any necessary
governmental or regulatory approval, in which case if Acquisition shall have
failed to accept for purchase and pay for Shares by July 15, 1997 (provided that
the right to terminate this Agreement under this Section 8.1(c) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in any of the circumstances
described in clauses (A) and (B) before such date); or
(d) by Parent or the Company, prior to the purchase of Shares pursuant to
the Offer, if the Board of Directors of the Company shall withdraw, modify or
change its approval or recommendation of the Offer, this Agreement or the Merger
in a manner adverse to Parent; or
(e) by Parent or the Company, prior to the purchase of Shares pursuant to
the Offer, (i) if any representation or warranty of the Company or Parent,
respectively, set forth in this Agreement shall be untrue when made, or (ii)
upon a breach in any material respect of any covenant or agreement on the part
of the Company or Parent, respectively, set forth in this Agreement, in each
case where such untruth or breach would have a Material Adverse Effect on the
Company or the Parent, as the case may be (either (i) or (ii) above being a
"Terminating Breach"), provided, that, if such Terminating Breach is curable by
the Company or Parent, as the case may be, through the exercise of its
reasonable best efforts and for so long as the Company or Parent, as the case
may be, continues to exercise such reasonable best efforts, neither Parent nor
the Company, respectively, may terminate this Agreement under this Section
7.1(e).
SECTION 8.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) as set forth in
Section 8.3 and Section 9.1 hereof, and (ii) except as otherwise provided in
Section 8.3, nothing herein shall relieve any party from liability for any
Termination Breach hereof by such party.
SECTION 8.3 Fees and Expenses.
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(a) Except as set forth in this Section 8.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated.
(b) The Company shall pay Parent a fee of $17.5 million (the "Company
Fee"), upon the first to occur of the following events:
(i) the termination of this Agreement by Parent pursuant to Section
8.1(d); or
(ii) the termination of this Agreement by Parent pursuant to Section
8.1(e) on account of a Terminating Breach by the Company.
(c) The Company Fee payable pursuant to Section 8.3(b) shall be paid
within two (2) business days after the first to occur of any of the events
described in Section 8.3(b)(i) or (ii); provided, that, in no event shall the
Company be required to pay such Fee to Parent if, immediately prior to the
termination of this Agreement, Parent was in breach of any of its material
obligations under this Agreement. The payment of Company Fee shall be Parent's
sole and exclusive remedy for the event giving rise to the payment of the
Company Fee.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Effectiveness of Representations, Warranties and Agreements;
Knowledge, Etc.
(a) Except as otherwise provided in this Section 9.1, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that (i) if the Merger is
consummated the agreements set forth in Article II shall survive the Effective
Time indefinitely, (ii) the agreements in Section 6.4 shall survive in
accordance with their respective terms and (iii) the agreements set forth in
Section 8.3 shall survive termination indefinitely. The Confidentiality Letter
shall survive termination of this Agreement as provided therein.
(b) Any disclosure made with reference to one or more sections of the
Company Disclosure Schedule or the Parent Disclosure Schedule shall be deemed
disclosed only with respect to such section.
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SECTION 9.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
(a) If to Parent or Acquisition:
Laidlaw Inc.
3221 North Service Road
Burlington, Ontario L7R 3Y8
Telecopier No.: (905) 332-6550
Telephone No.: (905) 336-1800
Attention: Ivan R. Cairns, Senior Vice President and General Counsel
(b) If to the Company:
American Medical Response, Inc.
2821 South Parker Road, Suite 1000
Aurora, CO 80014
Telecopier No.: (303) 614-8519
Telephone No.: (303) 614-8500
Attention: President
With a copy to:
Keith F. Higgins, Esq.
Ropes & Gray
One International Place
Boston, MA 02110
Telecopier No.: (617) 951-7050
Telephone No.: (617) 951-7000
SECTION 9.3 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliates" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person; including, without limitation, any partnership
or joint venture in which the
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Company (either alone, or through or together with any other subsidiary) has,
directly or indirectly, an interest of 10% or more;
(b) "beneficial owner" with respect to any shares of Company Common Stock
means a person who shall be deemed to be the beneficial owner of such shares (i)
which such person or any of its affiliates or associates (as such term is
defined in Rule 12b-2 of the Exchange Act) beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates or associates has,
directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding, or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
shares;
(c) "business day" means any day other than a day on which banks in New
York are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or indirectly,
more than 50% of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
SECTION 9.4 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the stockholders of the Company, no amendment may be made which
by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
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SECTION 9.5 Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
SECTION 9.6 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.8 Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Letters), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein.
SECTION 9.9 Assignment; Guarantee of Acquisition Obligations. This
Agreement shall not be assigned by operation of law or otherwise, except that
Parent and Acquisition may assign all or any of their rights hereunder to any
affiliate provided that no such assignment shall relieve the assigning party of
its obligations hereunder. Parent guarantees the full and punctual performance
by Acquisition of all the obligations hereunder of Acquisition or any such
assignees.
SECTION 9.10 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation, other
than Section 6.4 (which is intended to be for the benefit of the Indemnified
Parties and may be enforced by such Indemnified Parties).
SECTION 9.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any
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such right preclude other or further exercise thereof or of any other right.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 9.12 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware
applicable to contracts executed and fully performed within the State of
Delaware.
SECTION 9.13 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[This space intentionally left blank.]
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IN WITNESS WHEREOF, Parent, Acquisition and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
LAIDLAW INC.
By:/s/James R. Bullock
------------------------
Name: James R. Bullock
Title: President and Chief Executive Officer
MEDTRANS ACQUISITION CO.
By:/s/Ivan R. Cairns
-----------------------
Name: Ivan R. Cairns
Title: President
AMERICAN MEDICAL RESPONSE, INC.
By:/s/Paul T. Shirley
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Name: Paul T. Shirley
Title: President and Chief Executive Officer
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ANNEX A
OFFER CONDITIONS
The capitalized terms used in this Annex A have the meanings set forth
in the attached Agreement, except that the term "Merger Agreement" shall be
deemed to refer to the attached Agreement and the term "Commission" shall be
deemed to refer to the SEC.
Notwithstanding any other provision of the Offer, Acquisition shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including without limitation, Rule 14e-1(c) under
the Exchange Act (relating to Acquisition's obligation to pay for or return
Shares promptly after termination or withdrawal of the Offer), pay for any
Shares tendered pursuant to the Offer, and may postpone the acceptance for
payment or, subject to the restriction referred to above, payment for any Shares
tendered pursuant to the Offer, and may terminate or amend the Offer and not
accept for payment any Shares, if (i) the Minimum Condition shall not have been
satisfied, or (ii) any applicable waiting period under the HSR Act shall not
have expired or been terminated; provided, that prior to April 15, 1997, (or, if
the conditions to the Offer have not been satisfied prior to April 15, 1997 as
the result of the receipt by the Company of an Acquisition Proposal or as a
result of a failure of the applicable waiting period under the HSR Act to expire
or the failure to obtain any necessary governmental or regulatory approvals,
prior to July 15, 1997) Acquisition shall not terminate the Offer by reason of
the nonsatisfaction of any of the conditions and shall extend the Offer, or
(iii) Acquisition shall not have been reasonably satisfied that the provisions
of Section 203 of the Delaware General Corporation Law are inapplicable to the
Offer and Merger, or (iv) at any time on or after five days after announcement
and prior to the acceptance for payment of Shares, any of the following
conditions occurs:
(a) there shall have been any action or proceeding brought by any
governmental authority before any court located or having jurisdiction within
the United States or Canada or any statute, regulation, legislation, judgment or
order, enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to the Offer or the Merger by any court, governmental, administrative
or regulatory authority or agency located or having jurisdiction within the
United States or Canada that could result in a Material Adverse Effect and have
the effect of: (i) making illegal, or otherwise directly or indirectly
restraining or prohibiting or imposing material penalties or fines or requiring
the payment of material damages in connection with the making of, the Offer, the
acceptance for payment of, payment for, or ownership, directly or indirectly, of
some of or all the Shares by Parent or Acquisition, the consummation of the
Offer or the Merger; (ii) prohibiting or materially limiting the direct or
indirect ownership or operation by the Company or by Parent of all or any
material portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or compelling Parent to dispose of or hold separate all or any
material portion of the business or assets of the
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Company and its subsidiaries, taken as a whole, as a result of the transactions
contemplated by the Merger Agreement; (iii) imposing or confirming material
limitations on the ability of Parent effectively to hold or to exercise full
rights of ownership of Shares, including, without limitation, the right to vote
any Shares on all matters properly presented to the stockholders of the Company;
or (iv) requiring divestiture by Parent or Acquisition, directly or indirectly,
of any Shares; or
(b) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger Agreement
or any of the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct both when made and as of the date
of consummation of the Offer (except to the extent such representations and
warranties of the Company address matters only as of a particular date, in which
case as of such date) except where the failure to perform such covenants or
agreements or the failure of such representation and warranties to be so true
and correct would not have a Material Adverse Effect; or
(c) The Merger Agreement shall have been terminated in accordance with
its terms or the Offer shall have been amended or terminated with the consent of
the Company;
which, in the reasonable judgment of Acquisition in any such case, and
regardless of the circumstances (including any action or omission by Acquisition
not inconsistent with the Merger Agreement) giving rise to any such condition,
makes it inadvisable to proceed with such acceptance for payment or payments of
Shares.
The foregoing conditions are for the sole benefit of Acquisition
and may be asserted by Acquisition regardless of the circumstances giving
rise to any such condition or may be waived by Acquisition in whole or in
part at any time or from time to time in its sole discretion. The failure by
Acquisition at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect
to particular facts or circumstances shall not be deemed a waiver with
respect to any other facts or circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time or from time to time.
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Exhibit 2
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table shows the value of exercisable and unexercisable options
held by each of the Named Executive Officers as of December 31, 1995.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Option Shares In-the-Money Options
Shares Acquired Value at December 31, 1995(#) at December 31, 1995($)
on Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
--------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul T. Shirley. . . . . - - - 77,000 - 729,750
Paul M. Verrochi (1) . . - - - - 615,500
George B. DeHuff . . . . 7,500 48,750 9,166 93,334 95,097 913,340
Dominic J. Puopolo (1) . - - - 62,000 - 583,500
John K. Rester . . . . . - - 20,000 18,000 300,000 214,000
</TABLE>
(1) Each of the named executive officer's options became exercisable in full
subsequent to December 31, 1995. See "Severance and Consulting
Arrangements".
EMPLOYMENT AGREEMENTS
Messrs. Shirley and DeHuff have each entered into an employment agreement
with the Company that entitles him to receive an annual base salary as well as
such bonuses as may be authorized from time to time by the Board of Directors.
Each agreement has an initial term of three years, with automatic extensions of
one year added annually unless terminated, and with a covenant-not-to-compete
with the Company for a period of two years following termination of employment.
Each agreement requires the executive to devote his full time, attention and
efforts to the business and affairs of the Company. If the Company terminates
Mr. Shirley's employment agreement other than for cause, Mr. Shirley will be
entitled to a termination payment approximately equal to two times his base
salary, plus two times the greater of (i) any bonus or incentive compensation
paid to him during the previous twelve months or (ii) 50% of his base salary.
In addition, all options to purchase Common Stock which were previously granted
to Mr. Shirley shall immediately vest. If the Company terminates Mr. DeHuff's
employment agreement other than for cause, Mr. DeHuff will be entitled to a
termination payment approximately equal to 1.5 times his base salary, plus 1.5
times the greater of (i) any bonus or incentive compensation paid to him during
the previous twelve months or (ii) 50% of his base salary. In addition, all
options to purchase Common Stock which were previously granted to Mr. DeHuff
shall immediately vest. Base salaries for 1996 are: Mr. Shirley -- $300,000 and
Mr. DeHuff -- $250,000.
CHANGE-IN-CONTROL ARRANGEMENTS
The Company maintains an Executive Separation Allowance Plan (the
"Separation Plan") under which a participating executive is entitled to certain
benefits if, within 90 days following a change in control of the Company, the
executive is terminated other than for cause or if the executive terminates his
employment for good reason. Good reason includes a major reduction in the
executive's responsibilities, a significant reduction in base
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salary or total benefits or a relocation outside of 50 miles from the
executive's principal location of employment. The terminated executive is
entitled to a cash payment equal to a designated multiple of the sum of his
highest annual base salary during the last five years and the highest annual
bonus during the last three years. In addition, the executive will receive one
year's life insurance coverage in an amount equal to two times his highest
annual base salary during the previous five years and medical and dental
coverage for one year. All stock options held by the executive will also become
exercisable. Messrs. Shirley and DeHuff participate in the Separation Plan and
their designated salary and bonus multiples are 2.99 and 2.00, respectively.
SEVERANCE AND CONSULTING ARRANGEMENTS
Beginning in 1996, Mr. Verrochi ceased being a full-time employee of the
Company. In connection with his change in status and the cancellation of his
then existing employment contract, Mr. Verrochi executed a severance agreement
and the Company agreed to make a lump sum payment to him of $952,000 and to
accelerate the exercisability of stock options covering 96,000 shares of Common
Stock held by Mr. Verrochi. Mr. Verrochi has agreed not to compete with the
Company for a period of two years.
Beginning in April 1996, Mr. Puopolo ceased being a full-time employee of
the Company. In connection with his change in status and the cancellation of
his then existing employment contract, Mr. Puopolo executed a severance
agreement and the Company agreed to make a lump sum payment to him of $802,000
and to accelerate the exercisability of stock options covering 92,000 shares of
Common Stock held by Mr. Puopolo. Mr. Puopolo has agreed not to compete with
the Company for a period of two years. Mr. Puopolo remains as member of the
Board of Directors.
The Company has also entered into consulting agreements with Exel Holdings
Ltd., a company owned by Messrs. Verrochi and Puopolo, to provide consulting
services in connection with the Company's acquisition program. Payments under
the consulting agreements, each of which has a term of one year, in the
aggregate are $20,000 per acquisition up to a maximum of $200,000.
In connection with Mr. Paolella's termination of active employment with the
Company, the Company entered into a severance arrangement with him under which
the Company agreed to make to him a lump sum payment of $252,700 and to
accelerate the exercisability of stock options covering 8,000 shares of Common
Stock that Mr. Paolella holds. Mr. Paolella has agreed not to compete with the
Company for a period of two years.
Until December 1995 the Company had been paying to James E. McGrath a
monthly consulting retainer of $5,600 in connection with services he performed.
Beginning in 1996 the Company ceased paying the retainer, although Mr. McGrath
will remain available on an hourly basis if requested by the Company. In
connection with this restructuring of this consulting arrangement the Company
agreed to make a lump sum payment to Mr. McGrath of $134,400.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Thompson, Hammond and Michael A. Baker, none of whom is or was an
executive officer or employee of the Company, served on the Compensation
Committee during 1995. The Company is a party to a consulting agreement with
DECCS, Inc., a company owned by a trust for the benefit of Mr. Baker's children,
pursuant to which Mr. Baker provides certain merger and acquisition advice as
required by the Company. Under that Agreement, DECCS is paid monthly at the
rate of $75,000 per year. During 1995, the Company paid DECCS approximately
$90,000 pursuant to the consulting agreement.
ITEM 3 - AMENDMENT TO 1992 EMPLOYEE STOCK PURCHASE PLAN
On February 22, 1996, the Board of Directors approved, subject to
stockholder approval, an amendment (the "Amendment") to the 1992 Employee Stock
Purchase Plan (the "Purchase Plan") to increase the maximum number of shares of
Common Stock available for issuance under the Purchase Plan from 200,000 to
400,000 (subject to adjustment for stock splits and similar changes). During
1993, 1994 and 1995, employees purchased 44,862, 55,595 and 71,368 shares of
stock under the Purchase Plan. The Board of Directors believes that the
Purchase Plan provides a convenient way for employees to become stockholders of
the Company and to align their interests more closely with those of the
stockholders. The Board believes that it is possible that, at the current rate
of employee participation, the number of shares reserved for issuance would be
awarded prior to the time of the next annual meeting of stockholders.
Accordingly, it adopted the Amendment, subject to stockholder approval.
The Purchase Plan is designed to enable eligible employees to purchase
shares of Common Stock at a discount through payroll deductions. All employees
who customarily work more than 20 hours per week and who have completed at least
six months of continuous service, other than employees owning 5% or more of the
Common Stock, are eligible to participate. As of April 1, 1996, there were
approximately 8,800 employees eligible to participate in the Purchase Plan.
Purchases occur twice a year at the end of six-month option periods beginning on
January 1 and July 1. The purchase price for Common Stock under the Purchase
Plan is 85% of the lesser of the fair market value of the Common Stock at the
beginning of the option period and the fair market value of the Common Stock at
the end of the option period. Participants may elect under the Purchase Plan to
have between 2% and 10% of their pay withheld and applied to the purchase of
shares at the end of the option period.
If a participant's employment with the Company terminates, the
participant's option to purchase shares for that period will be deemed canceled
and the balance of the participant's payroll withholding account will be
refunded. If a participant dies during an option period, the participant's
option will be deemed canceled and the balance of his or her payroll withholding
account refunded unless the participant elected, as part of a valid beneficiary
designation, to have such balance applied at the end of the period toward the
purchase of shares of Common Stock to be delivered to the beneficiary.
The following discussion of certain federal income tax consequences
associated with participation in the Purchase Plan is based on the law as in
effect on April 1, 1996. It does not purport to cover federal employment tax or
other federal tax consequences that may be associated with the Purchase Plan,
nor does it cover state, local or non-U.S. taxes.
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TRANSACTIONS WITH MANAGEMENT
REAL PROPERTY TRANSACTIONS
The Company leases two ambulance stations in Santa Cruz, California from
Paul T. Shirley. The aggregate amount of lease payments for these properties
incurred by the Company in 1995 was approximately $59,000.
The Company leases its administrative facility in New Haven, Connecticut
from P&J Realty, a partnership in which Joseph R. Paolella is a partner. The
lease and related real estate tax payments paid by the Company to P&J Realty for
this property in 1995 totaled approximately $423,000. On March 31, 1996, the
Company made a payment to P&J Realty of $527,403 which represented the
discounted present value of future payments under the lease in excess of the
fair market value and the then current version of the lease was canceled. The
Company has entered into a new lease which provides for annual base rent of
$290,940 during the initial term with an increase to $339,430 seventeen months
after the commencement of any renewal period. The new lease is for five years
and allows either party to renew for an additional five-year period.
The Company has leased its administrative facility in Gulfport, Mississippi
from Mr. Rester. The Company paid $163,000 in lease payments on this property
during 1995. The lease for this property has a term of five years and expires
in January 1999, with an option for the Company to extend the term for an
additional five-year period. The lease provides for annual rent of
approximately $131,300. Mr. Rester has expanded the facility at the Company's
request and rent payments when approved for the new facilities will increase the
annual rent by approximately $40,800 annually to annual rent of approximately
$172,100.
COMPANY POLICY
The Company adopted a policy in June 1992 whereby any future transaction
with an officer, director or affiliate will be on terms no less favorable to the
Company than could be obtained from unrelated third parties and will be approved
by a majority of the disinterested members of the Company's Board of Directors.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors has selected the firm of KPMG Peat Marwick,
certified public accountants, as auditors for the Company for the fiscal year
ending December 31, 1996. A representative of KPMG Peat Marwick is expected to
be present at the Meeting with the opportunity to make a statement if he or she
desires and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be included in the Company's proxy
materials for the Company's 1997 annual meeting of stockholders must be received
by the Company not later than December 10, 1996 at its principal executive
office, 2821 South Parker Road, 10th floor, Aurora, Colorado 80014.
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EXHIBIT 3
[LOGO]
January 10, 1997
Dear Stockholder:
We are pleased to report that, on January 6, 1997, American Medical
Response, Inc. (the "Company") entered into a merger agreement with Laidlaw Inc.
and one of its subsidiaries that provides for the acquisition of the Company by
Laidlaw at a price of $40.00 per share in cash. Under the terms of the proposed
transaction, a Laidlaw subsidiary is today commencing a cash tender offer for
all outstanding shares of the Company common stock at $40.00 per share.
Following the successful completion of the Laidlaw tender offer, the Laidlaw
subsidiary will be merged into the Company and all shares not purchased in the
Laidlaw tender offer will be converted into the right to receive $40.00 per
share in cash in the merger.
YOUR BOARD OF DIRECTORS HAS APPROVED THE LAIDLAW TENDER OFFER AND DETERMINED
THAT THE TERMS OF THE TENDER OFFER AND THE MERGER, TAKEN TOGETHER, ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS. ACCORDINGLY, THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT ALL COMPANY STOCKHOLDERS ACCEPT
THE LAIDLAW TENDER OFFER AND TENDER THEIR SHARES TO LAIDLAW.
In arriving at its recommendations, the Board of Directors gave careful
consideration to a number of factors. These factors included the opinion dated
January 6, 1997 of Smith Barney Inc., financial advisor to the Company, to the
effect that, as of such date and based upon and subject to certain matters
stated in such opinion, the cash consideration of $40.00 per share to be
received by Company stockholders (other than Laidlaw and its affiliates) in the
offer and the merger, taken together, was fair from a financial point of view to
such stockholders.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is
Laidlaw's Offer to Purchase and related materials, including a Letter of
Transmittal for use in tendering shares. We urge you to read the enclosed
materials, including Smith Barney's opinion which is attached to the Schedule
14D-9, carefully.
The management and directors of American Medical Response, Inc. thank you
for the support you have given the Company.
Sincerely,
[SIGNATURE]
Paul T. Shirley
PRESIDENT AND CHIEF EXECUTIVE OFFICER
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Exhibit 4
[American Medical Response, Inc. Letterhead]
Contact: Anna Marie Dunlap
V.P. Investor Relations
(303) 614-8570
FOR IMMEDIATE RELEASE
LAIDLAW TO ACQUIRE
AMERICAN MEDICAL RESPONSE, INC.
MERGER WILL COMBINE TOP TWO AMBULANCE COMPANIES IN U.S.
JANUARY 6, 1997 -- AURORA, COLORADO -- American Medical Response, Inc.
(NYSE:EMT) announced today that it had signed a definitive agreement through
which Laidlaw Inc. (NYSE:LDWB) will acquire American Medical Response.
According to the terms of the merger agreement, Laidlaw will commence a tender
offer to acquire 100 percent of American Medical Response's outstanding shares
for $40 per share, or an equity value of approximately of $1.12 billion. The
transaction is expected to close in February, subject to a tender of a minimum
of two-thirds of American Medical Response's outstanding shares, required
regulatory approvals, and other customary conditions. American Medical Response
currently has approximately 28 million fully diluted common shares outstanding.
Laidlaw plans to merge its San Diego, California-based MedTrans ambulance
services unit with American Medical Response. The combined entity will operate
as American Medical Response, Inc. and will remain headquartered in Aurora,
Colorado. Paul T. Shirley, currently Chief Executive Officer of American
Medical Response, will continue in that role.
"This transaction represents a significant realization of value for our
shareholders," said Paul T. Shirley, Chief Executive Officer. "American Medical
Response and MedTrans are two highly successful medical transportation providers
sharing a common view of the future of emergency medical services. The
combination will create an organization with even greater operating efficiencies
and improved service for our patients. As a combined entity, we will be well
positioned to expand the scope of emergency and urgent care services offered to
municipalities and health care payors."
<PAGE>
"We have known and respected the management of MedTrans for the past several
years," Mr. Shirley continued. "We plan to capitalize on the experience of both
executive teams as we grow the new company."
Since its initial public offering in 1992, American Medical Response has
acquired more than 70 ambulance providers. MedTrans, acquired by Laidlaw in
mid-1993, has acquired 80 ambulance companies and currently operates in 23
states. Both companies provide a variety of emergency and non-emergency medical
transportation and related services to municipalities, health care payors, and
individuals. Upon completion of the merger, approximately 40% of Laidlaw's
total revenue will be derived from medical transportation and related services.
American Medical Response's Board of Directors received a fairness opinion
regarding the merger from Smith Barney. Merrill Lynch & Co. is acting as the
financial advisor to Laidlaw for the transaction.
American Medical Response is the nation's leading provider of emergency and non-
emergency medical transportation services, with operations in 28 states and over
12,000 employees. Laidlaw, Inc. is a major provider of transportation and
environmental services to municipalities and industries through the United
States and Canada.
NOTE: THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS
MAY VARY. FOR MORE IMPORTANT INFORMATION REGARDING THE ASSUMPTIONS UPON WHICH
THESE STATEMENTS ARE MADE, AND IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY, REFER TO EXHIBIT 99 FILED WITH THE COMPANY'S 1995 10-K.
##
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EXHIBIT 6
EMPLOYMENT AGREEMENT
This Agreement among American Medical Response, Inc., a Delaware corporation
(the "Company") and David C. Colby ("Executive") is hereby entered into as of
April 1, 1996.
RECITALS:
As of the date of this Agreement, the Company and its affiliates are engaged
in the business of medical transportation services. The operations of the
Company and its subsidiaries are a complex matter requiring direction and
leadership in a variety of arenas, including financial, strategic planning,
regulatory, community relations and others. The Executive is possessed of
certain experience and expertise that qualify him to provide the direction and
leadership required by the Company and its subsidiaries.
Executive is or will be employed by the Company in a confidential
relationship wherein Executive, in the course of his employment with the
Company, will become familiar with and aware of information as to the specific
manner of doing business and the customers of the Company, and its subsidiaries
and future plans with respect thereto, all of which will be established and
maintained at great expense to the Company and its subsidiaries; this
information is a trade secret and constitutes the valuable goodwill of the
Company and its subsidiaries.
Executive recognizes that the business of the Company and its subsidiaries
depends upon a number of trade secrets, including secret techniques, methods and
data. The protection of these trade secrets is of critical importance to the
Company and its subsidiaries.
The Company and its subsidiaries will sustain great loss and damage if
Executive should violate the provisions of paragraph 3 of this Agreement.
Further, monetary damages for such losses would be extremely difficult to
measure.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby agreed
as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Executive as Chief Financial Officer and
Executive Vice President to perform the duties normally associated
therewith. Executive hereby accepts this employment upon the terms and
conditions herein contained. Executive shall faithfully adhere to, execute
and fulfill all policies established by the Company. During the term of his
employment, as defined in paragraph 6(a), Executive shall devote his full
time, attention and efforts to promote and further the business and services
of the Company and perform all services not inconsistent with his position
which the Company s Board of Directors and Chief Executive Officer shall
designate, use his best efforts to promote the Company s interests, and
serve as director of the Company if elected as such.
(b) Executive shall perform such duties, assume such responsibilities
and devote such time, attention and energy to the business of the Company as
the Board of Directors and President of the Company shall from time to time
require and shall have all powers and duties consistent with such positions,
subject to the direction of the Board.
(c) All funds received by Executive on behalf of the Company, if any,
shall be held in trust for the Company and shall be delivered to the Company
as soon as practicable.
(d) The Company agrees to propose to the shareholders of the Company,
upon the recommendation of the Nominating Committee of the Board of
Directors, at each appropriate Annual Meeting of such shareholders during
the term hereof (provided the Executive continues in his position and is not
in material violation of this Agreement) the election or reelection of the
Executive as a member of the Board of Directors of the Company, provided
that the Executive is otherwise eligible for such election.
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2. COMPENSATION AND EXPENSES. For all services rendered by Executive to
the Company, the Company shall compensate the Executive as follows:
(a) BASE SALARY. The base salary payable to Executive shall be not
less than $275,000 per year payable in accordance with the Company's
customary pay practices.
(b) ANNUAL BONUS. Executive shall be eligible for an annual
performance bonus subject to the evaluation and approval of the Compensation
Committee of the Board of Directors.
(c) EXPENSES. Executive shall be entitled to reimbursement for
expenses incurred on behalf of the Company in the performance of his duties
hereunder, consistent with the Company's reimbursement policies.
(d) DISABILITY. Executive shall be entitled to receive for a period of
up to six (6) months his base salary and a pro rata portion of his bonus
during such time as, because of illness or physical or mental disability or
other incapacity, he is unable to perform his duties under this Agreement.
Such amounts payable shall be offset by any amounts paid to Executive under
disability insurance policies maintained by the Company.
(e) OTHER BENEFITS. In addition to the benefits described above,
Executive shall be entitled, during the term hereof and subject to any
contribution therefor generally required of executives of the Company, to
participate in any and all employee benefit plans from time to time in
effect for employees or executives of the Company generally, except to the
extent such plans are in a category of benefit otherwise provided to the
Executive. Such benefits and participation shall be subject to (i) the terms
of the applicable plan documents, (ii) generally applicable Company policies
and (iii) the discretion of the Board or any administrative or other
committee provided for in or contemplated by such plan. The Company may
alter, modify, add to or eliminate its employee benefit plans at any time as
it, in its sole judgment, determines to be appropriate, without recourse by
the Executive.
(f) CHANGE OF CONTROL. The parties acknowledge that the Executive is
subject to the provisions of and entitled to certain benefits under the
Company s Executive Separation Allowance Plan. The Executive acknowledges
and agrees that in addition to this Agreement, his inclusion in the Company
s Executive Separation Allowance Plan constitutes good and valuable
consideration for his covenants under Paragraph 3 of this Agreement.
3. NON-COMPETITION AGREEMENT; TRADE SECRETS.
(a) Executive agrees that, during the term of his employment with the
Company and for a two-year period following termination of his employment
with the Company for any reason, he shall not, directly or indirectly, for
himself or on behalf of any other person, company, partnership, corporation
or business of whatever nature:
(i) knowingly call upon any then current customer of the Company or
any of its subsidiaries (including any such customer obtained by the
Executive) for the purpose of soliciting or selling any services or
products in competition with those of the Company or any of its
subsidiaries;
(ii) knowingly solicit any employee of the Company or any of its
subsidiaries for the purpose or with the intent of enticing them away
from or out of the employ of the Company or any of its subsidiaries for
any reason whatsoever;
(iii) establish, enter into, be employed by or for, advise, consult
with or become an owner in or a part of, any company, partnership,
corporation or other business entity or venture, or in any way engage in
business where a material portion of such entity or business competes in
the business of providing medical transportation services with the
Company or any of its subsidiaries, within the United States of America
or within 100 miles of any location in which the Company or any of its
subsidiaries conducts business; or
2
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(iv) call upon any prospective acquisition candidates on Executive's
own behalf or on behalf of any competitor, which candidate was either
called upon by the Executive or for which Executive made an acquisition
analysis for the Company.
Ownership of not more than one percent of the voting stock of a corporation
whose stock is traded on a national securities exchange or over-the-counter
shall not of itself constitute a violation of this paragraph 3(a).
(b) Executive agrees that he will not, during or after the term of his
employment with the Company, disclose or use for his personal benefit,
nonpublic confidential information relating to the customers or other trade
secrets (whether in existence or proposed) of the Company or any of its
subsidiaries, or any other confidential information of the Company or its
subsidiaries to any person, firm, partnership, corporation or business for
any reason or purpose whatsoever.
(c) Because of the difficulty of measuring economic losses to the
Company and its subsidiaries as a result of the breach of any of the
foregoing covenants, and because of the immediate and irreparable damage
that would be caused to the Company and its subsidiaries for which they may
have no other adequate remedy, Executive agrees that, in the event of a
breach by him of any of the foregoing covenants, the Company or any of its
subsidiaries may, in addition to obtaining any other remedy or relief
available to it, enforce the foregoing covenants by all equitable relief,
including injunctions and restraining orders.
(d) The covenants in this paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and this Agreement shall thereby be reformed.
(e) It is specifically agreed that the post-termination non-competition
period referred to in paragraph 3(a) shall be computed by excluding from
such computation any time during which Executive is in violation of any
provision of this paragraph 3 as determined by a final and nonappealable
decree of a court of competent jurisdiction.
4. RETURN OF COMPANY PROPERTY. All records, plans, memoranda, lists and
other property delivered to Executive by or on behalf of the Company or any of
its subsidiaries or by a customer of any of them (including but not limited to,
any such customers obtained by Executive), and all records compiled by the
Executive which pertain to the business of the Company or any of its
subsidiaries shall be and remain the property of the Company or such subsidiary,
as the case may be, and be subject at all times to its discretion and control.
Likewise, all correspondence with customers or representatives, reports,
records, charts, advertising materials, and any data collected by Executive, or
by or on behalf of the Company, any of its respective subsidiaries or any
representative of any of them shall be delivered promptly to the Company without
request by them upon termination of Executive's employment.
5. INVENTIONS. Executive shall disclose promptly to the Company any and
all conceptions and ideas for inventions, improvements, discoveries and works,
whether or not patentable or copyrightable, which are conceived or made by
Executive solely or jointly with another during the period of employment which
are related to the business or activities of the Company or any of its
subsidiaries or which Executive conceives as a result of his employment by the
Company (collectively, "Proprietary Rights"), and Executive hereby assigns and
agrees to assign all his interests therein to the Company or its nominee. All
copyrightable Proprietary Rights shall be considered to be "works made for
hire". Whenever requested to do so by the Company, Executive shall execute any
and all applications, assignments or other instruments and do such other acts
that the Company shall request to apply for and obtain Letters Patent of the
United States or any foreign country or to otherwise protect the Company's
interest therein. These obligations
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shall continue beyond the termination of employment with respect to inventions,
improvements, discoveries and works, whether or not patentable or copyrightable,
conceived, made or acquired by Executive during the period of employment, and
shall be binding upon Executive's assigns, executors, administrators and other
legal representatives.
6. TERM; TERMINATION; RIGHTS OF TERMINATION.
(a) The initial term of Executive's employment with the Company
hereunder shall, unless terminated as herein provided, continue for a term
of three (3) years ending on the third anniversary of the date of this
Agreement. On each anniversary of the date of this Agreement, unless either
party has given prior written notice of nonrenewal at least 30 days prior to
the date of such anniversary, the term of the Executive's employment with
Company shall automatically be renewed for an additional three (3) year term
commencing on such anniversary, on the same terms and conditions contained
herein, unless otherwise terminated as herein provided. The Executive's
employment with the Company may be terminated in any one of the following
ways:
(i) The death of Executive or the inability of Executive, because of
illness or physical or mental disability or other incapacity which
continues for period in excess six months, to perform his duties under
this Agreement shall terminate Executive's employment.
(ii) The Company may terminate the Executive's employment after
ten-days' written notice to Executive for good cause, including without
limitation:
(A) Executive's willful failure to perform, or gross negligence
in performance of, the Executive's duties and responsibilities to the
Company and its affiliates or in the Executive's obligations under
this Agreement;
(B) Executive's fraud, embezzlement or other material dishonesty
with respect to the Company or any of its affiliates or if Executive
is convicted of, or pleads nolo contendere to, a felony involving
fraud, dishonesty or moral turpitude; or
(C) Executive's exclusion from participation in Medicare,
Medicaid or any other third party reimbursement program, for any
reason, or if Executive has had material civil money penalties or
assessments imposed on him under any federal or state law involving
Medicare, Medicaid or any other third party reimbursement program.
(iii) At any time after the commencement of Executive's employment
with the Company, the Company or Executive may, without cause, terminate
the Executive's employment thirty days after written notice is provided
to the other party.
(iv) The Executive may terminate his employment hereunder for Good
Reason, upon notice to the Company setting forth in reasonable detail the
nature of such Good Reason. The following shall constitute Good Reason
for termination by the Executive:
(A) Failure of the Company to continue the Executive in the
position of Chief Financial Officer and Executive Vice President;
(B) Material diminution in the nature or scope of the Executive's
responsibilities, duties or authority;
(C) Material failure of the Company to provide the Executive the
Base Salary and benefits in accordance with the terms of Section 4
hereof; or
(D) Failure by the Company to procure Directors and Officers
Insurance which is substantially equivalent to the coverage provided
at the time of the execution of this Agreement.
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(b) Upon termination of Executive's employment pursuant to clause (i) of
paragraph 6(a), by the Company pursuant to clause (iii) of paragraph 6(a)
(other than upon expiration of the initial or any successive term after
notice in accordance with paragraph 7(a)) or for Good Reason pursuant to
clause (iv) of paragraph 6(a), Executive shall be entitled to receive (i)
all cash compensation earned under this Agreement to the date of termination
PLUS (ii) an amount equal to last year's cash bonus, if any, prorated for
any partial year prior to termination PLUS (iii) base compensation as in
effect on the date prior to termination for an additional period of eighteen
months PLUS (iv) an amount equal to one and one-half times the greater of
the amount any cash incentive or bonus compensation paid to him during the
preceding twelve months or 50% of the Executive s base salary, and subject
to any employee contribution applicable to the Executive on the date of
termination, for an eighteen month period following the date of termination
the Company shall continue to pay for the cost of the Executive's
participation in the Company's group medical and dental insurance plans,
provided that the Executive is entitled to continue such participation under
applicable state and federal law and plan terms. In addition, upon the date
of such termination all options to purchase common stock of the Company
which were previously granted to the Executive but which have not vested
shall automatically and immediately vest.
(c) Upon termination of Executive's employment by the Company pursuant
to clause (ii) of paragraph 6(a), upon expiration of the initial or any
successive term after notice in accordance with paragraph 7(a), or by the
Executive pursuant to clause (iii) of paragraph 6(a), Executive shall be
entitled to receive all base cash compensation earned under this Agreement
to the date of termination, together with an amount equal to a pro rata
portion of last year's cash bonus based on the number of days worked in the
year of such termination. Such termination of the Executive's employment
shall not otherwise accelerate the payment date of any monies accrued or
accruing to the account of Executive as a result of any bonuses or other
compensation, nor shall termination vest in Executive any right in
connection therewith.
(d) In the event of termination of Executive's employment for any reason
provided in this paragraph 6, all rights and obligations of the Company and
Executive under this Agreement shall cease immediately, except that
Executive's obligations under paragraphs l(c), 3, 4, 5 and 7 hereof shall
survive such termination, and thereafter Executive shall have the right to
receive, and the Company shall be obligated to pay, the compensation as set
forth in paragraphs 6(b) or 6(c).
7. REPRESENTATIONS OF EXECUTIVE. Executive has represented and hereby
represents and warrants to the Company that he is not subject to any restriction
or non-competition covenant in favor of a former employer or any other person or
entity (other than the Company and its subsidiaries), and that the execution of
this Agreement by Executive and his employment by the Company and the
performance of his duties hereunder will not violate or be a breach of any
agreement with a former employer or any other person or entity and Executive
agrees to indemnify the Company for any claim by any third party that such third
party may now have or may hereafter come to have against the Company based upon
or arising out of any non-competition agreement or invention and secrecy
agreement between Executive and such third party.
8. COMPLETE AGREEMENT. There are no oral representations, understandings
or agreements with the Company or any of its officers, directors or
representatives covering the same subject matter as this Agreement and this
Agreement supersedes any prior agreement or understanding between the Company
and the Executive with respect to his employment. This Agreement is the final,
complete and exclusive statement and expression of this Agreement among the
Company and Executive and of all the terms of this Agreement, and it cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
oral or written agreements. The payments, benefits and rights of the Executive
under this agreement are not intended to be duplicative, and to the extent that
the Executive is entitled to payments or benefits with respect to a particular
class or category of benefit which is in the same category or class of a right
to payment or benefit found elsewhere in this Agreement or in any other
arrangement between the
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Company and the Executive, the Executive shall be entitled to the greater
benefit or payment but such payment or benefits shall not be cumulative. This
Agreement may not be later modified except by a further writing signed by the
parties, and no term of this Agreement may be waived except by writing signed by
the party waiving the benefit of such terms.
9. NO WAIVER. No waiver by the parties hereto of any default or breach of
any term, condition or covenant of this Agreement shall be deemed to be a waiver
of any subsequent default or breach of the same or any other term, condition or
covenant contained herein.
10. ASSIGNMENT: BINDING EFFECT. Executive understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, that neither
he nor the Company shall assign all or any portion of this Agreement.
11. NOTICE. Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
To the Company: American Medical Response, Inc.
2821 South Parker Road, 10th Floor
Aurora, CO 80014
Attention: General Counsel
Telephone: (303) 614-8500
Telecopy: (303) 614-8549
To Executive: David C. Colby
4425 Sheppard Place
Nashville, TN 37205
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 11.
12. SEVERABILITY: HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of this
Agreement or of any part hereof.
13. MISCELLANEOUS. This Agreement shall in all respects be construed
according to the laws of The State of Colorado. This Agreement may be executed
in any one 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.
AMERICAN MEDICAL RESPONSE, INC.
By /s/_PAUL T. SHIRLEY________________
Paul T. Shirley
CHIEF EXECUTIVE OFFICER AND
PRESIDENT
EXECUTIVE:
/s/_DAVID C. COLBY__________________________
David C. Colby
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EXHIBIT 7
EMPLOYMENT AGREEMENT
This Employment Agreement (hereinafter referred to as the "Agreement") is
made and entered into this 10th day of December, 1996 by and among American
Medical Response, Inc., a Delaware corporation ("American"), STAT Healthcare,
Inc., a Delaware corporation (hereinafter referred to as "Employer"), and
Russell D. Schneider, (hereinafter referred to as "Employee").
WHEREAS, American is engaged in the healthcare services businesses and
expects to, pursuant to an Agreement and Plan of Merger dated as of October 7,
1996 among American, Employer and SHI Acquisition Corp., a Delaware corporation
and wholly owned subsidiary of American ("Acquisition Sub"), under which
Acquisition Sub will merge with and into Employer (the "Merger"), acquire all of
the outstanding stock of Employer;
WHEREAS, Employee is or will be employed by Employer in a confidential
relationship wherein Employee, in the course of his employment, will become
familiar with and aware of information as to the specific manner of doing
business and the customers of the Employer, American and their respective
subsidiaries and affiliates and future plans with respect thereto, all of which
will be established and maintained at great expense to Employer, American and
their respective subsidiaries and affiliates.
WHEREAS, Employee recognizes that the business of Employer, American and
their respective subsidiaries and affiliates depends upon a number of trade
secrets, including secret techniques, methods and data. The protection of these
trade secrets is of critical importance to Employer, American and their
respective subsidiaries and affiliates.
WHEREAS, subject to the terms and conditions hereinafter provided, Employer
desires to employ Employee and Employee desires to be employed by Employer; and
NOW, THEREFORE, in consideration of the employment of Employee and the
compensation to be paid by Employer to Employee, the Employee hereby accepts
employment hereunder subject to the terms and conditions stated below including
the agreement of Employee not to enter into certain competitive activities with
the Employer, as follows:
1. TERM. This Agreement shall commence upon the consummation of the Merger
(the "Effective Date") and shall continue for a period of three years or until
terminated in accordance with the provisions set forth herein.
2. DUTIES. The Employee shall perform the following duties pursuant to
this Agreement:
a. Employee shall be employed at Employer's office in Houston, Texas, or at
such other location(s) as may be determined by Employer.
b. Employee shall be actively involved in Employer's day-to-day activities
and will have the duties assigned to Employee from time to time by the
Employer.
c. Employee shall be available to assist Employer and its subsidiaries and
related entities in any way deemed appropriate, commensurate with the
duties of a corporate executive.
c. All funds received by Employee on behalf of Employer, if any, shall be
held in trust for Employer and shall be delivered to Employer as soon as
practicable.
d. Employee acknowledges that Employer is an equal opportunity employer,
and that it is Employer's established policy not to discriminate on the
basis of age, marital status, race, color, sex, religion or national
origin, or to violate any federal or state anti-discrimination law.
Employee shall be responsible for carrying out and implementing the
foregoing policy throughout the operations and activities of Employer.
<PAGE>
3. COMPENSATION PACKAGE. For all services provided, Employee shall be
compensated as follows:
a. ANNUAL SALARY. Effective as of the Effective Date, Employer shall pay
Employee an annual salary of $150,000, payable in accordance with
Employer's customary pay practices as from time to time in effect.
b. INCENTIVE COMPENSATION. Employee may be entitled to receive additional
compensation as set forth below:
(i) performance Bonuses authorized by the Compensation Committee of the
Board of Directors of American.
(ii) participation in employee benefit programs subject to and on a
basis consistent with the terms, conditions and overall administration of
such programs.
c. EXPENSES REIMBURSED. Employee shall be entitled to reimbursement for
expenses incurred on behalf of Employer in the performance of his duties
hereunder, consistent with Employer's reimbursement policies.
d. DISABILITY PAY. Employee shall be entitled to receive for a period of
up to six (6) months his base salary during such time as, because of
illness or physical or mental disability or other incapacity, he is
unable to perform his duties under this Agreement. Such amounts payable
shall be offset by any amounts paid to Employee under disability
insurance policies maintained by Employer.
e. STOCK OPTION. The Employee may receive incentive stock options as
recommended by Employer and upon the approval of the Compensation
Committee of the Board of Directors of American.
4. SOLE EMPLOYMENT. During the term of this Agreement, the Employee shall
devote his entire time, attention and best efforts to advancing the business and
good reputation of Employer, its subsidiaries and affiliates, and shall not
during the term of his employment provide personal services for compensation,
whether received directly or indirectly, to any other business or commercial
enterprise, either alone, or as a member of a partnership, or an officer,
director, shareholder or employee of any other corporation or business, or as a
consultant or independent contractor. This Section shall not prevent Employee
from making passive investments, so long as such investments do not require
Employee to perform any services which interfere with the performance of
Employee's duties under this Agreement.
5. CONFIDENTIALITY, NON-DISCLOSURE AND OWNERSHIP OF CONFIDENTIAL
INFORMATION. The Employee acknowledges that during his employment, he will gain
access to, or possession or knowledge of, numerous trade secrets, confidential
information and other valuable properties, including, but not limited to,
hospital and healthcare facility client lists, client files and records, lists
of potential clients, prospects or targets, and/ or other market and marketing
data and plans, price books, promotional devices and methods, business methods,
manuals and plans, business and sales techniques and research and development
(hereinafter referred to collectively as "Confidential Information").
Confidential Information shall not include information in the public domain or
attainable from information generally available to the public. Employee
acknowledges that such Confidential Information is unique and a valuable asset
which is owned solely by Employer and is to be used only for Employer's benefit.
Employee shall not, during or after the term of employment, disclose, divulge,
reveal, transfer, reproduce, sell, capitalize upon or take advantage of such
Confidential Information and in addition, Employee shall exercise all reasonable
efforts and precautions to protect such Confidential Information form
misappropriation, misuse, disclosure, breach of confidentiality, or other
conduct or action inconsistent with Employer's rights. Upon termination,
Employee shall return immediately to Employer all Employer's property
(including, without limitation, Confidential Information) in Employee's
possession or control.
6. CONFIDENTIAL INFORMATION: COVENANT NOT TO COMPETE.
a. Employer acknowledges that Employee has previously been involved in an
executive capacity for a long period of time in the healthcare services
business and that Employee has acquired substantial knowledge concerning
that business as a result of such experience. Employee acknowledges that
his
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contact with physicians and medical institutions as a result of his
employment by Employer will result in a personal relationship being
established between Employee and such physicians and/or the
administration of such medical institutions whereby Employee could
influence the future actions of such medical institutions and/or
physicians relative to the renewal or cancellation of contractual
relationships between Employer, its subsidiaries and/or affiliates and
such medical institutions and/or physicians. Furthermore, Employee
acknowledges and agrees that Employee's employment by Employer will
result in the acquisition by Employee of confidential information
concerning the method of operation and administration of Employer and its
subsidiaries and affiliates and of medical institutions and physicians
with whom Employer and its subsidiaries and affiliates transact business,
including, but not limited to, fee schedules, formulas and special client
requirements. Employee acknowledges and agrees that such confidential
information would create an unfair advantage in the event Employee were
to attempt to solicit or provide services of a similar nature to a
medical client of Employer, its subsidiaries or affiliates.
Accordingly, Employee agrees not to disclose Confidential
Information and agrees not to interfere with the contractual
relationship between Employer, its subsidiaries, and/or affiliates and
any medical institution and/or physician for a period of two (2) years
after termination of employment.
b. Employee agrees, during the term hereof, and for a period of two (2)
years following the termination of employment hereunder, that he will
not, directly or indirectly, by himself, or as a shareholder, employee,
director, officer, partner, contractor or agent of another, enter into
any business or activity anywhere within 100 miles of any location in
which Employer or any of its subsidiaries or affiliates conducts
non-transportation business in competition with Employer or its
subsidiaries or affiliates and that would involve the following: (i) the
solicitation of hospitals or other healthcare facilities to provide
emergency department, kidney dialysis, or healthcare management services
or other contract physician services similar to or in competition with
such services provided by Employer or any of its subsidiaries or
affiliates providing similar services; or (ii) the solicitation of
hospitals or other healthcare facilities that are clients or prospective
clients (potential clients as to which a marketing presentation has been
made within six (6) months of the date of termination of this Agreement)
of Employer to provide any physician staffing, recruitment or management
services similar to or in competition with services provided by Employer
or its subsidiaries and with which Employee was associated.
Notwithstanding the foregoing, Ownership of up to 5% of the outstanding
equity or debt securities of any publicly traded entity which engages in
such activities shall not of itself constitute a breach of this
Agreement.
c. Employee acknowledges that Employer is a party to those certain
Professional Services Agreements with Columbia/HCA Healthcare Corporation
("Columbia") dated as of February 1, 1996 and October 1, 1996,
respectively, (collectively, the "Columbia Agreements") whereby Employer
provides services to certain Columbia facilities ("Facilities"). Employee
agrees that, for a period commencing on the date hereof and continuing
until two (2) years following termination of the Columbia Agreements, he
will not, without prior written approval of Columbia, either individually
or as an employee, agent, officer or director of a third party, directly
or indirectly (i) render any professional, administrative, advisory or
consulting services to or for any physician clinic, independent physician
organization or similar physician organization within a ten mile radius
of any hospital or similar facility to which Employer has provided
services under the Columbia Agreements, or (ii) solicit, raid, entice or
induce any person who is (or was at any time within the one year period
immediately preceding such termination) an employee or independent
contractor of any Facility to (y) terminate his employment or contract
with such Facility, or (z) become employed by or contract with any other
person, firm, or corporation, and Employee will not approach any such
employee or independent contractor for such purpose or authorize or
knowingly approve the taking of such actions by any other persons.
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7. SOLICITATION OF OTHER EMPLOYEES. Employee shall not, until two (2)
years subsequent to the termination of employment, solicit or seek to influence,
either directly or indirectly, any employee or any physician or healthcare
provider under contract with Employer or any of its subsidiaries or affiliates,
to enter into any employment agreements, independent contractor arrangement, or
any other contractual arrangement whereby such individual would perform services
for compensation, either directly or indirectly, for any person, firm,
corporation or other entity or business that provides products or services in
competition with the Employer or any of its subsidiaries or affiliates.
8. TRANSFER OF AMERICAN COMMON STOCK. Employee acknowledges and agrees
that as an executive he will be subject to American's policies with respect to
transactions in American Common Stock, as such policies are in effect from time
to time. Employee acknowledges that, as of the Effective Date, he is the owner
of 703,730 shares (the "Employee Shares") of the common stock of American, $.01
par value ("American Common Stock"), which Employee Shares represent all of the
shares of American Common Stock held by Employee. In the event that Employee
shall, without the prior written consent of American, sell, assign, pledge,
hypothecate or otherwise dispose of, directly or indirectly, any Employee Shares
(including any shares of American Common Stock distributed in respect of the
Employee Shares), except in such amounts and on or following such dates (the
"Release Dates") set forth on SCHEDULE A hereto, Employee shall pay to Employer
on or as soon as practicable following each such Release Date the product of (y)
the number of shares of American Common Stock sold by Employee in excess of that
permitted hereunder as of such Release Date (the "Excess Shares"), and (z) the
difference between (1) the weighted average selling price of the Excess Shares
and (2) the closing price of American Common Stock as of such Release Date or,
if such Release Date is not a business day, on the next business day following
such Release Date, as reported in The Wall Street Journal.
9. BREACH AND REMEDIES. Employee acknowledges that the breach or
threatened breach of any of the covenants set forth in this Agreement will
result in immediate and irreparable injury to Employer. Accordingly, Employee
agrees that in addition to any rights or remedies available to Employer for a
breach or threatened breach by Employee of any of the provisions set forth
above, Employer shall be entitled to injunctive relief to enforce the
obligations of Employee contained therein. Nothing herein shall be construed as
prohibiting Employer from pursuing any other legal or equitable remedies that
may be available to it for any such breach or threatened breach, including the
recovery of damages from Employee. In the event that any of the provisions of
this Agreement are found to be unenforceable or void (either in whole or in
part), then the offending portion shall be construed as valid and enforceable
only to the extent permitted by law and the balance of this Agreement shall
remain in full force and effect.
10. TERMINATION. This Agreement may be terminated as follows:
a. VOLUNTARY TERMINATION. Either party may terminate this Agreement
without cause at any time upon sixty (60) days prior written notice to
the other.
b. TERMINATION FOR CAUSE. This Agreement may be terminated by Employer at
any time for cause upon written notice to Employee, which notice shall
specify the reason for termination. For purposes of this Section, cause
shall include the following: fraud; substantial and continuous non-
performance of assigned duties and unlawful activities for which Employee
is convicted in a jurisdiction of the United States; and material breach
of an express term of this Agreement.
c. TERMINATION UPON DEATH OR DISABILITY. This Agreement shall terminate
upon the death or permanent disability of Employee. Employee shall be
deemed to be disabled if he qualifies as such for purposes of receiving
long term or permanent disability payments under the group disability
insurance program of Employer or in the event that he is unable to
regularly and consistently perform his normal duties as contemplated
hereunder for a continuous period of twelve (12) months.
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d. TERMINATION BENEFITS. Upon termination of Employee's employment
pursuant to paragraph 10.c. or by Employer pursuant to paragraph 10.a.,
Employee shall be entitled to receive (i) all cash compensation earned
under this Agreement to the date of termination PLUS (ii) an amount equal
to last year's cash bonus, if any, prorated for any partial year prior to
termination PLUS (iii) base compensation as in effect on the date prior
to termination for an additional period of 12 months plus (iv) subject to
any employee contribution applicable to the Employee on the date of
termination, for a 12 month period following the date of termination
Employer shall continue to pay for the cost of the Employee participation
in Employer's group medical and dental insurance plans, provided that
Employee is entitled to continue such participation under applicable
state and federal law and plan terms.
e. SURVIVAL OF CERTAIN PROVISIONS. In the event of termination of
Employee's employment for any reason provided in this paragraph 10, all
rights and obligations of Employer and Employee under this Agreement
shall cease immediately, except that Employee's obligations under
paragraphs 2.d., 5, 6, 7, 8 and 9 hereof shall survive such termination,
and thereafter Employee shall have the right to receive, and Employer
shall be obligated to pay, the compensation as set forth in paragraph
10.d.
11. CONFIDENTIALITY. Employee agrees to keep this Agreement and its terms
confidential except to the extent that disclosure is required by a lawfully
constituted judicial or governmental authority or to the extent that such
disclosure is authorized by the prior written consent of Employer and/or
Employee.
12. ENTIRE AGREEMENT. This Agreement supersedes and cancels any employment
agreement previously executed by the Employee and Employer, its subsidiaries or
affiliates. This Agreement contains the entire understanding between the parties
hereto and supersedes and cancels any prior oral or written understanding and/or
agreements between them respecting any subject matter of this Agreement. This
Agreement may be amended or modified only in writing signed by both parties
hereto.
13. SEVERABILITY. If any provision, term, condition or clause of this
Agreement or the application thereof shall be invalid or unenforceable to any
extent, the remainder of this Agreement shall not be affected thereby and shall
be enforced to the greatest extent permitted by law.
14. GOVERNING LAW. THIS AGREEMENT IS MADE AND ENTERED INTO IN THE STATE OF
TEXAS AND IS TO BE CONSTRUED IN ACCORDANCE WITH AND TAKE EFFECT UNDER THE LAWS
OF THE STATE OF TEXAS.
15. ASSIGNMENT. No party shall have any right to assign, mortgage, pledge,
hypothecate or encumber this Agreement, in whole or in part, or any benefit or
any rights accruing hereunder, without in any such case first obtaining the
prior written consent of the other party hereto, except that Employer may assign
this Agreement to a subsidiary or affiliate of Employer or American, provided
that in the event of such an assignment, Employer shall remain responsible for
its obligations hereunder. All rights hereunder are personal to the Employee and
shall cease upon the termination of this Agreement.
16. NOTICE. Any notice, or other written communication to be given
pursuant to this Agreement for whatever reason shall be deemed duly given and
received (a) if delivered personally, from the date of delivery, or (b) by
certified mail, postage prepaid, return receipt requested, three (3) days after
the date of mailing, addressed to the below parties as follows:
TO: American Medical Response, Inc.
2821 South Parker Drive
Suite 1000
Aurora, Colorado 80014
Attn: General Counsel
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TO: Russell D. Schneider
STAT Healthcare, Inc.
12450 Greenspoint Drive
Suite 1200
Houston, Texas 77060
17. MISCELLANEOUS. Any protection, benefits, rights or other provisions
given to Employer in this Agreement shall also be deemed to apply to, protect
and inure to the benefit of any subsidiary, affiliate or other business or
person related or connected to Employer. All rights of the Employer expressed in
this Agreement are in addition to any rights available under the common law or
other legal principles. Section or paragraph titles or captions contained in
this Agreement are inserted only as matter of convenience and for reference and
in no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof. All pronouns and any variation thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of person or persons, firm or firms, corporation or corporations, and
as context may require.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
AMERICAN MEDICAL RESPONSE, INC.
By: /s/ PAUL T. SHIRLEY
-----------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
STAT HEALTHCARE, INC.
By: /s/ VICTOR M. MIRANDA, M.D.
-----------------------------------------
Title: PRESIDENT--EMERGENCY PHYSICIANS
EMPLOYEE:
/s/ RUSSELL D. SCHNEIDER
- ---------------------------------
6
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
PERMITTED TRANSFER PERCENTAGE RELEASE DATE
- ------------------------------------------------------------ -----------------
<S> <C>
Up to 25% of the Employee Shares............................ June 30, 1997
Up to 50% of the Employee Shares............................ December 31, 1997
Up to 75% of the Employee Shares............................ June 30, 1998
Up to 100% of the Employee Shares........................... December 31, 1998
</TABLE>
7
<PAGE>
EXHIBIT 8
January 6, 1997
Mr. David C. Colby
177 Humboldt Street
Denver, Colorado 80218
Dear David:
Reference is made to the following documents:
1. The agreement and plan of merger (the "Merger Agreement") dated as of
January 6, 1997 by and among Laidlaw Inc. ("Parent"), American Medical Response,
Inc., (the "Company"), and MedTrans Acquisition Co., a wholly-owned subsidiary
of Parent ("Acquisition"). Capitalized terms defined in the Merger Agreement and
not otherwise defined herein are used herein with the meanings so defined.
2. The employment agreement (the "Employment Agreement") dated as of April
1, 1996 between the Company and you (the "Executive").
3. The Company's Executive Separation Allowance Plan (the "Separation
Plan").
Pursuant to the Merger Agreement, Acquisition will make a tender offer to
acquire all outstanding shares of common stock, par value $0.01 per share, of
the Company in accordance with the terms and subject to the conditions provided
for therein (the "Offer"). Subsequent to the Offer, Acquisition will merge with
and into the Company, and the Company will become a wholly-owned subsidiary of
Parent. It is contemplated that the medical transportation and health care
businesses of Parent and its subsidiaries will be consolidated with those of the
Company and its subsidiaries and will be operated under the direction of
executives of the Company.
Contemporaneous with Acquisition's purchase of Shares pursuant to the Offer,
Parent, the Company and the Executive hereby agree as follows:
1. INDUCEMENT PAYMENT. To induce Executive to remain in his position with
the Company and to accept the responsibilities arising from the management of
the Company following the Offer and the Merger, Parent or the Company will pay
or cause to be paid to Executive on August 31, 1997, provided Executive is still
employed by the Company on such date, an amount in cash equal to $841,500. If
prior to August 31, 1997 the Company terminates the Executive's employment other
than for Cause (as defined in the Separation Plan) or if Executive terminates
his employment following any of the events specified in Section III.B of the
Separation Plan, (a) Parent or the Company will pay or cause to be paid to
Executive an amount in cash equal to $841,500 and (b) Executive shall be
entitled to receive the benefits provided for in Section VI of the Separation
Plan.
2. AMENDMENTS TO EMPLOYMENT AGREEMENT. The Employment Agreement is hereby
amended effective upon the consummation of the Offer as follows:
(a) Paragraph (d) of Section 1 is deleted.
(b) Paragraph (a) of Section 2 is amended by deleting "$275,000" and
inserting "$325,000".
(d) Paragraph (b) of Section 2 is amended in its entirety to read as
follows:
"(b) BONUS. Executive shall be eligible for an annual performance bonus
with a target of 50% of Executive's base salary, which performance bonus
shall be based on quantitative and qualitative performance factors to be
established by the Company. Executive shall also participate in any other
bonus plan that Parent or the Company makes available for senior
executives of the Company."
(e) Paragraph (f) of Section 2 is deleted.
<PAGE>
(f) The first sentence of Paragraph (b) of Section 6 is amended to read as
follows:
"(b) Upon termination of Executive's employment pursuant to clause (i) of
paragraph 6(a), by the Company pursuant to clause (iii) of paragraph 6(a)
(other than upon expiration of the initial or any successive term after
notice in accordance with paragraph 6(a)) or by the Executive for Good
Reason pursuant to clause (iv) of paragraph 6(a), Executive shall be
entitled to receive (i) all cash compensation earned under this Agreement
to the date of termination PLUS (ii) in respect of the bonus amount
payable pursuant to the first sentence of paragraph (b) of Section 2, an
amount equal to the greater of the amount of any bonus paid to the
Executive during the preceding twelve months or 50% of the Executive's
then current base salary prorated for any partial year prior to
termination PLUS (iii) in respect of any other bonus plan in which
Executive is then participating, an amount that reflects the achievement
of any performance goals under such plan to the date of termination.
(g) Paragraph (c) of Section 6 is amended by deleting the reference to
"paragraph 7(a)" and inserting therefor a reference to "paragraph 6(a)".
3. OPTIONS TO PURCHASE PARENT COMMON STOCK. On the date on which the Merger
Agreement is executed and delivered, Parent shall grant to the Executive,
subject to the consummation of the Offer, an option to purchase 30,000 shares of
Parent's Class B Non-Voting Shares at an exercise price equal to the closing
price of the Shares on the New York Stock Exchange on the immediately preceding
day. Such option will vest in five equal annual installments beginning on the
first anniversary of the date of grant. In addition, Parent shall in April 1997
approve, and in May 1997 grant, to the Executive an option to purchase an
additional 30,000 shares of Parent's Class B Non-Voting Shares at an exercise
price equal to the fair market value of the Shares at the time of such grant.
Such option will vest in five equal annual installments beginning on the firsts
anniversary of the date of grant.
4. SEPARATION PLAN. Effective upon consummation of the Offer, Executive
waives his right to any payments or benefits due or to become due under the
Separation Plan, except as otherwise provided in clause (b) of the second
sentence of Paragraph 1 above.
Except as specifically set forth herein, the Employment Agreement will
remain in full force and effect.
This Agreement may be executed in any number of counterparts which together
shall constitute one instrument.
<TABLE>
<CAPTION>
LAIDLAW INC. AMERICAN MEDICAL RESPONSE, INC.
<S> <C>
By /s/ Ivan R. Cairns By /s/ Paul T. Shirley
- --------------------------------------- ---------------------------------------
Title: Senior Vice President and Title: President and Chief
General Counsel Executive Officer
EXECUTIVE:
/s/ David C. Colby
- ---------------------------------------
David C. Colby
</TABLE>
2
<PAGE>
EXHIBIT 9
January 6, 1997
Mr. George B. DeHuff III
1207 East Jesse Court
Highlands Ranch, Colorado 81026
Dear George:
Reference is made to the following documents:
1. The agreement and plan of merger (the "Merger Agreement") dated as of
January 6, 1997 by and among Laidlaw Inc. ("Parent"), American Medical Response,
Inc., (the "Company"), and MedTrans Acquisition Co., a wholly-owned subsidiary
of Parent ("Acquisition"). Capitalized terms defined in the Merger Agreement and
not otherwise defined herein are used herein with the meanings so defined.
2. The employment agreement (the "Employment Agreement") dated as of
November 1, 1995 between the Company and you (the "Executive").
3. The Company's Executive Separation Allowance Plan (the "Separation
Plan").
Pursuant to the Merger Agreement, Acquisition will make a tender offer to
acquire all outstanding shares of common stock, par value $0.01 per share, of
the Company in accordance with the terms and subject to the conditions provided
for therein (the "Offer"). Subsequent to the Offer, Acquisition will merge with
and into the Company, and the Company will become a wholly-owned subsidiary of
Parent. It is contemplated that the medical transportation and health care
businesses of Parent and its subsidiaries will be consolidated with those of the
Company and its subsidiaries and will be operated under the direction of
executives of the Company.
Contemporaneous with Acquisition's purchase of Shares pursuant to the Offer,
Parent, the Company and the Executive hereby agree as follows:
1. INDUCEMENT PAYMENT. To induce Executive to remain in his position with
the Company and to accept the responsibilities arising from the management of
the Company following the Offer and the Merger, Parent or the Company will pay
or cause to be paid to Executive on August 31, 1997, provided Executive is still
employed by the Company on such date, an amount in cash equal to $817,000. If
prior to August 31, 1997 the Company terminates the Executive's employment other
than for Cause (as defined in the Separation Plan) or if Executive terminates
his employment following any of the events specified in Section III.B of the
Separation Plan, (a) Parent or the Company will pay or cause to be paid to
Executive an amount in cash equal to $817,000 and (b) Executive shall be
entitled to receive the benefits provided for in Section VI of the Separation
Plan.
2. AMENDMENTS TO EMPLOYMENT AGREEMENT. The Employment Agreement is hereby
amended effective upon the consummation of the Offer as follows:
(a) Paragraph (d) of Section 1 is deleted.
(b) Paragraph (a) of Section 2 is amended by deleting "$250,000" and
inserting "$325,000".
(d) Paragraph (b) of Section 2 is amended in its entirety to read as
follows:
"(b) BONUS. Executive shall be eligible for an annual performance bonus
with a target of 50% of Executive's base salary, which performance bonus
shall be based on quantitative and qualitative performance factors to be
established by the Company. Executive shall also participate in any other
bonus plan that Parent or the Company makes available for senior
executives of the Company."
(e) Paragraph (f) of Section 2 is deleted.
<PAGE>
(f) The first sentence of Paragraph (b) of Section 6 is amended to read as
follows:
"(b) Upon termination of Executive's employment pursuant to clause (i) of
paragraph 6(a), by the Company pursuant to clause (iii) of paragraph 6(a)
(other than upon expiration of the initial or any successive term after
notice in accordance with paragraph 6(a)) or by the Executive for Good
Reason pursuant to clause (iv) of paragraph 6(a), Executive shall be
entitled to receive (i) all cash compensation earned under this Agreement
to the date of termination PLUS (ii) in respect of the bonus amount
payable pursuant to the first sentence of paragraph (b) of Section 2, an
amount equal to the greater of the amount of any bonus paid to the
Executive during the preceding twelve months or 50% of the Executive's
then current base salary prorated for any partial year prior to
termination PLUS(iii) in respect of any other bonus plan in which
Executive is then participating, an amount that reflects the achievement
of any performance goals under such plan to the date of termination.
(g) Paragraph (c) of Section 6 is amended by deleting the reference to
"paragraph 7(a)" and inserting therefor a reference to "paragraph 6(a)".
3. OPTIONS TO PURCHASE PARENT COMMON STOCK. On the date on which the Merger
Agreement is executed and delivered, Parent shall grant to the Executive,
subject to the consummation of the Offer, an option to purchase 30,000 shares of
Parent's Class B Non-Voting Shares at an exercise price equal to the closing
price of the Shares on the New York Stock Exchange on the immediately preceding
day. Such option will vest in five equal annual installments beginning on the
first anniversary of the date of grant. In addition, Parent shall in April 1997
approve, and in May 1997 grant, to the Executive an option to purchase an
additional 30,000 shares of Parent's Class B Non-Voting Shares at an exercise
price equal to the fair market value of the Shares at the time of such grant.
Such option will vest in five equal annual installments beginning on the first
anniversary of the date of grant.
4. SEPARATION PLAN. Effective upon consummation of the Offer, Executive
waives his right to any payments or benefits due or to become due under the
Separation Plan, except as otherwise provided in clause (b) of the second
sentence of Paragraph 1 above.
Except as specifically set forth herein, the Employment Agreement will
remain in full force and effect.
This Agreement may be executed in any number of counterparts which together
shall constitute one instrument.
<TABLE>
<S> <C>
LAIDLAW, INC. AMERICAN MEDICAL RESPONSE, INC.
By /s/ Ivan R. Cairns By /s/ Paul T. Shirley
-------------------------------------- ------------------------------------------
Title: Senior Vice President and Title: President and Chief Executive
General Counsel Officer
EXECUTIVE:
/s/ George B. DeHuff III
- -------------------------------------------
George B. DeHuff, III
</TABLE>
2
