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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
EMCARE HOLDINGS INC.
(Name of Subject Company)
EMCARE HOLDINGS INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
290810 10 9
(CUSIP Number of Class of Securities)
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ROBERT F. ANDERSON, II
CHIEF FINANCIAL OFFICER AND
SENIOR VICE PRESIDENT
1717 MAIN STREET
SUITE 5200
DALLAS, TEXAS 75201
(214) 712-2000
(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person filing statement)
With a copy to:
IRWIN F. SENTILLES, III, ESQ.
GIBSON, DUNN & CRUTCHER LLP
1717 MAIN STREET
SUITE 5400
DALLAS, TEXAS 75201
(214) 698-3100
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is EmCare Holdings Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 1717 Main Street, Suite 5200, Dallas, Texas 75201. 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 EHI Acquisition Corp., 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
August 5, 1997 to purchase all outstanding shares (the "Shares") of the Common
Stock at a price of $38.00 per Share, net to the seller in cash, without
interest thereon (the "Offer Consideration") upon the terms and subject to the
conditions set forth in the Offer to Purchase dated August 5, 1997 (the "Offer
to Purchase") and the related Letter of Transmittal (which together, as amended
or supplemented from time to time, constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of July 29, 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 99.1 to this Statement and is incorporated herein
by reference. A copy of the press release issued by the Parent and the Company
on July 30, 1997 is filed as Exhibit 99.2 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 76053.
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) Except as set forth in this Item 3(b), to the knowledge of the Company,
as of the date hereof, there are no material contracts, agreements,
arrangements, understandings or actual or potential conflicts of interest
between the Company or its affiliates and (i) the Company, its executive
officers, directors or affiliates or (ii) Parent or Purchaser or any of their
respective executive officers, directors or affiliates.
(b)(1) Certain contracts, agreements, arrangements or understandings
between the Company and its executive officers, directors and affiliates are
described in the Company's Proxy Statement dated April 4, 1997 for its 1997
Annual Meeting of Stockholders (the "1997 Proxy Statement") under the captions
"Board of Directors Meetings and Committees," "Executive Compensation," and
"Certain Transactions." A copy of the 1997 Proxy Statement is filed as Exhibit
99.3 to this Statement and, other than the information contained under the
headings "Report of the Compensation Committee" and "Performance Graph," is
incorporated herein by reference.
EMPLOYMENT AGREEMENTS
Each of Leonard M. Riggs, Jr., M.D., the Chairman of the Board and Chief
Executive Officer of the Company, and William F. Miller, III, the President and
Chief Operating Officer of the Company, have severally agreed to enter into an
Employment Agreement with the Company immediately following the acceptance of
the Shares pursuant to the Offer. A copy of the proposed forms of employment
agreement with
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Dr. Riggs and Mr. Miller are filed as Exhibits 99.4 and 99.5, respectively, to
this Statement and are incorporated herein by reference.
Under the terms of these agreements, Dr. Riggs and Mr. Miller will be paid
a base salary of not less than $325,000 per year, and will be eligible for an
annual bonus in the amount of $800,000 subject to the Company achieving earnings
growth at the level agreed to by the executive and the Chief Executive Officer
of Laidlaw, and shall remain eligible for this annual bonus for five years.
Should the Company, in any year, not achieve the specified earnings target, but
achieve 80% of the target, the executive shall be entitled to receive 50% of the
annual bonus plus a percentage of the balance equal to the percentage of the
target achieved between 80% and 100%. Should the executive remain employed by
the Company for five years and not have received the maximum bonus in each of
the five years, the executive shall be eligible for an additional bonus not to
exceed the aggregate unpaid amounts, in accordance with criteria agreed to by
the executive and the Chief Executive Officer of Parent.
In order to induce the executive to remain in his position with the Company
following the Offer and the Merger, the Company will pay or cause to be paid to
each executive a retention bonus ($799,297 in the case of Dr. Riggs and $786,544
in the case of Mr. Miller) upon execution of the employment agreement. The
executive is entitled to receive a pro rata portion of the 1997 fiscal bonus to
August 31, 1997, determined on a basis consistent with previous years, payable
at the time other annual bonuses are paid to executives, and shall not exceed
$110,000.
The agreements also provide that each of Dr. Riggs and Mr. Miller will be
granted, as soon as practicable following execution of his respective employment
agreement, an option to purchase 30,000 of Parent's common shares at an exercise
price equal to the fair market value of such common stock at the time of grant,
such options to vest consistent with the terms of the Parent stock option plan
under which such options are issued.
STOCK OPTIONS
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 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.
INDEMNIFICATION UNDER DELAWARE LAW, THE COMPANY'S CERTIFICATE OF INCORPORATION
AND BYLAWS AND THE MERGER AGREEMENT
The Company is a Delaware corporation. The General Corporation Law of the
State of Delaware (the "DGCL") generally provides that a corporation may
indemnify an officer or director who was, is or is threatened to be made a party
to any threatened, pending or completed action by reason of the fact that he is
or was a director, officer or employee of the corporation against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
The Amended and Restated Certificate of Incorporation of the Company,
provides that no person shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability for any breach of the director's duty of loyalty, for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, in respect of certain unlawful dividend payments or
stock purchases or redemptions or for any transaction from which the director
derived an improper personal benefit.
The Amended and Restated Bylaws of the Company provide that each person who
at any time is or was a director or officer of the Company, and is threatened to
be or is made a party to any threatened, pending or
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completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (a "Proceeding"), by reason of the fact that such
person is or was a director or officer of the Company, whether the basis of a
Proceeding is alleged action in such person's official capacity or in another
capacity while holding such office, shall be indemnified by the Company to the
fullest extent authorized by the DGCL against all expense, judgments, fines and
amounts paid in settlement (including attorneys' fees) actually and reasonably
incurred or suffered by such person in connection with a Proceeding so long as a
majority of a quorum of disinterested directors, the stockholders or legal
counsel through a written opinion determines that such person acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company. Such indemnification shall continue as to a person who
has ceased to serve in the capacity which initially entitled such person to
indemnity thereunder and shall inure to the benefit of his or her heirs,
executors and administrators. The Amended and Restated Bylaws also contain
certain provisions designed to facilitate receipt of such benefits by any such
persons, including the prepayment of any such benefits.
The current employment agreements of the Company with Dr. Riggs and Mr.
Miller provide that the Company will indemnify them to the full extent permitted
by applicable law for all liabilities and expenses that they incur in any
proceeding involving them by reason of their having been a director, officer or
other representative of the Company. The Company must also advance funds to Dr.
Riggs and Mr. Miller to cover their reasonable counsel fees and other costs
associated with their defense of any such proceeding, provided that they agree
to repay any amounts advanced if they are not ultimately entitled to
indemnification by the Company.
The Company maintains a directors' and officers' liability insurance policy
to insure its directors and officers against losses resulting from wrongful acts
committed by them in their capacities as directors and officers of the Company,
including liabilities arising under the Securities Act.
The Merger Agreement provides that the Surviving Corporation shall keep in
effect the provisions in its Certificate of Incorporation and Bylaws containing
the provisions with respect to indemnification and exculpation set forth in the
Amended and Restated Certificate of Incorporation and the Bylaws of the Company
on the date of the Merger Agreement. These provisions may not be amended,
repealed or otherwise modified for a period of six 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 Amended and Restated
Certificate of Incorporation or Bylaws, and, after the date of the Merger,
Parent and the Surviving Corporation shall, to the fullest extent permitted
under applicable law or under the Surviving Corporation's Certificate of
Incorporation or Bylaws, indemnify and hold harmless, each present and former
director, officer or employee of the Company or any of its subsidiaries
(together with their respective successors, assigns, heirs, executors,
administrators and representatives, collectively, the "Indemnified Parties")
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, 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
brought or filed, arising out of or pertaining to any acts or omissions or
alleged acts or omissions by them in their capacity as such, in each case for a
period of six years after the date of the Merger Agreement, including, without
limitation, the transactions contemplated by 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 or delayed); and provided, further, that, in the event
that any claim or claims for indemnification are asserted or made within such
six-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
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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 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 shall
guarantee the obligations of the Surviving Corporation under the provisions of
the Merger Agreement relating to indemnification and directors' and officers'
liability insurance.
(b)(2) On July 29, 1997, the Company, Parent and the Purchaser entered into
the Merger Agreement. Concurrently therewith, Parent, Purchaser, Dr. Riggs and
Mr. Miller entered into an agreement pertaining to Shares held by each of Dr.
Riggs and Mr. Miller (the "Tender Agreements") and a Stock Purchase Agreement.
Copies of each of the Tender Agreement and the Stock Purchase Agreement are
filed as Exhibit 99.6 and 99.7, respectively, and are incorporated herein by
this reference. The following summaries of certain provisions of the Merger
Agreement, the Tender Agreement, the Stock Purchase Agreement and the
Confidentiality Agreement (as defined below) are qualified in their entirety by
reference to the full text of the Merger Agreement, the Tender Agreement, the
Stock Purchase Agreement and the Confidentiality Agreement, respectively.
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 99.1 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, and the
conditions that any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act (the "HSR Act") shall have expired or been terminated
and that the Merger Agreement shall not have been terminated in accordance with
its terms, which conditions 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
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be purchased in the Offer, imposes conditions to the Offer in addition to those
set forth in the Merger Agreement or amends or modifies such conditions, amends
any other terms or conditions of the Offer or that is otherwise adverse to
holders of Shares. Purchaser, subject to the conditions of the Offer, 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 (assuming the exercise of all outstanding options and rights to
purchase Shares), Purchaser may extend the Offer up to the fifth business day
following the date on which all conditions to the Offer shall first have been
satisfied or waived, provided that if Purchaser so extends the Offer, its
obligation to purchase the Shares tendered pursuant to the Offer shall be
unconditional. The Merger Agreement provides that if all offer conditions set
forth in the Merger Agreement are not satisfied on the initial expiration date
of the Offer, Acquisition shall extend (and re-extend) the Offer through October
31, 1997 to provide time to satisfy such conditions.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof and the 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. 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 the greatest amount per Share paid pursuant to the Offer, without
interest, and the issued and outstanding shares of common stock of the Purchaser
will be converted into validly issued, fully paid and non-assessable share of
common stock of the Surviving Corporation in an amount equal to the number of
Shares outstanding on the date of the Merger Agreement.
The Merger Agreement provides that the certificate of incorporation and
Bylaws of the Purchaser at the Effective Time will be the certificate of
incorporation and Bylaws 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 Company at the Effective Time
will be the officers of the Surviving Corporation, until their respective
successors are duly elected or appointed and qualified.
Company Stock Options. At the Effective Time, each outstanding option to
purchase Shares (a "Company Stock Option"), whether or not then vested and
exercisable, shall become vested and exercisable. Each holder of a Company Stock
Option who executes an agreement to cancel such Company Stock Option shall be
entitled to receive as soon as practicable 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 Offer
Consideration over the exercise price per share of the Company Common Stock
previously subject to such Company Stock Option.
The Company's Board of Directors. The Merger Agreement provides that,
promptly upon the purchase of Shares pursuant to the Offer, and from time to
time thereafter, Purchaser will be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company that equals 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, provided that at all times there shall
be at least two directors who are not designees of Purchaser and the number of
directors shall not be more than 10 nor less than six. The Company has agreed,
upon request of the Purchaser, promptly either to increase the size of the
Board, to the extent permitted by the Company's Certificate of Incorporation
and/or 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
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Board of Directors any amendment of the Merger Agreement or any amendment to the
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 (or the concurrence of the director, if there is only one remaining)
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 Securities Exchange Act of
1934, as amended (the "Exchange Act") and Rule 14f-1 promulgated thereunder.
Stockholder's Meeting. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger and subject to
the fiduciary duties of the Board under applicable law (as determined in good
faith after consultation with independent counsel), duly call, give notice of,
convene and hold a special meeting of its stockholders (the "Special Meeting")
as soon as practicable following the consummation of the Offer for the purpose
of considering and taking action upon the Merger Agreement. The Proxy Statement
shall include the recommendation of the Board that stockholders of the Company
vote in favor of the approval and adoption of the Merger Agreement and the
transactions contemplated thereby (provided, however, that such recommendation
may be modified or withdrawn as provided in the Merger Agreement or if the Board
determines in good faith, and after consultation with independent counsel, that
such action is necessary to properly discharge its fiduciary duties).
Interim Operations. In the Merger Agreement, the Company has agreed that,
except as otherwise agreed in writing by Laidlaw, prior to the Effective Time,
the businesses of the Company and the Company Subsidiaries (as defined in the
Merger Agreement) shall be conducted only in the ordinary course of business
consistent with past practice, the Company will use 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 the Company Subsidiaries, and preserve the present relationships of
the Company and the Company Subsidiaries with customers, suppliers, and other
persons with which the Company or any of the Company 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 the Company Subsidiaries will not:
(a) amend or otherwise change the Certificate of Incorporation or
Bylaws of the Company or any of the Company 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 (except for (i) the issuance of shares of
Company Common Stock issuable pursuant to any stock option or other
agreement approved in the Merger Agreement; and (ii) the grant of options
under the Company's Stock Plan consistent with past practice and the
issuance of shares upon exercise thereof);
(c) sell, pledge, dispose of or encumber any assets of the Company or
any Company Subsidiary, except for (i) sales of assets in the ordinary
course of business 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 hereafter
defined);
(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
Company Subsidiary 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 Company
Subsidiary to purchase, repurchase, redeem or otherwise acquire, any of its
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securities 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 Stock Plan and
the net exercise of such options, or as approved in the Merger Agreement.
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof other than emergency health care providers, emergency
physician practice management groups or other emergency health care
entities, in each case located in the United States ("Permitted
Acquisitions"); provided that the total consideration paid for all such
acquisitions completed after the date of the Merger Agreement shall not
exceed $12 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 except
in the ordinary course of business consistent with past practice or in
connection with purchases of equipment or capital improvements or Permitted
Acquisitions, or make any loans or advances (other than loans or advances
to or from direct or indirect wholly owned Company Subsidiaries or in
connection with Permitted Acquisitions), (iii) except as approved in the
Merger Agreement, enter into or amend any Material Contract (as defined in
the Merger Agreement) other than in the ordinary course of business or
where such contract or amendment would not have a Company Material Adverse
Effect (as defined in the Merger Agreement); or (iv) authorize any capital
expenditures or purchase of fixed assets (but excluding Permitted
Acquisitions) which are, in the aggregate, in excess of $2,000,000 for the
Company and the Company Subsidiaries taken as a whole;
(f) except as approved in the Merger Agreement or, in each case, as
may be required by law or in ordinary course consistent with past practice,
increase the compensation payable or to become payable to its officers or
employees, except in accordance with past practice or 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 Company Subsidiary, 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;
(g) change accounting policies or procedures (including, without
limitation, procedures with respect to revenue recognition, payments of
accounts payable and collection of accounts receivable);
(h) except as would not result in a Company Material Adverse Effect,
make any tax election inconsistent with past practice or settle or
compromise any 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 the Merger
Agreement; and
(i) take, or agree in writing 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 in any material respect or prevent the Company from performing or
cause the Company not to perform in any material respect its covenants
under the Merger Agreement.
No Solicitation. In the Merger Agreement the Company has agreed that it
shall not, directly or indirectly, take (nor shall the Company authorize or
permit any Company Subsidiary or its or their officers, directors, employees,
representatives, investment bankers, financial advisors, attorneys, accountants
or other agents, to take) any action to (i) solicit or initiate the submission
of any Business Combination Proposal, (ii) enter into any agreement with respect
to any Business Combination Proposal or (iii) participate in any negotiations
with, or furnish any non-public written information to, any person in connection
with any proposal that constitutes, or may reasonably be expected to lead to,
any Business Combination Proposal; provided, however, that the Company may (A)
participate in negotiations with or furnish information to any persons or group
(other than Parent or an affiliate of Parent) (a "Third Party") that makes a
Business Combination
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Proposal not so solicited that the Board determines may reasonably be expected
to result in a Superior Proposal or if the Board determines, in good faith and
after consultation with independent counsel, that such action is required in
order to discharge properly its fiduciary duties, and enter into any
confidentiality agreement or standstill agreement with such Third Party in
connection with such a Business Combination Proposal, (B) comply with Rule 14e-2
promulgated under the Exchange Act with regard to any Business Combination
Proposal (assuming that such Business Combination Proposal includes a tender
offer requiring the Company's response pursuant to such Rule), (C) withdraw or
modify its recommendation of the Offer and the Merger if there exists a Business
Combination Proposal that is a Superior Proposal or if the Board determines, in
good faith and after consultation with of independent counsel, that such action
is required to discharge properly its fiduciary duties, and (D) recommend to its
stockholders a Business Combination Proposal if it is a Superior Proposal or if
the Board determines, in good faith and after consultation with independent
counsel, that such action is required to discharge properly its fiduciary
duties. A "Business Combination Proposal" means, with respect to the Company,
the commencement of any tender or exchange offer, any bona fide, written
proposal for a merger, consolidation or other business combination involving the
Company or any Company Subsidiary or any other bona fide, written proposal or
offer to enter into a Business Combination or any public announcement of a
proposal, plan or intention to do any of the foregoing. "Superior Proposal"
means any Business Combination Proposal for which any required financing is
supported by reasonable commitments and which the Board determines in good faith
will be more favorable to the Company's stockholders than the Offer and the
Merger. The term "Business Combination" means the occurrence of any of the
following events: (a) the Company or any Company Subsidiary is acquired by
merger or otherwise by any Third Party; (b) the Company or any Company
Subsidiary enters into an agreement with a Third Party that contemplates the
acquisition of 35% or more of the total assets of the Company and the Company
Subsidiaries taken as a whole; (c) the Company enters into a merger or other
agreement with a Third Party that contemplates the acquisition of beneficial
ownership of more than 35% of the outstanding shares of the Company's capital
stock; or (d) a Third Party acquires more than 35% of the outstanding shares of
the Company's capital stock. The Company has agreed to promptly advise Parent of
any request for non-public written information or of any Business Combination
Proposal, the material terms and conditions of such request or Business
Combination Proposal, and the identity of the person making any such request or
Business Combination Proposal and to shall keep Parent reasonably informed of
the status and details of any such request or Business Combination Proposal
informed of the status and details of any such request or Business Combination
Proposal.
Directors' and Officers' Insurance; Indemnification. The Merger Agreement's
provisions relating to indemnification and insurance are described above in Item
3.
Conditions to the Merger. The Merger Agreement provides that the respective
obligations of the Company, Parent 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) the 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 issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger shall be in effect, and there shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or applicable
to the Merger which makes the consummation of the Merger illegal; and (iv) there
shall not be in effect any judgment, decree or order of any governmental
authority, administrative agency or court of competent jurisdiction that
prohibits or limits 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 Parent Subsidiary (as defined in the Merger
Agreement) of all or a material portion of the business or assets of Parent or
any Parent Subsidiary, or seeking to compel Parent or any Parent Subsidiary to
dispose of or hold separate all or any material portion of the business or
assets of Parent or any Parent Subsidiary (including the Surviving Corporation
and its subsidiaries), as a result of the Merger or the transactions
contemplated by the Merger Agreement.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, the organization,
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existence and good standing of the Company, the Company's Subsidiaries and
Professional Associations; capitalization; compliance with law and governmental
permits; the Company's SEC filings and its financial statements; the absence of
certain changes or events; the absence of undisclosed liabilities; the absence
of litigation; employee benefit plans and employment agreements; labor matters;
restrictions on business activities; title to property; taxes; intellectual
property; interested party transactions; insurance; healthcare regulatory
compliance; opinion of financial advisor; brokers fees; the applicability of
Section 203 of the Delaware Law; and the adequacy of information provided for
the Schedule 14D-9 and Offer Documents.
The Parent and the Purchaser have also made customary representations and
warranties to the Company with respect to, among other things, the organization,
existence and good standing of the Parent and the Purchaser; the adequacy of
information provided for the Offer Documents, Schedule 14D-9 and Proxy
Statement; the absence of any prior activities by Purchaser and the availability
to Purchaser of adequate funds to satisfy its obligation to pay the Offer
Consideration and the Merger Consideration.
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, (a) by mutual written consent
duly authorized by the Boards of Directors of Parent, the Purchaser and the
Company; (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 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 shall not be available to any party who
has not complied with its obligations to 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 the Merger Agreement, to obtain in
a timely manner all material waivers, consents and approvals and to effect all
necessary registrations and filings, and otherwise to satisfy or cause to be
satisfied in all material respects all conditions precedent to its obligations
under the Merger Agreement and such noncompliance materially contributed to the
issuance of any such order, decree or ruling or the taking of such action); (c)
by either Parent or the Company if Purchaser shall have failed to accept for
purchase and pay for Shares pursuant to the Offer by October 31, 1997 (provided
that the right to terminate the Merger Agreement under this provision shall not
be available to any party whose failure to fulfill any obligation under the
Merger Agreement has been the cause of or resulted in any of the circumstances
described in this provision before such date); (d) by Parent or the Company,
prior to the purchase of Shares pursuant to the Offer, if the Board shall
withdraw, modify or change its approval or recommendation of the Offer, the
Merger Agreement or the Merger in a manner adverse to Parent; (e) by the
Company, prior to the purchase of Shares pursuant to the Offer, (i) if any
representation or warranty of the Parent or Purchaser set forth in the Merger
Agreement shall be untrue in any material respect when made, or (ii) upon a
breach in any material respect of any covenant or agreement on the part of
Parent or the Purchaser set forth in the Merger Agreement; (f) by the Company,
if the Offer shall have expired or shall have been withdrawn, abandoned or
terminated without Purchaser purchasing any Shares pursuant thereto; or (g) by
the Parent, if Purchaser shall have terminated the Offer without purchasing any
Shares thereunder in accordance with the terms of the Offer, provided Parent may
not terminate the Agreement pursuant to this provision if Purchaser has failed
to purchase the Shares in the Offer in breach of the terms thereof.
If the Merger Agreement is terminated as described in clause (d) above, the
Company has agreed (provided that Parent or Purchaser is not then in material
breach of its obligations under the Merger Agreement), promptly after the
termination of the Merger Agreement, to reimburse Parent and Purchaser for all
documented out-of-pocket expenses and fees (including, without limitation, fees
payable to all banks, investment banking firms and other financial institutions,
and their respective agents and counsel, and all fees of counsel, accountants,
financial printers, experts and consultants to Purchaser and its affiliates),
whether incurred prior to, on or after the date of the Merger Agreement, in
connection with the Offer, the Merger and the consummation of all transactions
contemplated by the Merger Agreement; provided that in no event shall Company be
required to pay in excess of an aggregate of $1,500,000 pursuant to this
provision. If the Merger Agreement is terminated as described in clause (d)
above and within twelve months following the date of such termination the
Company either (x) consummates with any Third Party a transaction the proposal
of which
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<PAGE> 11
would otherwise qualify as a Business Combination Proposal or (y) enters into a
definitive agreement with a Third Party with respect to a transaction the
proposal of which would otherwise qualify as a Business Combination Proposal,
then the Company shall promptly pay to Parent a fee of $6,275,000, less any
amounts paid by the Company pursuant to the provision described in the preceding
paragraph.
Guaranty. The Merger Agreement provides that the Parent guarantees the full
and punctual performance by the Purchaser of the obligations of the Purchaser
under the Merger Agreement.
THE TENDER AGREEMENT
The following is a summary of certain provisions of the Tender Agreement.
Such summary is qualified in its entirety by reference to the Tender Agreement,
a copy of which is filed herewith as Exhibit 99.6 and is incorporated herein by
reference.
Agreement to Tender; Proxy. Dr. Riggs and Mr. Miller (each a "Seller") have
each severally agreed (the "Tender Agreement") that he will promptly tender
pursuant to the terms of the Offer, and not withdraw, the Shares of which he is
the holder or beneficial owner, or over which he has dispositive and voting
authority (the "Seller's Shares"). Pursuant to the Tender Agreement, each Seller
has granted to Purchaser, James R. Bullock, the President and Chief Executive
Officer of Parent, and Ivan R. Cairns, the Senior Vice President and General
Counsel of Parent, or any of them, each with full power of substitution, a proxy
to exercise all voting and other rights with respect to such Seller's shares,
including without limitation, with respect to the Merger and the other matters
contemplated by the Merger Agreement.
Representations and Warranties. In the Tender Agreement, each Seller has
made customary representations and warranties to the Purchaser and the Parent,
including as to the ownership of the shares subject to such agreement. The
Purchaser and the Parent have also made customary representations and warranties
to each Seller.
No Negotiations. The Tender Agreement provides that each Seller will not,
directly or indirectly, (i) initiate, contract with, solicit or enter into
negotiations with any corporation, partnership, person or other entity
concerning any possible proposal that constitutes, or may reasonably be expected
to lead to, an Acquisition Proposal, or (ii) furnish any internal nonpublic
financial or business information to any corporation, partnership, person or
other entity (a "Third Party") in connection with any Acquisition Proposal (as
defined); and each Seller severally agrees to notify Purchaser immediately if
any discussions or negotiations are sought to be initiated, or any such
information is requested, with respect to an Acquisition Proposal or potential
Acquisition Proposal or if any Acquisition Proposal is received or indicated to
be forthcoming. The term "Acquisition Proposal" means the occurrence of any of
the following events: (a) the Company or any Company Subsidiary is acquired by
merger or otherwise by any Third Party; (b) the Company or any Company
Subsidiary enters into an agreement with a Third Party that contemplates the
acquisition of 35% or more of the total assets of the Company and the Company
Subsidiaries taken as a whole; (c) the Company enters into a merger or other
agreement with a Third Party that contemplates the acquisition of beneficial
ownership of more than 35% of the outstanding shares of the Company's capital
stock; or (d) a Third Party acquires more than 35% of the outstanding shares of
the Company's capital stock.
Other Transactions. Each Seller has severally agreed that such Seller shall
not engage in any action or omission that would have the effect of preventing or
disabling such Seller from delivering the Shares of such Seller to Purchaser or
otherwise performing such Seller's obligations under the Tender Agreement or
causing any representation or warranty to be untrue. Without limiting the
foregoing, each Seller severally agrees not to sell or transfer, or agree to
sell or transfer, any of the Shares of such Seller or any interest in such
Shares, and shall keep such Shares free and clear of all liens, charges and
encumbrances and voting agreements, commitments, agreements, understandings and
arrangements of every kind and shall not give any proxy with respect to the
voting power of such Shares.
Employment Agreements. Each Seller severally agreed to enter into an
Employment Agreement with the Company immediately following the acceptance of
the Shares pursuant to the Offer. The terms of such employment agreements are
described in Item 3.
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Termination. The Tender Agreement terminates at the earliest of (a) the
time mutually agreed to by Purchaser, Parent and the Sellers expressed in
writing or (b) so long as Sellers are not in default under the Tender Agreement,
the termination of the Merger Agreement in accordance with its terms.
Fiduciary Duty. The Tender Agreement provides that nothing therein shall in
any way affect any action taken by any director or executive officer of the
Company that is required to be taken in order to discharge properly their
fiduciary duties to the Company.
STOCK PURCHASE AGREEMENT
The following is a summary of certain provisions of the Stock Purchase
Agreement. Such summary is qualified in its entirety by reference to the Stock
Purchase Agreement, a copy of which is filed as Exhibit 99.7 and incorporated
herein by reference.
Pursuant to the Stock Purchase Agreement, dated as of July 29, 1997, among
Parent, Dr. Riggs and Mr. Miller, (a) Parent has agreed to sell to Dr. Riggs,
and Dr. Riggs has agreed to purchase, a number of common shares of Parent
("Parent Common Shares") determined by dividing $7,000,000 by the Market Price
(as defined below) and (b) Parent has agreed to sell to Mr. Miller, and Mr.
Miller has agreed to purchase, a number of Parent Common Shares determined by
dividing $3,000,000 by the Market Price, in each case for cash at a price per
share equal to the Market Price. The Market Price is the closing sale price of
Parent Common Shares on the New York Stock Exchange on the trading day
immediately preceding the day of closing. The closing will take place
immediately following the acceptance of Shares by Purchaser pursuant to the
Offer, or at such other time as Parent and Dr. Riggs and Mr. Miller may agree in
writing.
Transfer Restrictions. None of the Parent Common Shares purchased pursuant
to the Stock Purchase Agreement shall be sold, pledged, assigned or otherwise
transferred, voluntarily or involuntarily, by the purchasers except (a) on the
first anniversary of the date of the Stock Purchase Agreement, the restrictions
on transfer shall lapse with respect to 10% of the shares of Parent Common
Shares purchased; (b) on the second anniversary of the date of the Stock
Purchase Agreement, the restrictions on transfer shall lapse with respect to an
additional 10% of the shares of Parent Common Shares purchased, and (c) on the
third anniversary of the date of the Stock Purchase Agreement, the restrictions
on transfer shall lapse with respect to all remaining Parent Common Shares. The
restrictions on transfer do not apply with respect to transfers pursuant to
applicable laws of descent and distribution or to transfers among the
purchaser's spouse and descendants and any trust or partnership solely for the
benefit of such purchaser or such purchaser's spouse or descendants, provided
that the restrictions will continue to be applicable to the shares of Parent
Common Shares after such transfer and the transferees of such shares shall agree
in writing to be bound by the provisions of the Stock Purchase Agreement. The
restrictions terminate upon the first to occur of the death of such purchaser
and the sale of the Company by Parent (whether by stock or asset sale, merger or
otherwise). Additionally, the Parent Common Shares will not be registered under
the Securities Act and cannot be sold unless subsequently registered or unless
an exemption from such registration is available.
Representations and Warranties. The Parent has made customary
representations and warranties to Dr. Riggs and Mr. Miller, including that the
certain reports filed by the Parent with the SEC did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made not misleading. Dr. Riggs and Mr.
Miller have each severally made customary representations and warranties to
Parent, including as to the access to information concerning Parent, his status
as an "accredited investor" and that the Parent Common Shares will be
"restricted securities" within the meaning of Rule 144 under the Securities Act.
The Parent has agreed to continue to file all reports, schedules, forms,
statements and other documents in accordance with the applicable requirements of
the Securities Act and the Exchange Act and the rules and regulations of the SEC
promulgated thereunder.
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THE CONFIDENTIALITY AGREEMENT
The following is a summary of certain provisions of the Confidentiality
Agreement such summary is qualified in its entirety by reference to the
Confidentiality Agreement, a copy of which is filed as Exhibit 99.8 and is
incorporated herein by reference.
On May 21, 1997 American Medical Response, Inc. ("AMR"), an indirect
wholly-owned subsidiary of Parent, entered into a confidentiality agreement with
the Company pursuant to which, among other things, Parent agreed to treat as
confidential certain information provided by or on behalf of the Company and
agreed that, for a period of two years, unless specifically invited in writing
by the Board of Directors of the Company, not to (a) effect or seek, offer or
propose (whether publicly or otherwise) to effect, or cause or participate in or
in any way assist any other person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in (i) any acquisition of any
securities (or beneficial ownership thereof) or assets of the Company or any of
its subsidiaries; (ii) any tender or exchange offer or merger or other business
combination involving the Company or any of its subsidiaries; (iii) any
recapitalization, restructuring, liquidation, dissolution or any other
extraordinary transaction with respect to the Company or any of its subsidiaries
or (iv) any solicitation of proxies (as such terms are used in the proxy rules
of the SEC) or consents to vote any voting securities of the Company; (b) form,
join or in any way participate in a "group" (as defined in the Exchange Act),
(c) otherwise act, alone or in concert with others, to seek to control or
influence the management, Board of Directors of policies of the Company, (d)
take any action which might force the Company to make a public announcement
regarding any of the types of matters set forth in (a) above, or (e) enter into
any discussions or arrangements with any third party with respect to the
foregoing.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
OF THE BOARD OF DIRECTORS
(a) Recommendation.
At a meeting held on July 28, 1997, the Board of Directors of the Company
unanimously approved the Offer and the Merger, determining that the terms of the
Offer and the Merger (including the offer price of $38.00 per Share in cash) are
fair to the stockholders of the Company and are in the best interests of the
Company's stockholders. At such meeting, the Board also unanimously adopted a
resolution recommending that the stockholders of the Company accept the Offer
and tender their Shares pursuant to the Offer. In addition, the Board
unanimously approved the form of the Merger Agreement. Copies of a press release
and a letter from the Board to the Company's stockholders concerning the Offer,
the Merger Agreement and the Board's recommendations are filed as Exhibits 99.2
and 99.9, respectively, to this Statement and are incorporated herein by
reference.
(b) Background and Reasons for the Recommendation.
The Company's strategic plan has traditionally included acquisitions. As a
consequence, the Company's management and its Board have from time to time
discussed the trend of consolidations in the healthcare industry and, in
particular, the Company's reliance on acquisitions for continued growth. In
addition to the acquisitions of the size it has traditionally made, the Company
has from time to time considered or responded to invitations for bids in
connection with the sales of other larger healthcare companies involved in the
delivery of emergency healthcare management services. The Company has not
acquired any of these larger companies.
During the second half of 1996, the Company's management was approached by
other companies regarding the desirability of a merger with or acquisition of
the Company. From time to time, the Company's management had informal,
preliminary discussions with representatives of such companies, but none of
these discussions resulted in a merger or acquisition proposal.
In September 1996, representatives of a healthcare company ("Party A")
inquired of Company management whether the Company had any interest in merging
and as to the status of a civil lawsuit brought by the United States Department
of Justice then pending against the Company involving the billing practices
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of an outside vendor (the "DOJ Lawsuit"). Prior to meeting with such
representatives, Dr. Riggs consulted with members of the Company's Board and was
advised that although the Company was not for sale, in their judgment it would
be advisable to have a conversation with representatives of Party A regarding
its interest in the Company. After discussions with the Company, Party A advised
that it would be interested in further discussions with the Company concerning a
merger if the DOJ Lawsuit was settled. Subsequently, directors of the Company
confirmed the absence of an interest of Party A in a combination with the
Company until after the settlement of the DOJ Lawsuit in conversations with an
executive officer of Party A.
Also in September 1996, Dr. Riggs had conversations with a representative
of another healthcare company ("Party B") that suggested to him that Party B
might at some point be interested in a combination with the Company. However,
none of such conversations were substantive, although Dr. Riggs did report to
the Board his view of such possible interest.
As a result of the expressions of interest from Party A and Party B, in
September 1996 Company management contacted Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"). DLJ provided management with advice concerning
the Company's strategic alternatives, including the acquisition process, and
information concerning Party A, Party B and another healthcare company and the
Company's position in the healthcare industry.
At a meeting held on November 21, 1996, the Board discussed the continued
need for the Company to make acquisitions in an increasingly competitive and
consolidating industry. It was the consensus of the Board at such time that it
might be in the best interest of the Company to consider the possibility of a
merger or other combination with a significant company in the healthcare
industry in order to become part of a larger entity providing a broader array of
services. After the meeting, Company management sought additional advice from
DLJ to assist the Company if the prior approaches were renewed and to consider
other companies that might have an interest in the Company in the future.
In December 1996, DLJ reported to Company management with respect to the
Company's strategic alternatives, including possible business combination
partners as well as the potential benefits of a securities offering to refinance
outstanding indebtedness and provide significant capital for its future growth.
In January 1997, the Company formally retained DLJ to provide investment banking
services in connection with any business combination involving the Company.
Also in December 1996, Dr. Riggs was contacted by an executive officer of
another healthcare company concerning the possibility of a merger and ultimate
sale of the combined companies to a third party. Such executive officer had
previously mentioned to Dr. Riggs that a combination with the Company would be
advantageous. Such executive officer subsequently contacted Dr. Riggs about the
possibility of a combination once the DOJ Lawsuit was settled. No acquisition
proposals were made during such contacts.
In December 1996, Company representatives were invited to meet with
representatives of AMR in Denver to acquaint its management with a history of
the Company and for AMR to discuss its concept of pathways in emergency
medicine. At such meeting, the Company's representatives made a presentation of
certain of the Company's publicly available information, and representatives of
AMR provided information with respect to its operations. At such time, AMR's
management inquired as to whether the Company would have any interest in being
acquired. Company management responded that it was not then actively seeking a
sale, but stated that the Company would give consideration to a meaningful
proposal. Company management further advised that it was not prepared to pursue
seriously any discussions in this regard, however, until the settlement of the
DOJ Lawsuit.
On January 21, 1997, Dr. Riggs was telephoned by Party A management to
express Party A's general interest in pursuing a stock merger with the Company
which would be treated as a pooling of interests for accounting purposes. Dr.
Riggs advised that, while the Company would give consideration to a meaningful
proposal, it was not then interested in pursuing serious conversations because
of its ongoing discussions regarding settlement of the DOJ Lawsuit.
On February 5, 1997, James R. Bullock, the President and Chief Executive
Officer of Laidlaw, which at such time had agreed to (and subsequently did)
acquire AMR, and Paul T. Shirley, the President and Chief
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Executive Officer of AMR, met, at the request of Laidlaw and AMR, with the
Company management in Dallas. At such time, the Company made a presentation of
publicly available information concerning the Company. Mr. Bullock inquired as
to the Company's interest in being acquired by Laidlaw. Dr. Riggs responded that
the Company was not then in a position to pursue seriously discussions
concerning a combination until a settlement of the DOJ Lawsuit, which the
Company expected in a matter of weeks. No acquisition proposal was presented by
Laidlaw during this meeting.
On February 12, 1997, the Company had announced that it had reached an
agreement in principle to settle the DOJ Lawsuit for $7,750,000, plus an
additional $250,000 in attorneys' fees.
At its meeting on February 18, 1997, the Board discussed generally the
Company's strategic alternatives. However, it was the consensus of the Board
that until the DOJ Lawsuit was finally settled, the Company should not be
involved in substantive discussions concerning any proposal for an acquisition
of the Company.
On February 27, 1997, Company representatives met with Messrs. Bullock and
Shirley and other members of AMR management at AMR's invitation to discuss
possible synergies between the companies. At such meeting, Mr. Bullock proposed
a possible transaction in which AMR would sell its emergency management services
division to the Company and Laidlaw would underwrite a rights offering for
refinancing indebtedness incurred for such purpose, as a result of which Laidlaw
would acquire a significant equity interest in the Company. Dr. Riggs discussed
this preliminary proposal with members of the Board and with DLJ. On March 3,
1997, he responded to Mr. Bullock that after review, the Company was not
interested in pursuing such a transaction, and Dr. Riggs advised Mr. Bullock
that he would keep him apprised as to the Company's progress in effecting its
settlement of the DOJ Lawsuit.
At a meeting held on March 14, 1997, the Board discussed generally the
approaches it had received from Laidlaw, Party A and Party B. At such meeting,
DLJ made a presentation to the Board concerning companies that might likely be
in a position to acquire the Company. DLJ provided the Board with information
concerning the amounts that such companies might be able to pay for the Company,
the type of consideration that might be available and the comparison of
potential transactions with prior transactions in the healthcare industry. It
was the consensus of the Board at the time that substantive discussions with
respect to a business combination would not be in the best interest of the
Company until such time as the DOJ Lawsuit had been finally settled. The Board
therefore instructed Company management and DLJ to advise Laidlaw and any other
companies expressing an interest in the Company that the Company was not
prepared to pursue substantive discussions until such time as the DOJ Lawsuit
had been finally resolved. Subsequent to such meeting, DLJ contacted the
financial advisors for Laidlaw and advised them of the Company's position.
On May 6, 1997, the Company signed an agreement with the Department of
Justice settling the DOJ Lawsuit. However, such agreement was contingent upon
reaching settlement agreements with the 14 states that were also party to the
DOJ Lawsuit. The Company continued to negotiate with such states at such time.
At a meeting held on May 15, 1997, DLJ made a presentation to the Board,
discussing the acquisition activity in the public market and possible responses
the Board might consider should a proposal be made to acquire the Company.
Possible securities offerings and financings were also discussed. At such time,
the Board noted the signing of a settlement agreement with the Department of
Justice regarding the DOJ Lawsuit and the Company's progress in completing
negotiations and documentation with the 14 states also involved. It was the
consensus of the Board that the Company was now in a position to entertain
substantive proposals with respect to an acquisition of the Company.
Following the May 15 Board meeting, DLJ was instructed to advise the
inquiring companies that the Company was now in a position to pursue substantive
discussions with respect to their interest in the Company. In addition, DLJ was
instructed to solicit indications of interest from these companies and other
companies which it had identified that might have an interest or ability to
enter into a business combination with the Company.
During the week of May 19, 1997, DLJ made inquiries to eleven companies,
including Laidlaw, Party A and Party B, to solicit indications of interest in
acquiring the Company. As a result of these inquiries, four companies, Laidlaw,
Party A, Party B and a company which had not previously been in contact with the
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Company, made arrangements to visit the Company in Dallas for management
presentations concerning the Company and to review data that had been assembled
by the Company. Such companies also entered into confidentiality agreements with
the Company.
On May 21, 1997, Dr. Riggs and Mr. Miller met with the chief financial
officer of AMR and a representative of Laidlaw's financial advisor. At such
meeting, the Laidlaw representatives explained its concepts underlying its
expansion in the area of emergency medical care. They also discussed how the
Company might be run if an acquisition by Laidlaw were consummated. At such
meeting, however, no proposal for an acquisition was made.
The four parties that had made arrangements to visit the Company conducted
such visits over the period June 2 through June 9, 1997, conducting initial
diligence at that time. During the course of those meetings, these companies
discussed individually with the Company the cost benefits, synergies and other
advantages of a business combination with the Company. However, no substantive
proposals for an acquisition were made.
After the visit by Party B, an executive officer of Party B called Dr.
Riggs to indicate Party B's interest in pursuing an acquisition with the Company
and to express his interest in continuing to retain Dr. Riggs and Mr. Miller
subsequent to an acquisition for the Company's operations.
On June 13, 1997, DLJ received non-binding indications of interest from
three of the four potential acquirers that had visited the Company: Laidlaw,
Party A and Party B. The fourth company that visited the Company and reviewed
data assembled by the Company declined to submit an indication of interest.
The indication of interest from Laidlaw proposed an acquisition of the
Company for $34.00 per Share in cash, with a unilateral option for Laidlaw to
use its then existing Class B shares to pay up to $14.00 per Share of the
consideration. The Laidlaw indication of interest did not include a financing
contingency.
The indication of interest from Party A proposed an acquisition of the
Company at a price of $35.00 per Share, structured as a merger in which common
stock of Party A would be exchanged for the Shares of the Company in a tax-free
reorganization and as a pooling of interests for accounting purposes. The
indication of interest did not include price protection with respect to the
proposed merger consideration.
The indication of interest from Party B proposed a merger in which the
Company stockholders would receive shares of Party B in a transaction structured
as a tax free reorganization and a pooling of interests for accounting purposes.
The indication of interest stated a price of $38.00 per Share with protection of
such value by guaranteeing a floor value of $33.529 per Share but a ceiling
value of $41.304 per Share based on the price of the Party B stock immediately
prior to the closing date of the merger. The indication of interest included
among the conditions to the merger that it be approved by the stockholders of
Party B.
On June 17, 1997, the Board of Directors met with DLJ to review
preliminarily the indications of interest received by the Company. DLJ discussed
the companies that submitted indications of interest, the consideration proposed
to be received and various factors affecting the value, timing and completion of
the proposed transactions. At the meeting, the Board expressed a preference for
a transaction involving only cash consideration that would provide certain value
to the stockholders without the attendant delays and uncertainties involved in a
transaction involving stock. DLJ was thus instructed to contact Laidlaw to
determine whether it could provide a higher all cash bid, which would eliminate
the option for the delivery of Laidlaw stock. The Board agreed to reconvene in
two days' time to discuss the proposals further and the results of the
additional conversations with Laidlaw.
On June 17 and 18, 1997, DLJ was advised by Laidlaw's investment bankers
that any higher offer, or an all cash offer, would require that Laidlaw be
satisfied of management's commitment to continuing in the Company's business.
On June 19, 1997, Messrs. Bullock and Shirley met with Dr. Riggs and Mr.
Miller in Dallas to discuss the Laidlaw business combination proposal and their
continued involvement with the Company. At such meeting, Mr. Bullock indicated
that Laidlaw was prepared to increase the offer price to $37.50 per Share all
cash. However, Mr. Bullock also advised that because of the pendency of a
capital reorganization of Laidlaw
16
<PAGE> 17
scheduled for mid-July 1997, Laidlaw would not be in a position to commit to any
transaction until after the recapitalization.
A meeting of the Board of Directors of the Company was convened immediately
after the meeting with Messrs. Bullock and Shirley, at which the Board was
advised of those discussions and the willingness of Laidlaw to increase its
proposal but also of the timing considerations that might affect the proposal.
It was the consensus of the Board that the timing of the transaction was
important, and the Board suggested that Company management seek an increase in
Laidlaw's purchase price and a satisfactory resolution of the timing issues.
After such meeting, Dr. Riggs and representatives of DLJ met with Messrs.
Bullock and Shirley. During such discussions, Mr. Bullock advised that he was
prepared to increase his bid to $38.00 per Share but that he would need to
consult with his board to determine whether the remaining work to be done in
connection with the transaction could be completed and a purchase agreement
negotiated with a target date in early July 1997.
After such discussions, the Board of Directors reconvened and Dr. Riggs and
DLJ provided their assessments of the implications of the developments up to
that time. It was the Board's view that the Laidlaw transaction likely presented
the most value then proposed for the Company and that it was prepared to proceed
to pursue a combination with Laidlaw provided Laidlaw could satisfy the
Company's timing concerns. DLJ thereafter relayed to the other bidders that an
all cash offer had been made which the Board was pursuing, but that the Board
would also consider other all cash offers or substantially improved stock
offers.
After the Board meeting, on June 19, 1997, Dr. Riggs called Messrs. Bullock
and Shirley and advised them that the Board was prepared to pursue a $38.00
offer if the Board's concerns regarding timing were satisfactorily addressed. On
the same day, representatives of DLJ contacted the financial advisors for Party
A and Party B and communicated to them the Board's position.
On June 23, 1997, DLJ received a revised non-binding preliminary indication
of interest from Party B in which it raised its bid to $43.00 per Share in Party
B stock, with price protection guaranteeing a floor value of $40.611 per Share
and a maximum value of $44.955 per Share. Later on June 23, 1997, Dr. Riggs
telephoned an executive officer of Party B and thanked him for increasing its
bid. The Company was then invited to perform diligence on Party B at the
earliest possible date.
On June 24, 1997, Mr. Bullock called Dr. Riggs to inform him that Laidlaw
would be unable to meet the Company's timing requirements. Mr. Bullock did
advise, however, that he would be prepared to pursue the transaction soon after
the effectiveness of Laidlaw's capital reorganization. He advised Dr. Riggs that
in his opinion the Laidlaw proposal continued to present, notwithstanding the
delay, the transaction of choice for the Company. Dr. Riggs responded that the
Company would be unhappy with the timing considerations and that, in the
meantime, another bidder had raised its bid. That same day, representatives of
DLJ and the investment bankers for Laidlaw had similar conversations. In a
subsequent conversation that day, Mr. Bullock continued to support the Laidlaw
cash proposal as superior to a stock transaction. Dr. Riggs advised Mr. Bullock
that the Board would be meeting on June 26, 1997 to discuss the situation. On
June 26, 1997, (prior to the Board meeting) Dr. Riggs and Messrs. Bullock and
Shirley again discussed the Laidlaw position.
Also during this time, DLJ was advised by the investment advisors for Party
A that Party A was not interested in increasing its bid.
On June 26, 1997, a meeting of the Board of Directors was held at which Dr.
Riggs and DLJ reported to the Board the status of the acquisition proposals. At
the meeting, the Board was advised that Party A believed it could not be
competitive and had declined to increase its bid. DLJ noted for the Board that
the then current high bidder, Party B, required significant synergies from a
combination in order to make it non-dilutive to earnings. It continued to be the
Board's view that cash consideration presented significant advantages and that
the higher nominal price offered by Party B would involve investment
considerations concerning the bidder's business, potential changes in its stock
price and other factors affecting its ultimate value. Concern was also expressed
that significant delay would be entailed in a stock transaction, including the
risk that Party B's stockholders would not approve the transaction in certain
circumstances. It was the consensus of the Board that discussions with both
Laidlaw and Party B should be continued.
17
<PAGE> 18
After the meeting, Dr. Riggs telephoned Messrs. Bullock and Shirley to
report the results of the meeting. He advised them that the Company would
continue discussions with them and others and would appreciate a strong effort
on the part of Laidlaw to move a possible transaction forward. Dr. Riggs also
telephoned Party B management and advised them that the Company had talked with
several bidders and would like to have more information concerning Party B. He
proposed a visit and preliminary due diligence session with Party B as soon as
practicable.
On June 30, 1997, Dr. Riggs and Mr. Miller met with Mr. Shirley to discuss
possible employment contracts. On July 1, 1997, they met with AMR
representatives to discuss cost savings and other synergies.
On July 9, 1997, Dr. Riggs, Mr. Miller and representatives of DLJ visited
the offices of Party B to conduct preliminary due diligence and discuss the
synergies available in a combination. On July 14 and 15, 1997, Party B visited
Company offices in Philadelphia and Dallas to finalize its due diligence and
review operating synergies. During the course of such meetings, Company
management was advised by Party B representatives that in their view the
estimated synergies would likely be insufficient to support their current
proposal. Over the next several days indications were received from Party B's
financial advisor that Party B intended to lower its bid. On July 18, 1997,
Party B's financial advisor advised DLJ that Party B had decided against then
submitting a revised bid and was withdrawing from the bidding, but indicated a
willingness to return to the bidding process at approximately $35.00 per Share
in stock pending an increase in its stock price or the disappearance of higher
bids.
On July 15, 1997, Dr. Riggs had a telephone conversation with Mr. Shirley
to negotiate terms of a possible employment arrangement. On July 18, 1997, Mr.
Miller discussed employment issues and possible reporting relationships with Mr.
Shirley.
On July 16, 1997, a meeting of the Company's Board was held at which DLJ
advised the directors as to the status of the discussions with the bidders. At
such time, the Board was advised that Laidlaw had completed its due diligence
and provided comments on a draft agreement and plan of merger previously
submitted to it by the Company. The Board was also advised of the status of the
Party B position. The Board was further advised that all 14 states involved in
the DOJ Lawsuit had executed settlement agreements and that the Company was in
the process of making its initial payment under the settlement.
On July 22, 1997, Party A's financial advisor called DLJ to inquire whether
Party A would have an opportunity to return to the bidding process. Party A was
encouraged to increase its bid and to conduct any required due diligence as soon
as possible. Later that day, Mr. Miller discussed with Party A management Party
A's renewed interest in a business combination, and Mr. Miller encouraged Party
A management to act quickly. Also on that day, Party A's financial advisor
indicated to DLJ that Party A preliminarily was considering a bid at $40.00 per
Share in stock, pending further due diligence.
On July 23, 1997, Party A visited the Company to conduct additional
diligence. At such meeting, cost savings, the roles of management, employment
contracts and the operation of the post-merger companies were discussed.
However, no proposal was submitted at such time. The due diligence process and
discussions continued through July 24, 1997, and the Company submitted a draft
agreement and plan of merger to Party A. On July 24, 1997, Mr. Miller talked
with Party A management and was advised of Party A's continued interest in the
Company.
On July 23, 1997, Mr. Bullock contacted Mr. Miller to report Laidlaw's
successful capital reorganization. Mr. Bullock advised, however, that he had
concerns that the Company's stock price exceeded the amount of the Laidlaw bid
and that he would have difficulty in recommending to his board such a price. At
such time, Mr. Miller informed Mr. Bullock that another bidder had resurfaced
and that the Company wanted to conclude the proposal process by July 28, 1997.
On July 25, 1997, Dr. Riggs was telephoned by Party A management to discuss
the terms of his employment if a combination were effected.
On July 25, 1997, Dr. Riggs and Mr. Miller flew to Canada to meet with Mr.
Bullock. During their meeting, Mr. Bullock proposed that all of the Company
stockholders be offered, at their election, either $38.00
18
<PAGE> 19
per Share in cash or a combination of $23.00 per Share in cash plus one Laidlaw
share, but that Dr. Riggs and Mr. Miller would be required to elect the cash and
stock combination. Mr. Bullock proposed a financial arrangement designed to ease
the tax burden of such consideration to Dr. Riggs and Mr. Miller, which involved
restrictions on the transferability of the shares obtained by them for up to a
three-year period. At such time, other terms of employment were discussed.
On July 25, 1997, Company management was advised by Party A management that
it was interested in pursuing a transaction; however, because of a pending,
unrelated financing, Party A would not be in a position to conclude a
transaction for at least two or three weeks.
Later on the evening of July 25, 1997, Dr. Riggs, Mr. Miller, an
independent director of the Company and DLJ discussed the latest positions of
Laidlaw and Party A and the Company's alternatives.
On July 26, 1997, Dr. Riggs spoke with Party A management and encouraged
them to conclude an agreement at an earlier date than proposed. Later that day,
Dr. Riggs and Mr. Miller discussed possible employment arrangements with Party A
management. Still later, Dr. Riggs and Mr. Miller telephoned Party A management
to reaffirm the need to make a firm proposal as to price and resolve the
Company's timing concerns.
On July 27, 1997, Party A submitted a revised indication of interest
providing for two possible prices to effect a stock merger structured as a tax
reorganization and pooling of interests for accounting purposes. In the
proposal, Party A advised it would be willing to pay $37.00 per Share in stock
if a transaction were concluded as soon as practicable, but that if the Company
would be willing to negotiate an agreement at a later date, to be determined by
Party A, it would be willing to pay $39.50 per Share in stock. The proposal
contained no price protection with respect to merger consideration under either
scenario. Subsequently that day, Dr. Riggs called Party A management to advise
that the Company had received a cash proposal and would require a price equal to
its cash price, supported by price protection, for a near-term transaction.
In the morning of July 28, 1997, Dr. Riggs and Mr. Miller telephoned Mr.
Bullock and made a counter proposal for a transaction. They proposed that
Laidlaw return to an all-cash proposal for all Company stockholders at $38.00
per Share, but that Dr. Riggs and Mr. Miller would be required to reinvest 20%
of their after-tax proceeds in Laidlaw stock and agree to a restriction on the
resale of those shares for up to three years. Mr. Bullock was also asked to
consider provision of bonus incentives for such executives.
Also in the morning of July 28, 1997, DLJ was advised by the financial
advisors of Party A that its bid would not be changed and that no price
protection for the stock consideration to be received would be added. Later that
morning, Mr. Bullock called Dr. Riggs to make a counter proposal regarding the
proposed reinvestment by Dr. Riggs and Mr. Miller. Mr. Bullock, Dr. Riggs and
Mr. Miller settled upon reinvestments for Dr. Riggs and Mr. Miller of $7,000,000
and $3,000,000, respectively. Potential bonus incentive payments over a
five-year period tied to earnings targets and a change of control payment for
these executives were also discussed.
Immediately prior to the Board meeting on such date, an executive officer
of Party A called Dr. Riggs to encourage him to accept the higher of the two
bids by Party A with the longer, uncertain time frame.
On July 28, 1997, the Company's Board met to consider the Laidlaw and Party
A proposals. The Company's chief financial officer advised the Board concerning
the Company's preliminary results of operations for the six months ended June
30, 1997, and the Company's balance sheet as of such date. The chief financial
officer also advised the Board concerning the acquisition transactions already
completed by the Company during 1997 and those under consideration by the
Company.
DLJ then reported to the Board concerning the bidding. DLJ reviewed with
the Board its written report concerning a number of factors affecting the
Board's decision, including the performance of the Company's stock, the
Company's historical and projected financial and operating data, its
capitalization, information concerning the bidders and other matters. It then
reviewed its analysis methodologies regarding the transactions under
consideration. It compared the proposed transactions against other merger and
acquisition transactions in the physician practice management industry, premiums
paid in selected merger and acquisition
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<PAGE> 20
transactions and comparisons of Company data against data of selected publicly
held physician practice management companies. It also reviewed a discounted cash
flow analysis with respect to the Company. DLJ also reviewed the cash
transaction proposed by Laidlaw relative to the historical price of the
Company's stock.
With respect to the Laidlaw proposal, Dr. Riggs then summarized for the
meeting the proposed reinvestment of a portion of the proceeds to be received by
him and Mr. Miller in Laidlaw stock, as well as the employment arrangements that
have been negotiated with Laidlaw management for Dr. Riggs and Mr. Miller.
It was the consensus of the Board that the Laidlaw transaction presented
the highest value for Company stockholders, noting the cash price offered by
Laidlaw was in excess of the stock price offered by Party A to execute a
definitive agreement in a time frame comparable to the Laidlaw proposal, and
that there was insufficient additional value and a greater deal of risk in the
alternative offer of stock consideration from Party A to warrant waiting for an
indefinite time. The directors also expressed concern that the proposed delay
could lengthen and that additional negotiations would be required.
At the meeting, a form of Merger Agreement was then presented to the Board
for its review and consideration. The Board considered the terms of the
Agreement, including the terms of a proposed termination fee equal to 2% of the
merger consideration, payable to Laidlaw under certain conditions. The Board was
also advised of the requirement of Laidlaw that Dr. Riggs and Mr. Miller enter
into an agreement to tender their Shares in the Offer and vote their Shares in
favor of the Merger in any meeting called for such purpose. After completion of
the Board's discussion, DLJ orally presented its opinion that the consideration
to be received by the stockholders of the Company pursuant to the Offer and the
Merger, taken together, was fair to the Company stockholders, from a financial
point of view. The Board then unanimously approved the Merger Agreement and the
transactions contemplated thereby, including the Merger and the Offer,
determined that the Merger and the Offer are fair to and in the best interests
of the Company stockholders and adopted a resolution recommending approval and
adoption of the Merger Agreement by the Company stockholders and that the
Company stockholders accept the Offer and tender their shares pursuant to the
Offer. The Board authorized management of the Company to finalize the specific
wording of the Merger Agreement to reflect the terms presented to and approved
by the Board and to execute and deliver the Merger Agreement on behalf of the
Company.
On July 29, 1997, the Merger Agreement was executed and delivered by the
Company, Laidlaw and the Purchaser. On July 30, 1997, the parties publicly
announced that they had entered into the Merger Agreement.
In deciding to accept Laidlaw's proposal, approve the Merger Agreement and
recommend acceptance of the Offer and approval of the Merger Agreement to the
stockholders, the Board considered a number of factors, including, without
limitation, the following:
(i) The price provided by the Laidlaw proposal was the highest then
available, and the price proposed by Party A for a stock transaction to be
negotiated after a period of unknown duration was not subject to price
protection provisions and was subject to other uncertainties.
(ii) The desirability of cash consideration because of the investment
considerations affecting a stock transaction.
(iii) Laidlaw's ability to effect a cash transaction without any
financing contingency.
(iv) The desire to close a transaction quickly to limit the disruption
in the Company's operations and its personnel resulting from the
acquisition process and uncertainty as to the outcome of the process. Due
to regulatory approval requirements involving registration of the issuance
of stock in connection with an acquisition, Laidlaw's all cash tender
offer/merger presented a faster time schedule to closing than a merger
transaction involving stock as proposed by Party A.
(v) The presentations of DLJ at the July 28, 1997 meeting of the Board
and the oral opinion of DLJ delivered to the Board at such meeting (which
opinion was subsequently confirmed by delivery of a written opinion) to the
effect that the cash consideration of $38.00 per Share to be received by
holders of
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<PAGE> 21
Shares in the Offer and the Merger was fair to the stockholders of the
Company, from a financial point of view. A copy of the opinion of DLJ is
attached as Annex II to this Schedule 14D-9 and is incorporated herein by
reference. STOCKHOLDERS ARE URGED TO READ THE OPINION OF DLJ CAREFULLY AND
IN ITS ENTIRETY.
(vi) The circumstances giving rise to the Offer and the Merger
Agreement, the Company's financial performance and projections, various
factors affecting the Company's strategic plans, the Company's position in
its industry and industry conditions generally, the historical price range
of the Shares and the price-earnings multiples represented by the Offer as
compared to historical ratios, the premium presented by the price to be
paid in the Offer for the Shares over the historical price range of the
Shares, and prices paid in recent acquisitions of similar companies.
The Board did not assign relative weights to the above factors. Rather, the
Board viewed its position and recommendations as being based on the totality of
the information presented to and considered by it during the process followed by
the Board.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company has engaged DLJ as its financial advisor in connection with the
Offer and the Merger. Pursuant to the terms of DLJ's engagement, the Company
agreed to pay DLJ for its services (A) a fee of $600,000 at the time DLJ
notified the Board that DLJ was prepared to deliver an opinion to the Board as
to the fairness, from a financial point of view, of the consideration to be
received by the Company or its stockholders in any proposed transaction and (B)
cash compensation in an amount equal to 1.0% of the aggregate amount of
consideration received by the Company or its stockholders (treating any shares
issuable upon exercise of options, warrants or other rights of conversion as
outstanding), plus the amount of any debt assumed, acquired, remaining
outstanding, retired or defeased or preferred stock redeemed or remaining
outstanding in connection with the transaction, less the amount paid by the
Company pursuant to clause (A). The Company also has agreed to reimburse DLJ for
out-of-pocket expenses, including reasonable fees and expenses of counsel,
incurred in connection with its engagement and to indemnify DLJ and certain
related parties against certain liabilities, including liabilities under the
federal securities laws, arising out of DLJ's engagement. In the ordinary course
of business, DLJ 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) No transactions in the Shares have been effected during the past 60
days by the Company or, to the best knowledge of the Company, by any executive
officer, director or affiliate of the Company other than as follows:
(i) On July 25, 1997, Dr. Riggs and his wife transferred 260,000
Shares to a charitable remainder trust in which Dr. Riggs and his wife
retain a life interest and on July 15, 1997 donated 12,900 shares to an
educational institution;
(ii) The former Executive Vice President of the Company exercised
options to purchase 28,500 Shares on July 15, 1997.
(b) To the best knowledge of the Company, all of the executive officers,
directors, affiliates and subsidiaries currently intend to tender Shares to the
Purchaser pursuant to the Offer. For information concerning the commitment of
Dr. Riggs and Mr. Miller to tender their Shares, see Item 3(b) hereof. The
foregoing (except as to Dr. Riggs and Mr. Miller as described in Item 3(b)) does
not include any Shares over which, or with respect to which, any such person
acts in a fiduciary or representative capacity or is subject to
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<PAGE> 22
instructions from a third party, as to which Shares, to the Company's knowledge,
no determination has been made.
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 or any subsidiary of the Company; (ii) a purchase, sale or transfer of
material amount of assets by the Company or any subsidiary of 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
ANTITRUST.
Under the HSR Act, and the rules and regulations promulgated thereunder by
the Federal Trade Commission (the "FTC"), certain acquisition transactions may
not be consummated unless certain information has been furnished to the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares pursuant to the Offer is subject to such
requirements. Pursuant to the requirements of the HSR Act, Parent and the
Company intend to file the required Notification and Report Forms (the "Forms")
with the Antitrust Division and the FTC shortly. The statutory waiting period
applicable to the purchase of Shares pursuant to the Offer will expire at 11:59
P.M., New York City time, fifteen days after the filing of the Forms by Parent.
However, prior to such date, the Antitrust Division of the FTC may extend the
waiting periods by requesting additional information or documentary material
relevant to the acquisition.
SECTION 203 OF THE DGCL.
Section 203 of the DGCL purports to regulate certain business combinations
of a corporation organized under Delaware law, such as the Company, with a
stockholder beneficially owning 15% or more of the outstanding stock of such
corporation (an "Interested Stockholder"). Section 203 provides, among other
things, that the corporation shall not engage in any business combination with
any Interested Stockholder for a period of three years following the time that
such stockholder first becomes an Interested Stockholder unless, prior to such
time the stockholder first becomes an Interested Stockholder, the board of
directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an Interested
Stockholder. The Company's Board of Directors approved the Merger Agreement and
the transactions contemplated thereby at its meeting on July 28, 1997, and
therefore Section 203 of the DGCL is not applicable to such transactions.
INFORMATION STATEMENT.
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.
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<PAGE> 23
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<C> <S>
Exhibit 99.1 Agreement and Plan of Merger, dated as of July 29, 1997,
among the Parent, the Purchaser and the Company.
Exhibit 99.2 Press release jointly issued by the Company and Parent,
dated July 30, 1997.
Exhibit 99.3 The Company's Proxy Statement, dated April 4, 1997.
Exhibit 99.4 Form of Employment Agreement between EmCare Holdings Inc.
and Leonard M. Riggs, Jr., M.D.
Exhibit 99.5 Form of Employment Agreement between EmCare Holdings Inc.
and William F. Miller, III.
Exhibit 99.6 Agreement, dated July 29, 1997, among Laidlaw Inc., EHI
Acquisition Corp., Leonard M. Riggs, Jr., M.D., and William
F. Miller, III.
Exhibit 99.7 Stock Purchase Agreement, dated July 29, 1997, between
Laidlaw Inc., Leonard M. Riggs, Jr., M.D., and William F.
Miller, III.
Exhibit 99.8 Confidentiality Agreement, dated May 21, 1997, by and
between American Medical Response, Inc. and the Company.
*Exhibit 99.9 Letter to stockholders of the Company, dated August 5, 1997.
*Exhibit 99.10 Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation, dated July 28, 1997 (included as Annex II to
this Statement).
</TABLE>
- ---------------
* Included in copies of this Schedule 14D-9 mailed to stockholders.
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.
EMCARE HOLDINGS INC.
By: /s/ ROBERT F. ANDERSON, II
----------------------------------
Name: Robert F. Anderson, II
Title: Chief Financial Officer
and Senior Vice President
Dated: August 5, 1997
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<PAGE> 24
ANNEX I
EMCARE HOLDINGS INC.
1717 MAIN STREET
SUITE 5200
DALLAS, TEXAS 75201
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 August 5,
1997 to the holders of shares of the common stock, par value $.01 per share (the
"Common Stock") of EmCare Holdings Inc., a Delaware corporation (the "Company"),
is being furnished in connection with the designation by EHI Acquisition Corp.,
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 July 29, 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 August 5, 1997 to purchase all of the issued
and outstanding shares (the "Shares") of Company Stock at a price of $38.00 per
Share, net to the seller in cash, as described in the Purchaser's Offer to
Purchase dated August 5, 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 Wednesday, September 3,
1997, unless extended. The Offer is subject to, among other things, the
condition that a number of Shares representing not less than fifty-one percent
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 and Dissenting Shares) will be converted into the
right to receive cash in an amount of $38.00.
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 Bylaws 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 will require the concurrence of a majority of the
directors of the Company (or the concurrence of the director, if there is only
one) then in office who are not designees of Purchaser or employees of the
Company.
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
A-1
<PAGE> 25
(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 Section 7 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 76053.
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
July 31, 1997, there were 8,279,046 shares of Common Stock outstanding. The
Board of Directors of the Company currently consists of 6 members. The Board is
divided into three classes, with each class elected to serve a three year term.
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 of Shares
pursuant to the Offer, and from time to time thereafter, Purchaser will be
entitled to designate up to such number of directors, rounded up to the next
whole number, on the Board of Directors of the Company that equals 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, provided that at all times there shall be at least two directors who are
not designees of Purchaser and the number of directors shall not be more than 10
nor less than six. The Company has agreed, upon request of the Purchaser,
promptly either to increase the size of the Board, to the extent permitted by
the Company's Certificate of Incorporation and/or 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
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 (or the concurrence of the director, if there is only one remaining)
then in office who are not designees of the Purchaser or employees of the
Company. 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.
A-2
<PAGE> 26
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 September 3, 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 53 years old, has been a director of Parent since
1991 and President and Chief Executive Officer since October 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 51 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 48 years old, has been President of Laidlaw
Transit, the Parent's passenger services group, since May 1992. From February
1990 to that date, he was a Senior Vice-President of Laidlaw Transit.
Leslie W. Haworth, who is 54 years old, has been Senior Vice-President and
Chief Financial Officer of Laidlaw since October 1990 and, prior thereto, was
Vice-President, Finance and Chief Financial Officer since March 1978.
CURRENT DIRECTORS OF THE COMPANY
The names of the current directors of the Company, their ages as of July
31, 1997, 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>
DIRECTOR YEAR TERM POSITIONS WITH COMPANY
NAME AGE CLASS EXPIRES AND COMMITTEE MEMBERSHIP
---- --- -------- --------- ------------------------
<S> <C> <C> <C> <C>
Terry Hartshorn...................... 52 I 1998 Director; Compensation
Committee
James T. Kelly....................... 50 I 1998 Director; Audit Committee
William F. Miller, III............... 48 II 1999 Director; President and
Chief Operating Officer
Andrew M. Paul....................... 41 II 1999 Director; Audit and
Compensation Committee
Leonard M. Riggs, Jr., M.D........... 54 III 2000 Chairman of the Board and
Chief Executive Officer
Richard H. Stowe..................... 53 III 2000 Director; Audit and
Compensation Committees;
Stock Option Subcommittee
</TABLE>
Dr. Riggs. Leonard M. Riggs, Jr., M.D. has served as Chairman of the Board
and Chief Executive Officer of the Company since 1992. From 1974 through 1992,
Dr. Riggs served as the President of EmCare, Inc. ("EmCare"), the Company's
emergency physician practice management subsidiary. Dr. Riggs began practicing
emergency medicine in 1969, and has served twelve years on the Medical Board of
the Company's largest hospital client as Chief of Emergency Medicine. Prior to
that time, Dr. Riggs served as such hospital's Director of Emergency Medicine.
Dr. Riggs is a past president of the American College of Emergency
A-3
<PAGE> 27
Physicians. Dr. Riggs is a director of American Oncology Resources, Inc.
("American Oncology"), which operates comprehensive cancer treatment centers,
and Prentiss Property Trust, a real estate investment trust.
Mr. Stowe. Richard H. Stowe has served as a director of the Company since
February 1992 when Welsh, Carson, Anderson & Stowe ("Welsh Carson") participated
in the recapitalization of EmCare, which resulted in the formation of the
Company (the "Recapitalization"). Mr. Stowe has been a general partner of Welsh
Carson since 1979 and is a general partner of the partnerships that serve as the
general partners of Welsh, Carson, Anderson & Stowe V, L.P. ("WCAS V") and WCAS
Capital Partners II, L.P. ("Capital Partners"), the Welsh Carson affiliates that
participated in the Recapitalization. Mr. Stowe is a director of Aurora
Electronics Inc., a distributor of computer spare parts, Health Management
Systems, Inc., a provider of revenue enhancement services for health care
providers and payors, and several private companies.
Mr. Hartshorn. Terry Hartshorn has served as a director of the Company
since December 1994. Since 1993, Mr. Hartshorn has been the Chairman of the
Board of Pacificare Health Systems ("Pacificare"), a managed care organization.
From 1977 to 1993, Mr. Hartshorn served as the President and Chief Executive
Officer of Pacificare. From 1993 to February 1997, Mr. Hartshorn also was the
Chief Executive Officer and President of UniHealth, a non-profit integrated
health system. Mr. Hartshorn is a director of Apria Healthcare, a provider of
home health care products and services.
Mr. Kelly. James T. Kelly has served as a director of the Company since May
1993. Mr. Kelly is the Chairman of the Board of Lincare Holdings Inc.
("Lincare"), a provider of oxygen and other respiratory therapy services in the
home. Mr. Kelly served as Chief Executive Officer of Lincare from June 1986
through December 1996. Prior to that time, Mr. Kelly served for 19 years in a
number of capacities within the Mining and Metals Division of Union Carbide
Corp., departing as Director of Marketing.
Mr. Miller. William F. Miller, III has served as the President and Chief
Operating Officer of the Company since 1992. Mr. Miller also has been a director
of the Company since 1992. From 1983 to 1992, Mr. Miller served as the Chief
Executive Officer of EmCare. Prior to 1983, Mr. Miller served for nine years in
financial and management positions in the health care industry, including
positions as chief executive officer and chief financial officer of hospitals
and administrator/director of operations of a multi-specialty group practice.
Mr. Paul. Andrew M. Paul has served as a director of the Company since the
Recapitalization in February 1992. Mr. Paul joined Welsh Carson in 1984 and is a
general partner of the partnerships that serve as the general partners of WCAS V
and Capital Partners. Mr. Paul is a director of American Oncology, Housecall
Medical Resources Inc., a provider of home health services, Lincare, Medcath
Incorporated, a provider of cardiology and cardiovascular services, National
Surgery Centers Inc., an operator of surgical centers, and several private
companies.
CURRENT EXECUTIVE OFFICERS OF THE COMPANY
The names of the current executive officers of the Company, their ages as
of July 31, 1997, and certain other information about them are set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Leonard M. Riggs, Jr., M.D........... 54 Chairman of the Board, Chief Executive Officer
and Director
William F. Miller, III............... 48 President, Chief Operating Officer, and Director
Robert F. Anderson, II............... 55 Chief Financial Officer, Senior Vice President,
Treasurer and Secretary
S. Kent Fannon....................... 45 Senior Vice President of Corporate Development
</TABLE>
The business experience of Dr. Riggs and Mr. Miller is described above.
A-4
<PAGE> 28
Mr. Anderson. Robert F. Anderson, II, has served as Chief Financial
Officer, Senior Vice President, Treasurer, and Secretary of the Company since
April 1, 1996. Mr. Anderson also administers the Company's compliance programs.
From 1977 to 1996, Mr. Anderson was a partner with Ernst & Young LLP and its
predecessor firms. From 1994 to 1995, Mr. Anderson was Director of the
Healthcare Industry Group for the North Texas office of Ernst & Young. From 1990
to 1993, Mr. Anderson was Director of the Audit Practice for the Fort Worth
office of Ernst & Young. From 1984 to 1989, Mr. Anderson was Managing Partner of
the Fort Worth office of Ernst & Whinney. From 1981 to 1983, Mr. Anderson was
Director of Entrepreneurial Services for the Dallas office of Ernst & Whinney.
Mr. Fannon. S. Kent Fannon has served as Senior Vice President of Corporate
Development since December 30, 1996. From 1994 to 1996, Mr. Fannon was a partner
with Covington Group, L.C., a merchant banking and consulting firm. From 1993 to
1994, Mr. Fannon was Planning, Quality, and Resource Management Officer for EPIC
Healthcare Group, Inc., which owned and operated hospitals and other health care
related businesses. From 1990 to 1993, Mr. Fannon was a partner with The Elder
Group, a management consulting firm. Between 1983 and 1990, Mr. Fannon held
senior financial and management positions in the broadcasting and retail
industries. Prior to 1983, he served in various capacities with American
Airlines, Inc.
BOARD OF DIRECTOR MEETINGS AND COMMITTEES
Meetings. During the year ended December 31, 1996, the Board of Directors
held four regularly scheduled meetings and no special meetings. During the year,
each director attended 75% or more of the aggregate number of such meetings and
committee meetings of the Board of Directors on which the director served. In
addition, during 1996 the Board of Directors acted by unanimous written consent
on seven occasions.
Director compensation. The Company's general policy through 1995 was that
the Company did not compensate the directors for their service as directors,
although the Company reimbursed them for the expenses that they incurred when
serving as directors. On two occasions, however, the Company granted stock
options to two different outside directors to compensate them for their service
as directors. On May 10, 1993, the Company granted Mr. Kelly options to purchase
7,500 shares of Common Stock at an exercise price of $14.00 per share. In
connection with the initial public offering, the Company decreased the exercise
price of these options to $11.00 per share, the price per share in the offering.
In addition, on January 12, 1995 the Company granted Mr. Hartshorn options to
purchase 7,500 shares of Common Stock at an exercise price of $11.00 per share.
The options granted to Messrs. Kelly and Hartshorn vest over five years.
In 1996 the Company implemented a policy of granting options to purchase
shares of Common Stock annually to each outside director as compensation for
serving as a director. The per share exercise price of these options will be the
closing price of a share of Common Stock on the trading day immediately
preceding the date of the grant. Under this policy, on August 15, 1996, the
Company granted options to purchase 6,000 shares of Common Stock to each outside
director at an exercise price of $23.25 per share. One-third of these stock
options vested on the date of grant and one-third of these stock options will
vest on the first two anniversaries of such date, subject to automatic vesting
upon a change in control of the Company. In addition, the Company continues to
reimburse the directors for the expenses that they incur when serving as
directors.
Committees. The Board of Directors has an audit committee (the "Audit
Committee"), a compensation committee (the "Compensation Committee"), and a
sub-committee of the Compensation Committee (the "Stock Option Subcommittee")
that administers the Company's Amended and Restated Stock Option and Restricted
Stock Purchase Plan (the "Stock Option Plan"). The Audit Committee reviews the
financial and internal controls of the Company, makes recommendations to the
Board of Directors concerning the engagement of the Company's independent
certified public accountants and reviews their audit plan, reviews related party
transactions and potential conflict of interest situations involving the
Company, and reviews the Company's compliance programs. The members of the Audit
Committee are Messrs. Kelly, Paul, and Stowe. The Audit Committee held three
meetings during 1996. The Audit Committee did not act by unanimous written
consent during the year.
A-5
<PAGE> 29
The Board of Directors does not have a nominating committee. The entire
Board of Directors considers nominees for the position of director. If any
Stockholder desires the Board of Directors to consider an individual for
nomination as a director at next year's annual meeting, such Stockholder should
contact the Company concerning such nomination during the period described below
for considering Stockholder proposals for next year's annual meeting.
Compensation committee interlocks and insider participation. The
Compensation Committee consists of Messrs. Hartshorn, Paul, and Stowe. None of
them has ever been an employee or officer of the Company or any of its
subsidiaries. The Compensation Committee reviews and approves the compensation
that the Company pays to its executive officers. The Stock Option Subcommittee
consists of members of the Compensation Committee selected by the Board of
Directors who satisfy: (i) the non-employee director requirement under Rule
16b-3 of the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), and (ii) the outside director requirement under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). Currently, Messrs. Paul
and Stowe are the members of the Stock Option Subcommittee. During 1996 the
Compensation Committee held one meeting and acted by unanimous written consent
on one occasion. During 1996 the Stock Option Subcommittee held one meeting and
acted by unanimous written consent on one occasion.
EXECUTIVE COMPENSATION
Summary compensation table. The following table sets forth certain
information with respect to compensation paid or accrued by the Company during
the years ended December 31, 1996, 1995, and 1994 to the Company's Chief
Executive Officer and its other four executive officers at the end of fiscal
year 1996. Dr. Cooley resigned as Executive Vice President effective July 15,
1997. The fringe benefits provided to each of these executive officers was less
than the lesser of $50,000 or 10% of such executive officer's compensation. The
Company therefore excluded such fringe benefits from the following table as
permitted under the Commission's rules.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION/
COMPENSATION SECURITIES
----------------- UNDERLYING ALL OTHER
SALARY BONUS OPTIONS(1) COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
--------------------------- ---- ------- ------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Leonard M. Riggs, Jr., M.D. 1996 297,448 166,031 75,000 9,250(2)
Chairman of the Board and 1995 278,250 225,000 75,000 16,534(2)
Chief Executive Officer 1994 265,585 175,000 37,500 13,268(2)
William F. Miller, III 1996 284,258 266,031(3) 110,000(3) 9,250(4)
President and Chief Operating 1995 257,250 225,000 75,000 16,784(4)
Officer 1994 245,000 175,000 37,500 16,667(4)
Robert F. Anderson, II(5) 1996 147,449 74,714 70,000 0
Chief Financial Officer, Senior Vice
President, Treasurer, and Secretary
Steven W. Cooley, M.D. 1996 229,379 74,714 45,000 9,250(6)
F.A.C.E.P., Executive Vice President 1995 215,254 100,000 15,000 13,807(6)
of EmCare 1994 205,004 65,000 17,500 13,281(6)
S. Kent Fannon(7) 1996 0 0 50,000 0
Senior Vice President of Corporate
Development
</TABLE>
- ---------------
(1) The Company originally granted the stock options shown as granted during
1994 at an exercise price of $14.00 per share in December 1993 and then
repriced them to the Company's initial public offering price of $11.00 per
share in December 1994, except that the Company originally granted stock
options to purchase 12,500 shares of Common Stock to Dr. Cooley in July
1994.
A-6
<PAGE> 30
(2) The 1996 other compensation amount for Dr. Riggs consists of $4,750 in
matching contributions made under the Company's 401(k) Plan and $4,500 in
profit sharing payments that the Company paid into the 401(k) Plan on Dr.
Riggs's behalf. The 1995 other compensation amount for Dr. Riggs consists of
$4,638 in matching contributions made under the Company's 401(k) Plan,
$4,500 in profit sharing payments that the Company paid into the 401(k) Plan
on Dr. Riggs's behalf, $5,278 in health insurance premiums paid on behalf of
Dr. Riggs, $957 in life insurance premiums paid on behalf of Dr. Riggs, and
$1,161 in disability insurance premiums paid on behalf of Dr. Riggs. The
1994 other compensation amount for Dr. Riggs consists of $3,524 in
contributions on behalf of Dr. Riggs to a Money Purchase Pension Plan, $624
in life insurance premiums paid on behalf of Dr. Riggs, $4,620 in matching
contributions made under the Company's 401(k) Plan, and $4,500 in profit
sharing payments that the Company paid into the 401(k) Plan on Dr. Riggs's
behalf.
(3) Mr. Miller's bonus and stock option grants include an incremental bonus of
$100,000 and an incremental award of stock options to purchase 35,000 shares
of Common Stock because of Mr. Miller's successful implementation of the
Company's aggressive acquisition program in 1996. Although the Company
actually granted these incremental stock options to Mr. Miller on February
18, 1997, the Company has included them in this table because they related
to Mr. Miller's 1996 performance.
(4) The 1996 other compensation amount for Mr. Miller consists of $4,750 in
matching contributions made under the Company's 401(k) Plan and $4,500 in
profit sharing payments that the Company paid into the 401(k) Plan on Mr.
Miller's behalf. The 1995 other compensation amount for Mr. Miller consists
of $4,888 in matching contributions made under the Company's 401(k) Plan,
$4,500 in profit sharing payments that the Company paid into the 401(k) Plan
on Mr. Miller's behalf, $5,278 in health insurance premiums paid on behalf
of Mr. Miller, $957 in life insurance premiums paid on behalf of Mr. Miller,
and $1,161 in disability insurance premiums paid on behalf of Mr. Miller.
The 1994 other compensation amount for Mr. Miller consists of $3,524 in
contributions on behalf of Mr. Miller to a Money Purchase Pension Plan,
$4,049 in life insurance premiums paid on behalf of Mr. Miller, $4,594 in
matching contributions made under the Company's 401(k) Plan, and $4,500 in
profit sharing payments that the Company paid into the 401(k) Plan on Mr.
Miller's behalf.
(5) Mr. Anderson became an employee of the Company on April 1, 1996.
Accordingly, the table does not contain any information for Mr. Anderson for
1995 and 1994.
(6) The 1996 other compensation amount for Dr. Cooley consists of $4,750 in
matching contributions made under the Company's 401(k) Plan and $4,500 in
profit sharing payments that the Company paid into the 401(k) Plan on Dr.
Cooley's behalf. The 1995 other compensation amount for Dr. Cooley consists
of $4,620 in matching contributions made under the Company's 401(k) Plan,
$4,500 in profit sharing payments that the Company paid into the 401(k) Plan
on Dr. Cooley's behalf, $2,540 in health insurance premiums paid on behalf
of Dr. Cooley, $986 in life insurance premiums paid on behalf of Dr. Cooley,
and $1,161 in disability insurance premiums paid on behalf of Dr. Cooley.
The 1994 other compensation amount for Dr. Cooley consists of $3,524 in
contributions on behalf of Dr. Cooley to a Money Purchase Pension Plan, $645
in life insurance premiums paid on behalf of Dr. Cooley, $4,612 in matching
contributions made under the Company's 401(k) Plan, and $4,500 in profit
sharing payments that the Company paid into the 401(k) Plan on Dr. Cooley's
behalf.
(7) Mr. Fannon became an employee of the Company on December 30, 1996, although
he did not receive any salary or bonus with respect to 1996. Accordingly,
the table does not contain any information for Mr. Fannon for 1995 or 1994.
A-7
<PAGE> 31
Options granted in the last fiscal year. The following table sets forth
certain information regarding the grant of stock options during the year ended
December 31, 1996 to each of the Company's executive officers and the grant of
stock options to purchase 35,000 shares of Common Stock to Mr. Miller on
February 18, 1997 in partial compensation for his successful implementation of
the Company's aggressive acquisition program in 1996. Although the Company
granted these stock options to Mr. Miller in 1997, the Company has included them
in this table because they relate to Mr. Miller's 1996 performance.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES PRICE OPTION TERM
OPTIONS IN FISCAL (PER SHARE) EXPIRATION -----------------------
NAME GRANTED(#) YEAR(#) ($) DATE 5% ($) 10% ($)
---- ---------- ------------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Leonard M. Riggs, Jr., M.D..... 75,000 13.31 25.63 03-11-06 918,375 2,600,625
William F. Miller, III......... 75,000 13.31 25.63 03-11-06 918,375 2,600,625
35,000 6.21 24.44 02-18-07 470,138 1,255,188
Robert F. Anderson, II......... 50,000 8.87 26.88 04-01-06 549,750 1,671,250
20,000 3.55 20.25 11-12-06 352,400 801,000
Steven W. Cooley, M.D.,
F.A.C.E.P.................... 45,000 7.99 25.63 03-11-06 551,025 1,560,379
S. Kent Fannon................. 50,000 8.87 23.00 12-30-06 743,500 1,865,000
</TABLE>
- ---------------
(1) The total stock options granted used to compute this percentage includes:
(a) the stock options granted to the participants under the Stock Option
Plan who are physicians under contract with either a subsidiary of the
Company or a PA (as defined in the section entitled "Certain Transactions"),
and (b) the stock options to purchase 35,000 shares of Common Stock granted
to Mr. Miller on February 18, 1997 in partial compensation for his
successful implementation of the Company's aggressive acquisition program in
1996.
Options exercised and held. The following table sets forth information
regarding the exercise of stock options during the year ended December 31, 1996
and the number and value of options held as of December 31, 1996 by each of the
Company's executive officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS IN-THE MONEY OPTIONS
ACQUIRED ON VALUE AT FISCAL YEAR END(#) AT FISCAL YEAR END($)
NAME EXERCISE(#) REALIZED($) (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
---- ----------- ----------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Leonard M. Riggs, Jr.,
M.D........................ 0 0 71,667/125,833 682,466/718,099
William F. Miller, III....... 22,500 285,000 57,500/130,000(1) 600,735/794,430(1)
Robert F. Anderson, II....... 0 0 14,000/ 56,000 12,000/ 48,000
Steven W. Cooley, M.D.,
F.A.C.E.P.................. 8,500 157,681 12,500/ 55,500 42,875/241,431
S. Kent Fannon............... 0 0 10,000/ 40,000 2,500/ 10,000
</TABLE>
- ---------------
(1) These numbers exclude the stock options to purchase 35,000 shares of Common
Stock granted to Mr. Miller on February 18, 1997 in partial compensation for
his successful implementation of the Company's aggressive acquisition
program in 1996.
Employment and severance agreements. In connection with the Recapitalization
in February 1992, Dr. Riggs and Mr. Miller each entered into a five year
employment agreement with the Company. Although the five year terms under these
agreements have expired, they continue to govern the terms of the Company's
employment arrangements with each of Dr. Riggs and Mr. Miller. The parties
amended these employment
A-8
<PAGE> 32
agreements in December 1993 to increase the 1994 base salaries under them. The
amendment to Dr. Riggs's employment agreement increased his 1994 base salary to
$265,000. The amendment to Mr. Miller's employment agreement increased his 1994
base salary to $245,000. After 1994, the base salaries under both of these
employment agreements increase annually by the greater of the increase in the
Consumer Price Index during the preceding year or 5%.
In addition, under their employment agreements, Dr. Riggs and Mr. Miller
are each entitled to an annual bonus of not less than $100,000 if the Company
achieves certain earnings targets for internal growth and profitability. If the
Company fails to achieve these targets, Dr. Riggs and Mr. Miller are entitled to
receive pro rata portions of their bonuses if the Company achieves at least 80%
of its operating income target.
Under Dr. Riggs's and Mr. Miller's employment agreements, if the Company
terminates such individual without cause or he resigns because of the Company's
breach of his employment agreement, during the year immediately after such
termination or resignation the Company must pay him a monthly amount equal to
the aggregate of his monthly salary and one-twelfth of his estimated bonus.
During this period, the Company also must continue to provide such individual
and his dependents with the medical, life, and disability insurance coverage in
effect at the time of such termination or resignation.
During the year ended December 31, 1996, the parties amended and restated
these employment agreements. Dr. Riggs's and Mr. Miller's amended and restated
agreements added a change in control provision that provides that if the Company
terminates him or he resigns for good reason during the two years immediately
after a change in control of the Company, the Company will pay him a lump sum
equal to twice the aggregate of his annual salary and average annual bonus. The
Company will increase this amount for any excise tax that Dr. Riggs or Mr.
Miller must pay on such payment under the "golden parachute" provisions of the
Code. In addition, during the two years immediately after such termination or
resignation the Company must continue to provide such individual with the
health, dental, life, and disability benefits that the Company previously
provided to him. Finally, following such termination or resignation such
individual's vested stock options will remain exercisable for at least 30 days.
Under each amended and restated agreement the Company provides equivalent
benefits to Dr. Riggs and Mr. Miller if the Company terminates him without cause
or he resigns for good reason within one year after a potential change in
control. Any payments to Dr. Riggs or Mr. Miller because of a change in control
or potential change in control will be offset by any other severance obligations
provided to him under his respective agreement.
During the year ended December 31, 1996, the Company entered into a
severance agreement with Mr. Anderson. This agreement provides that the Company
will pay Mr. Anderson severance of $190,000 if within 180 days following a
change in control the Company terminates him without cause or he resigns for
good reason. In addition, for up to one year after such termination or
resignation the Company will continue to provide Mr. Anderson with the
disability, health, and life insurance benefits provided to him at the time of
such termination or resignation.
A-9
<PAGE> 33
COMMON STOCK OWNERSHIP
Principal stockholders. The following table sets forth the persons and
groups who beneficially owned more than 5% of the outstanding shares of Common
Stock as of July 31, 1997. The Company compiled this information from its stock
records, the Schedules 13D and 13G sent to the Company, and other information
available to the Company. Unless otherwise indicated, these persons and groups
possess sole voting and investment power with respect to the shares of Common
Stock that they beneficially own.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS NUMBER OF SHARES OUTSTANDING
OF BENEFICIAL OWNER BENEFICIALLY OWNED SHARES
------------------- ------------------ -------------
<S> <C> <C>
William F. Miller, III...................................... 448,500(1) 5.35%
c/o EmCare Holdings Inc.
1717 Main Street, Suite 5200
Dallas, Texas 75201
Putnam Investments, Inc..................................... 1,010,000 12.20%
One Post Office Square
Boston, Massachusetts 02109
Leonard M. Riggs, Jr., M.D.................................. 957,866(2) 11.41%
c/o EmCare Holdings Inc.
1717 Main Street, Suite 5200
Dallas, Texas 75201
Warburg, Pincus Counselors, Inc............................. 1,162,058 14.04%
466 Lexington Avenue
New York, New York 10017
</TABLE>
- ---------------
(1) These shares of Common Stock include: (a) 107,500 shares issuable to Mr.
Miller upon the exercise of stock options that are vested or will vest
within 60 days after July 31, 1997, (b) 10,000 shares owned by The Abby
Margaret Miller 1994 Descendants Trust, for which Mr. Miller serves as the
trustee, (c) 10,000 shares owned by The Joshua William Miller 1994
Descendants Trust for which Mr. Miller serves as the trustee, (d) 500 shares
owned by Abby M. Miller, Mr. Miller's minor daughter, and (e) 500 shares
owned by Joshua W. Miller, Mr. Miller's minor son. This amount does not
include 180,000 stock options that are not currently exercisable within 60
days of July 31, 1997, the vesting of which options will accelerate upon
consummation of the Merger.
(2) These shares of Common Stock include: (a) 114,667 shares issuable to Dr.
Riggs upon the exercise of stock options that are vested or will vest within
60 days after July 31, 1997, (b) 94,350 shares owned by the Riggs Family
Limited Partnership, a partnership in which Dr. Riggs and trusts established
for Dr. Riggs's children are the partners, (c) 166,917 shares owned by a
voting trust established for Peggy A. Riggs, Dr. Riggs's wife, for which Dr.
Riggs serves as the trustee and (d) 260,000 shares owned by the Riggs 1997
Charitable Remainder Trust for which Dr. Riggs serves as the trustee. This
amount does not include 147,833 stock options that are not currently
exercisable within 60 days of the July 31, 1997, the vesting of which
options will accelerate upon consummation of the Merger.
Directors and executive officers. The following table sets forth the number
of shares of Common Stock beneficially owned as of July 31, 1997 by each
director of the Company, each executive officer of the Company, and all
directors and executive officers of the Company as a group. The Company obtained
this
A-10
<PAGE> 34
information from its directors and executive officers. Unless otherwise
indicated, these individuals possess sole voting and investment power with
respect to the shares that they beneficially own.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENTAGE OF
BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES
------------------- ------------------ ------------------
<S> <C> <C>
Robert F. Anderson, II...................................... 28,000 *
S. Kent Fannon.............................................. 10,000 *
Terry Hartshorn............................................. 7,000 *
James T. Kelly.............................................. 15,500 *
William F. Miller, III...................................... 448,500 5.35%
Andrew M. Paul.............................................. 17,175 *
Leonard M. Riggs, Jr., M.D.................................. 957,866 11.41%
Richard H. Stowe............................................ 53,201 *
All directors and executive officers as a group (8
individuals).............................................. 1,537,242 17.95%
</TABLE>
- ---------------
* Less than 1%.
(1) The shares of Common Stock owned beneficially by the following individuals
include stock options that are vested or will vest within 60 days after July
31, 1997 for the number of shares following their name: Mr.
Anderson -- 28,000 shares, Mr. Fannon -- 10,000 shares, Mr.
Hartshorn -- 7,000 shares, Mr. Kelly -- 11,500 shares, Mr. Miller -- 107,500
shares, Mr. Paul -- 4,000 shares, Dr. Riggs -- 114,667 shares, and Mr.
Stowe -- 4,000 shares, and all directors and executive officers as a
group -- 286,667 shares. These amounts do not include stock options that are
not currently exercisable within 60 days of July 31, 1997, the vesting of
which options will accelerate upon consummation of the Merger. The number of
such unvested options follow the name of the following individuals: Mr.
Anderson -- 62,000 shares, Mr. Miller -- 180,000 shares, Dr.
Riggs -- 147,833 shares, Mr. Fannon -- 40,000 shares, Mr. Hartshorn -- 6,500
shares, Mr. Kelly -- 2,000 shares, Mr. Paul -- 2,000 shares, Mr.
Stowe -- 2,000 shares, and all directors and officers as a group -- 442,333
shares.
(2) See the preceding table for a description of the beneficial ownership of the
shares of Common Stock by Mr. Miller and Dr. Riggs. In connection with the
Recapitalization, the Company granted certain registration rights with
respect to the transfer of shares of Common Stock to Mr. Miller, Dr. Riggs,
and certain other persons.
CERTAIN TRANSACTIONS
In certain states the Company's services are provided in conjunction with
professional associations and corporations owned by Dr. Riggs or another
representative of the Company who is a physician (the "PAs"). Under this
arrangement, a PA enters into a management agreement with the hospital and
engages physicians to provide the necessary medical practice coverage. The
Company then provides the non-medical portion of the service under this
arrangement pursuant to a management agreement between a Company subsidiary and
the PA. For the fiscal year ended December 31, 1996, the PAs paid approximately
$33,211,000 to the Company's subsidiaries under these management agreements,
which approximated the excess of the PAs' revenues over their expenses. Dr.
Riggs and such other representatives have generally arranged for the transfer of
the capital stock of the PAs to other representatives of the Company who are
medical doctors if they die or become incapacitated.
For operational purposes, a subsidiary of the Company has entered into a
revolving credit agreement with each PA that permits such PA to borrow up to
$1,000,000. These agreements restrict operations of the PAs and prohibit them
from making any distributions to Dr. Riggs or the Company's other
representatives. As of August 1, 1997, no PA had borrowed any amount under these
agreements.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Reporting Persons
to file with the Commission initial reports of Common Stock ownership and
reports of changes in such ownership. A
A-11
<PAGE> 35
Reporting Person must file a Form 3 -- Initial Statement of Beneficial Ownership
of Securities within 10 days after such person becomes a Reporting Person. A
Reporting Person must file a Form 4 -- Statement of Changes of Beneficial
Ownership of Securities within 10 days after any month in which such person's
beneficial ownership of securities changes, except for certain changes exempt
from the reporting requirements of Form 4. Such exempt changes include stock
options granted under a plan qualifying under Rule 16b-3. A Reporting Person
must file a Form 5 -- Annual Statement of Beneficial Ownership of Securities
within 45 days after the end of the issuer's fiscal year to report any changes
in ownership during such year not reported on a Form 4, including changes exempt
from the reporting requirements of Form 4.
The Commission's rules require the Company's Reporting Persons to furnish
the Company with copies of all Section 16(a) reports that they file. Based
solely upon a review of the copies of such reports furnished to the Company and
written representations that no other reports were required with respect to the
year ended December 31, 1996, the Company believes that the Reporting Persons
have complied with all applicable Section 16(a) filing requirements for 1996 on
a timely basis, except that Mr. Anderson filed his Form 3 when he became an
executive officer of the Company and his Form 5 for 1996 late, Andrew G. Buck,
the Company's Chief Accounting Officer, filed his Form 5 for 1996 late, Dr.
Cooley filed his Form 5 for 1996 late, and Mr. Fannon filed his Form 3 when he
became an executive officer of the Company and his Form 5 for 1996 late.
A-12
<PAGE> 36
ANNEX II
[DONALDSON, LUFKIN & JENRETTE LETTERHEAD]
July 28, 1997
Board of Directors
EmCare Holdings Inc.
1717 Main Street
Suite 5200
Dallas, TX 75201
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the stockholders of EmCare Holdings Inc. (the "Company") of the
consideration to be received by such stockholders pursuant to the terms of the
Agreement and Plan of Merger, dated as of July 29, 1997 (the "Agreement"), by
and between Laidlaw, Inc. ("Laidlaw"), the Company and EHI Acquisition Corp., a
wholly owned subsidiary of Laidlaw ("Acquisition Subsidiary"), pursuant to which
Acquisition Subsidiary will be merged (the "Merger") with and into the Company.
Pursuant to the Agreement, Laidlaw will commence a tender offer (the
"Tender Offer") for any and all outstanding shares of the Company's common stock
at a price of $38.00 per share. The Tender Offer is to be followed by the Merger
in which the shares of all shareholders who did not tender would be converted
into the right to receive $38.00 per share in cash.
In arriving at our opinion, we have reviewed the draft dated July 23, 1997,
of the Agreement and the exhibits thereto. We also have reviewed financial and
other information that was publicly available or furnished to us by the Company
including information provided during discussions with management. Included in
the information provided during discussions with management were certain
financial projections of the Company for the period beginning December 31, 1997
and ending December 31, 2002, prepared by the management of the Company. In
addition, we have compared certain financial and securities data of the Company
with various other companies whose securities are traded in public markets,
reviewed the historical stock prices and trading volumes of the common stock of
the Company, reviewed prices and premiums paid in certain other business
combinations and conducted such other financial studies, analyses and
investigations as we deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company or its
representatives, or that was otherwise reviewed by us. With respect to the
financial projections supplied to us, we have assumed that they have been
reasonably prepared on the basis reflecting the best currently available
estimates and judgments of the management of the Company as to the future
operating and financial performance of the Company. We have not assumed any
responsibility for making an independent evaluation of any assets or liabilities
or for making any independent verification of any of the information reviewed by
us.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. Our opinion does not constitute a
recommendation to any stockholder as to whether such stockholder should tender
any shares of common stock of the Company into the Tender Offer.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. DLJ has performed investment
banking and other services for the Company in the past and has been compensated
for such services.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be received by the stockholders of the
Company pursuant to the Tender Offer and the Merger is fair to such stockholders
from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN &
JENRETTE SECURITIES CORPORATION
By: /s/ MICHAEL R. NICOLAIS
----------------------------------
Michael R. Nicolais
Managing Director
<PAGE> 37
EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit 99.1 Agreement and Plan of Merger, dated as of July 29, 1997,
among the Parent, the Purchaser and the Company.
Exhibit 99.2 Press release jointly issued by the Company and Parent,
dated July 30, 1997.
Exhibit 99.3 The Company's Proxy Statement, dated April 4, 1997.
Exhibit 99.4 Form of Employment Agreement between EmCare Holdings Inc.
and Leonard M. Riggs, Jr., M.D.
Exhibit 99.5 Form of Employment Agreement between EmCare Holdings Inc.
and William F. Miller, III.
Exhibit 99.6 Agreement, dated July 29, 1997, among Laidlaw Inc., EHI
Acquisition Corp., Leonard M. Riggs, Jr., M.D., and William
F. Miller, III.
Exhibit 99.7 Stock Purchase Agreement, dated July 29, 1997, between
Laidlaw Inc., Leonard M. Riggs, Jr., M.D., and William F.
Miller, III.
Exhibit 99.8 Confidentiality Agreement, dated May 21, 1997, by and
between American Medical Response, Inc. and the Company.
Exhibit 99.9 Letter to stockholders of the Company, dated August 5, 1997.
Exhibit 99.10 Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation, dated July 28, 1997 (included as Annex II to
this Statement).
</TABLE>
<PAGE> 1
EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EMCARE HOLDINGS INC.
AND
LAIDLAW INC. (THE "PARENT")
EHI ACQUISITION CORP. ("ACQUISITION")
DATED
JULY 29, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1. THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1. Commencement. . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.2. Filing Offer Documents. . . . . . . . . . . . . . . . . . . 2
1.2. Company Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2.1. Board Approval. . . . . . . . . . . . . . . . . . . . . . . 3
1.2.2. Schedule 14D-9. . . . . . . . . . . . . . . . . . . . . . . 3
1.2.3. Dissemination of the Offer. . . . . . . . . . . . . . . . . 4
1.3. Board of Directors and Committees; Section 14(f). . . . . . . . . . . 4
1.3.1. Board Representation. . . . . . . . . . . . . . . . . . . . 4
1.3.2. Compliance with Section 14(f). . . . . . . . . . . . . . . 5
1.3.3. Action by Disinterested Directors. . . . . . . . . . . . . 5
ARTICLE 2. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1. The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1.1. Effective Time. . . . . . . . . . . . . . . . . . . . . . . 5
2.1.2. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2. Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3. Effect of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4. Certificate of Incorporation; By-Laws. . . . . . . . . . . . . . . . . 6
2.4.1. Certificate of Incorporation. . . . . . . . . . . . . . . . 6
2.4.2. By-Laws. . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5. Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . 7
2.6. Effect on Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . 7
2.6.1. Conversion of Securities. . . . . . . . . . . . . . . . . . 7
2.6.2. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . 7
2.6.3. Stock Options. . . . . . . . . . . . . . . . . . . . . . . 7
2.6.4. Capital Stock of Acquisition. . . . . . . . . . . . . . . . 8
2.6.5. Dissenting Shares. . . . . . . . . . . . . . . . . . . . . 8
2.7. Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . . . 8
2.7.1. Exchange Agent and Procedures. . . . . . . . . . . . . . . 8
2.7.2. Consideration. . . . . . . . . . . . . . . . . . . . . . . 9
2.7.3. Investment of Merger Consideration. . . . . . . . . . . . . 9
2.7.4. Termination of Duties. . . . . . . . . . . . . . . . . . . 9
2.7.5. No Liability. . . . . . . . . . . . . . . . . . . . . . . . 9
2.7.6. Withholding Rights. . . . . . . . . . . . . . . . . . . . . 9
2.8. No Further Ownership Rights in Company Common Stock. . . . . . . . . . 10
2.9. Lost, Stolen or Destroyed Certificates. . . . . . . . . . . . . . . . 10
2.10. Taking of Necessary Action; Further Action. . . . . . . . . . . . . . 10
2.11. Stockholders' Meeting. . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1. Organization, Existence and Good Standing of the Company. . . . . . . 11
3.2. Organization, Existence and Good Standing of Subsidiaries and PAs. . . 12
3.3. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4. Authority Relative to this Agreement. . . . . . . . . . . . . . . . . 13
3.5. No Conflict; Required Filings and Consents. . . . . . . . . . . . . . 14
3.6. Compliance; Permits. . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.7. SEC Filings; Financial Statements. . . . . . . . . . . . . . . . . . . 15
3.8. Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . 16
3.9. No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . 16
3.10. Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . . . 16
3.11. Employee Benefit Plans, Employment Agreements. . . . . . . . . . . . 17
3.12. Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.13. Restrictions on Business Activities. . . . . . . . . . . . . . . . . 18
3.14. Title to Property. . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.15. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.16. Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . 19
3.17. Interested Party Transactions. . . . . . . . . . . . . . . . . . . . 20
3.18. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.19. Healthcare Regulatory Compliance. . . . . . . . . . . . . . . . . . . 20
3.20. Opinion of Financial Advisor. . . . . . . . . . . . . . . . . . . . . 20
3.21. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.22. Section 203 of the Delaware Law Not Applicable. . . . . . . . . . . . 20
3.23. Schedule 14D-9. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION . . . . . . . . . . . 21
4.1. Organization, Existence and Good Standing of Parent; Acquisition. . . 21
4.2. Authority Relative to this Agreement. . . . . . . . . . . . . . . . . 22
4.3. No Conflict, Required Filings and Consents. . . . . . . . . . . . . . 22
4.4. Offer Documents; Schedule 14D-9; Proxy Statement. . . . . . . . . . . 23
4.5. No Prior Activities; Financing. . . . . . . . . . . . . . . . . . . . 23
ARTICLE 5. CONDUCT OF BUSINESS PENDING THE MERGER . . . . . . . . . . . . . . . . . . . . 23
5.1. Conduct of Business by the Company Pending the Merger. . . . . . . . . 24
5.2. No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 6. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.1. HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2. Access to Information; Confidentiality. . . . . . . . . . . . . . . . 27
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
6.3. Indemnification and Insurance. . . . . . . . . . . . . . . . . . . . . 28
6.4. Notification of Certain Matters. . . . . . . . . . . . . . . . . . . . 29
6.5. Further Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.6. Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 7. CONDITIONS TO THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.1. Conditions to Obligation of Each Party to Effect the Merger. . . . . . 30
7.1.1. Purchase of Shares. . . . . . . . . . . . . . . . . . . . . 30
7.1.2. HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.1.3. No Injunctions or Restraints; Illegality. . . . . . . . . . 30
7.1.4. Governmental Actions. . . . . . . . . . . . . . . . . . . . 30
ARTICLE 8. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.1. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.2. Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 9. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.1. Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.2. Effectiveness of Representations, Warranties and Agreements. . . . . . 32
9.3. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.4. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.5. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.6. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.7. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.8. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.9. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.10. Assignment; Guarantee of Acquisition Obligations. . . . . . . . . . . 35
9.11. Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . . . 36
9.12. Failure or Indulgence Not Waiver; Remedies Cumulative. . . . . . . . 36
9.13. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.14. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.15. Jurisdiction; Consent to Service of Process. . . . . . . . . . . . . 36
9.15.1. Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . 36
9.15.2. Venue; Inconvenient Forum. . . . . . . . . . . . . . . . . 37
9.15.3. Service of Process. . . . . . . . . . . . . . . . . . . . 37
ANNEX A 1
</TABLE>
iii
<PAGE> 5
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1997 Company Balance Sheet ................................................ 14
Acquisition ............................................................... 1
Affiliates ................................................................ 30
Antitrust Division ........................................................ 24
Associated PA ............................................................. 10
Beneficial Owner .......................................................... 30
Blue Sky Laws ............................................................. 13
Board ..................................................................... 1
Business Combination ...................................................... 24
Business Combination Proposal ............................................. 24
Business Day .............................................................. 31
Certificate of Merger ..................................................... 5
Certificates .............................................................. 7
Code ...................................................................... 8
Common Stock .............................................................. 1
Company ................................................................... 1
Company Common Stock ...................................................... 1
Company Disclosure Schedule ............................................... 10
Company Employee Plans .................................................... 15
Company Permits ........................................................... 13
Company SEC Reports ....................................................... 14
Company Stock Plan ........................................................ 6
Company Subsidiary ........................................................ 10
Confidentiality Letter .................................................... 25
Control ................................................................... 31
Delaware Law .............................................................. 1
Dissenting Shares ......................................................... 7
DLJ ....................................................................... 3
dollars ................................................................... 30
Effective Time ............................................................ 5
ERISA ..................................................................... 15
ERISA Affiliate ........................................................... 15
Exchange Act .............................................................. 4
FTC ....................................................................... 24
HSR Act ................................................................... 13
Indemnified Parties ....................................................... 25
IRS ....................................................................... 15
Material Adverse Effect ................................................... 31
Material Contracts ........................................................ 12
</TABLE>
i
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C>
Merger .................................................................... 1
Merger Consideration ...................................................... 6
Minimum Condition ......................................................... 2
Offer ..................................................................... 1
Offer Documents ........................................................... 2
Parent .................................................................... 1
Parent Subsidiary ......................................................... 19
Paying Agent .............................................................. 7
PBGC ...................................................................... 15
Per Share Amount .......................................................... 1
Permitted Acquisitions .................................................... 22
Person .................................................................... 31
Proxy Statement ........................................................... 18
Schedule 14D-9 ............................................................ 3
SEC ....................................................................... 2
Securities Act ............................................................ 13
Shares .................................................................... 1
Stock Option .............................................................. 6
Stockholders' Meeting ..................................................... 9
Subsidiary ................................................................ 31
Superior Proposal ......................................................... 24
Surviving Corporation ..................................................... 5
Tax ....................................................................... 17
Tax Returns ............................................................... 17
Taxes ..................................................................... 17
Third Party ............................................................... 23
</TABLE>
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<PAGE> 7
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 29, 1997, is among
EmCare Holdings Inc., a Delaware corporation (the "Company"), Laidlaw Inc., a
Canadian corporation ("Parent") and EHI Acquisition Corp., 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 $.01 per share, of the Company (the "Common Stock" or "Company
Common Stock") for a cash amount of $38.00 per Share, net to the seller in cash
(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 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:
ARTICLE 1.
THE OFFER
1.1. THE OFFER.
1.1.1. 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 only to (A)
the condition that a number of Shares representing not less than
fifty-one percent (51%) of the
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Company's outstanding voting power (assuming the exercise of all
outstanding options and rights to purchase shares of Common Stock),
shall have been validly tendered and not withdrawn prior to the
expiration date of the Offer (the "Minimum Condition"), and (B) 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 and the conditions set forth in
clause (ii) and (iii)(c) of Annex A 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, imposes conditions to the Offer
in addition to those set forth in Annex A hereto or amends or modifies
such conditions, amends any other terms or conditions of the Offer, or
that is otherwise adverse to the holders of Shares. 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 fifth business day following the date on which all
conditions to the Offer shall first have been satisfied or waived,
provided that if Acquisition so extends the Offer, its obligation to
purchase the Shares tendered pursuant to the Offer shall be
unconditional. 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
October 31, 1997 to provide time to satisfy such conditions.
1.1.2. 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
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<PAGE> 9
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.
1.2. COMPANY ACTION.
1.2.1. 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 July 28, 1997, unanimously (i)
determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, are 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 (provided, however, that such recommendation
may be modified or withdrawn as contemplated by SECTION 5.2. or if the
Board determines, in good faith and after consultation with
independent counsel, that such action is necessary to properly
discharge its fiduciary duties). The Company further represents and
warrants that Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ") has delivered to the Board its opinion to the effect that, as
of the date of the Board's approval 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.
1.2.2. 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"). 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) and SECTION 5.2., at all times contain the
determinations, approvals and recommendations described in SECTION
1.2.1.. 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.
1.2.3. 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
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<PAGE> 10
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.
1.3. BOARD OF DIRECTORS AND COMMITTEES; SECTION 14(f).
1.3.1. 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; provided that at all times there shall be at least
two directors who are not designees of Acquisition and the number of
directors shall not be more than 10 nor less than six. The Company
shall, upon request by Acquisition, subject to the provisions of
SECTION 1.3.2., promptly either increase the size of the Board, to the
extent permitted by its Certificate of Incorporation and/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 1.3.2., 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.
1.3.2. 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.
1.3.3. 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
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<PAGE> 11
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 (or the concurrence of the director, if there is only one
remaining) then in office who are not designees of Acquisition or
employees of the Company.
ARTICLE 2.
THE MERGER
2.1. THE MERGER.
2.1.1. 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 surviving corporation after the Merger
is hereinafter sometimes referred to as the "Surviving Corporation."
2.1.2. 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 SECTION 7.1., 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 SECTION 7.1., at the offices of Gibson, Dunn &
Crutcher LLP, 1717 Main Street, suite 5400 Dallas, Texas 75201, unless
another date, time or place is agreed to in writing by the parties
hereto.
2.2. EFFECTIVE TIME. As promptly as practicable (and in any event
within two business days) after the satisfaction or waiver of the conditions
set forth in ARTICLE 7., 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").
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.
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<PAGE> 12
2.4. CERTIFICATE OF INCORPORATION; BY-LAWS.
2.4.1. CERTIFICATE OF INCORPORATION. 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 of the Certificate of
Incorporation of Acquisition shall be amended to change its name to
"EmCare Holdings Inc.".
2.4.2. 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.
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 the
Company shall be the initial officers of the Surviving Corporation, in each
case until their respective successors are duly elected or appointed and
qualified.
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:
2.6.1. CONVERSION OF SECURITIES. Each Share issued and
outstanding immediately prior to the Effective Time (excluding any
Shares to be canceled pursuant to SECTION 2.6.2. and Dissenting Shares
as defined in SECTION 2.6.5.) shall be converted into the right to
receive the Per Share Amount (the "Merger Consideration").
2.6.2. 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 cease to be outstanding, be canceled
and retired without payment of any consideration therefor and cease to
exist.
2.6.3. STOCK OPTIONS. At the Effective Time, each outstanding
option to purchase Company Common Stock (a "Stock Option") granted
under the Company's Amended and Restated Stock Option and Restricted
Stock Purchase Plan (the "Company Stock Plan") or pursuant to any
other stock option plan or agreement entered into by the Company with
any person who is or was employed by or performing services for the
Company, or any Company Subsidiary or Associated PA listed on SECTION
3.3. of the Company Disclosure Schedule, whether or not then vested or
exercisable, shall vest and become exercisable for the Merger
Consideration, 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
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<PAGE> 13
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.
2.6.4. CAPITAL STOCK OF ACQUISITION. The shares of common
stock, $.01 par value, of Acquisition issued and outstanding
immediately prior to the Effective Time shall be converted into and
exchanged for 8,250,546 validly issued, fully paid and nonassessable
shares of common stock, $.01 par value, of the Surviving Corporation.
2.6.5. DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, in the event Dissenter's Rights are
available in connection with the Merger pursuant to Section 262 of the
Delaware Law, Shares, if any, of Company Common Stock that are issued
and outstanding immediately prior to the Effective Time that are held
by stockholders who have not voted such shares in favor of the Merger
and who shall have delivered a written demand for appraisal of such
shares in the manner provided in Section 262 the Delaware Law (the
"Dissenting Shares") shall not be converted into or be exchangeable
for the right to receive the consideration provided in SECTION 2.6.1.
unless and until such holder shall have failed to perfect or shall
have effectively withdrawn or lost his right to appraisal under the
Delaware Law. If such holder shall have to failed to perfect or shall
have effectively withdrawn or lost such right, his shares of Company
Common Stock shall thereupon be deemed to have been converted into and
to have become exchangeable for, at the Effective Time, the right to
receive the consideration provided in Section 2.6.1. without any
interest thereon.
2.7. EXCHANGE OF CERTIFICATES.
2.7.1. 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 2.6.1.. 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 or Dissenting Shares) 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
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<PAGE> 14
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.
2.7.2. CONSIDERATION. At the Effective Time, 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 2.6.1.
2.7.3. 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 Ratings Group, or certificates of deposit issued by
a commercial bank having at least $25,000,000,000 in assets.
2.7.4. 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.
2.7.5. 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.
2.7.6. 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.
2.8. 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
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<PAGE> 15
shall be canceled and exchanged as provided in this ARTICLE 2. At the Effective
Time, the stock transfer books of the Company shall be closed.
2.9. 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 as may be required pursuant to SECTION 2.6.; provided, however,
that Parent may, in its discretion and as a condition precedent to the delivery
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.
2.10. TAKING OF NECESSARY ACTION; FURTHER ACTION. If at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of 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.
2.11. 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) or as contemplated by SECTION
5.2., as soon as practicable following the consummation of the Offer:
(i) duly call, give notice of, convene and hold a 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
3.23.) 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 (provided, however, that such
recommendation may be modified or withdrawn as provided in SECTION
5.2. or if the Board determines in good faith, and after consultation
with independent counsel, that such action is necessary to properly
discharge its fiduciary duties); and
(iii) use its reasonable 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 approvals by
its stockholders of this Agreement and the transactions contemplated
hereby.
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At such meeting, Parent and Acquisition will vote all Shares owned by them in
favor of this Agreement and the transactions contemplated hereby.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the 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 the Parent that is
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this ARTICLE 3. (the "Company Disclosure Schedule"):
3.1. ORGANIZATION, EXISTENCE AND GOOD STANDING OF THE COMPANY. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has all necessary
corporate power and authority to own its properties and assets and to carry on
its business as presently conducted. The Company is qualified to do business
and is in good standing in each jurisdiction where the nature or character of
the property owned, leased or operated by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure
to be so qualified or be in good standing would not have a Company Material
Adverse Effect. The Company has delivered to Parent a complete and correct copy
of its Certificate of Incorporation and By-Laws as most recently restated and
subsequently amended to the date hereof.
3.2. ORGANIZATION, EXISTENCE AND GOOD STANDING OF SUBSIDIARIES AND
PAS.
(a) SECTION 3.2(a) to the Company Disclosure Schedule sets forth a
list of all subsidiaries of the Company (a "Company Subsidiary"), the
jurisdiction of incorporation or organization, as applicable, of each Company
Subsidiary, the type of each Company Subsidiary, the percentage of the
Company's and Company Subsidiaries' ownership of the outstanding voting stock
of each such corporate Company Subsidiary, the authorized and outstanding
capital stock of each such corporate Company Subsidiary, and the type and
percentage of the Company's and Company Subsidiaries' ownership interest in
each other Company Subsidiary. Each Company Subsidiary is a corporation,
business trust, limited partnership or limited liability company (as specified
on Section 3.2(a) to the Company Disclosure Schedule) duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, as applicable. Each Company Subsidiary has all
necessary entity power and authority to own its properties and assets and to
carry on its business as presently conducted. Each Company Subsidiary is
qualified to do business and is in good standing in each jurisdiction where the
nature or character of the property owned, leased or operated by it or the
nature of the business transacted by it makes such qualification necessary,
except where the failure to be so qualified or be in good standing would not
have a Company Material Adverse Effect.
(b) Attached as SECTION 3.2(b) to the Company Disclosure Schedule is a
list of all professional corporations or professional associations engaging in
the practice of medicine (A) which are associated with the Company and (B) as
to which the Company or any Company Subsidiary has entered into an
Administrative Management Agreement (each an "Associated PA")
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and the jurisdiction of association or incorporation of each Associated PA
listed thereon. Each Associated PA is a professional association or
professional corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its association or incorporation. Each
Associated PA has all necessary corporate or association power and authority to
own its property and assets and to carry on its business as presently
conducted. Each Associated PA is qualified to do business and is in good
standing in each jurisdiction where the nature or character of the property
owned, leased or operated by it or the nature of the business transacted by it
makes such qualification necessary, except where the failure to be so qualified
or be in good standing would not have a Company Material Adverse Effect.
(c) Except for the Company Subsidiaries and as set forth in SECTION
3.2.(c) to the Company Disclosure Schedule, the Company does not, directly or
indirectly, own any equity interest in any other corporation, association,
partnership, joint venture, business organization or limited liability company
or other entity, with respect to which interest the Company or any Company
Subsidiary 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 voting securities of such company.
(d) For the purposes of the representations and warranties of the
Company set forth in this Agreement, any act, event, or state of facts
affecting any Associated PA, which act, event, or state of facts has or would
materially adversely affect the Company or a Company Subsidiary, shall be
deemed an act, event, or state of facts affecting the Company or Company
Subsidiary to the extent of such materially adverse effect.
3.3. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 25,000,000
shares of Company Common Stock and 5,000,000 shares of preferred stock, $.01
par value per share. As of June 30, 1997: (i) 8,250,546 shares of Company
Common Stock were issued and outstanding, all of which are validly issued,
fully paid and nonassessable (except as set forth in SECTION 3.3. of the
Company Disclosure Schedule) and none of which shares were held in treasury,
and no shares of preferred stock were issued and outstanding; (ii) 1,422,836
shares of Company Common Stock were reserved for future issuance pursuant to
outstanding stock options; and (iii) 37,570 shares of Company Common Stock were
reserved for future issuance in connection with purchase price payments
(including deferred purchase price payments) in conjunction with acquisitions.
Except as set forth in Section 3.2. and 3.3. of the Company Disclosure
Schedule, all of the outstanding shares of capital stock, or other ownership
interest, of each Company Subsidiary is validly issued, fully paid and
nonassessable, and is owned by the Company or another Company Subsidiary, free
and clear of all security interests, liens, claims, pledges, charges or other
encumbrances of any nature whatsoever. Except as set forth in SECTION 3.2. and
SECTION 3.3. of the Company Disclosure Schedule, (A) all of the outstanding
shares of capital stock of each Associated PA are validly issued, fully paid
and non-assessable, and (B) are owned by the holders and in the percentages set
forth in SECTION 3.2. of the Company Disclosure Schedule, and, except as set
forth in SECTION 3.3(a) of the Company Disclosure Schedule, free and clear of
all security interests, liens, claims, pledges, charges or other encumbrances
of any nature whatsoever.
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(b) SECTION 3.3.(b) of the Company Disclosure Schedule sets forth a
true and complete list of all outstanding rights to purchase Company Common
Stock, the name of each holder thereof, the number of shares purchasable
thereunder and the per share exercise or purchase price of each right. Except
as set forth in SECTION 3.3. of the Company Disclosure Schedule, there are no
options, warrants or other similar rights, agreements, arrangements or
commitments of any character obligating the Company or any Company Subsidiary
to issue or sell any shares of capital stock of, or other equity interests in,
the Company or any Company Subsidiary. Except as set forth in SECTION 3.3.(B)
of the Company Disclosure Schedule, there are no obligations, contingent or
otherwise, of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or the capital stock or
other equity interest of any Company Subsidiary or to make any investment (in
the form of a loan, capital contribution or otherwise) in any Company
Subsidiary or any other entity.
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 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).
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.
3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) SECTION 3.5.(a) of the Company Disclosure Schedule sets forth a
list of all agreements to which the Company or any Company Subsidiary 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 would have a Company Material Adverse
Effect; 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 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 Company Subsidiary 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 rights of the Company
or any Company Subsidiary or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation
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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 Company Subsidiary
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any Company Subsidiary is a party or by which the Company or any
Company Subsidiary 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 Company 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 of 1933, as amended
(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 Company Material Adverse Effect.
3.6. COMPLIANCE; PERMITS.
(a) Except as disclosed in SECTION 3.6.(a) of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary 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 Company Subsidiary or by which its
or any of their respective properties is bound or affected or (ii) any Material
Contract, except in each case for any such conflicts, defaults or violations
which would not have a Company Material Adverse Effect.
(b) Except as disclosed in SECTION 3.6.(b) of the Company Disclosure
Schedule, the Company and each Company Subsidiary holds all permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from governmental authorities that are material to the operation of the
business of the Company and the Company Subsidiaries taken as a whole as it is
now being conducted (collectively, the "Company Permits"), except where the
failure to hold such Company Permits would not have a Company Material Adverse
Effect. The Company and the Company Subsidiaries are in compliance with the
terms of the Company Permits, except where the failure to so comply would not
have a Company Material Adverse Effect.
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, 1995 and 1996,
respectively, (ii) its Quarterly Report on Form 10-Q for the
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period ended March 31, 1997, (iii) all proxy statements relating to the
Company's meetings of stockholders (whether annual or special) held since
January 1, 1996, (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, 1996, and (v) all amendments and supplements to
all such reports and registration statements filed by the Company with the SEC
since January 1, 1996 (collectively, the "Company SEC Reports"). 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. None of the Company 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 consolidated
subsidiaries as at the respective dates thereof and the consolidated statements
of income 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.
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, 1997, there has not occurred: (i) any Company 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
of the Company (whether or not covered by insurance) that would have a Company
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 off
notes or accounts receivable other than in the ordinary course of business; or
(vi) any sale of a material amount of property of the Company or any Company
Subsidiary except in the ordinary course of business.
3.9. NO UNDISCLOSED LIABILITIES. Except as is disclosed in SECTION
3.9. of the Company Disclosure Schedule, neither the Company nor any Company
Subsidiary 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
March 31, 1997 (the "1997 Company Balance Sheet"), (b) incurred in the ordinary
course of business and not required under generally accepted accounting
principles to be reflected on the 1997 Company Balance Sheet, (c) incurred
since March 31, 1997 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 Company Material Adverse
Effect.
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3.10. ABSENCE OF LITIGATION. Except as set forth in SECTION 3.10. of
the Company Disclosure Schedule or the Company SEC Reports, there are no
claims, actions, suits, proceedings or investigations pending or, to the
knowledge of the Company, overtly threatened against the Company or any Company
Subsidiary or any properties or rights of the Company or any Company Subsidiary
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, that would have a Company Material
Adverse Effect.
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 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 Company Subsidiary, 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 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) Except as set forth in SECTION 3.11.(b) of the Company Disclosure
Schedule: (i) none of the Company Employee Plans provides retiree medical or
other retiree welfare benefits to any person (other than as required under
COBRA), 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
non-exempt "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 would result in a Company Material Adverse Effect; (iii) all Company
Employee Plans are in compliance 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) except as would not result in a
Company Material Adverse Effect, and the Company and each Company Subsidiary
has performed all obligations required to be performed by them under, and are
not in any material respect in default under or violation of any of the Company
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Employee Plans except as would not result in a Company Material Adverse Effect;
(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; (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).
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, overtly threatened, between the Company or any
Company Subsidiary and any of their respective employees, which controversies
have had or would have a Company Material Adverse Effect; (ii) neither the
Company nor any Company Subsidiary is a party to any material collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or any Company Subsidiary, nor does the Company know of
any activities or proceedings of any labor union to organize any such
employees; and (iii) the Company has no knowledge of any strikes, slowdowns,
work stoppages, lockouts, or threats thereof, by or with respect to any
employees of the Company or any Company Subsidiary which would have a Company
Material Adverse Effect.
3.13. RESTRICTIONS ON BUSINESS ACTIVITIES. Except for this Agreement
or as set forth in SECTION 3.13. of the Company Disclosure Schedule, to the
Company's knowledge, there is no material agreement, judgment, injunction,
order or decree binding upon the Company or any Company Subsidiary which has or
would have the effect of prohibiting the conduct of business by the Company or
any Company Subsidiary as currently conducted, except for any prohibition as
would not have a Company Material Adverse Effect.
3.14. TITLE TO PROPERTY. Except as set forth in SECTION 3.14. of the
Company Disclosure Schedule, the Company or each Company Subsidiary has 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 delinquent
and such liens or other imperfections of title, if any, as do not materially
interfere with the present use of the property affected thereby or which would
not have a Company Material Adverse Effect. To the knowledge of the Company,
all leases pursuant to which the Company or any Company Subsidiary leases 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 Company Material Adverse Effect.
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3.15. 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, premiums, windfall profits, transfer and gains
taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto. For purposes of this Agreement, "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 3.15. of the Company Disclosure
Schedule: (i) the Company and the Company Subsidiaries (for such periods as
each Company Subsidiary was owned, directly or indirectly, by the Company) have
filed all United States federal income Tax Returns and all other Tax Returns
required to be filed by them except where any such failure to file does not
have a Company Material Adverse Effect; and (ii) the Company and the Company
Subsidiaries have paid and discharged all Taxes shown as due and payable on
such Tax Returns, except such Taxes as may be determined to be owed upon
completion of any Tax Return not yet filed based upon an extension of time to
file. Except to the extent the following does not involve, nor would result in,
a liability to the Company or any Company Subsidiary that would have a Company
Material Adverse Effect, (1) there are no Tax liens on any assets of the
Company or any Company Subsidiary, other than liens for Taxes that are not
delinquent, and (2) neither the Company nor any Company Subsidiary 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 1997 Company Balance Sheet are
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, except where such
inadequacy would not have a Company Material Adverse Effect.
3.16. INTELLECTUAL PROPERTY. Except as set forth in SECTION 3.16. of
the Company Disclosure Schedule, the Company and the Company Subsidiaries own,
or are 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 the Company Subsidiaries as
currently conducted, except as would not have a Company Material Adverse
Effect.
3.17. INTERESTED PARTY TRANSACTIONS. Except as set forth in SECTION
3.17. of the Company Disclosure Schedule or in the Company SEC Reports, to the
knowledge of the Company, since the date of the Company's proxy statement dated
April 4, 1997, 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.
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3.18. INSURANCE. The Company maintains insurance with financially
responsible insurance companies in amounts customary in its industry to insure
it against risks and losses associated with the operation of the business and
properties of the Company and the Company Subsidiaries.
3.19. HEALTHCARE REGULATORY COMPLIANCE. To the knowledge of the
Company, neither the Company nor any Company Subsidiary has violated federal
Medicare and Medicaid statutes, including, without limitation, 42 U.S.C. (S)
1320a-7b or related state or local statutes or regulations, except for such
violations as would not have a Company Material Adverse Effect.
3.20. OPINION OF FINANCIAL ADVISOR. The Board has received the opinion
of the Company's financial advisor, DLJ, to the effect that, as of the date of
the Board's approval 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.
3.21. BROKERS. No broker, finder or investment banker (other than DLJ)
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
DLJ pursuant to which such firm would be entitled to any payment relating to
the transactions contemplated hereunder.
3.22. SECTION 203 OF THE DELAWARE LAW NOT APPLICABLE. The Board 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 consummation of the transactions contemplated by this Agreement.
3.23. SCHEDULE 14D-9. 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 in writing specifically for
use in the Offer Documents shall, on the respective dates the Schedule 14D-9 or
the Offer Documents 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, 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.
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PARENT AND
ACQUISITION
Parent and Acquisition hereby, jointly and severally, represent and
warrant to the Company that:
4.1. ORGANIZATION, EXISTENCE AND GOOD STANDING OF PARENT; ACQUISITION.
(a) The Parent is a corporation duly organized, validly existing and
in good standing under the laws of Canada. Each subsidiary of the Parent (a
"Parent Subsidiary") is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization. The
Parent and each Parent Subsidiary has all necessary corporate power and
authority to own its properties and assets and to carry on its business as
presently conducted. The Parent and each Parent Subsidiary is qualified to do
business and is in good standing in each jurisdiction where the nature or
character of the property owned, leased or operated by it or the nature of the
business transacted by it makes such qualification necessary, except where the
failure to be so qualified or be in good standing would not have a Parent
Material Adverse Effect. The Parent has delivered to the Company a complete and
correct copy of its Articles of Association and By-Laws (or other constituent
instruments) as most recently restated and subsequently amended to date.
(b) Acquisition is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Acquisition has all
necessary corporate power and authority to own its properties and assets and to
carry on its business as presently conducted. Acquisition is qualified to do
business and is in good standing in each jurisdiction where the nature or
character of the property owned, leased or operated by it or the nature of the
business transacted by it makes such qualification necessary, except where the
failure to be so qualified or be in good standing would not have a Parent
Material Adverse Effect. The Parent has delivered to the Company a complete and
correct copy of Acquisition's Certificate of Incorporation and By-Laws.
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.
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4.3. NO CONFLICT, REQUIRED FILINGS AND CONSENTS.
(a) 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 Association,
Certificate of Incorporation or By-Laws (or other constituent instruments) of
Parent or Acquisition, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent, Acquisition or any Parent
Subsidiary 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 Parent Subsidiary's 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 Parent Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any Parent Subsidiary is a party or by which
Parent or any Parent Subsidiary or its or any of their respective properties
are bound or affected, except in any such case for any such conflicts,
violations, breaches, defaults or other occurrences that would not have a
Parent 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 otherwise have a Parent Material Adverse Effect.
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 or by its auditors, legal counsel, financial advisors or other
consultants or advisors in writing specifically for use in the Offer Documents.
None of the information provided by Parent or Acquisition 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, 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
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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.
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
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 fees and expenses in connection with the Offer and
the Merger.
ARTICLE 5.
CONDUCT OF BUSINESS PENDING THE MERGER
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 Effective Time, 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 the Company Subsidiaries
to be conducted only in, and the Company and the Company Subsidiaries shall not
take any action except in, the ordinary course of business in the manner
consistent with past practice. The Company shall use reasonable commercial
efforts to preserve substantially intact the business organization of the
Company and the Company Subsidiaries, to keep available the services of the
present officers, employees and consultants of the Company and the Company
Subsidiaries and to preserve the present relationships of the Company and the
Company Subsidiaries with customers, suppliers and other persons with which the
Company or any Company Subsidiary has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement,
neither the Company nor any Company Subsidiary shall, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, directly or indirectly 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 Company Subsidiary;
(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,
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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 (except for (i) the issuance of shares of
Company Common Stock issuable pursuant to any stock option or other agreement
listed on SECTION 3.3. of the Company Disclosure Schedule; and (ii) the grant
of options under the Company's Stock Plan consistent with past practice and the
issuance of shares upon exercise thereof;
(c) sell, pledge, dispose of or encumber any assets of the Company or
any Company Subsidiary, except for (i) sales of assets in the ordinary course
of business 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 Company
Subsidiary 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 Company Subsidiary to purchase, repurchase,
redeem or otherwise acquire, any of its securities 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 Stock Plan and the net exercise of such options, or as
contemplated by SECTION 3.3.(b) of the Company Disclosure Schedule.
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof other than emergency health care providers, emergency physician
practice management groups or other emergency health care entities, in each
case located in the United States ("Permitted Acquisitions"), provided that the
total consideration paid for all such acquisitions completed after the date
hereof shall not exceed $12 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
except in the ordinary course of business consistent with past practice or in
connection with purchases of equipment or capital improvements or Permitted
Acquisitions, or make any loans or advances (other than loans or advances to or
from direct or indirect wholly owned Company Subsidiary or in connection with
Permitted Acquisitions), (iii) except as set forth on SECTION 5.1(e)(iii) of
the Company Disclosure Schedule, enter into or amend any Material Contract
other than in the ordinary course of business or where such contract or
amendment would not have a Company Material Adverse Effect; or (iv) authorize
any capital expenditures or purchase of fixed assets (but excluding Permitted
Acquisitions) 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
the Company Subsidiaries taken as a whole;
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(f) except as set forth in SECTION 5.1.(f) of the Company Disclosure
Schedule or in each case, as may be required by law or in ordinary course
consistent with past practice, increase the compensation payable or to become
payable to its officers or employees, except in accordance with past practice
or 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 Company Subsidiary, 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;
(g) change accounting policies or procedures (including, without
limitation, procedures with respect to revenue recognition, payments of
accounts payable and collection of accounts receivable);
(h) except as would not result in a Company Material Adverse Effect,
make any tax election inconsistent with past practice or settle or compromise
any 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; and
(i) take, or agree in writing to take, any of the actions described in
SECTIONS 5.1.(A) through (H) above, or any action which would make any of the
representations or warranties of the Company contained in this Agreement untrue
or incorrect in any material respect as contemplated hereby or prevent the
Company from performing or cause the Company not to perform in any material
respect its covenants hereunder.
5.2. NO SOLICITATION.
(a) From and after the date hereof and prior to the Effective Date or
the earlier termination of this Agreement pursuant to SECTION 8.1., the Company
shall not, directly or indirectly, take (nor shall the Company authorize or
permit any Company Subsidiary or its or their officers, directors, employees,
representatives, investment bankers, financial advisors, attorneys, accountants
or other agents, to take) any action to (i) solicit or initiate the submission
of any Business Combination Proposal, (ii) enter into any agreement with
respect to any Business Combination Proposal or (iii) participate in any
negotiations with, or furnish any non-public written information to, any person
in connection with any proposal that constitutes, or may reasonably be expected
to lead to, any Business Combination Proposal; provided, however, that the
Company may (A) participate in negotiations with or furnish information to any
persons or group (other than Parent or an affiliate of Parent) (a "Third
Party") that makes a Business Combination Proposal not so solicited that the
Board determines may reasonably be expected to result in a Superior Proposal or
if the Board determines, in good faith and after consultation with independent
counsel, that such action is required in order to discharge properly its
fiduciary duties, and enter into any confidentiality agreement or standstill
agreement with such Third Party in connection with such a Business Combination
Proposal, (B) comply with Rule 14e-2 promulgated under the Exchange Act with
regard to any Business Combination Proposal
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(assuming that such Business Combination Proposal includes a tender offer
requiring the Company's response pursuant to such Rule), (C) withdraw or modify
its recommendation referred to in SECTION 1.2.1. if there exists a Business
Combination Proposal that is a Superior Proposal or if the Board determines, in
good faith and after consultation with of independent counsel, that such action
is required to discharge properly its fiduciary duties, and (D) recommend to
its stockholders a Business Combination Proposal if it is a Superior Proposal
or if the Board determines, in good faith and after consultation with
independent counsel, that such action is required to discharge properly its
fiduciary duties. Any actions permitted under, and taken in compliance with
this SECTION 5.2. shall not be deemed a breach of any other covenant or
agreement of the Company contained in this Agreement. For purposes of this
Agreement, "Business Combination Proposal" shall mean, with respect to the
Company, the commencement of any tender or exchange offer, any bona fide,
written proposal for a merger, consolidation or other business combination
involving the Company or any Company Subsidiary or any other bona fide, written
proposal or offer to enter into a Business Combination or any public
announcement of a proposal, plan or intention to do any of the foregoing.
"Superior Proposal" shall mean any Business Combination Proposal for which any
required financing is supported by reasonable commitments and which the Board
determines in good faith will be more favorable to its stockholders than the
Merger. The term "Business Combination" means the occurrence of any of the
following events: (a) the Company or any Company Subsidiary is acquired by
merger or otherwise by any Thirty Party; (b) the Company or any Company
Subsidiary enters into an agreement with a Third Party that contemplates the
acquisition of 35% or more of the total assets of the Company and the Company
Subsidiaries taken as a whole; (c) the Company enters into a merger or other
agreement with a Third Party that contemplates the acquisition of beneficial
ownership of more than 35% of the outstanding shares of the Company's capital
stock; or (d) a Third Party acquires more than 35% of the outstanding shares of
the Company's capital stock.
(b) In addition to the obligations of the Company set forth in SECTION
5.2.(a), the Company shall promptly advise Parent of any request for non-public
written information or of any Business Combination Proposal, the material terms
and conditions of such request or Business Combination Proposal, and the
identity of the person making any such request or Business Combination
Proposal. The Company shall keep Parent reasonably informed of the status and
details of any such request or Business Combination Proposal.
ARTICLE 6.
ADDITIONAL AGREEMENTS
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
thereafter use reasonable best efforts 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.
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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 Company Subsidiary to)
afford to the officers, employees, accountants, counsel and other
representatives of Parent or 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
Company Subsidiary 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 letter dated May 21, 1997 (the "Confidentiality Letter"),
between Parent's affiliate and the Company.
6.3. 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 six 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) From and after the purchase of any Shares pursuant to the Offer,
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, Parent and 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 Company
Subsidiary (together with their respective successors, assigns, heirs,
executors, administrators and representatives, 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, brought or filed, arising out of or pertaining to any acts
or omissions or alleged acts or omissions by them in their capacity as such, in
each case for a period of six years after the date hereof, including, without
limitation, the transactions contemplated hereby. 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
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event that any claim or claims for indemnification are asserted or made within
such six-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 between the positions
of any two or more Indemnified Parties. The indemnity agreements of Parent and
the Surviving Corporation in this SECTION 6.3.(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 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,
that in no event shall Parent or Surviving Corporation be required to spend in
excess of 300% of the annual premium currently paid by the Company for such
coverage and provided further if the premium for such coverage exceeds such
amount, Parent or 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 6.3.
(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 Parent and 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 6.3.
6.4. 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 cause any representation or warranty contained in this
Agreement to be untrue or inaccurate the results of which would be a Material
Adverse Effect to the Parent or Company, as applicable, or (ii) any failure of
the Company, Parent or Acquisition, as the case may be, materially to comply
with or satisfy any
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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 6.4. shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
6.5. FURTHER ACTION. Upon the terms and subject to the conditions
hereof, including SECTION 5.2. and subject to the fiduciary duties of the Board
under applicable law, as determined in good faith after consultation with
independent counsel, 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 material waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied in all material respects all conditions
precedent to its obligations under this Agreement.
6.6. 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 or delayed; 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 or the NASDAQ Stock Market
if it has used all reasonable efforts to consult with the other party.
ARTICLE 7.
CONDITIONS TO THE MERGER
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:
7.1.1. PURCHASE OF SHARES. Acquisition shall have purchased
Shares pursuant to the Offer.
7.1.2. HSR ACT. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or
been terminated.
7.1.3. 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, and there shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or applicable to the
Merger which makes the consummation of the Merger illegal.
7.1.4. GOVERNMENTAL ACTIONS. There shall not be in effect any
judgment, decree or order of any governmental authority,
administrative agency or court of competent
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jurisdiction that prohibits or limits 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
Parent Subsidiary of all or a material portion of the business or
assets of Parent or any Parent Subsidiary, or seeking to compel Parent
or any Parent Subsidiary to dispose of or hold separate all or any
material portion of the business or assets of Parent or any Parent
Subsidiary (including the Surviving Corporation and its subsidiaries),
as a result of the Merger or the transactions contemplated by this
Agreement.
ARTICLE 8.
TERMINATION
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 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 6.5. 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 failed
to accept for purchase and pay for Shares pursuant to the Offer by October 31,
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 this SECTION 8.1.(c) before such date); or
(d) by Parent or the Company, prior to the purchase of Shares pursuant
to the Offer, if the Board 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 the Company, prior to the purchase of Shares pursuant to the
Offer, (i) if any representation or warranty of the Parent or Acquisition set
forth in this Agreement shall be untrue in any material respect when made, or
(ii) upon a breach in any material respect of any covenant or agreement on the
part of Parent or Acquisition set forth in this Agreement; or
(f) by the Company, if the Offer shall have expired or shall have been
withdrawn, abandoned or terminated without Acquisition purchasing any Shares
pursuant thereto; or
(g) by the Parent, if Acquisition shall have terminated the Offer
without purchasing any Shares thereunder in accordance with the terms of the
Offer; provided Parent may not
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terminate this Agreement pursuant to this SECTION 8.1.(g) if Acquisition has
failed to purchase the Shares in the Offer in breach of the terms thereof.
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 (i) except as set forth in
SECTION 9.1. hereof and (ii) except to the extent that such termination results
from the willful and material breach by a party of any of its representations,
warranties, covenants or other agreements set forth in this Agreement.
ARTICLE 9.
GENERAL PROVISIONS
9.1. FEES AND EXPENSES.
(a) Except as provided in this SECTION 9.1., 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) If this Agreement is terminated pursuant to SECTION 8.1.(d), then
Company shall (provided that Parent or Acquisition is not then in material
breach of its obligations under this Agreement), promptly after the termination
of this Agreement, reimburse Parent and Acquisition for all documented
out-of-pocket expenses and fees (including, without limitation, fees payable to
all banks, investment banking firms and other financial institutions, and their
respective agents and counsel, and all fees of counsel, accountants, financial
printers, experts and consultants to Acquisition and its Affiliates), whether
incurred prior to, on or after the date hereof, in connection with the Offer,
the Merger and the consummation of all transactions contemplated by this
Agreement; provided that in no event shall Company be required to pay in excess
of an aggregate of $1,500,000 pursuant to this SECTION 9.1.(b).
(c) If this Agreement is terminated pursuant to SECTION 8.1.(d) and
within twelve months following the date of such termination the Company either
(x) consummates with any Third Party a transaction the proposal of which would
otherwise qualify as a Business Combination Proposal under SECTION 5.2. or (y)
enters into a definitive agreement with a Third Party with respect to a
transaction the proposal of which would otherwise qualify as a Business
Combination Proposal under SECTION 5.2., then Company shall promptly pay to
Parent a fee of $6,275,000, less any amounts paid by Company pursuant to
SECTION 9.1.(b).
9.2. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Except as otherwise provided in this SECTION 9.2., the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time, except that (i) the agreements set forth
in ARTICLE 2. shall survive the Effective Time
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indefinitely, and (ii) the agreements in SECTION 6.3. shall survive in
accordance with their respective terms. The Confidentiality Letter shall
survive termination of this Agreement as provided therein.
9.3. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below (or at such
other address or telecopy number for a party as shall be specified by like
notice):
(a) If to Parent or Acquisition:
Laidlaw Inc.
3221 North Service Road
Burlington, Ontario L7R 3Y8
Telecopier No.: (905) 332-6550
Telephone No.: (905) 336-1800
Attention: Ivan R. Cairns, Senior Vice President
and General Counsel
(b) If to the Company:
EmCare Holdings Inc.
1717 Main Street, Suite 5200
Dallas, Texas 75201
Telecopier No.: (214) 712-2061
Telephone No.: (214) 712-2000
Attention: Leonard M. Riggs, Jr., M.D., Chairman of
the Board and Chief Executive Officer
9.4. CERTAIN DEFINITIONS. For purposes of this Agreement, the term:
(a) "$" or "dollars" " means the lawful currency of the United States
of America.
(b) "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 Company (either alone, or through or
together with any other subsidiary) has, directly or indirectly, an interest of
10% or more;
(c) "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
30
<PAGE> 37
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;
(d) "business day" means any day other than a day on which banks in
New York are required or authorized to be closed;
(e) "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;
(f) "material adverse effect" means, when used in connection with the
Company or any Company Subsidiary or Parent or any Parent Subsidiary, as the
case may be, any change, effect or circumstance that is materially adverse to
the business, assets, financial condition or results of operations of the
Company and the Company Subsidiaries, or Parent and the Parent 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 in the case of the Company or any Company Subsidiary; (ii)
set forth or described in the Company SEC Reports or the Parent SEC Reports, as
the case may be; or (iii) affecting the physician practice management industry
generally;
(g) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, other
entity or group (as defined in Section 13(d)(3) of the Exchange Act); and
(h) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture, limited liability company, business trust 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.
9.5. 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.
9.6. 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
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<PAGE> 38
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.
9.7. 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.
9.8. 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.
9.9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and supersedes all prior agreements and undertakings (other than the
Confidentiality Letter), 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.
9.10. 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.
9.11. 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 6.3. (which is intended to be for the benefit of the Indemnified
Parties and may be enforced by such Indemnified Parties).
9.12. 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 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.
9.13. 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.
9.14. 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
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<PAGE> 39
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
9.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS.
9.15.1. JURISDICTION. Each of the parties irrevocably and
unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the United States District Court for the
Northern District of Texas, Dallas Division, and any State court
sitting in the County of Dallas, State of Texas, and any appellate
court therefrom, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the parties irrevocably and unconditionally
agrees, to the fullest extent permitted by applicable law, that all
claims in respect of any such action or proceeding may be heard and
determined in any such court. Each of the parties hereto agrees that a
final judgment in any such proceeding shall be conclusive and may be
enforced in any other jurisdictions by suit on the judgment or in any
other manner provided by law.
9.15.2. VENUE; INCONVENIENT FORUM. Each of the parties hereby
irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby in the United States District Court
for the Northern District of Texas, Dallas Division and any State
court sitting in the County of Dallas, State of Texas. Each of the
parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in such court.
9.15.3. SERVICE OF PROCESS. Each of the parties hereby
irrevocably consents to service of process by registered or certified
mail to the address provided for notices in Section 9.3.. Nothing in
this Agreement will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
[Remainder of page intentionally left blank.]
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<PAGE> 40
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:
------------------------------------------
Name:
Title:
EHI ACQUISITION CORP.
By:
------------------------------------------
Name:
Title:
EMCARE HOLDINGS INC.
By:
------------------------------------------
Name:
Title:
34
<PAGE> 41
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.
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 SEC, 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; or
(iii) 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 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 that would result in a Company 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 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
35
<PAGE> 42
(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 when made and as of the date of consummation of the Offer
(except to the extent such representations and warranties 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 Company Material Adverse Effect; or
(c) The Merger Agreement shall have been terminated in
accordance with its terms;
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; provided, that prior to October 31, 1997, Acquisition shall
not terminate the Offer by reason of the nonsatisfaction of any of the
conditions and shall extend the Offer.
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.
A-2
<PAGE> 1
EXHIBIT 99.2
LAIDLAW TO EXPAND IN EMERGENCY HEALTHCARE
AGREEMENT SIGNED TO ACQUIRE EMCARE HOLDINGS INC.
BURLINGTON, ONTARIO AND DALLAS, TEXAS, JULY 30, 1997 -- Laidlaw Inc.
(NYSE:LDW.B; TSE and ME:LDM) and EmCare Holdings Inc. (Nasdaq:EMCR) today
announced that they have entered into a definitive agreement under which
Laidlaw will acquire, for cash, all outstanding shares of Dallas, Texas-based,
EmCare Holdings Inc. -- a leading emergency physician practice management
corporation. Under the terms of the agreement, a cash tender offer, EmCare
shareholders will be offered $38.00 (U.S.) per share. Aggregate value of the
transaction is $400.0 million based on approximately 8.2 million outstanding
EmCare shares, $25.0 million of costs associated with stock options retired and
the assumption of $65 million of debt.
EmCare and Laidlaw have signed a merger agreement pursuant to which Laidlaw
will commence a tender offer within five business days from today. EmCare's
Board of Directors has received a fairness opinion from its financial advisor,
Donaldson, Lufkin & Jenrette Securities Corporation, and the Board is
recommending that all EmCare shareholders accept Laidlaw's offer. Morgan
Stanley & Co., Incorporated is acting as advisor to Laidlaw. It is expected the
transaction will be completed in September and is subject to the tender of a
minimum of 51% of EmCare's voting shares and other customary conditions,
including normal regulatory approvals.
EmCare is widely regarded within its industry as a premier provider of
emergency physician practice management services. Founded in 1972, the company
provides a variety of services to hospital emergency departments, principally
physician recruitment and staffing as well as inpatient, primary and managed
care services contracting. More than 90% of its $250 million annualized revenue
is generated by the management of emergency departments under 131 contracts in
162 hospitals. EmCare operates in 21 states and contracts with 1,800 physicians
who annually provide care for more than three million patients. EmCare will
integrate the STAT emergency department management business of Laidlaw's
American Medical Response (AMR) into its operations.
EmCare's founding chairman and chief executive officer, Dr. Leonard M. Riggs
Jr., and its president and chief operating officer, William F. Miller III, will
remain in their respective positions with EmCare, which will
- 1 -
<PAGE> 2
operate as a division of Laidlaw. They have agreed to tender their EmCare
shares representing, in aggregate, about 15% of the total outstanding. They
have each agreed to reinvest approximately 25% of their after-tax proceeds from
the transaction in Laidlaw shares in order to significantly align their
interests with those of Laidlaw's existing shareholders.
Commenting on the merger, James R. Bullock, Laidlaw's president and CEO said,
"For some time, our intention has been to expand our role in the
healthcare service industry into markets associated with the emergency
transportation we now provide with AMR. The acquisition of EmCare is
a concrete example of this direction.
"EmCare, when added to the base we've built from the integration of AMR
and MedTrans, makes Laidlaw a clear leader in the provision of
emergency healthcare transportation and emergency physician practice
management. Additionally, this acquisition will strengthen our
emergency American Medical Pathways - a nurse triage service - and
position Laidlaw as a growing force in a broader range of emergency
healthcare services."
EmCare's Dr. Riggs stated,
"With our focus on unscheduled, episodic care we will provide a strong
complement to Laidlaw's existing emergency healthcare services. I look
forward to working with the Laidlaw team to continue EmCare's growth
and success. I believe this transaction is in the best interests of all
EmCare's shareholders."
EmCare Holdings Inc. is a leading provider of physician services management in
hospital management in hospital emergency departments and other practice
settings. EmCare provides practice management services to its physician
contractors and arranges contracts and schedules for their services. EmCare has
managed emergency physicians for more than 20 years primarily in larger
hospitals with high-volume emergency departments.
-2-
<PAGE> 3
Based in Burlington, Ontario, Laidlaw Inc. is the largest emergency healthcare
transportation, school busing and municipal transit service company in North
America.
-30-
Contacts: 1-800-563-6072
T.A.G. Watson Vice President, Communications
ext. 309 Laidlaw Inc.
Les Haworth Senior Vice President and CFO
ext. 208 Laidlaw Inc.
Website: www.laidlaw.com
Dr. Leonard M. Riggs, Jr. Chairman and C.E.O.
214-712-2000 EmCare Holdings Inc.
Robert P. Jones/Jill Ruja
212-850-5600 Morgen-Walke Associates
David Sassoon Media Contact
212-850-5600 Morgen-Walke Associates
-3-
<PAGE> 1
EXHIBIT 99.3
EMCARE HOLDINGS INC.
1717 MAIN STREET, SUITE 5200
DALLAS, TEXAS 75201
NOTICE OF THE 1997 ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD MAY 15, 1997
To the Stockholders:
EmCare Holdings Inc. (the "Company") cordially invites you to
attend the 1997 annual meeting of its stockholders at the Crescent Club, 200
Crescent Court, 17th Floor, Dallas, Texas, on May 15, 1997, at 10:00 a.m., for
the following purposes:
1. CLASS III DIRECTORS. The election of the
Class III Directors of the Company, who will serve until the 2000
annual meeting and the election and qualification of their successors;
and
2. OTHER MATTERS. The transaction of such other
business as may properly come before the meeting, including any
continuation of the meeting pursuant to any adjournment of it to
another time (the "Annual Meeting").
The board of directors of the Company has established the
close of business on April 4, 1997, as the record date for determining the
stockholders entitled to notice of the Annual Meeting and to vote at it. Any
stockholder may examine the list of stockholders as of the record date during
regular business hours at the principal executive office of the Company on any
business day before the Annual Meeting.
By Order of the Board of Directors,
/s/ ROBERT F. ANDERSON, II
Robert F. Anderson, II
Chief Financial Officer, Senior Vice
President, Treasurer, and Secretary
Dallas, Texas
April 4, 1997
<PAGE> 2
EMCARE HOLDINGS INC.
PROXY STATEMENT
1997 ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD MAY 15, 1997
INTRODUCTION
The board of directors (the "Board of Directors") of EmCare
Holdings Inc., a Delaware corporation (the "Company"), hereby solicits your
proxy on behalf of the Company for use at the 1997 annual meeting of the
Company's stockholders and any continuation of such meeting pursuant to any
adjournment of it to another time (the "Annual Meeting"). The Annual Meeting
will be held at the Crescent Club, 200 Crescent Court, 17th Floor, Dallas,
Texas, on May 15, 1997, at 10:00 a.m.
The Company's principal executive office is located at 1717
Main Street, Suite 5200, Dallas, Texas 75201. The Company's telephone number is
(214) 712-2000.
The Company will mail this proxy statement (this "Proxy
Statement") and the accompanying proxy card (the "Proxy Card") on or about
April 17, 1997. The date of this Proxy Statement is April 4, 1997.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the stockholders of the Company (the
"Stockholders") will vote upon the following matters:
1. CLASS III DIRECTORS. The election of the
Class III Directors of the Company who will serve until the 2000
annual meeting and the election and qualification of their successors;
and
2. OTHER MATTERS. The transaction of such other
business as may properly come before the Annual Meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that you vote to elect as
Class III Directors the nominees named in this Proxy Statement and the Proxy
Card.
RECORD DATE AND VOTING
RECORD DATE. The Board of Directors has established the close
of business on April 4, 1997 (the "Record Date"), as the record date for
determining the Stockholders entitled to notice of the Annual Meeting and to
vote at it. On that date, the Company had 8,180,611 shares of Common Stock
outstanding. The Company did not have any other shares of capital stock
outstanding.
<PAGE> 3
VOTING. Each Stockholder will be entitled to one vote per
share of Common Stock in connection with the election of each Class III
Director and each other matter that properly comes before the Annual Meeting.
The Stockholders do not possess cumulative voting rights.
The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock will constitute a quorum at
the Annual Meeting. Shares represented at the meeting but not voted will be
counted for the purpose of determining the presence of a quorum. Unless a
quorum is present at the Annual Meeting, no action may be taken at the meeting
except the adjournment of the meeting until a later time. Abstaining from
participation in the Annual Meeting will affect whether the necessary quorum
exists to convene the meeting.
The election of each of the two nominees for Class III
Director requires a plurality of the votes of the shares of Common Stock
represented at the Annual Meeting. The Stockholders may cast their votes for a
nominee or withhold them. Withholding authority to vote for one or more of the
nominees will result in such nominee receiving fewer votes. The withholding of
such authority, however, will not decrease the number of votes that such
nominee otherwise receives. Withheld votes will count towards determining
whether a quorum exists.
BROKER NON-VOTES. Under the rules of the American and New York
Stock Exchanges, if a broker holds shares of Common Stock on behalf of its
customers and forwards this Proxy Statement and the accompanying material to
its customers at least 15 days before the Annual Meeting, the broker may vote
its customers' shares on the proposal to elect the Class III Directors if the
broker does not receive voting instructions from its customers by the tenth day
before the meeting.
PROXYHOLDERS. The proxyholders named on the Proxy Card (the
"Proxyholders") will vote the shares of Common Stock represented by valid
proxies at the Annual Meeting in accordance with the directions given on the
respective Proxy Cards. If a Stockholder signs and returns a Proxy Card without
giving any directions, the Proxyholders will vote such Stockholder's shares of
Common Stock for the election of the two nominees for Class III Director named
in this Proxy Statement and the Proxy Card. The Board of Directors does not
intend to present, and has no information that others will present, any
business at the Annual Meeting requiring a vote on any other matter. If any
other matter requiring a vote properly comes before the Annual Meeting, the
Proxyholders will vote the proxies that they hold in accordance with their best
judgment, including voting them to adjourn the Annual Meeting to another time
if a quorum is not present at the meeting or if they believe that an
adjournment is in the best interests of the Company.
REVOCATION. A Stockholder has the unconditional right to
revoke such Stockholder's proxy at any time prior to the voting of it by: (i)
submitting a later dated proxy to the Company or someone who attends the Annual
Meeting, (ii) attending the Annual Meeting and delivering a written notice of
revocation of the proxy to an officer of the Company present at the meeting, or
(iii) delivering a written notice of revocation of the proxy to the principal
executive office of the Company, which the Company receives on or before May
14, 1997.
SOLICITATION AGENT. The Company has retained Chemical Mellon
Shareholder Services, L.L.C. (the "Solicitation Agent") to solicit proxies in
connection with the Annual Meeting. The Solicitation Agent may solicit proxies
from the Stockholders and other persons in person or by mail, facsimile
transmission, telephone, personal interview, or any other means. The Company
will pay the Solicitation Agent a fee of $4,000 and
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<PAGE> 4
reimburse it for its out-of-pocket expenses in connection with this
solicitation. The Company also will reimburse banks, brokers, custodians,
fiduciaries, nominees, securities dealers, trust companies, and other persons
for the reasonable expenses that they incur when forwarding this Proxy
Statement and the accompanying material to the beneficial owners of shares of
Common Stock. The directors, officers, and employees of the Company also may
solicit proxies from Stockholders and other persons by any of the means
described above. The Company will not pay these individuals any extra
compensation for their participation in this solicitation.
ELECTION OF THE CLASS III DIRECTORS
(PROPOSAL 1 ON THE PROXY CARD)
The Board of Directors is divided into three classes, with
each class elected to serve a three year term. Mr. Terry Hartshorn and Mr.
James T. Kelly are the Class I Directors, their terms expire at the 1998 annual
meeting. Mr. Andrew M. Paul and Mr. William F. Miller, III are the Class II
Directors, their terms expire at the 1999 annual meeting. Leonard M. Riggs,
Jr., M.D. and Mr. Richard H. Stowe are the Class III Directors, their terms
expire at this year's Annual Meeting.
Mr. Hartshorn and Mr. Kelly were elected as Class I Directors
at the 1995 annual meeting. Mr. Paul and Mr. Miller were elected as Class II
Directors at the 1996 annual meeting. Dr. Riggs and Mr. Stowe were elected
Class III Directors pursuant to a shareholders' agreement that terminated when
the Company completed its initial public offering in December 1994.
At the Annual Meeting, the Stockholders will vote for the
election of the Class III Directors. The Class III Directors elected will serve
until the 2000 annual meeting and the election and qualification of their
successors.
The nominees for election as Class III Directors are Dr. Riggs
and Mr. Stowe, the current Class III Directors. If either Dr. Riggs or Mr.
Stowe is unavailable for election as a result of unforeseen circumstances, the
Proxyholders will vote for the election of such substitute nominee as the Board
of Directors may propose.
DR. RIGGS. Leonard M. Riggs, Jr., M.D. has served as Chairman
of the Board and Chief Executive Officer of the Company since 1992. From 1974
through 1992, Dr. Riggs served as the President of EmCare, Inc. ("EmCare"), the
Company's emergency physician practice management subsidiary. Dr. Riggs began
practicing emergency medicine in 1969, and has served twelve years on the
Medical Board of the Company's largest hospital client as Chief of Emergency
Medicine. Prior to that time, Dr. Riggs served as such hospital's Director of
Emergency Medicine. Dr. Riggs is a past president of the American College of
Emergency Physicians. Dr. Riggs is a director of American Oncology Resources,
Inc. ("American Oncology"), which operates comprehensive cancer treatment
centers, and Prentiss Property Trust, a real estate investment trust.
MR. STOWE. Richard H. Stowe has served as a director of the
Company since February 1992 when Welsh, Carson, Anderson & Stowe ("Welsh
Carson") participated in the recapitalization of EmCare, which resulted in the
formation of the Company (the "Recapitalization"). Mr. Stowe has been a general
partner of Welsh Carson since 1979 and is a general partner of the partnerships
that serve as the general partners of Welsh, Carson, Anderson & Stowe V, L.P.
("WCAS V") and WCAS Capital Partners II, L.P. ("Capital Partners"), the Welsh
Carson affiliates that participated in the Recapitalization. Mr. Stowe is a
director of Aurora Electronics Inc., a distributor of computer spare parts,
3
<PAGE> 5
Health Management Systems, Inc., a provider of revenue enhancement services for
health care providers and payors, and several private companies.
THE BOARD OF DIRECTORS
The following table sets forth certain information concerning the directors.
<TABLE>
<CAPTION>
DIRECTOR YEAR TERM POSITIONS WITH THE COMPANY/
NAME AGE CLASS EXPIRES COMMITTEE MEMBERSHIPS
------ ----- ------- --------- -----------------------
<S> <C> <C> <C> <C>
Terry Hartshorn 52 I 1998 Compensation Committee
James T. Kelly 50 I 1998 Audit Committee
William F. Miller, III 47 II 1999 President and Chief Operating Officer
Andrew M. Paul 41 II 1999 Audit and Compensation Committees and
Stock Option Subcommittee
Leonard M. Riggs, Jr., M.D. 54 III 1997 Chairman of the Board and Chief
Executive Officer
Richard H. Stowe 53 III 1997 Audit and Compensation Committees and
Stock Option Subcommittee
</TABLE>
The business experience of Dr. Riggs and Mr. Stowe is
described above.
MR. HARTSHORN. Terry Hartshorn has served as a director of the
Company since December 1994. Since 1993, Mr. Hartshorn has been the Chairman of
the Board of Pacificare Health Systems ("Pacificare"), a managed care
organization. From 1977 to 1993, Mr. Hartshorn served as the President and
Chief Executive Officer of Pacificare. From 1993 to February 1997, Mr.
Hartshorn also was the Chief Executive Officer and President of UniHealth, a
non-profit integrated health system. Mr. Hartshorn is a director of Apria
Healthcare, a provider of home health care products and services.
MR. KELLY. James T. Kelly has served as a director of the
Company since May 1993. Mr. Kelly is the Chairman of the Board of Lincare
Holdings Inc. ("Lincare"), a provider of oxygen and other respiratory therapy
services in the home. Mr. Kelly served as Chief Executive Officer of Lincare
from June 1986 through December 1996. Prior to that time, Mr. Kelly served for
19 years in a number of capacities within the Mining and Metals Division of
Union Carbide Corp., departing as Director of Marketing.
MR. MILLER. William F. Miller, III has served as the President
and Chief Operating Officer of the Company since 1992. Mr. Miller also has been
a director of the Company since 1992. From 1983 to 1992, Mr. Miller served as
the Chief Executive Officer of EmCare. Prior to 1983, Mr. Miller served for
nine years in financial and management positions in the health care industry,
including positions as chief executive officer and chief financial officer of
hospitals and administrator/director of operations of a multi-specialty group
practice.
4
<PAGE> 6
MR. PAUL. Andrew M. Paul has served as a director of the
Company since the Recapitalization in February 1992. Mr. Paul joined Welsh
Carson in 1984 and is a general partner of the partnerships that serve as the
general partners of WCAS V and Capital Partners. Mr. Paul is a director of
American Oncology, Housecall Medical Resources Inc., a provider of home health
services, Lincare, Medcath Incorporated, a provider of cardiology and
cardiovascular services, National Surgery Centers Inc., an operator of surgical
centers, and several private companies.
BOARD OF DIRECTOR MEETINGS AND COMMITTEES
MEETINGS. During the year ended December 31, 1996, the Board
of Directors held four regularly scheduled meetings and no special meetings.
During the year, each director attended 75% or more of the aggregate number of
such meetings and committee meetings of the Board of Directors on which the
director served. In addition, during 1996 the Board of Directors acted by
unanimous written consent on seven occasions.
DIRECTOR COMPENSATION. The Company's general policy through
1995 was that the Company did not compensate the directors for their service as
directors, although the Company reimbursed them for the expenses that they
incurred when serving as directors. On two occasions, however, the Company
granted stock options to two different outside directors to compensate them for
their service as directors. On May 10, 1993, the Company granted Mr. Kelly
options to purchase 7,500 shares of Common Stock at an exercise price of $14.00
per share. In connection with the initial public offering, the Company
decreased the exercise price of these options to $11.00 per share, the price
per share in the offering. In addition, on January 12, 1995 the Company granted
Mr. Hartshorn options to purchase 7,500 shares of Common Stock at an exercise
price of $11.00 per share. The options granted to Messrs. Kelly and Hartshorn
vest over five years.
In 1996 the Company implemented a policy of granting options
to purchase shares of Common Stock annually to each outside director as
compensation for serving as a director. The per share exercise price of these
options will be the closing price of a share of Common Stock on the trading day
immediately preceding the date of the grant. Under this policy, on August 15,
1996 the Company granted options to purchase 6,000 shares of Common Stock to
each outside director at an exercise price of $23.25 per share. One-third of
these stock options vested on the date of grant and one-third of these stock
options will vest on the first two anniversaries of such date, subject to
automatic vesting upon a change in control of the Company. In addition, the
Company continues to reimburse the directors for the expenses that they incur
when serving as directors.
COMMITTEES. The Board of Directors has an audit committee (the
"Audit Committee"), a compensation committee (the "Compensation Committee"),
and a sub-committee of the Compensation Committee (the "Stock Option
Subcommittee") that administers the Company's Amended and Restated Stock Option
and Restricted Stock Purchase Plan, as amended (the "Stock Option Plan"). The
Audit Committee reviews the financial and internal controls of the Company,
makes recommendations to the Board of Directors concerning the engagement of
the Company's independent certified public accountants and reviews their audit
plan, reviews related party transactions and potential conflict of interest
situations involving the Company, and reviews the Company's compliance
programs. The members of the Audit Committee are Messrs. Kelly, Paul, and
Stowe. The Audit Committee held three meetings during 1996. The Audit Committee
did not act by unanimous written consent during the year.
5
<PAGE> 7
The Board of Directors does not have a nominating committee.
The entire Board of Directors considers nominees for the position of director.
If any Stockholder desires the Board of Directors to consider an individual for
nomination as a director at next year's annual meeting, such Stockholder should
contact the Company concerning such nomination during the period described
below for considering Stockholder proposals for next year's annual meeting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The Compensation Committee consists of Messrs. Hartshorn, Paul, and Stowe. None
of them has ever been an employee or officer of the Company or any of its
subsidiaries. The Compensation Committee reviews and approves the compensation
that the Company pays to its executive officers. The Stock Option Subcommittee
consists of members of the Compensation Committee selected by the Board of
Directors who satisfy: (i) the non-employee director requirement under Rule
16b-3 of the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), and (ii) the outside director requirement under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). Currently, Messrs. Paul
and Stowe are the members of the Stock Option Subcommittee. During 1996 the
Compensation Committee held one meeting and acted by unanimous written consent
on one occasion. During 1996 the Stock Option Subcommittee held one meeting and
acted by unanimous written consent on one occasion.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee reviews and approves the salaries
and other compensation that the Company pays to its executive officers.
OVERALL POLICY. The Compensation Committee intends to
compensate the Company's executive officers in ways that: (i) motivate them to
strive continually to improve the Company's financial results, and (ii) align
their interests with the interests of the Stockholders.
ANNUAL COMPENSATION. The compensation of Dr. Riggs and Mr.
Miller for 1996 was established under their employment agreements, which are
discussed below. These employment agreements provide that a significant portion
of the annual compensation of these individuals may consist of bonuses payable
upon the Company's achievement of earnings targets. The Company has not
disclosed the specific earnings targets used when determining these bonuses
because the Board of Directors has determined that such disclosure would
adversely affect the Company's competitive position. The Compensation Committee
established the 1996 salary levels for the other executive officers by
evaluating their relative skills and past performances.
The Compensation Committee established the 1996 bonuses for
the executive officers based upon the committee's evaluation of their
individual performances and the Company's achievement of earnings targets,
subject to any minimum bonuses under the employment agreements described above.
The Compensation Committee generally awarded smaller bonuses in 1996 than in
1995 because in 1995 the Company significantly surpassed its earnings targets.
Although the Company achieved its earnings targets in 1996, the Company did not
surpass them.
When establishing salary and bonus amounts, the Compensation
Committee consulted with Dr. Riggs and Mr. Miller and considered the
compensation ranges for executive officers of companies similar to the Company
set forth in a consultant's report prepared in 1993 and updated for use in
1996. This report and the related compensation
6
<PAGE> 8
decisions did not specifically compare the compensation levels of the Company's
executive officers to the compensation levels of the executive officers of all
of the companies in the Peer Group described in connection with the Performance
Graph set out below because of the varying sizes of the companies comprising
the Peer Group. The Compensation Committee also did not compare each executive
officer's performance against any list of specific factors, use any formula to
determine such officer's overall compensation, or seek to compensate such
officer at a predetermined percentile within the compensation range for such
officer in the consultant's report.
The Compensation Committee believes that the 1996 compensation
of the Company's executive officers is reasonable in relation to the market
performance of the Common Stock in 1996. As shown in the Performance Graph, the
closing price of the Common Stock on December 31, 1996 was $23.25, a decrease
of 3.1% from the closing price on December 31, 1995. This decrease of 3.1%
compares favorably to the decrease of 33.4% in the weighted average of the
common stocks in the Peer Group during 1996. See "Performance Graph."
CHANGE IN CONTROL PROVISIONS. During 1996 the Compensation
Committee approved adding change in control provisions to the employment
agreements of Dr. Riggs and Mr. Miller. These provisions provide for the
payment and benefits described below if the Company terminates such individual
without cause or he resigns for good reason following a change in control or a
potential change in control of the Company. In addition, during 1996 the
Company entered into a severance agreement with Mr. Anderson providing for the
payment and benefits described below if the Company terminates him without
cause or he resigns for good reason following a change in control of the
Company.
The Compensation Committee believes that providing these
individuals with some measure of financial security in the event of a change in
control of the Company would increase their loyalty to the Company and
encourage them to remain with the Company immediately following any change in
control. The assurance that these individuals would remain with the Company
during the transition period following any change in control should increase
the value of any change in control transaction to the Stockholders. These
change in control provisions are precautionary and responsive to the industry's
consolidation.
STOCK OPTIONS. The Stock Option Subcommittee determines the
number of stock options to grant to each executive officer and other
participant under the Stock Option Plan. This plan limits the number of shares
of Common Stock subject to options that the Stock Option Subcommittee may grant
to any executive officer or other participant under the plan to 250,000 shares
in any given year, including all shares related to forfeited, canceled, or
repriced options. The Stock Option Subcommittee does not grant stock options at
pre-determined times or intervals, although the committee usually grants some
stock options during the first quarter of each year. The stock options
reflected in the compensation tables set out below are the options actually
granted during the periods indicated, except for certain stock options granted
to Mr. Miller discussed below.
The Stock Option Subcommittee grants stock options to the
executive officers to encourage loyalty to the Company, reward them for their
past contributions to the Company's success, and motivate them to perform in a
superior manner in the future. When awarding stock options, the Stock Option
Subcommittee also considers the executive officer's seniority and the number of
stock options previously granted to such individual. The Stock Option
Subcommittee grants stock options at an exercise price equal to the closing
price of the Common Stock on the trading day immediately preceding the date of
the grant. The options therefore provide value to the executive officers only
if the
7
<PAGE> 9
price of the stock appreciates. The stock options generally vest over four or
five years. When options vest over four years, 20% of the options usually vest
upon their grant. The stock options granted during 1996 also automatically vest
upon a change in control of the Company. This change in control provision is
precautionary and responsive to the industry's consolidation.
In 1996 the Securities and Exchange Commission (the
"Commission") significantly revised Rule 16b-3. Effective August 15, 1996, the
Board of Directors amended the Stock Option Plan to conform to the revised rule
and make certain insignificant changes to the plan. Section 16(b) of the
Exchange Act generally provides that directors, executive officers, and
beneficial owners of more than 10% of any class of an issuer's equity
securities (collectively, "Reporting Persons") must disgorge any "short-swing
profit" realized on purchases and sales of the issuer's equity securities
during any six month period. A grant of a stock option usually is considered a
purchase of the underlying stock for purposes of Section 16(b). Accordingly,
granting stock options to a Reporting Person could cause such person to become
liable for short-swing profits. If the issuer complies with Rule 16b-3 when
granting the stock options, however, the grant is not considered a purchase.
SECTION 162(m). Unless the Company satisfies certain
requirements, Section 162(m) of the Code will generally limit the Company's tax
deduction for compensation paid to each of the executive officers named in the
Summary Compensation Table below to $1.0 million. During 1996, none of the
executive officers named in the table received compensation exceeding the
maximum deductible amount. The Company believes that the Stock Option Plan
complies with Section 162(m). Accordingly, the tax deductions available to the
Company when executive officers exercise their stock options should not count
against the $1.0 million limit. The Compensation Committee intends to monitor
the compensation paid to the Company's executive officers to insure
deductibility under Section 162(m), subject to maintaining the Company's
flexibility to attract and retain qualified executives to manage the Company.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. As described
above, the compensation of Dr. Riggs is established under his employment
agreement originally entered into prior to the Company's initial public
offering in December 1994. Under that agreement, Dr. Riggs was eligible for a
1996 bonus of not less than $100,000 if the Company achieved an earnings target
established by the Board of Directors. In the year ended December 31, 1996, the
Company achieved the established target and the Compensation Committee awarded
Dr. Riggs a bonus of $166,031. The Compensation Committee awarded Dr. Riggs a
bonus in excess of the minimum bonus under his employment agreement because
that minimum amount was based upon the Company's status as a private company.
The Compensation Committee believed that Dr. Riggs's increased responsibilities
as the chief executive officer of a public company and the Company's
achievement of the 1996 earnings target established by the Board of Directors
justified a higher bonus amount.
8
<PAGE> 10
MR. MILLER'S ACQUISITION BONUS. In the beginning of 1996, the
Compensation Committee informally arranged with Mr. Miller and the other
members of the Company's acquisition team to award them incremental bonuses if
they successfully implemented the Company's aggressive acquisition program. The
incremental bonuses would be based upon the estimated increase in the Company's
earnings per share from the acquisitions. The key members of the team were Mr.
Miller and the Company's former Chief Financial Officer. In March 1996, the
former Chief Financial Officer resigned to accept a position with another
company. Mr. Miller, however, proceeded to close all nine of the company's 1996
acquisitions, which represented over 65 contracts to provide emergency
department management services.
The incremental bonus to which Mr. Miller would have been
entitled under the informal arrangement exceeded $500,000. Both Mr. Miller and
the members of the Compensation Committee believed that Mr. Miller's success
went beyond the boundaries that they had contemplated when establishing the
incremental bonus arrangement. In addition, both Mr. Miller and the members of
the Compensation Committee believed that awarding Mr. Miller such a large
incremental bonus when regular year-end bonuses had decreased from the prior
year would be inappropriate.
Mr. Miller and the members of the Compensation Committee
decided that Mr. Miller's incremental bonus should only be $100,000. In
addition, they requested the Stock Option Subcommittee to make an incremental
award of stock options to Mr. Miller. In response, the Stock Option
Subcommittee awarded Mr. Miller options to purchase an additional 35,000 shares
of Common Stock. This incremental cash bonus and stock option grant was in
addition to Mr. Miller's regular 1996 bonus of $166,031 and his March 1996
grant of stock options to purchase 75,000 shares of Common Stock.
Respectfully submitted,
Terry Hartshorn
Andrew M. Paul
Richard H. Stowe
9
<PAGE> 11
EXECUTIVE OFFICERS
The following table sets forth the current executive officers
of the Company. Although the Board of Directors has not elected Dr. Cooley as
an officer of the Company, he is considered an executive officer for purposes
of this Proxy Statement because he performs policy making functions for the
Company. Each executive officer serves at the pleasure of the Board of
Directors.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Leonard M. Riggs, Jr., M.D. 54 Chairman of the Board, Chief
Executive Officer, and Director
William F. Miller, III 47 President, Chief Operating
Officer, and Director
Robert F. Anderson, II 54 Chief Financial Officer, Senior
Vice President, Treasurer, and
Secretary
Steven W. Cooley, M.D., 44 Executive Vice President of
F.A.C.E.P. EmCare
S. Kent Fannon 44 Senior Vice President of
Corporate Development
</TABLE>
The business experience of Dr. Riggs and Mr. Miller is
described above.
MR. ANDERSON. Robert F. Anderson, II, has served as Chief
Financial Officer, Senior Vice President, Treasurer, and Secretary of the
Company since April 1, 1996. Mr. Anderson also administers the Company's
compliance programs. From 1977 to 1996, Mr. Anderson was a partner with Ernst &
Young LLP and its predecessor firms. From 1994 to 1995, Mr. Anderson was
Director of the Healthcare Industry Group for the North Texas office of Ernst &
Young. From 1990 to 1993, Mr. Anderson was Director of the Audit Practice for
the Fort Worth office of Ernst & Young. From 1984 to 1989, Mr. Anderson was
Managing Partner of the Fort Worth office of Ernst & Whinney. From 1981 to
1983, Mr. Anderson was Director of Entrepreneurial Services for the Dallas
office of Ernst & Whinney.
DR. COOLEY. Steven W. Cooley, M.D., F.A.C.E.P. has served as
Executive Vice President of EmCare since 1992. From 1991 to 1992, Dr. Cooley
served as Executive Vice President and Chief Medical Officer of Spectrum
Emergency Care, Inc., a physician practice management company. From 1989 to
1991, Dr. Cooley served as Executive Vice President and Chief Operating Officer
of Synergon and Government Health Services, Inc. ("Synergon"), an emergency
medicine practice management company. From 1985 to 1989, Dr. Cooley served as
Executive Vice President of Synergon. Dr. Cooley began practicing emergency
medicine in 1978. In addition to his activities described above, from 1978 to
1992 Dr. Cooley served as a director, staff physician, or attending physician
in hospital emergency departments.
MR. FANNON. S. Kent Fannon has served as Senior Vice President
of Corporate Development since December 30, 1996. From 1994 to 1996, Mr. Fannon
was a partner with Covington Group, L.C., a merchant banking and consulting
firm. From 1993 to 1994, Mr. Fannon was Planning, Quality, and Resource
Management Officer for EPIC
10
<PAGE> 12
Healthcare Group, Inc., which owned and operated hospitals and other health
care related business. From 1990 to 1993, Mr. Fannon was a partner with The
Elder Group, a management consulting firm.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth
certain information with respect to compensation paid or accrued by the Company
during the years ended December 31, 1996, 1995, and 1994 to the Company's Chief
Executive Officer and its other four executive officers. The fringe benefits
provided to each of these executive officers was less than the lesser of
$50,000 or 10% of such executive officer's compensation. The Company therefore
excluded such fringe benefits from the following table as permitted under the
Commission's rules.
<TABLE>
<CAPTION>
Long-Term
Compensa-
Annual tion/
Compensation Securities
----------------------- Underlying All Other
Salary Bonus Options(1) Compensation
Name and Principal Position Year ($) ($) (#) ($)
--------------------------- ---- --------- --------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Leonard M. Riggs, Jr., M.D. 1996 297,448 166,031 75,000 9,250 (2)
Chairman of the Board and 1995 278,250 225,000 75,000 16,534 (2)
Chief Executive Officer 1994 265,585 175,000 37,500 13,268 (2)
William F. Miller, III, 1996 284,258 266,031 (3) 110,000 (3) 9,250 (4)
President and Chief Operating 1995 257,250 225,000 75,000 16,784 (4)
Officer 1994 245,000 175,000 37,500 16,667 (4)
Robert F. Anderson, II, (5) 1996 147,449 74,714 70,000 0
Chief Financial Officer, Senior
Vice President, Treasurer, and
Secretary
Steven W. Cooley, M.D. 1996 229,379 74,714 45,000 9,250 (6)
F.A.C.E.P., Executive Vice 1995 215,254 100,000 15,000 13,807 (6)
President of EmCare 1994 205,004 65,000 17,500 13,281 (6)
S. Kent Fannon (7) 1996 0 0 50,000 0
Senior Vice President of
Corporate Development
</TABLE>
- -----------------------------------
(1) The Company originally granted the stock options shown as granted during
1994 at an exercise price of $14.00 per share in December 1993 and then
repriced them to the Company's initial public offering price of $11.00 per
share in December 1994, except that the Company originally granted stock
options to purchase 12,500 shares of Common Stock to Dr. Cooley in July
1994.
(2) The 1996 other compensation amount for Dr. Riggs consists of $4,750 in
matching contributions made under the Company's 401(k) Plan and $4,500 in
profit sharing payments that the Company paid into the 401(k) Plan on Dr.
Riggs's behalf. The 1995 other compensation amount for Dr. Riggs
11
<PAGE> 13
consists of $4,638 in matching contributions made under the Company's
401(k) Plan, $4,500 in profit sharing payments that the Company paid into
the 401(k) Plan on Dr. Riggs's behalf, $5,278 in health insurance premiums
paid on behalf of Dr. Riggs, $957 in life insurance premiums paid on behalf
of Dr. Riggs, and $1,161 in disability insurance premiums paid on behalf of
Dr. Riggs. The 1994 other compensation amount for Dr. Riggs consists of
$3,524 in contributions on behalf of Dr. Riggs to a Money Purchase Pension
Plan, $624 in life insurance premiums paid on behalf of Dr. Riggs, $4,620
in matching contributions made under the Company's 401(k) Plan, and $4,500
in profit sharing payments that the Company paid into the 401(k) Plan on
Dr. Riggs's behalf.
(3) Mr. Miller's bonus and stock option grants include an incremental bonus of
$100,000 and an incremental award of stock options to purchase 35,000
shares of Common Stock because of Mr. Miller's successful implementation of
the Company's aggressive acquisition program in 1996. Although the Company
actually granted these incremental stock options to Mr. Miller on February
18, 1997, the Company has included them in this table because they related
to Mr. Miller's 1996 performance. See "Report of the Compensation
Committee -- Mr. Miller's Acquisition Bonus."
(4) The 1996 other compensation amount for Mr. Miller consists of $4,750 in
matching contributions made under the Company's 401(k) Plan and $4,500 in
profit sharing payments that the Company paid into the 401(k) Plan on Mr.
Miller's behalf. The 1995 other compensation amount for Mr. Miller consists
of $4,888 in matching contributions made under the Company's 401(k) Plan,
$4,500 in profit sharing payments that the Company paid into the 401(k)
Plan on Mr. Miller's behalf, $5,278 in health insurance premiums paid on
behalf of Mr. Miller, $957 in life insurance premiums paid on behalf of Mr.
Miller, and $1,161 in disability insurance premiums paid on behalf of Mr.
Miller. The 1994 other compensation amount for Mr. Miller consists of
$3,524 in contributions on behalf of Mr. Miller to a Money Purchase Pension
Plan, $4,049 in life insurance premiums paid on behalf of Mr. Miller,
$4,594 in matching contributions made under the Company's 401(k) Plan, and
$4,500 in profit sharing payments that the Company paid into the 401(k)
Plan on Mr. Miller's behalf.
(5) Mr. Anderson became an employee of the Company on April 1, 1996.
Accordingly, the table does not contain any information for Mr. Anderson
for 1995 and 1994.
(6) The 1996 other compensation amount for Dr. Cooley consists of $4,750 in
matching contributions made under the Company's 401(k) Plan and $4,500 in
profit sharing payments that the Company paid into the 401(k) Plan on Dr.
Cooley's behalf. The 1995 other compensation amount for Dr. Cooley consists
of $4,620 in matching contributions made under the Company's 401(k) Plan,
$4,500 in profit sharing payments that the Company paid into the 401(k)
Plan on Dr. Cooley's behalf, $2,540 in health insurance premiums paid on
behalf of Dr. Cooley, $986 in life insurance premiums paid on behalf of Dr.
Cooley, and $1,161 in disability insurance premiums paid on behalf of Dr.
Cooley. The 1994 other compensation amount for Dr. Cooley consists of
$3,524 in contributions on behalf of Dr. Cooley to a Money Purchase Pension
Plan, $645 in life insurance premiums paid on behalf of Dr. Cooley, $4,612
in matching contributions made under the Company's 401(k) Plan, and $4,500
in profit sharing payments that the Company paid into the 401(k) Plan on
Dr. Cooley's behalf.
(7) Mr. Fannon became an employee of the Company on December 30, 1996, although
he did not receive any salary or bonus with respect to 1996. Accordingly,
the table does not contain any information for Mr. Fannon for 1995 or 1994.
12
<PAGE> 14
OPTIONS GRANTED IN THE LAST FISCAL YEAR. The following table
sets forth certain information regarding the grant of stock options during the
year ended December 31, 1996 to each of the Company's executive officers and
the grant of stock options to purchase 35,000 shares of Common Stock to Mr.
Miller on February 18, 1997 in partial compensation for his successful
implementation of the Company's aggressive acquisition program in 1996.
Although the Company granted these stock options to Mr. Miller in 1997, the
Company has included them in this table because they relate to Mr. Miller's
1996 performance.
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------
Percent of
Total
Number of Options Potential Realizable
Securities Granted to Value at Assumed
Underlying Employees Exercise Annual Rates of Stock
Options in Fiscal Price (Per Price Appreciation for
Granted Year Share) Expiration Option Term
--------------------------
Name (#) (%)(1) ($) Date 5% ($) 10% ($)
- ------------------- ---------- ------------ ------------ ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Leonard M. Riggs, 75,000 13.31 25.63 03-11-06 918,375 2,600,625
Jr., M.D.
William F. Miller, III 75,000 13.31 25.63 03-11-06 918,375 2,600,625
35,000 6.21 24.44 02-18-07 470,138 1,255,188
Robert F. Anderson, II 50,000 8.87 26.88 04-01-06 549,750 1,671,250
20,000 3.55 20.25 11-12-06 352,400 801,000
Steven W. Cooley, 45,000 7.99 25.63 03-11-06 551,025 1,560,379
M.D., F.A.C.E.P.
S. Kent Fannon 50,000 8.87 23.00 12-30-06 743,500 1,865,000
</TABLE>
- ---------------
(1) The total stock options granted used to compute this percentage
includes: (a) the stock options granted to the participants under the
Stock Option Plan who are physicians under contract with either a
subsidiary of the Company or a PA (as defined in the section entitled
"Certain Transactions"), and (b) the stock options to purchase 35,000
shares of Common Stock granted to Mr. Miller on February 18, 1997 in
partial compensation for his successful implementation of the
Company's aggressive acquisition program in 1996. See "Report of the
Compensation Committee -- Mr. Miller's Acquisition Bonus."
OPTIONS EXERCISED AND HELD. The following table sets forth
information regarding the exercise of stock options during the year ended
December 31, 1996 and the number and value of options held as of December 31,
1996 by each of the Company's executive officers.
13
<PAGE> 15
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired Value at Fiscal Year End (#) at Fiscal Year End ($)
on Exercise Realized (Exercisable/ (Exercisable/
Name (#) ($) Unexercisable Unexercisable)
- ---------------------- ----------- --------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Leonard M. Riggs, 0 0 71,667/125,833 682,466/718,099
Jr., M.D.
William F. Miller, III 22,500 285,000 57,500/130,000(1) 600,735/794,430(1)
Robert F. Anderson, II 0 0 14,000/56,000 12,000/48,000
Steven W. Cooley, M.D., 8,500 157,681 12,500/55,500 42,875/241,431
F.A.C.E.P.
S. Kent Fannon 0 0 10,000/40,000 2,500/10,000
</TABLE>
- ---------------
(1) These numbers exclude the stock options to purchase 35,000 shares of
Common Stock granted to Mr. Miller on February 18, 1997 in partial
compensation for his successful implementation of the Company's
aggressive acquisition program in 1996.
EMPLOYMENT AND SEVERANCE AGREEMENTS. In connection with the
Recapitalization in February 1992, Dr. Riggs and Mr. Miller each entered into
a five year employment agreement with the Company. Although the five year terms
under these agreements have expired, they continue to govern the terms of the
Company's employment arrangements with each of Dr. Riggs and Mr. Miller. The
parties amended these employment agreements in December 1993 to increase the
1994 base salaries under them. The amendment to Dr. Riggs's employment
agreement increased his 1994 base salary to $265,000. The amendment to Mr.
Miller's employment agreement increased his 1994 base salary to $245,000. After
1994, the base salaries under both of these employment agreements increase
annually by the greater of the increase in the Consumer Price Index during the
preceding year or 5%.
In addition, under their employment agreements, Dr. Riggs and
Mr. Miller are each entitled to an annual bonus of not less than $100,000 if
the Company achieves certain earnings targets for internal growth and
profitability. If the Company fails to achieve these targets, Dr. Riggs and
Mr. Miller are entitled to receive pro rata portions of their bonuses if the
Company achieves at least 80% of its operating income target.
Under Dr. Riggs's and Mr. Miller's employment agreements, if
the Company terminates such individual without cause or he resigns because of
the Company's breach of his employment agreement, during the year immediately
after such termination or resignation the Company must pay him a monthly amount
equal to the aggregate of his monthly salary and one-twelfth of his estimated
bonus. During this period, the Company also must continue to provide such
individual and his dependents with the medical, life, and disability insurance
coverage in effect at the time of such termination or resignation.
During the year ended December 31, 1996, the parties amended
and restated these employment agreements. Dr. Riggs's and Mr. Miller's amended
and restated agreements added a change in control provision that provides that
if the Company terminates him or he resigns for good reason during the two
years immediately after a change in control of the Company, the Company will
pay him a lump sum equal to twice the
14
<PAGE> 16
aggregate of his annual salary and average annual bonus. The Company will
increase this amount for any excise tax that Dr. Riggs or Mr. Miller must pay
on such payment under the "golden parachute" provisions of the Code. In
addition, during the two years immediately after such termination or
resignation the Company must continue to provide such individual with the
health, dental, life, and disability benefits that the Company previously
provided to him. Finally, following such termination or resignation such
individual's vested stock options will remain exercisable for at least 30 days.
Under each amended and restated agreement the Company provides
equivalent benefits to Dr. Riggs and Mr. Miller if the Company terminates him
without cause or he resigns for good reason within one year after a potential
change in control. Any payments to Dr. Riggs or Mr. Miller because of a change
in control or potential change in control will be offset by any other severance
obligations provided to him under his respective agreement.
During the year ended December 31, 1996, the Company entered
into a severance agreement with Mr. Anderson. This agreement provides that the
Company will pay Mr. Anderson severance of $190,000 if within 180 days
following a change in control the Company terminates him without cause or he
resigns for good reason. In addition, for up to one year after such termination
or resignation the Company will continue to provide Mr. Anderson with the
disability, health, and life insurance benefits provided to him at the time of
such termination or resignation.
COMMON STOCK OWNERSHIP
PRINCIPAL STOCKHOLDERS. The following table sets forth the
persons and groups who beneficially owned more than 5% of the outstanding
shares of Common Stock as of April 4, 1997. The Company compiled this
information from its stock records, the Schedules 13D and 13G sent to the
Company, and other information available to the Company. Unless otherwise
indicated, these persons and groups possess sole voting and investment power
with respect to the shares of Common Stock that they beneficially own.
15
<PAGE> 17
<TABLE>
<CAPTION>
Number of Shares Percentage of
Name and Address of Beneficial Owner Beneficially Owned Outstanding Shares
- ------------------------------------ ------------------ ------------------
<S> <C> <C>
William F. Miller, III 499,500(1) 6.03%
c/o EmCare Holdings Inc.
1717 Main Street, Suite 5200
Dallas, Texas 75201
Putnam Investments, Inc. 1,010,000 12.35%
One Post Office Square
Boston, Massachusetts 02109
Leonard M. Riggs, Jr., M.D. 970,766(2) 11.70%
c/o EmCare Holdings Inc.
1717 Main Street, Suite 5200
Dallas, Texas 75201
Warburg, Pincus Counselors, Inc. 1,162,058 14.21%
466 Lovington Avenue
New York, New York 10017
</TABLE>
- ----------------------------------
(1) These shares of Common Stock include: (a) 107,500 shares issuable to
Mr. Miller upon the exercise of stock options that are vested or will
vest within 60 days after April 4, 1997, (b) 10,000 shares owned by
The Abby Margaret Miller 1994 Descendants Trust, for which Mr. Miller
serves as the trustee, (c) 10,000 shares owned by The Joshua William
Miller 1994 Descendants Trust for which Mr. Miller serves as the
trustee, (d) 500 shares owned by Abby M. Miller, Mr. Miller's minor
daughter, and (e) 500 shares owned by Joshua W. Miller, Mr. Miller's
minor son.
(2) These shares of Common Stock include: (a) 114,667 shares issuable to
Dr. Riggs upon the exercise of stock options that are vested or will
vest within 60 days after April 4, 1997, (b) 94,350 shares owned by
the Riggs Family Limited Partnership, a partnership in which Dr. Riggs
and trusts established for Dr. Riggs's children are the partners, and
(c) 257,884 shares owned by a voting trust established for Peggy A.
Riggs, Dr. Riggs's wife, for which Dr. Riggs serves as the trustee.
DIRECTORS AND EXECUTIVE OFFICERS. The following table sets
forth the number of shares of Common Stock beneficially owned as of April 4,
1997 by each director of the Company, each executive officer of the Company,
and all directors and executive officers of the Company as a group. The Company
obtained this information from its directors and executive officers. Unless
otherwise indicated, these individuals possess sole voting and investment power
with respect to the shares that they beneficially own.
16
<PAGE> 18
<TABLE>
<CAPTION>
Percentage of
Number of Shares Outstanding
Name Beneficially Owned Shares
---- ------------------ ------------------
<S> <C> <C>
Robert F. Anderson, II 28,000 (1) *
Steven W. Cooley, M.D., F.A.C.E.P. 37,000 (1) *
S. Kent Fannon 10,000 (1) *
Terry Hartshorn 5,000 (1) *
James T. Kelly 13,500 (1) *
William F. Miller, III 499,500 (1)(2) 6.03%
Andrew M. Paul 15,175 (1) *
Leonard M. Riggs, Jr., M.D. 970,766 (1)(2) 11.70%
Richard H. Stowe 51,201 (1) *
All directors and executive officers as a group 1,630,142 (1) 19.19%
(9 individuals)
</TABLE>
- --------------------------
* Less than 1%.
(1) The shares of Common Stock owned beneficially by the following
individuals include stock options that are vested or will vest within
60 days after April 4, 1997 for the number of shares following their
name: Mr. Anderson-28,000 shares, Dr. Cooley-37,000 shares, Mr.
Fannon-10,000 shares, Mr. Hartshorn-5,000 shares, Mr. Kelly-9,500
shares, Mr. Miller-107,500 shares, Mr. Paul-2,000 shares, Dr.
Riggs-114,667 shares, and Mr. Stowe-2,000 shares, and all directors
and executive officers as a group-315,667 shares.
(2) See the preceding table for a description of the beneficial ownership
of the shares of Common Stock by Mr. Miller and Dr. Riggs.
In connection with the Recapitalization, the Company granted
certain registration rights with respect to the transfer of shares of Common
Stock to Mr. Miller, Dr. Riggs, and certain other persons.
PERFORMANCE GRAPH
The following Performance Graph compares the Company's
cumulative total Stockholder return on the Common Stock for the period from
December 8, 1994, the day the Common Stock commenced trading on the NASDAQ
National Market, to December 31, 1996, with the cumulative total return of: (i)
the NASDAQ market index, which includes the Company, and (ii) the peer group of
companies described below that the Company selected for purposes of this
comparison (the "Peer Group"). The return of each company in the Peer Group has
been weighted to reflect its relative stock market capitalization. The
Performance Graph assumes dividend reinvestment.
17
<PAGE> 19
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
THE COMPANY, THE NASDAQ MARKET INDEX, AND THE PEER GROUP
<TABLE>
<CAPTION>
Dec. 8, Dec. 31, Dec. 31, Dec. 31,
1994 1994 1995 1996
------- -------- -------- ---------
<S> <C> <C> <C> <C>
EmCare Holdings Inc. 100.00 130.34 215.73 208.99
Peer Group 100.00 106.25 169.60 112.95
NASDAQ Market Index 100.00 100.09 129.83 161.33
</TABLE>
The Peer Group is comprised of Coastal Physician Group, Inc.
(formerly Coastal Healthcare Group, Inc.), InPhyNet Medical Management Inc.,
PhyCor, Inc., and Physician Reliance Network, Inc. Although they are not all
direct competitors of the Company, all the companies in the Peer Group are
engaged in emergency physician practice management or related businesses in the
health care industry. The Company believes that including only its direct
competitors in the Peer Group would not provide a meaningful group for
comparative purposes because of the small number of public companies that
directly compete against the Company. Pacific Physician Services, Inc. was
included in the Peer Group in last year's proxy statement. As Med Partners,
Inc. acquired Pacific Physician Services, Inc. in 1996, however, the Company
has excluded it from the Peer Group for all of the years shown in the
Performance Graph above.
CERTAIN TRANSACTIONS
In certain states the Company's services are provided in
conjunction with professional associations and corporations owned by Dr. Riggs
or another representative of the Company who is a physician (the "PAs"). Under
this arrangement, a PA enters into a management agreement with the hospital and
engages physicians to provide the necessary medical practice coverage. The
Company then provides the non-medical portion of the service under this
arrangement pursuant to a management agreement between a Company subsidiary and
the PA. For the fiscal year ended December 31, 1996, the PAs paid approximately
$33,211,000 to the Company's subsidiaries under these management agreements,
which approximated the excess of the PAs' revenues over their expenses. Dr.
Riggs and such other representatives have generally arranged for the transfer
of the capital stock of the PAs to other representatives of the Company who are
medical doctors if they die or become incapacitated.
For operational purposes, a subsidiary of the Company has
entered into a revolving credit agreement with each PA that permits such PA to
borrow up to $1,000,000. These agreements restrict operations of the PAs and
prohibit them from making any distributions to Dr. Riggs or the Company's other
representatives. As of April 4, 1997, no PA had borrowed any amount under these
agreements.
18
<PAGE> 20
CERTIFIED PUBLIC ACCOUNTANTS
The policy of the Board of Directors is not to request the
Stockholders to ratify the selection of the Company's certified public
accounting firm. The Company's current certified public accounting firm is
Ernst & Young LLP. The Company has invited representatives of Ernst & Young
LLP to attend the Annual Meeting. The Company will give these representatives
the opportunity to make a statement at the meeting and respond to appropriate
questions from any Stockholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's
Reporting Persons to file with the Commission initial reports of Common Stock
ownership and reports of changes in such ownership. A Reporting Person must
file a Form 3 -- Initial Statement of Beneficial Ownership of Securities within
10 days after such person becomes a Reporting Person. A Reporting Person must
file a Form 4 -- Statement of Changes of Beneficial Ownership of Securities
within 10 days after any month in which such person's beneficial ownership of
securities changes, except for certain changes exempt from the reporting
requirements of Form 4. Such exempt changes include stock options granted under
a plan qualifying under Rule 16b-3. A Reporting Person must file a Form 5 --
Annual Statement of Beneficial Ownership of Securities within 45 days after the
end of the issuer's fiscal year to report any changes in ownership during such
year not reported on a Form 4, including changes exempt from the reporting
requirements of Form 4.
The Commission's rules require the Company's Reporting Persons
to furnish the Company with copies of all Section 16(a) reports that they file.
Based solely upon a review of the copies of such reports furnished to the
Company and written representations that no other reports were required with
respect to the year ended December 31, 1996, the Company believes that the
Reporting Persons have complied with all applicable Section 16(a) filing
requirements for 1996 on a timely basis, except that Mr. Anderson filed his
Form 3 when he became an executive officer of the Company and his Form 5 for
1996 late, Andrew G. Buck, the Company's Chief Accounting Officer, filed his
Form 5 for 1996 late, Dr. Cooley filed his Form 5 for 1996 late, and Mr. Fannon
filed his Form 3 when he became an executive officer of the Company and his
Form 5 for 1996 late.
STOCKHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
To be considered for inclusion in the Company's proxy
statement for the 1998 annual meeting, Stockholder proposals must be received
at the Company's principal executive office in the manner described in the
Company's bylaws between November 18, 1997 and December 18, 1997.
INCORPORATION BY REFERENCE
With respect to any future filings with the Commission into
which this Proxy Statement is incorporated by reference, the material under the
headings "Report of the Compensation Committee" and "Performance Graph" shall
not be incorporated into such future filings.
19
<PAGE> 21
ANNUAL REPORT
Accompanying this Proxy Statement is a copy of the Company's
Annual Report for the year ended December 31, 1996.
FORM 10-K
The Company will mail a copy of its Annual Report on Form 10-K
for the year ended December 31, 1996 (the "Form 10-K") to any Stockholder or
beneficial owner of shares of Common Stock upon written request and without
charge. Any such person desiring a Form 10-K should make such request to Mr.
Robert F. Anderson, II at the principal executive office of the Company. The
Company will only furnish copies of any exhibits to the Form 10-K, however,
upon further request and reimbursement of the Company's copying and mailing
expenses.
20
<PAGE> 1
EXHIBIT 99.4
EMPLOYMENT AGREEMENT
This Agreement between EmCare Holdings, Inc., a Delaware corporation
(the "Company"), and Dr. Leonard M. Riggs, Jr. ("Executive") is hereby entered
into as of , 1997.
RECITALS:
The Company has entered into an agreement and plan of merger (the
"Merger Agreement") dated as of July , 1997 by and among the Company, Laidlaw
Inc., a Canadian corporation ("Laidlaw") and EHI Acquisition Corp., a
wholly-owned subsidiary of Laidlaw ("Acquisition").
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 (the "Merger") and the Company will become a
wholly-owned indirect subsidiary of Laidlaw.
Executive is or will be employed by the Company in a confidential
relationship wherein Executive, in the course of his employment with the
Company, has and 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,
effective as of the time of the Merger, it is hereby agreed as follows:
1
<PAGE> 2
1. EMPLOYMENT AND DUTIES
(a) The Company hereby employs Executive as Chief Executive Officer of
Emcare Holdings, Inc. to perform the duties normally associated
therewith. Executive shall report directly to the Chief Executive
Officer or Chief Operating Officer of Laidlaw. Executive hereby
accepts this employment upon the terms and conditions herein contained
and agrees to devote his full time, attention and efforts to promote
and further the business and services of the Company. Executive shall
faithfully adhere to, execute and fulfill all policies established by
the Company.
(b) Executive shall perform such duties, assume such responsibilities and
devote such time and energy to the business of the Company as the
Chief Executive Officer or Chief Operating Officer of Laidlaw shall
from time to time require and shall not, during the term of his
employment hereunder, be engaged in any other business activity
pursued for gain, profit or other pecuniary advantage without the prior
approval of the Company.
However, the foregoing limitations shall not be construed as
prohibiting Executive from making personal investments in such form
and manner as will neither require his services in the operation or
affairs of the companies or enterprises in which such investments are
made nor violate the terms of paragraph 3 hereof. The Executive shall
not be prohibited from serving as a director of other entities
provided there is no conflict with the business of the Company or the
ability of the Executive to perform his duties hereunder subject in
any case to the approval of the Chief Executive Officer of Laidlaw,
not to be unreasonably withheld.
(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 possible.
2. COMPENSATION AND EXPENSE
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 $325,000 per year payable in accordance with the Company's
customary pay practices.
(b) ANNUAL PERFORMANCE BONUS. Executive shall be eligible for an annual
bonus in the amount of $800,000 per year subject to the Company
2
<PAGE> 3
achieving earnings growth at the level agreed to by the Executive and
the Chief Executive Officer of Laidlaw. Executive shall remain
eligible for annual bonus for five years from the date hereof, or, if
earlier, until his employment with the Company has been terminated. The
annual bonus shall be paid to the Executive after each fiscal year at
such time as annual performance bonus would normally be paid to senior
executives of Laidlaw.
Should the Company, in any year, not achieve the specified earnings
target, but achieve 80% of the target, Executive shall be entitled to
receive 50% of the annual bonus plus a percentage of the balance equal
to the percentage of the target achieved between 80% and 100%. Should
the Executive remain employed by the Company for five years from the
date hereof and not have received the maximum bonus hereunder in each
of the five years, the Executive shall be eligible for an additional
bonus not to exceed the aggregate unpaid amounts, in accordance with
criteria agreed to by the Executive and the Chief Executive Officer of
Laidlaw.
(c) RETENTION BONUS. In order 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,
the Company will pay or cause to be paid to Executive on execution of
this agreement, an amount in cash equal to $799,297.
Executive shall be entitled to receive a pro rata portion of the 1997
fiscal bonus to August 31, 1997, determined on a basis consistent,
with previous years, which bonus shall be payable at the time other
annual bonuses are paid to executives and shall not exceed $110,000.
(d) 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.
(e) AUTOMOBILE ALLOWANCE. Executive shall receive an automobile allowance
in the amount of $1,172 per month and shall be reimbursed for the cost
of automobile insurance which is intended to cover all expenses
relating to Executive's automobile.
(f) 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
3
<PAGE> 4
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.
(g) STOCK OPTIONS. As soon as practicable following the date hereof, the
Company will cause Laidlaw to grant to Executive an option to purchase
30,000 Common Shares of Laidlaw at an exercise price equal to the fair
market value of such common stock at the time of the grant, such
options to vest consistent with the terms of the Laidlaw stock option
plan under which such options are issued, Annual grants to the
Executive shall be proposed to the compensation committee of Laidlaw's
board of directors at levels consistent with other Laidlaw
executives.
(h) OTHER BENEFITS. Executive shall be entitled to participate in the
Company's employee benefit programs to the extent that his position,
title, and tenure make him eligible to participate therein, and
subject to and on a basis consistent with the terms, conditions and
overall administration of such programs, including, but not
necessarily limited to participation in the Company's 401(k) plan and
health, vision and dental coverage. In addition to the benefits
described above, Executive shall be entitled to the benefits set forth
on Annex A hereto.
3. NON-COMPETITION AGREEMENT: TRADE SECRETS
(a) Executive agrees that, for the greater of four years from the date
hereof and one year following termination of his employment with the
Company for any reason, he shall not, directly or indirectly, for
himself or on behalf of, or in conjunction with, any other person
company, partnership, corporation or business of whatever nature:
(i) knowingly call upon any past or present 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 the medical
transportation services and emergency department management services
business of the Company or any of its subsidiaries or affiliates;
(ii) knowingly call upon any employee of the Company or any 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 for
4
<PAGE> 5
himself or for others, that competes with the Company or its
affiliates in the business of providing medical transportation
services or emergency department management services 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
(iv) call upon any prospective acquisition candidates in the
medical transportation services or emergency department services
business 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 five 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,
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.
5
<PAGE> 6
(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 properly delivered to Executive by or on behalf of the Company
or any of its subsidiaries or affiliates 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 or affiliate, 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, charter, advertising materials, and
any data collected by Executive, or by or on behalf of the Company,
any of its respective subsidiaries or affiliates 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 or within one (1) year thereafter and which
are related to the business or activities of the Company or any of its
subsidiaries or affiliates 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 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 or within one (1) year thereafter, and shall be
binding upon Executive's assigns, executors,
6
<PAGE> 7
administrators and other legal representatives. Notwithstanding the
provisions of this Paragraph 5, articles or other writings which are
written or co-written for inclusion in academic or other periodicals,
journals, monographs or professionals shall remain the property of
Executive and may be copyrighted by Executive or such publication.
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 the
Merger. On the third anniversary of the date of the Merger, unless
either party has given prior written notice of nonrenewal at least 90
days prior to the date of such anniversary, the term of Executive's
employment with the 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 a period in excess of six months, to
perform his duties under this Agreement shall terminate Executive's
employment.
(ii) the Company may terminate the Executive's employment following
ten-days' written notice to Executive for good cause, which includes
the following ("Good Cause"):
(A) Executive's willful and knowing material breach of
this Agreement which results in material detriment to the
Company;
(B) Executive's fraud or gross negligence with respect to
the business or affairs of the Company resulting in material
detriment to the Company or if Employee is convicted of a
felony involving fraud, dishonesty or moral turpitude;
(C) Executive's exclusion from participation in Medicare,
Medicaid or any other governmental 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
governmental third party reimbursement program;
7
<PAGE> 8
(D) alcohol or drug abuse, or sexual harassment by
Executive as determined by the final decision of a court of
competent jurisdiction which results in material detriment to
the Company;
(iii) Executive may terminate his employment following 30-days'
written notice to the Company for Good Reason. The Executive shall
have "Good Reason" to terminate employment if: (A) the Executive's
duties, responsibilities or authority as an executive or office to
which he has been appointed are materially reduced or diminished from
those in effect as of the commencement of his employment hereunder
without the Executive's consent; (B) the Executive's compensation or
benefits are reduced; (C) the Company requires that the Executive's
employment be based other than at Dallas, Texas without his consent;
(D) the Company materially breaches any of the provisions of this
Agreement; or (E) the failure of the Company to require a successor to
its business to assume this agreement.
(iv) 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.
(b) Upon termination of Executive's employment pursuant to clause (i) of
paragraph 6(a), by Executive pursuant to clause (iii) of paragraph
6(a), or by the Company pursuant to clause (iv) of paragraph 6(a),
Executive or his heirs, as the case may be, shall be entitled to
receive (i) all cash compensation earned under this Agreement to the
date of termination, including the pro rata portion of any performance
bonus payable for the year during which the termination occurred plus
(ii) base compensation as in effect on the day prior to termination for
an additional period of one year plus and subject to any employee
contribution applicable to the Executive on the date of termination,
for a one year 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 life, disability, medical and dental insurance
plans provided that the Executive is entitled to continue such
participation under applicable state and federal law and plan terms.
(c) Upon termination of Executive's employment by the Company pursuant to
clause (ii) of paragraph 6(a), or by the Executive pursuant to clause
(iv) of paragraph 6(a), Executive shall be entitled to receive all
base cash compensation earned under this Agreement to the date of
termination. Such termination of the Executive's employment shall not
otherwise accelerate the payment date of any monies accrued or
accruing to the
8
<PAGE> 9
account of Executive as a result of any bonuses or other compensation,
nor shall termination vest in Executive any right in connection
therewith.
(d) If during the term of this agreement a Change of Control of the
Company occurs as a result of Laidlaw disposing of majority control of
the Company, and during the two (2) year period commencing on the
effective date of such Change of Control, the Executive's employment
is terminated by the Company other than for Good Cause, or by the
Executive for Good Reason, in addition to the benefits Executive is
eligible to receive under paragraph 6(b) above but excluding the
amount specified in 6(b)(ii), Executive shall be entitled to the
following benefits:
1. Any outstanding stock options, restricted stock, or other form
of stock-based grant or award previously granted to Executive by the
Company, to the extent vested in Executive as of the date of such
Termination of Employment, shall remain exercisable in accordance with
the terms of the plan.
2. For a two-year period following such termination of employment
the Executive shall not lose his eligibility for health, dental life,
or disability benefits under any Executive benefit plan, policy,
arrangement, or program (regardless of whether such program is
maintained for Executives in general, highly-compensated Executives
(as that term is defined in Section 414(q) of the Internal Revenue
Code of 1986, as amended (the "Code")), non-highly compensated
Executives, or for a select group of management Executives or
highly-compensated Executives (described in 29 CFR Section
2520.104-24)) at the same employee cost and benefit levels as prior to
the change of control. In the event that under the terms of such plan,
policy, arrangement, or program, the Executive's termination of
employment results in a loss of such coverage, the Company shall
immediately purchase comparable coverage for Executive for any portion
of the 24-month period so remaining. Following this period, Executive
shall be entitled to receive continuation coverage under COBRA,
treating the end of this period as a termination of Executive's
employment other than for gross misconduct.
3. Immediately following such Termination of Employment, the
Company shall pay to Executive an amount equal to two (2) times the
sum of:
(A) Executive's annual base rate of pay determined as of
the greater of (x) the year in which the termination of
employment occurs, or (y) the beginning of the calendar year
coinciding with or next preceding such Change in Control; plus
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(B) the greater of (x) the average of the last
performance bonuses paid to the Executive under paragraph 2(b)
of this Agreement prior to such Change in Control, or (y) the
average of the first three annual incentive bonuses paid to
Executive under paragraph 2(b) of this Agreement immediately
prior to such termination of employment.
Such amount shall be paid in cash to the Executive within 30
days of such termination of employment
4. If, in the written opinion of a national accounting firm
engaged by either the Company or the Executive for this purpose (at
the Company's expense), or if so alleged by the Internal Revenue
Service, the aggregate of the benefit payments hereunder (other than
under this subparagraph 6(c)(4)) would cause the payment of one or
more of such benefits to constitute an "excess parachute payment" as
defined in Section 280G(B) of the Code, then the Company will pay to
the Executive an additional amount in cash (the "Gross-Up Payment")
equal to the amount necessary to cause the net amount retained by the
Executive, after deduction of any (i) excise tax on the payments
hereunder (other than under this subparagraph 6(c)(4)), (ii) federal,
state or local income tax on the Gross-Up Payment, and (iii) excise
tax on the Gross-Up Payment, to be equal to the aggregate remuneration
the Executive would have received hereunder, excluding such Gross-Up
Payment (net of all federal, state and local excise and income taxes),
as if Sections 280G and 4999 of the Code (and any successor provisions
thereto) had not been enacted into law. The Gross-Up Payment provided
for in this subparagraph shall be made within thirty (30) days after
termination of Executive's employment, provided, however, that if the
amount of the payment cannot be finally determined at the time, the
Company shall pay to Executive an estimate as determined in good faith
by the Company of such payments (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the forty fifth
(45th) day after the Termination of Employment date.
5. For purposes of this Agreement, a "Change of Control" shall be
defined as (A) an event or series of events by which any "person" or
"group" (as such terms are defined in Sections 3(a)(9) and 13(d) of
the Securities Exchange Act of 1934, hereinafter known as the "Act"),
together with its or their "affiliates" and "associates" (as defined
in Rule 13d-3 of the Act), becomes the "Beneficial Owner" (as defined
in Rule 13d-3 of the Act modified to include, without regard to the
60-day period referred to in such Rule, all shares that such person or
group has the right to acquire pursuant to any agreement or
arrangement, or upon exercise of conversion rights, warrants or
options, or otherwise), directly or
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indirectly, of securities of the Company, having 51% or more of the
total number of votes entitled to be cast for the election of the
Board of Directors of the Company; (B) the sale or transfer of 50% or
more of the assets or earning power of the Company and its
subsidiaries (taken as a whole); or (C) at any time (i) the Company
shall consolidate with, or merge with, any other person and the
Company shall not be the continuing or surviving corporation, (ii) any
person shall consolidate with, or merge with the Company, and the
Company shall be the continuing or surviving corporation and in
connection therewith, all or part of the outstanding Company stock
shall be changed into or exchanged for stock or other securities of
any other person or cash or any other property, or (iii) the Company
shall be a party to a statutory share exchange with any other person.
Notwithstanding anything in the foregoing to the contrary, any events
occurring in connection with the stock of the Company becoming
publicly traded on a national exchange shall not constitute a "Change
in Control".
(e) 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 Executives 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), 6(c) or 6(d),
as the case may be.
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, 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 of 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 including without limitation that certain Employment
Agreement between the Company and the Executive dated February 5,
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1992. 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. 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, conditon 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 he cannot assign all or any portion of this Agreement. Subject to
the preceding sentence, this Agreement shall be binding upon and inure
to the benefit of the parties thereto and their respective heirs,
successors and assigns. The Company agrees to require any purchaser,
successor or assigns to assume the obligations hereunder and to agree
to be bound by the terms hereof. Laidlaw Inc. has executed this
Agreement to guarantee performance by the Company.
11. NOTICE. Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
To the Company: c/o Laidlaw Inc.
3221 North Service Road
Burlington, Ontario
L7R 3Y8
Attention: Chief Executive Officer
Fax: 905-332-6550
To Executive: Dr. Leonard M. Riggs, Jr.
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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 Texas. The parties agree that
any court proceeding shall be before a judge alone and waive trial by
jury. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
EXECUTIVE:
- -----------------------------------------
Dr. Leonard M. Riggs, Jr., Individually
EMCARE HOLDINGS INC.
By:
--------------------------------------
Name:
Title:
LAIDLAW INC.
By:
--------------------------------------
Name:
Title:
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ANNEX A
Other Benefits
1. Fees or dues reasonably incurred by Executive for country club and
athletic club membership.
2. Term and whole life insurance as presently in place.
3. Disability policy as presently in place.
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<PAGE> 1
EXHIBIT 99.5
EMPLOYMENT AGREEMENT
This Agreement between EmCare Holdings Inc., a Delaware corporation
(the "Company"), and William F. Miller III ("Executive") is hereby entered into
as of , 1997.
RECITALS:
The Company has entered into an agreement and plan of merger (the
"Merger Agreement") dated as of July , 1997 by and among the Company, Laidlaw
Inc., a Canadian corporation ("Laidlaw") and EHI Acquisition Corp., a
wholly-owned subsidiary of Laidlaw ("Acquisition").
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 (the "Merger") and the Company will become a
wholly-owned indirect subsidiary of Laidlaw.
Executive is or will be employed by the Company in a confidential
relationship wherein Executive, in the course of his employment with the
Company, has and 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,
effective as of the time of the Merger, it is hereby agreed as follows:
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1. EMPLOYMENT AND DUTIES
(a) The Company hereby employs Executive as President and Chief Operating
Officer of Emcare Holdings, Inc. to perform the duties normally
associated therewith. Executive shall report directly to the Chief
Executive Officer of the Company. Executive hereby accepts this
employment upon the terms and conditions herein contained and agrees
to devote his full time, attention and efforts to promote and further
the business and services of the Company. Executive shall faithfully
adhere to, execute and fulfill all policies established by the
Company.
(b) Executive shall perform such duties, assume such responsibilities and
devote such time and energy to the business of the Company as the
Chief Executive Officer of the Company shall from time to time require
and shall not, during the term of his employment hereunder, be engaged
in any other business activity pursued for gain, profit or other
pecuniary advantage without the prior approval of the Company.
However, the foregoing limitations shall not be construed as
prohibiting Executive from making personal investments in such form
and manner as will neither require his services in the operation or
affairs of the companies or enterprises in which such investments are
made nor violate the terms of paragraph 3 hereof. The Executive shall
not be prohibited from serving as a director of other entities
provided there is no conflict with the business of the Company or the
ability of the Executive to perform his duties hereunder subject in
any case to the approval of the Chief Executive Officer or Laidlaw,
not to be unreasonably withheld.
(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 possible.
2. COMPENSATION AND EXPENSE
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 $325,000 per year payable in accordance with the Company's
customary pay practices,
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<PAGE> 3
(b) ANNUAL PERFORMANCE BONUS. Executive shall be eligible for an annual
bonus in the amount of $800,000 per year subject to the Company
achieving earnings growth at the level agreed to by the Executive and
the Chief Executive Officer of Laidlaw. Executive shall remain
eligible for this annual bonus for five years from the date hereof,
or, if earlier, until his employment with the Company has been
terminated. The annual bonus shall be paid to the Executive after each
fiscal year at such time as annual performance bonuses would normally
be paid to senior executives of Laidlaw.
Should the Company, in any year, not achieve the specified earnings
target, but achieve 80% of the target, Executive shall be entitled to
receive 50% of the annual bonus plus a percentage of the balance equal
to the percentage of the target achieved between 80% and 100%. Should
the Executive remain employed by the Company for five years from the
date hereof and not have received the maximum bonus hereunder in each
of the five years, the Executive shall be eligible for an additional
bonus not to exceed the aggregate unpaid amounts, in accordance with
criteria agreed to by the Executive and the Chief Executive Officer of
Laidlaw.
(c) RETENTION BONUS. In order 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,
the Company will pay, or cause to be paid to Executive on execution of
agreement, an amount in cash equal to $786,544.
Executive shall be entitled to receive a pro rata portion of the 1997
fiscal bonus to August 31, 1997, determined on a basis consistent with
previous years, which bonus shall be payable at the time other annual
bonuses are paid to executives and shall not exceed $110,000.
(d) 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.
(e) AUTOMOBILE ALLOWANCE. Executive shall receive an automobile allowance
in the amount of $1,172 per month and shall be reimbursed for the cost
of automobile insurance which is intended to cover all expenses
relating to Executive's automobile.
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(f) 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.
(g) STOCK OPTIONS. As soon as practicable following the date hereof, the
Company will cause Laidlaw to grant to Executive an option to
purchase 30,000 Common Shares of Laidlaw at an exercise price equal to
the fair market value of such common stock at the time of the grant,
such options to vest consistent with the terms of the Laidlaw stock
option plan under which such options are issued. Annual grants to the
Executive shall be proposed to the compensation committee of Laidlaw's
board of directors at levels consistent with other Laidlaw executives.
(h) OTHER BENEFITS. Executive shall be entitled to participate in the
Company's employee benefit programs to the extent that his position,
title, and tenure make him eligible to participate therein, and
subject to and on a basis consistent with the terms, conditions and
overall administration of such programs, including, but not
necessarily limited to participation in the Company's 401(k) plan and
health, vision and dental coverage. In addition to the benefits
described above, Executive shall be entitled to the benefits set forth
on Annex A hereto.
3. NON-COMPETITION AGREEMENT: TRADE SECRETS
(a) Executive agrees that, for the greater of four years from the date
hereof and one year following termination of his employment with the
Company for any reason, he shall not, directly or indirectly, for
himself or on behalf of, or in conjunction with, any other person,
company, partnership, corporation or business of whatever nature:
(i) knowingly call upon any past or present 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 the medical
transportation services or emergency department management services
business of the Company or any of its subsidiaries or affiliates;
(ii) knowingly call upon 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;
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(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 for himself or for others, that competes with the Company
or its affiliates in the business of providing medical transportation
services or emergency department management services 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
(iv) call upon any prospective acquisition candidates in the
medical transportation services or emergency department services
business on Executive's own behalf or on behalf of an 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 five 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
information relating to the customers or other trade secrets (whether
in existence or proposed) of the Company or any of its subsidiaries,
of 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.
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(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 affiliates 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 or affiliate, 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 affiliates or any representative
of any of them shall be delivered promptly to the Company without
request by them upon termination of Executive's employment.
3. 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 or within one (1) year thereafter and which
are related to the business or activities of the Company or any of its
subsidiaries or affiliates or which Executive conceives as a result of
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 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 or within one (1) year thereafter, and shall be
binding upon Executive's assigns, executors,
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administrators and other legal representatives. Notwithstanding the
provisions of this Paragraph 5, articles or other writings which are
written or co-written for inclusion in academic or other periodicals,
journals, monographs or professionals shall remain the property of
Executive and may be copyrighted by Executive or such publication.
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 the
Merger. On the third anniversary of the date of the Merger, unless
either party has given prior written notice of nonrenewal at least 90
days prior to the date of such anniversary, the term of Executive's
employment with the 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 a period in excess of six months, to perform his duties
under this Agreement shall terminate Executive's employment.
(ii) the Company may terminate the Executive's employment following
ten-days' written notice to Executive for good cause, which includes
the following ("Good Cause"):
(A) Executive's willful and knowing material breach of
this Agreement which results in material detriment to the
Company;
(B) Executive's fraud or gross negligence with respect to
the business or affairs of the Company resulting in material
detriment to the Company or if Executive is convicted of a
felony involving fraud, dishonesty or moral turpitude;
(C) Executive's exclusion from participation in Medicare,
Medicaid or any other governmental 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
governmental third party reimbursement program;
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(D) alcohol or drug abuse, or sexual harassment by
Executive as determined by the final decision of a court of
competent jurisdiction which results in material detriment
to the Company;
(iii) Executive may terminate his employment following 30-days'
written notice to the Company for Good Reason. The Executive shall
have "Good Reason" to terminate employment if: (A) the Executive's
duties, responsibilities or authority as an executive or office to
which he has been appointed are materially reduced or diminished from
those in effect as of the commencement of his employment hereunder
without the Executive's consent, (B) the Executive's compensation or
benefits are reduced; (C) the Company requires that the Executive's
employment be based other than at Dallas, Texas without his consent;
(D) the Company materially breaches any of the provisions of this
Agreement; or (F) the failure of the Company to require a successor to
its business to assume this agreement.
(iv) 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.
(b) Upon termination of Executives employment pursuant to clause (i) of
paragraph 6(a), by Executive pursuant to clause (iii) of paragraph
6(a), or by the Company pursuant to clause (iv) of paragraph 6(a),
Executive or his heirs, as the case may be, shall be entitled to
receive (i) all cash compensation earned under this Agreement to the
date of termination including the pro rata portion of any performance
bonus payable for the year during which the termination occurred plus
(ii) base compensation as in effect on the day prior to termination
for an additional period of one year and subject to any employee
contribution applicable to the Executive on the date of termination,
for a one year 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 life, disability, medical and dental insurance
plans provided that the Executive is entitled to continue such
participation under applicable state and federal law and plan terms.
(c) Upon termination of Executive's employment by the Company pursuant to
clause (ii) of paragraph 6(a), or by the Executive pursuant to clause
(iv) of paragraph 6(a), Executive shall be entitled to receive all
base cash compensation earned under this Agreement to the date of
termination. Such termination of the Executive's employment shall not
otherwise accelerate the payment date of any monies accrued or
accruing to the
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account of Executive as a result of any bonuses or other compensation,
nor shall termination vest in Executive any right in connection
therewith.
(d) If during the term of this agreement a Change of Control of the
Company occurs as a result of Laidlaw disposing of majority control of
the Company, and during the two (2) year period commencing on the
effective date of such Change of Control, the Executive's employment is
terminated by the Company other than for Good Cause, or by the
Employee for Good Reason, in addition to the benefits Executive is
eligible to receive under paragraph 6(b) above but excluding the
amount specified in 6(b)(ii), Executive shall be entitled to the
following benefits;
1. Any outstanding stock options, restricted stock, or other form
of stock-based grant or award previously granted to Executive by the
Company, to the extent vested in Executive as of the date of such
Termination of Employment, shall remain exercisable in accordance with
the terms of the plan.
2. For a two-year period following such termination of employment,
the Executive shall not lose his eligibility for health, dental, life,
or disability benefits under any Executive benefit plan, policy,
arrangement, or program (regardless of whether such program is
maintained for Executives in general, highly-compensated Executives
(as that term is defined in Section 414(q) of the Internal Revenue
Code of 1986, as amended (the "Code")), non-highly compensated
Executives, or for a select group of management Executives or
highly-compensated Executives (described in 29 CFR Section
2520.104-24)) at the same employee cost and benefit levels as prior to
the change of control. In the event that under the terms of such plan,
policy, arrangement, or program, the Executive's termination of
employment results in a loss of such coverage, the Company shall
immediately purchase comparable coverage for Executive for any portion
of the 24-month period so remaining. Following this period, Executive
shall be entitled to receive continuation coverage under COBRA,
treating the end of this period as a termination of Executive's
employment other than for gross misconduct.
3. Immediately following such Termination of Employment, the
Company shall pay to Executive an amount equal to two (2) times the
sum of:
(A) Executive's annual base rate of pay determined as of
the greater of (x) the year in which the termination of
employment occurs, or (y) the beginning of the calendar year
coinciding with or next preceding such Change in Control; plus
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(B) the greater of (x) the average of the last three
annual performance bonuses paid to the Executive under
paragraph 2(b) of this Agreement prior to such Change in
Control, or (y) the average of the first three annual
incentive bonuses paid to Executive under paragraph 2(b) of
this Agreement immediately prior to such termination of
employment.
Such amount shall be paid in cash to the Executive within 30
days of such termination of employment.
4. If, in the written opinion of a national accounting firm
engaged by either the Company or the Executive for this purpose (at
the Company's expense), or if so alleged by the Internal Revenue
Service, the aggregate of the benefit payments hereunder (other than
under this subparagraph 6(c)(4)) would cause the payment of one or
more of such benefits to constitute an "excess parachute payment" as
defined in Section 280G(b) of the Code, then the Company will pay to
the Executive an additional amount in cash (the "Gross-Up Payment")
equal to the amount necessary to cause the net amount retained by the
Executive, after deduction of any (i) excise tax on the payments
hereunder (other than under this subparagraph 6(c)(4), (ii) federal,
state or local income tax on the Gross-Up Payment, and (iii) excise tax
on the Gross-Up Payment, to be equal to the aggregate remuneration
the Executive would have received hereunder, excluding such Gross-Up
Payment (net of all federal, state and local excise and income taxes),
as if Sections 280G and 4999 of the Code (and any successor provisions
thereto) had not been enacted into law. The Gross-Up Payment provided
for in this subparagraph shall be made within thirty (30) days after
termination of Executive's employment, provided, however, that if the
amount of the payment cannot be finally determined at the time, the
Company shall pay to Executive an estimate as determined in good faith
by the Company of such payments (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the forty fifth
(45th) day after the Termination of Employment date.
5. For purposes of this Agreement, a "Change of Control" shall be
defined as (A) an event or series of events by which any "person" or
"group" (as such terms are defined in Sections 3(a)(9) and 13(d) of
the Securities Exchange Act of 1934, hereinafter known as the "Act"),
together with its or their "affiliates" and "associates" (as defined
in Rule 13d-3 of the Act), becomes the "Beneficial Owner" (as defined
in Rule 13d-3 of the Act, modified to include, without regard to the
60-day period referred to in such Rule, all shares that such person or
group has the right to acquire pursuant to any agreement or
arrangement, or upon exercise of conversion rights, warrants or
options, or otherwise), directly or
10
<PAGE> 11
indirectly, of securities of the Company having 51% or more of the
total number of votes entitled to be cast for the election of the
Board of Directors of the Company. (B) the sale or transfer of 50% or
more of the assets or earning power of the Company and its
subsidiaries (taken as a whole); or (C) at any time (i) the Company
shall consolidate with, or merge with, any other person and the
Company shall not be the continuing or surviving corporation, (ii) any
person shall consolidate with, or merge with the Company, and the
Company shall be the continuing or surviving corporation and in
connection therewith, all or part of the outstanding Company stock
shall be changed into or exchanged for stock or other securities of
any other person or cash or any other property, or (iii) the Company
shall be a party to a statutory share exchange with any other person.
Notwithstanding anything in the foregoing to the contrary, any events
occurring in connection with the stock of the Company becoming
publicly traded on a national exchange shall not constitute a "Change
in Control".
(e) 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 Executives obligations under paragraphs 1(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), 6(c) or 6(d),
as the case may be.
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, and that the execution of this
Agreement by Executive and his employment by the Company and the
performance of its 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 including without limitation that certain Employment
Agreement between the Company and the Executive dated February 5,
11
<PAGE> 12
1992. 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. 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 he cannot assign all or any portion of this Agreement. Subject to
the preceding sentence, this Agreement shall be binding upon and inure
to the benefit of the parties thereto and their respective heirs,
successors and assigns. The Company agrees to require any purchaser,
successor or assigns to assume the obligations hereunder and to agree
to be bound by the terms hereof. Laidlaw Inc. has executed this
agreement to guarantee performance by the Company.
11. NOTICE. Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
To the Company: c/o Laidlaw Inc.
3221 North Service Road
Burlington, Ontario
L7R 3Y8
Attention: Chief Executive Officer
Fax: 905-332-6550
To Executive: William F. Miller
12
<PAGE> 13
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 Texas. The parties agree that
any court proceeding shall be before a judge alone and waive trial by
jury. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EXECUTIVE:
- ----------------------------------------------
William F. Miller, Individually
EMCARE HOLDINGS, INC.
by:
-------------------------------------------
Name:
Title:
LAIDLAW INC.
by:
-------------------------------------------
Name:
Title:
13
<PAGE> 14
ANNEX A
OTHER BENEFITS
1. Fees or dues reasonably incurred by Executive for country club and
athletic club membership.
2. Term and whole life insurance (annual premium approximately $9,500).
3. Disability policy (annual premium approximately $3,100).
14
<PAGE> 1
EXHIBIT 99.6
AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of July 29, 1997,
among Laidlaw Inc., a Canadian corporation ("Parent"), EHI Acquisition Corp., a
Delaware corporation and an indirect wholly owned subsidiary of Parent
("Purchaser"), and each other person whose name is set forth on the signature
pages hereto (individually, a "Seller" and collectively, the "Sellers").
WHEREAS, Parent, the Purchaser, and EmCare Holdings Inc., a
Delaware corporation (the "Company"), propose to enter into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which
provides, among other things, that Purchaser, upon the terms and subject to the
conditions thereof, will make a tender offer (the "Tender Offer") for all of
the outstanding shares of common stock, par value $0.01 per share, of the
Company (the "Common Stock"), and thereafter Purchaser and the Company will be
merged (the "Merger") (the Tender Offer and Merger being collectively referred
to as the "Acquisition Transaction"); and
WHEREAS, each Seller is the holder or beneficial owner of, or
has dispositive and voting authority for, the number of shares of the Common
Stock set forth opposite the name of such Seller on the signature pages hereto
(collectively, the "Shares"); and
WHEREAS, as a condition to the willingness of Purchaser and
Parent to enter into the Merger Agreement, Purchaser and Parent have required,
among other things, that the Sellers execute and deliver this Agreement; and
WHEREAS, the Sellers are desirous of inducing Purchaser and
Parent to enter into the Merger Agreement and, therefore, are desirous of
executing and delivering this Agreement.
NOW, THEREFORE, in contemplation of the foregoing and in
consideration of the mutual agreements, covenants, representations and
warranties contained herein and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
Acquisition Transaction
Section 1.1 Tender Offer. The parties acknowledge that
the Purchaser and Parent would not have entered into the Merger Agreement
without the concurrent execution of this Agreement and that the Sellers, the
Parent and the Purchaser would not have entered into this Agreement without the
concurrent execution of the Merger Agreement. In connection with the Tender
Offer, each Seller severally agrees that such Seller will promptly tender, and
not withdraw, the Shares of such Seller pursuant to the terms of the Tender
Offer.
Section 1.2 Grant of Irrevocable Proxy. Each Seller
hereby irrevocably grants to the Purchaser, James R. Bullock and Ivan R.
Cairns, or any of them (each a "Proxyholder"), each with full power of
substitution, a proxy to exercise all voting and other rights with respect to
all such
<PAGE> 2
Seller's Shares, including without limitation, with respect to the Merger and
the other matters contemplated by the Merger Agreement. All prior proxies and
powers given by each Seller with respect to such Seller's Shares are, without
further action, hereby revoked for so long as this Agreement is in effect, and
no subsequent proxies or powers may be given, and if given will not be
effective. Each Proxyholder will, with respect to the Shares, be empowered to
exercise all voting and other rights of the Sellers with respect to the Shares
as such Proxyholder, in his or its sole discretion, may deem proper at any
meeting of the Company's shareholders, by written consent or otherwise. The
foregoing proxy may be exercised by any Proxyholder only to the extent
consistent with the terms of this Agreement and the Merger Agreement.
ARTICLE II
Designated Affiliate and Adjustments
Section 2.1 Designated Affiliate. It is understood
and agreed among the parties that Purchaser may cause one or more companies
which are directly or indirectly controlled by or under common control with
Parent designated by it (the "Designated Affiliate" or "Designated Affiliates")
to carry out some or all of the provisions of this Agreement (including,
without limitation, the effectuation of the Acquisition Transaction); provided,
however, that Purchaser shall nevertheless remain liable for all of its
obligations and those of the Designated Affiliate or Affiliates hereunder.
Section 2.1 Adjustment Upon Changes in Capitalization. In
the event of any change in any of the Shares by reason of any stock dividends,
split-ups, mergers, recapitalization or other changes in the corporate or
capital structure of the Company, the number and kind of such Shares subject to
this Agreement shall be appropriately adjusted.
ARTICLE III
Representations of
and Warranties by the Seller
Each Seller severally hereby represents and warrants to
Purchaser and Parent as follows:
Section 3.1 Ownership of the Shares. Such Seller has full
power and authority to tender, sell, assign and transfer the number of the
shares of the Common Stock set forth opposite such Seller's name on the
signature pages hereto (which are all the shares of the Common Stock which such
Seller so owns), and will have (without exception) good and unencumbered title
with respect to all of the Shares of such Seller, free and clear of all liens,
restrictions, charges and encumbrances and such Shares will not be subject to
any adverse claim whatsoever, and upon the delivery of and payment for the
Shares of such Seller, Purchaser will receive good and
- 2 -
<PAGE> 3
unencumbered title with respect to all of such Shares, free and clear of all
liens, restrictions, charges and encumbrances and such Shares will not be
subject to any adverse claim whatsoever.
Section 3.2 Authorization, Valid and Binding Agreement.
This Agreement has been duly and validly authorized, executed and delivered by
such Seller and constitutes the valid and binding agreement of Seller
enforceable against such Seller in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency
or other similar laws affecting creditors' rights generally or by general
equitable principles.
Section 3.3 No Conflicts. Neither the execution and
delivery of this Agreement nor the performance by such Seller of such Seller's
obligations hereunder will constitute a violation of, or conflict with, or
constitute a default under, any contract, commitment, agreement, understanding,
arrangement or restriction of any kind to which such Seller is a party or by
which such Seller is bound or any judgment, decree or order applicable to such
Seller.
ARTICLE IV
Representations of and
Warranties by Purchaser and Parent
Purchaser and Parent hereby represent and warrant to such
Seller as follows:
Section 4.1 Authorization; Valid and Binding Agreement.
This Agreement has been duly authorized by all necessary corporate action on
the part of Purchaser and Parent. This Agreement has been duly and validly
executed and delivered by Purchaser and Parent, and constitutes the valid and
binding agreement of Purchaser and Parent, enforceable against Purchaser and
Parent in accordance with its terms, except to the extent enforceability may be
limited by applicable bankruptcy, insolvency or other similar laws affecting
creditors' rights generally or by general equitable principles.
Section 4.2 No Conflicts. Neither the execution and
deliver of this Agreement nor the performance by Purchaser or Parent of its
respective obligations hereunder will constitute a violation of, or conflict
with, or constitute a default under, any contract, commitment, agreement,
understanding, arrangement or restriction of any kind to which Purchaser or
Parent is a party or by which Purchaser or Parent is bound or any judgment,
decree or order applicable to Purchaser or Parent.
ARTICLE V
Covenants
Section 5.1 Negotiations. Following the execution of this
Agreement by the Sellers, each Seller severally agrees not to, directly or
indirectly, (i) initiate contact with, solicit or
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<PAGE> 4
enter into negotiations with, any corporation, partnership, person or other
entity (a "Third Party") concerning any possible proposal that constitutes, or
may reasonably be expected to lead to, any Acquisition Proposal (as hereinafter
defined), or (ii) furnish any internal nonpublic financial or business
information to any corporation, partnership, person or other entity in
connection with any Acquisition Proposal; and each Seller severally agrees to
notify Purchaser immediately if any discussions or negotiations are sought to
be initiated, or any such information is requested, with respect to an
Acquisition Proposal or potential Acquisition Proposal of if any Acquisition
Proposal is received or indicated to be forthcoming. Purchaser and Parent each
hereby acknowledge that any action taken by a Seller in such Seller's capacity
as a director or executive officer of the Company contemplated by Section 5.2
of the Merger Agreement shall not constitute a violation by such Seller of such
Seller's obligations under this Section 5.1. The term "Acquisition Proposal"
means the occurrence of any of the following events: (a) the Company or any
subsidiary of the Company is acquired by merger or otherwise by any Third
Party; (b) the Company or any subsidiary of the Company enters into an
agreement with a Third Party that contemplates the acquisition of 35% or more
of the total assets of the Company and its subsidiaries taken as a whole; (c)
the Company enters into a merger or other agreement with a Third Party that
contemplates the acquisition of beneficial ownership of more than 35% of the
outstanding shares of the Company's capital stock; or (d) a Third Party
acquires more than 35% of the outstanding shares of the Company's capital
stock.
Section 5.2 Other Transactions. Each Seller severally
agrees that, prior to the termination of this Agreement, such Seller shall not
engage in any action or omission that would have the effect of preventing or
disabling such Seller from delivering the Shares of such Seller to Purchaser
hereunder or otherwise performing such Seller's obligations under this
Agreement or causing any representation of or warranty by such Seller to be
untrue. Without limiting the foregoing and except as provided in this
Agreement, each Seller severally agrees not to sell or transfer, or agree to
sell or transfer, any of the Shares of such Seller or any interest in such
Shares, shall keep such Shares free and clear of all liens, charges and
encumbrances and voting agreements, commitments, agreements, understandings and
arrangements of every kind and shall not give any proxy with respect to the
voting power of such Shares until the termination of this Agreement.
Section 5.3 Guaranty. Parent hereby guarantees the due
performance by Purchaser of any obligations of Purchaser hereunder.
Section 5.4 Employment Agreements. Each Seller severally
agrees and Parent agrees, and shall cause the Company, to enter into an
employment agreement in the form bearing the name of such Seller attached
hereto as Exhibit A or B, as the case may be, immediately following the
acceptance of shares of the Company's stock pursuant to the Offer contemplated
by the Merger Agreement.
ARTICLE VI
[Reserved]
- 4 -
<PAGE> 5
ARTICLE VII
Termination
Section 7.1 Termination. This Agreement shall terminate
at the earliest of (a) the time mutually agreed to by Purchaser, Parent and the
Sellers expressed in writing, or (b) so long as Sellers are not in default
under this Agreement, the termination of the Merger Agreement in accordance
with its terms.
Section 7.2 Effect of the Termination. In the event of
the termination of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and have no effect, without liability on the part of any
party or its directors, officers or shareholders. Nothing contained in this
Article VII shall relieve any party from liability for any breach of this
Agreement.
ARTICLE VIII
Miscellaneous
Section 8.1 Expenses. No party hereto will pay any fees
and expenses incurred by any other party in connection with this Agreement,
including without limitation the fees and expenses of such party's financial
and legal advisors and any brokerage or finder's fee incurred by such party,
each party representing that such party has incurred no obligation for any such
fee for which any other party is responsible.
Section 8.2 Non-Survival of Representations and
Warranties. The representations and warranties of Purchaser, Parent and the
Seller in this Agreement or in any instrument delivered by Purchaser, Parent
and any Seller pursuant to this Agreement shall not survive the Closing except
for those contained in Sections 3.1, 4.1 and 8.3 which shall survive the
Closing and any investigation at any time made by or on behalf of any party
hereto.
Section 8.3 Non Registration. Purchaser acknowledges that
the sale of the Shares has not been registered under the Securities Act of
1933, represents that it is not acquiring the Shares with a view to the
distribution thereof, and agrees that it will not sell the Shares except
pursuant to a registration statement under that Act or an exemption from
registration thereunder.
Section 8.4 Assignment; Parties in Interest. Except as
permitted by Section 2.1 hereof or as required by operation of law, this
Agreement shall not be assignable by the parties hereto without the prior
written consent of the other parties. Notwithstanding the foregoing, Purchaser
may assign this Agreement to an entity which controls or is controlled by the
same persons who control Purchaser. This Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and permitted assigns.
- 5 -
<PAGE> 6
Section 8.5 Entire Agreement; Amendments. This Agreement
and the documents referred to herein or delivered pursuant hereto which form a
part hereof, contain the entire understanding of the parties with respect to
its subject matter. There are no restrictions, agreements, promises,
warranties, covenants or undertakings other than those expressly set forth
herein or therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may be amended only by written instrument duly executed by all the
parties. Any condition to a party's obligations hereunder may be waived in
writing by such party.
Section 8.6 Notices. All notices, claims, certificates,
requests, demands and other communications hereunder shall be in writing and
will be deemed to have been duly given (i) when delivered if delivery is made
in person, by cable, telegram, telecopier or telex, (ii) on the next business
day after mailing by means of an overnight delivery service, or (iii) on the
fifth business day after deposit in the mails (registered or certified mail,
postage prepaid, return receipt requested), as follows:
(a) If to Purchaser or Parent, to:
Laidlaw Inc.
3221 N. Service Road
P.O. Box 5028
Burlington, Ontario
Canada L7R 3Y8
Telecopy No. 905-332-6550
Telephone No. 905-336-1800
Attention: Ivan R. Cairns
(b) If to any Seller, to:
EmCare Holdings Inc.
1717 Main Street
Suite 5200
Dallas, Texas 75201
Telecopy No. (214) 712-2444
Telephone No. (214) 712-20000
Attention: [insert Seller's name]
or to such other address as the person to whom notice is to be given may have
previously furnished to the other parties in writing in the manner set forth
above. No notice, claim, certificate, request, demand or other communication
shall be deemed to have been duly given to any party hereto unless
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<PAGE> 7
deemed to have been duly given in the manner set forth above to both such party
and any person or person designated to receive a copy.
Section 8.7 Law Governing. This Agreement will be
governed by and construed in accordance with the laws of the State of Delaware
without giving effect to the principles of conflicts of law thereof.
Section 8.8 Severability of Provisions. In case any one
or more of the provisions contained in this Agreement should be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby.
Section 8.9 Counterparts; Headings. This Agreement may be
executed simultaneously in several counterparts, each of which will be deemed
to be an original, but all of which together will constitute one and the same
instrument. The article and section headings contained herein are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement.
Section 8.10 Remedies. The parties hereto agree that if
for any reason any party hereto shall have failed to perform its obligations
under this Agreement, then any other party hereto seeking to enforce this
Agreement against such non-performing party shall be entitled to specific
performance and injunctive and other equitable relief, and the parties hereto
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that any party
hereto may have against any other party hereto for any failure to perform its
obligations under this Agreement.
Section 8.11 Fiduciary Duty. Nothing herein shall in any
way affect any action by any director or executive officer of the Company that
is required to be taken in order to discharge properly their fiduciary duties
to the Company.
Section 8.12 Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, property or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, the Sellers, Purchaser or Parent, as the case may be, shall take all
such necessary action.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
EHI ACQUISITION CORP.
By:
-------------------------------
Title:
----------------------------
LAIDLAW INC.
By:
-------------------------------
Title:
----------------------------
SELLERS
Number of Shares
of Common Stock:______
----------------------------------
Leonard M. Riggs, Jr., M.D.
Number of Shares
of Common Stock:_______
----------------------------------
William F. Miller, III
- 8 -
<PAGE> 1
EXHIBIT 99.7
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into this 29th day of
July, 1997, among Laidlaw Inc., a Canadian corporation ("Parent"), Leonard M.
Riggs, Jr., M.D. ("Riggs") and William F. Miller, III ("Miller" and, together
with Riggs, the "Purchasers").
The Company, EHI Acquisition Corp., a wholly owned Delaware
subsidiary of Parent ("Acquisition"), and EmCare Holdings Inc., a Delaware
corporation ("EHI") have entered into an Agreement and Plan of Merger dated
July 29, 1997 providing for a tender offer by Acquisition for shares of common
stock of EHI and the subsequent merger of Acquisition with and into EHI (the
"Merger Agreement"). Riggs and Miller are the Chairman of the Board and Chief
Executive Officer and the President and Chief Operating Officer, respectively,
of EHI. In connection with the transactions contemplated by the Merger
Agreement, Parent desires the Purchasers to make, and the Purchasers desire to
make, an equity investment in Parent as provided in this Agreement.
In consideration of the agreements set forth below, Parent and
the Purchasers agree as follows:
1. Sale and Purchase. Subject to the terms and
conditions of this Agreement, at the closing provided for in Section 2, Parent
shall sell to Riggs, and Riggs shall purchase from Parent, a number (rounded to
the nearest whole number) of common shares of Parent (the "Common Shares")
determined by dividing US$7,000,000 by the Market Price (as defined below), and
Parent shall sell to Miller, and Miller shall purchase from Parent, a number
(rounded to the nearest whole number) of Common Shares determined by dividing
US$3,000,000 by the Market Price, in each case for cash at a price per share
equal to the Market Price. The Market Price shall be the closing sale price of
the Common Shares on the New York Stock Exchange on the trading day immediately
preceding the day of the closing. Only whole Common Shares will be issued. The
Common Shares sold and purchased pursuant to this Agreement shall be referred
to as the "Shares."
2. Closing. The purchase and sale of the Shares shall
take place at the offices of Gibson, Dunn & Crutcher LLP, 1717 Main Street,
Suite 5400, Dallas, Texas 75201 immediately following the acceptance of shares
of EHI stock pursuant to the Offer contemplated by the Merger Agreement, or at
such other time place and/or time as Parent and the Purchasers may agree in
writing.
<PAGE> 2
3. Transfer Restrictions.
a. None of the Shares shall be sold, pledged,
assigned or otherwise transferred, voluntarily or involuntarily, by
either of the Purchasers except as set forth in Section 3(b) hereof
and except as follows:
i. On the first anniversary of the date
of this Agreement, the restrictions on transfer shall lapse
with respect to 10% of the Shares purchased by each Purchaser;
ii. On the second anniversary of the
date of this Agreement, the restrictions on transfer shall
lapse with respect to an additional 10% of the Shares
purchased by each Purchaser; and
iii. On the third anniversary of the date
of this Agreement, the restrictions on transfer shall lapse
with respect to all remaining Shares.
Moreover, since the Shares have not been registered under the United States
Securities Act of 1933, as amended (the "Securities Act"), or applicable state
securities laws, the economic risk of investment in the Shares must be borne by
the Purchasers, and the Shares cannot be sold by the Purchasers unless
subsequently registered under the Securities Act and such laws or unless an
exemption from such registration is available.
b. The restrictions contained in this Section 3
will not apply with respect to transfers of Shares (i) pursuant to
applicable laws of descent and distribution, or (ii) among Purchaser's
Family Group (as defined below), provided that the restrictions
contained in this Section 3 will continue to be applicable to the
Shares after any such transfer and the transferees of such Shares
shall agree in writing to be bound by the provisions of this
Agreement. "Family Group" means, with respect to each Purchaser, such
Purchaser's spouse and descendants (whether natural or adopted) and
any trust or partnership solely for the benefit of such Purchaser
and/or Purchaser's spouse and/or descendants. Any transferee of Shares
pursuant to a transfer in accordance with the provisions of this
Section 3(b), is herein referred to as a "Permitted Transferee." Upon
the transfer of the Shares pursuant to this Section 3(b), Purchaser
will deliver a written notice (the "Transfer Notice") to Parent. The
Transfer Notice will disclose in reasonable detail the identity of the
Permitted Transferees.
c. This provision of this Section 3 will
terminate with respect to each Purchaser upon the first to occur of
(i) the death of such Purchaser, and (ii) the sale of EHI by Parent
(whether by stock or asset sale, merger or otherwise).
4. Rights as Shareholder. From and after the closing,
each Purchaser shall be entitled to all of the rights of a shareholder with
respect to the Shares purchased by him, including
2
<PAGE> 3
the right to vote such Shares and to receive dividends and other distributions
payable with respect to such Shares.
5. Stock Certificates and Legend. Certificates
representing the Shares shall be issued in the Purchasers' names, shall bear
the legends set forth in Section 8, and shall be delivered to the Purchasers at
the closing.
6. Representations and Warranties of Parent. Parent
represents and warrants to each of the Purchasers as follows:
a. Organization. Parent is a corporation duly
organized, validly existing and in good standing under the Canada
Business Corporations Act and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to
conduct its business as currently conducted.
b. Authority. Parent has all requisite power and
authority to execute and deliver this Agreement and to perform the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all requisite corporate action on the
part of Parent, and no other approval on the part of Parent is
necessary for the execution, delivery and performance of this
Agreement. This Agreement constitutes the legal, valid and binding
obligation of Parent, enforceable against it in accordance with its
terms.
c. No Conflicts. Subject to compliance with the
requirements of federal, state and provincial securities laws with
respect to the issuance of the Shares, the execution and delivery of
this Agreement by Parent and the consummation of the transactions
contemplated hereby (a) do not require Parent to file any notice with
or obtain any consent, approval, authorization or exemption from any
person, (b) will not violate any court order, judgment, law, rule or
regulation and (c) will not constitute a default or breach under any
agreement to which Parent is a party or by which it or any of its
properties may be bound.
d. SEC Reports. Parent's Annual Report on Form
10-K for the year ended August 31, 1996, as filed with the Securities
and Exchange Commission (the "SEC"), and all reports, schedules,
forms, statements and other documents subsequently filed by Parent
with the SEC, as of their respective dates, (a) complied with the
applicable requirements of the Securities Act or the Securities
Exchange Act of 1934, as the case may be, and the rules and
regulations of the SEC promulgated thereunder, and (b) did not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. During the entire term of this Agreement,
Parent agrees to continue to file all reports, schedules, forms,
statements and other documents in accordance with the applicable
requirements of the Securities Act and the Securities Exchange Act of
1934, and the rules and regulations of the SEC promulgated thereunder.
3
<PAGE> 4
e. Shares Valid. The Shares will be, when
issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights.
7. Representations and Warranties of the Purchasers.
Each of the Purchasers severally represents and warrants, as to himself only,
as follows:
a. Authority. Such Purchaser has all requisite
authority to execute and deliver this Agreement and to perform the
transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligation of such Purchaser, enforceable
against him in accordance with its terms.
b. No Conflicts. The execution and delivery of
this Agreement by such Purchaser and the consummation of the
transactions contemplated hereby (a) do not require such Purchaser to
file any notice with or obtain any consent, approval, authorization or
exemption from any person, (b) will not violate any court order,
judgment, law, rule or regulation and (c) will not constitute a
default or breach under any agreement to which such Purchaser is a
party or by which he or any of his properties may be bound.
c. Exempt Offering. Such Purchaser understands
that the Shares are not being and will not be registered under the
Securities Act and are being distributed to him in a transaction that
is exempt from the registration requirements of the Securities Act.
d. Access to Information. Such Purchaser has
reviewed the Merger Agreement and Parent's SEC Filings and understands
the information contained therein. Such Purchaser has had an
opportunity to ask questions of and receive information and answers
from Parent, Acquisition and EHI concerning the terms and conditions
of the Merger Agreement, the Common Shares and other matters
pertaining to this investment and has been given the opportunity to
verify the information provided to such Purchaser in order for him to
evaluate the merits and risks of an investment in the Shares, and all
such questions have been answered and all such information has been
provided to the full satisfaction of such Purchaser. No oral or
written representations have been made to such Purchaser in connection
with the Shares which were in any way inconsistent with the
information provided by Parent. Such Purchaser has determined that an
investment in the Common Shares is a suitable investment for such
Purchaser, and that at this time such Purchaser could bear a complete
loss of the investment.
e. Investor Sophistication. Such Purchaser has
the capacity to protect his interest in connection with this
investment and has such knowledge and experience in financial, tax and
business matters as to be capable of evaluating the merits and risks
of
4
<PAGE> 5
an investment in the Common Shares and protecting such Purchaser's
interests in connection with the investment and, in such Purchaser's
judgment, has obtained sufficient information from Parent to evaluate
the merits and risks of an investment in the Common Shares. Such
Purchaser is an "accredited investor" (within the meaning of Rule
501(a) of Regulation D under the Securities Act) and has the financial
ability to bear the economic risk of investment in the Shares
(including such Purchaser's possible loss), has adequate means for
providing for his current needs and personal contingencies and has no
need for liquidity with respect to the investment in the Shares.
f. Investment Intent. Such Purchaser is
acquiring the Shares solely for his own account, for investment
purposes only and not with a view to the resale or distribution
thereof.
g. Restrictions on Transfer. Such Purchaser
understands that (i) the Shares will be considered "restricted
securities" within the meaning of Rule 144 under the Securities Act
("Rule 144"); (ii) Rule 144 may not be available to exempt from the
registration requirements of the Securities Act sales of such
"restricted securities"; (iii) if Rule 144 is available, sales may be
made in reliance upon Rule 144 only in accordance with the terms and
conditions of Rule 144, which among other things generally requires
that the securities be held for at least one year and that sales be
made in limited amounts (which amounts are subject to certain
exceptions depending upon whether the seller is an "affiliate" within
the meaning of Rule 144 and how long the securities have been held);
(iv) a Purchaser may dispose of his Shares pursuant to an exemption
from the registration requirements of the Securities Act other than
the exemption available under Rule 144 if prior to such disposition
such Purchaser has delivered to Parent an opinion of counsel
experienced in securities law matters to the effect that such
disposition does not require registration under the Securities Act;
and (v) if an exemption for the disposition of Shares is not
available, registration of the Shares may be required, but that Parent
is under no obligation to effect such a registration.
8. Restrictive Legends. The certificates representing
the Shares shall bear a legend substantially to the following effect:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR UNDER ANY APPLICABLE STATE LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
BY THE REGISTERED OWNER HEREOF FOR INVESTMENT AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE 1933 ACT. THE SHARES MAY NOT
BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT
5
<PAGE> 6
UNDER THE PROVISIONS OF THE 1933 ACT OR ANY APPLICABLE STATE
SECURITIES LAWS, OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN A TRANSACTION OTHERWISE IN COMPLIANCE WITH
APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
IN ADDITION, UNTIL JULY 29, 2000, THE SALE OR OTHER
DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED BY AND SUBJECT TO THE PROVISIONS OF A STOCK
PURCHASE AGREEMENT DATED JULY 29, 1997, A COPY OF WHICH IS
AVAILABLE UPON REQUEST FOR INSPECTION AT THE OFFICES OF THE
CORPORATION. ANY SUCH REQUEST SHOULD BE ADDRESSED TO THE
SECRETARY OF THE CORPORATION."
9. Investor Awareness. Each Purchaser further
acknowledges, represents, agrees and is aware that:
(i) no federal or state agency has passed upon the Common
Shares or made any finding or determination as to the fairness of this
investment; and
(ii) the representations, warranties, agreements,
undertakings and acknowledgments made by such Purchaser in this
Agreement are made with the intent that they be relied upon by Parent
in determining such Purchaser's suitability as a purchaser of Common
Shares, and shall survive the acquisition of the Shares. In addition,
such Purchaser undertakes to notify Parent immediately of any change
in any representation, warranty or other information relating to him
set forth herein.
10. Government Regulations. Notwithstanding anything
contained herein to the contrary, Parent shall not be required to issue or
deliver any certificates for Shares pending compliance with applicable federal,
state and provincial securities laws (including any registration required) and
compliance with applicable stock exchange rules and practices. Parent shall use
its best efforts to cause compliance with those laws, rules and practices.
11. No Right to Service. Nothing in this Agreement shall
be construed as creating any right in either Purchaser to continued employment
or as altering or amending the existing terms and conditions of employment of
the Purchasers.
12. Termination. This Agreement shall automatically
terminate upon termination of the Merger Agreement.
13. Governing Law. This Agreement shall be governed by
and construed under the laws of the State of Delaware.
6
<PAGE> 7
14. Sole Agreement. This Agreement is the entire
agreement between the parties hereto with respect to the matters described
herein, all prior oral and written representations being merged herein. No
amendment or modification of the terms of this Agreement shall be binding on
either party unless reduced to writing and signed by the party to be bound.
15. Severability. The invalidity of any provision of the
Agreement shall not in any manner affect the validity of any other provisions
hereof and each and every provision of the Agreement shall be enforceable
regardless of the invalidity, if any, of any other provision hereof.
16. Notice. Notices under the Agreement shall be in
writing and sent by registered mail, return receipt requested, to the following
addresses or to such other address as the party being notified may have
previously furnished to the others by written notice.
If to Parent: Laidlaw Inc.
P.O. Box 5028
Burlington, Ontario L7R 3Y8
Attention: Ivan R. Cairns
If to Riggs: Leonard M. Riggs, Jr., M.D.
c/o EmCare Holdings Inc.
1717 Main Street
Suite 5200
Dallas, Texas 75201
If to Miller: William F. Miller, III
c/o EmCare Holdings Inc.
1717 Main Street
Suite 5200
Dallas, Texas 75201
7
<PAGE> 8
In Witness Whereof, Parent by its duly authorized officer and
each of the Purchasers have signed this Agreement the day and year first above
written.
LAIDLAW INC.
By:
------------------------------
Its:
-----------------------------
---------------------------------
Leonard M. Riggs, Jr., M.D.
---------------------------------
William F. Miller, III
8
<PAGE> 1
EXHIBIT 99.8
[DONALDSON, LUFKIN & JENRETTE LETTERHEAD]
May 21, 1997
American Medical Response, Inc.
2821 South Parker Road
10th Floor
Aurora, CO 80014
Attention: Mr. Paul T. Shirley
President and Chief Executive Officer
Gentlemen:
In connection with your consideration of a possible negotiated
transaction by you or one or more of your affiliates involving EmCare Holdings
Inc. (the "Company") (a "Transaction"), the Company, Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"), acting as the Company's exclusive
financial advisor in connection with the proposed Transaction, and their
respective advisors and agents may make available to you certain information
which is non-public, confidential or proprietary in nature ("Evaluation
Material").
By execution of this letter agreement (the "Agreement"), you agree to
treat all Evaluation Material confidentially and to observe the terms and
conditions set forth herein. For purposes of this Agreement, Evaluation
Material shall include all information, regardless of the form in which it is
communicated or maintained (whether prepared by the Company, DLJ or otherwise)
that contains or otherwise reflects information concerning the Company that you
or your Representatives (as defined below) may be provided by or on behalf of
the Company or DLJ in the course of your evaluation of a possible Transaction.
The term "Evaluation Material" shall also include all reports, analyses, notes
or other information that are based on, contain or reflect any Evaluation
Material ("Notes"). You shall not be required to maintain the confidentiality
of those portions of the Evaluation Material that (i) become generally
available to the public other than as result of a disclosure by you or any of
your Representatives, (ii) were available to you on a non-confidential basis
prior to the disclosure of such Evaluation Material to you pursuant to this
Agreement, provided that the source of such information was not known by you or
any of your Representatives, to be bound by a confidentiality agreement with or
other contractual, legal or fiduciary obligation of confidentiality to the
Company or any of its affiliates with respect to such material, (iii) become
available to you on a non-confidential basis from a source other than the
Company or its agents, advisors or representatives provided that the source of
such information was not known by you or any of your Representatives to be
bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the Company or any of its affiliates
with respect to such material, or (iv) were developed by you or your employees
or agents independently and without reference to Evaluation Material.
You agree that you will not use the Evaluation Material for any purpose
other than determining whether you wish to enter into a Transaction. You agree
not to disclose or allow disclosure to others of any Evaluation Material;
except that, you may disclose Evaluation Material to your directors, officers,
employees, partners, affiliates, agents, advisors or representatives
(hereinafter, "Representatives"), to the extent necessary to permit such
Representatives to assist you
<PAGE> 2
Mr. Paul T. Shirley
American Medical Response, Inc.
Page 2
May 21, 1997
in making the determination referred to in the prior sentence, provided,
however, that you shall require each such Representative to be bound by the
terms of this Agreement to the same extent as if they were parties hereto and
you shall be responsible for any breach of this Agreement by any of your
Representatives.
You agree that you will not knowingly use the Evaluation Material in
any way detrimental to the Company. In particular you agree that for a period
of 18 months from the date of the signing of this Agreement you and your
affiliates will not knowingly, as a result of knowledge or information obtained
from the Evaluation Material or otherwise in connection with a possible
Transaction: (i) divert or attempt to divert any business relationship or
customer of the Company or any of its affiliates; nor (ii) employ or attempt to
employ or retain an employee of or physician retained by the Company or any of
its affiliates.
In addition, you agree that you will not make any disclosure that you
are having or have had discussions concerning a Transaction, that you have
received Evaluation Material or that you are considering a possible
Transaction; provided that you may make such disclosure if you have received
the written opinion of your counsel that such disclosure must be made by you in
order that you not commit a violation of law and, prior to such disclosure, you
promptly advise and consult with the Company and its legal counsel concerning
the information you propose to disclose.
Although the Company and DLJ will endeavor to include in the Evaluation
Material information known to them which they believe to be relevant for the
purpose of your investigation, you understand and agree that none of the
Company, DLJ or any of their affiliates, agents, advisors or representatives
(i) have made or make any representation or warranty, expressed or implied, as
to the accuracy or completeness of the Evaluation Material or (ii) shall have
any liability whatsoever to you or your Representatives relating to or
resulting from the use of the Evaluation Material or any errors therein or
omissions therefrom.
In the event that you or anyone to whom you transmit any Evaluation
Material in accordance with this Agreement are requested or required (by
deposition, interrogatories, requests for information or documents in legal
proceedings, subpoenas, civil investigative demand or similar process), in
connection with any proceeding, to disclose any Evaluation Material, you will
give the Company prompt written notice of such request or requirement so that
the Company may seek an appropriate protective order or other remedy and you
will cooperate with the Company to obtain such protective order. In the event
that such protective order or other remedy is not obtained and the Company
waives compliance with the relevant provisions of this Agreement, you (or such
other persons to whom such request is directed) will furnish only that portion
of the Evaluation Material which, in the written opinion of your counsel, is
legally required to be disclosed and, upon the Company's request, use your
reasonable efforts to obtain assurances that confidential treatment will be
accorded to such information.
If you decide that you do not wish to proceed with a Transaction, you
will promptly notify DLJ of that decision. In that case, or if the Company
shall elect at any time to terminate further access by you to the Evaluation
Material for any reason, you will promptly redeliver to us all copies of the
Evaluation Material, destroy all Notes and deliver to DLJ and the Company a
certificate executed by one of your duly authorized officers indicating that
the requirements of this sentence have been satisfied in full. Notwithstanding
the return or destruction of Evaluation Material and
<PAGE> 3
Mr. Paul T. Shirley
American Medical Response, Inc.
Page 3
May 21, 1997
Notes, you and your Representatives will continue to be bound by your
obligations of confidentiality and other obligations hereunder.
You hereby acknowledge that you are aware that the securities laws of
the United States prohibit any person who has material, non-public information
concerning the Company or a possible Transaction involving the Company from
purchasing or selling securities in reliance upon such information or from
communicating such information to any other person or entity under
circumstances in which it is reasonably foreseeable that such person or entity
is likely to purchase or sell such securities in reliance upon such
information.
You agree that, for a period of two years from that date of this
agreement, unless such shall have been specifically invited in writing by the
Board of Directors of the Company, neither you nor any of your Representatives
on your behalf will in any manner, directly or indirectly, (a) effect or seek,
offer or propose (whether publicly or otherwise) to effect, or cause or
participate in or in any way assist any other person to effect or seek, offer
or propose (whether publicly or otherwise) to effect or participate in, (i) any
acquisition of any securities (or beneficial ownership thereof) or assets of
the Company or any of its subsidiaries; (ii) any tender or exchange offer or
merger or other business combination involving the Company or any of its
subsidiaries; (iii) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect to the Company or
any of its subsidiaries; or (iv) any "solicitation" of "proxies" (as such terms
are used in the proxy rules of the Securities and Exchange Commission) or
consents to vote any voting securities of the Company, (b) form, join or in any
way participate in a "group" (as defined under the Securities Exchange Act of
1934, as amended), (c) otherwise act, alone or in concert with others, to seek
to control or influence the management, Board of Directors or policies of the
Company, (d) take any action which might force the Company to make a public
announcement regarding any of the types of matters set forth in (a) above, or
(e) enter into any discussions or arrangements with any third party with
respect to any of the foregoing. You also agree during any such period not to
request the Company (or its directors, officers, employees or agents), directly
or indirectly, to amend or waive any provision of this paragraph (including
this sentence).
You understand that (i) the Company and DLJ may consider a possible
Transaction through such processes as they in their sole discretion shall
determine (including, without limitation, providing information, negotiating
with any prospective buyer and entering into definitive agreements without
prior notice to you or any other person), (ii) any procedures relating to such
a Transaction may be changed at any time without notice to you or any other
person, (iii) the Company shall have the right to cease providing information,
terminate its consideration or reject or accept any potential buyer, proposal
or offer, for any reason whatsoever, in its sole discretion, and (iv) neither
you nor any of your Representatives shall have any claims whatsoever against
the Company or DLJ or any of their respective directors, officers,
stockholders, owners, affiliates or agents arising out of or relating to the
Transaction (other than those against the parties to any definitive agreement
with you in accordance with the terms thereof). The parties agree that unless
and until a definitive agreement between the Company and you with respect to
any Transaction has been executed and delivered, neither the Company nor you
will be under any legal obligation of any kind whatsoever with respect to such
Transaction, other than the express obligations of the parties under this
Agreement.
<PAGE> 4
Mr. Paul T. Shirley
American Medical Response, Inc.
Page 4
May 21, 1997
It is further understood and agreed that DLJ will arrange for
appropriate contacts for due diligence purposes. It is also understood and
agreed that all (i) substantive communications regarding a possible
Transaction, (ii) requests for information, (iii) requests for facility tours
or management meetings and (iv) discussions or questions regarding procedures,
will be submitted or directed to DLJ, and that none of your or your
Representatives who are aware of the Evaluation Material and/or the possibility
of a Transaction will initiate or cause to be initiated any substantive
communication with any director, officer or employee of the Company concerning
the Evaluation Material or a Transaction.
You agree that money damages would not be a sufficient remedy for any
breach of this Agreement by you or your Representatives, that in addition to
all other remedies the Company shall be entitled to specific performance and
injunctive or other equitable relief as a remedy for any such breach, and you
further waive and agree to use your reasonable efforts to cause your
Representatives to waive, any requirement for the securing or posting of any
bond in connection with such remedy. In the event of litigation relating to this
letter agreement, the reasonable legal fees incurred by the prevailing party in
connection with such litigation, including any appeal therefrom, shall be paid
by the other party.
The Company reserves the right to assign its rights, powers and
privileges under this letter agreement (including, without limitation, the
right to enforce the terms of this letter agreement) to any person who enters
into a Transaction.
All modifications of, waivers of and amendments to this Agreement or
any part hereof must be in writing signed on behalf of you and the Company or
by you and DLJ, as agent for the Company. You acknowledge that the Company is
intended to be benefited by this Agreement and that the Company shall be
entitled, either alone or together with DLJ, to enforce this Agreement and to
obtain for itself the benefit of any remedies that may be available for the
breach hereof.
It is further understood and agreed that no failure or delay by the
Company in exercising any right, power or privilege under this Agreement shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise of any right, power or privilege
hereunder.
You hereby irrevocably and unconditionally submit to the exclusive
jurisdiction of any State or Federal court sitting in Dallas, Texas over any
suit, action or proceeding arising out of or relating to this letter. You
hereby agree that service of any process, summons, notice or document by U.S.
registered mail addressed to you shall be effective service of process for any
action, suit or proceeding brought against you in any such court. You hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any such suit, action or proceeding brought in any such court and any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. You agree that a final judgment in any such
suit, action or proceeding brought in any such court shall be conclusive and
binding upon you and may be enforced in any other courts to whose jurisdiction
you are or may be subject, by suit upon such judgment.
In the event that any provision or portion of this letter is determined
to be invalid or unenforceable for any reason, in whole or in part, the
remaining provisions of this letter shall be
<PAGE> 5
Mr. Paul T. Shirley
American Medical Response, Inc.
Page 5
May 21, 1997
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by applicable law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas without regard to the
principles of conflicts of law that would apply any other law.
If you are in agreement with the foregoing, please so indicate by
signing, dating and returning one copy of this Agreement, which will constitute
our agreement with respect to the matters set forth herein.
Very truly yours,
EMCARE HOLDINGS INC.
By: /s/ RICHARD DEITCH II
--------------------------------
Richard Deitch II
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
as Exclusive Agent
Agreed and Accepted:
AMERICAN MEDICAL RESPONSE, INC.
By: /s/
---------------------------
Title: SVP - Finance
------------------------
Date: 5/23/97
------------------------
<PAGE> 1
EMCARE HOLDINGS INC.
1717 MAIN STREET, SUITE 5200
DALLAS, TEXAS 75201
August 5, 1997
To Our Stockholders:
On behalf of the Board of Directors of EmCare Holdings Inc. (the "Company")
we are pleased to inform you that on July 29, 1997, the Company entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Laidlaw, Inc. (the
"Parent") and its wholly owned subsidiary, EHI Acquisition Corp. (the
"Purchaser"). Pursuant to the Merger Agreement, the Purchaser has today
commenced a cash tender offer (the "Offer") to purchase all of the outstanding
shares (the "Shares") of the common stock of the Company at $38.00 per Share,
net to the seller in cash, subject to the terms and conditions in the Offer to
Purchase accompanying this letter.
Subject to certain conditions specified in the Merger Agreement, the Offer
will be followed by a merger (the "Merger") in which any Shares not tendered
pursuant to the Offer (except for any Shares as to which the holder has properly
exercised dissenter's rights of appraisal) will be converted into the right to
receive $38.00 in cash, without interest.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER
AND HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER (INCLUDING THE
OFFER PRICE OF $38.00 PER SHARE IN CASH) ARE FAIR TO, AND IN THE BEST INTEREST
OF, THE COMPANY'S STOCKHOLDERS. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to the factors described in the attached Schedule 14D-9 that is
being filed today with the Securities and Exchange Commission, including the
opinion of Donaldson, Lufkin & Jenrette Securities Corporation, the Company's
financial advisor, relating to the fairness from a financial point of view of
the consideration to be received by the stockholders in the Offer and the
Merger.
In addition, William F. Miller, III, the Company's President, Chief
Operating Officer and a director of the Company, and I have entered into an
agreement pursuant to which we have agreed to tender all of the Shares owned by
us (representing approximately 15% of the Shares) pursuant to the terms of the
Offer.
In addition to the attached Schedule 14D-9, also enclosed is the Offer to
Purchase dated July 29, 1997, together with related materials, including a
Letter of Transmittal, to be used for tendering your Shares in the Offer. These
documents state the terms and conditions of the Offer and the merger and provide
instructions as to how to tender your Shares. WE URGE YOU TO READ THESE
DOCUMENTS CAREFULLY IN MAKING YOUR DECISION WITH RESPECT TO TENDERING YOUR
SHARES PURSUANT TO THE OFFER.
On behalf of the Board of Directors,
/s/Leonard M. Riggs, Jr., M.D.
Leonard M. Riggs, Jr., M.D.
Chairman of the Board and Chief
Executive Officer
