SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): November 27, 1996
OWEN HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
TEXAS 0-26416 75-1329577
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification Number)
9800 CENTRE PARKWAY
SUITE 1100
HOUSTON, TEXAS
(Address of principal executive offices)
77036-8279
(Zip Code)
Registrant's telephone number, including area code: (713) 777-8173
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ITEM 5. OTHER EVENTS
On November 27, 1996, Owen Healthcare, Inc. ("Owen") entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Cardinal Health, Inc.
("Cardinal") and Owl Merger Corp., a wholly owned subsidiary of Cardinal
("Merger Sub"), pursuant to which Merger Sub will be merged with and into Owen,
and Owen will be the surviving corporation in the Merger (the "Merger") and
become a wholly owned subsidiary of Cardinal.
Under the terms of the Merger Agreement, shareholders of Owen will
receive $27.25 in the form of Cardinal common stock for each share of Owen, so
long as the market price of Cardinal stock is between $82.175 and $90.825 (based
upon the average closing prices thereof over a specified period). Based upon the
closing stock price for Cardinal common shares on November 26, 1996, the day
before announcement of the proposed Merger, of $86.50, Owen shareholders would
receive .3150 shares of Cardinal stock for each Owen share. If the price of
Cardinal's stock falls below $82.175, shareholders of Owen will receive .3316
shares of Cardinal common stock for each Owen share. If Cardinal's stock price
rises above $90.825, Owen shareholders will receive .3000 shares of Cardinal
common stock for each Owen share. Based upon this specified price range,
Cardinal will issue between 5.49 and 6.07 million fully diluted shares in the
Merger for a total transaction value of approximately $496 million. The
combination has been structured as a tax-free transaction, to be accounted for
as a pooling of interests. The Merger Agreement may be terminated by either Owen
or Cardinal under specified circumstances, including, among others, if the
average trading price of Cardinal's common stock over a specified period prior
to the Owen shareholders' meeting is less than $69.20.
The Merger is expected to be completed in the first quarter of 1997,
subject to approval by Owen's shareholders as well as other customary
conditions, including expiration or termination of requisite regulatory waiting
periods. Upon completion of the Merger, Owen will operate as a separate
subsidiary of Cardinal. Members of Owen's management team will continue to serve
in their current positions, and the company's headquarters will remain in
Houston, Texas. The Merger Agreement is filed as Exhibit 2.1 hereto and its
terms are incorporated herein by reference. The foregoing description of the
Merger Agreement is qualified in its entirety by reference to such exhibit.
Concurrent with the execution of the Merger Agreement, the directors and
certain officers of Owen entered into the Support/Voting Agreements dated as of
November 27, 1996 with Cardinal that provide that such officers and directors
will not transfer or dispose of any shares of Owen common stock beneficially
owned by them and will vote such shares in favor of the Merger at any meeting of
shareholders held to consider the Merger. Officers and directors who are a party
to such Support/Voting Agreements beneficially own approximately 22% of the
outstanding shares of Owen common stock.
In connection with the execution of the Merger Agreement, Owen and
Cardinal have entered into a Stock Option Agreement dated November 27, 1996,
pursuant to which Owen has granted
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Cardinal an option, exercisable under certain circumstances specified in the
agreement, to purchase up to 3,396,750 shares of Owen common stock
(approximately 19.9% of Owen's outstanding common stock) for $27.25 per share,
subject to adjustment under certain circumstances. The Stock Option Agreement is
filed as Exhibit 10.1 hereto and its terms are incorporated herein by reference.
The foregoing description of the Stock Option Agreement is qualified in its
entirety by reference to such exhibit.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
The following exhibits are filed as part of this report:
2.1 Agreement and Plan of Merger, dated as of November 27, 1996, by
and between Cardinal Health, Inc., Owen Healthcare, Inc. and Owl
Merger Corp.
10.1 Stock Option Agreement, dated as of November 27, 1996, by and
between Cardinal Health, Inc. and Owen Healthcare, Inc.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: December 4, 1996
OWEN HEALTHCARE, INC.
By: /s/ STEVE DRURY
Steve Drury
Executive Vice President
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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2.1 Agreement and Plan of Merger, dated as of November 27, 1996, by
and between Cardinal Health, Inc., Owen Healthcare, Inc. and Owl
Merger Corp.
10.1 Stock Option Agreement, dated as of November 27, 1996, by and
between Cardinal Health, Inc. and Owen Healthcare, Inc.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
CARDINAL HEALTH, INC.
("Cardinal"),
OWL MERGER CORP.
a wholly owned direct subsidiary of Cardinal
("Subcorp"),
and
OWEN HEALTHCARE, INC.
("Owen")
November 27, 1996
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TABLE OF CONTENTS
PAGE
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AGREEMENT AND PLAN OF MERGER 1
PRELIMINARY STATEMENTS 1
AGREEMENT 1
ARTICLE I: THE MERGER 2
1.1 The Merger 2
1.2 Effective Time 2
1.3 Effects of the Merger 2
1.4 Certificate of Incorporation and Bylaws 2
1.5 Directors and Officers 2
1.6 Additional Actions 2
ARTICLE II: CONVERSION OF SECURITIES 3
2.1 Conversion of Capital Stock 3
2.2 Exchange Ratio; Fractional Shares 3
2.3 Exchange of Certificates
(a) Exchange Agent 4
(b) Exchange Procedures 4
(c) Distributions with Respect to Unexchanged Shares 5
(d) No Further Ownership Rights in Owen Common Stock 5
(e) Termination of Exchange Fund 5
(f) No Liability 6
(g) Investment of Exchange Fund 6
2.4 Treatment of Stock Options 6
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF
CARDINAL AND SUBCORP 7
3.1 Organization and Standing 7
3.2 Corporate Power and Authority 7
3.3 Capitalization of Cardinal and Subcorp 7
3.4 Conflicts; Consents and Approval 8
3.5 Brokerage and Finder's Fees 9
3.6 Accounting Matters; Reorganization 9
3.7 Cardinal SEC Documents 9
3.8 Registration Statement 10
3.9 No Material Adverse Change 10
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF
OWEN 10
4.1 Organization and Standing 10
4.2 Subsidiaries 11
4.3 Corporate Power and Authority 11
4.4 Capitalization of Owen 11
4.5 Conflicts; Consents and Approvals 12
4.6 No Material Adverse Change 12
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4.7 Owen SEC Documents 13
4.8 Taxes 13
4.9 Compliance with Law 14
4.10 Intellectual Property 15
4.11 Title to and Condition of Properties 16
4.12 Registration Statement; Proxy Statement 16
4.13 Litigation 17
4.14 Brokerage and Finder's Fees; Expenses 17
4.15 Accounting Matters; Reorganization 17
4.16 Employee Benefit Plans 17
4.17 Contracts 20
4.18 Labor Matters 21
4.19 Operation of Owen's Business; Relationships 21
4.20 Permits; Compliance 21
4.21 Product Warranties and Liabilities 21
4.22 Environmental Matters 21
4.23 Opinion of Financial Advisors 22
4.24 Board Recommendation 22
4.25 State Takeover Laws 22
4.26 Lease Arrangements 22
ARTICLE V: COVENANTS OF THE PARTIES 23
5.1 Mutual Covenants 23
(a) General 23
(b) HSR Act 23
(c) Other Governmental Matters 24
(d) Pooling-of-Interests 24
(e) Tax-Free Treatment 24
(f) Public Announcements 24
5.2 Covenants of Cardinal 25
(a) Preparation of Registration Statement 25
(b) Indemnification 25
(c) Insurance 25
(d) Employee Benefits 25
(e) Notification of Certain Matters 25
(f) Pooling Press Release 26
(g) Merger Sub 26
(h) NYSE Listing 26
(i) Affiliates of Cardinal 26
(j) Access 26
5.3 Covenants of Owen 26
(a) Owen Shareholders Meeting 26
(b) Information for the Registration Statement
and Preparation of Proxy Statement 26
(c) Conduct of Owen's Operations 27
(d) Intellectual Property Matters 28
(e) No Solicitation 29
(f) Termination Right 30
(g) Affiliates of Owen 30
(h) Access 30
(i) Notification of Certain Matters 31
(j) Subsequent Financial Statements 31
ARTICLE VI: CONDITIONS 31
6.1 Mutual Conditions 31
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6.2 Conditions to Obligations of Owen 32
6.3 Conditions to Obligations of Cardinal and
Subcorp 32
ARTICLE VII: TERMINATION AND AMENDMENT 33
7.1 Termination 33
7.2 Effect of Termination 34
7.3 Amendment 35
7.4 Extension; Waiver 35
ARTICLE VIII: MISCELLANEOUS 35
8.1 Survival of Representations and Warranties 35
8.2 Notices 35
8.3 Interpretation 36
8.4 Counterparts 37
8.5 Entire Agreement 37
8.6 Third Party Beneficiaries 37
8.7 Governing Law 37
8.8 Consent to Jurisdiction; Venue 37
8.9 Specific Performance 37
8.10 Assignment 38
8.11 Expenses 38
Exhibit A-1 - Form of Owen Affiliate Letter
Exhibit A-2 - Form of Cardinal Affiliate Letter
Exhibit B - Form of Opinion of Cardinal and Subcorp's Counsel
Exhibit C - Form of Opinion of Owen's Counsel
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of the 27th day of November, 1996, by and among Cardinal Health,
Inc., an Ohio corporation ("Cardinal"), Owl Merger Corp., a Texas corporation
and a wholly owned subsidiary of Cardinal ("Subcorp") and Owen Healthcare, Inc.,
a Texas corporation ("Owen").
PRELIMINARY STATEMENTS
A. Cardinal desires to acquire the pharmacy management services
business, the automated medication management business and other businesses
operated by Owen through the merger of Subcorp with and into Owen, with Owen as
the surviving corporation (the "Merger"), pursuant to which each share of Owen
Common Stock (as defined in Section 4.4) outstanding at the Effective Time (as
defined in Section 1.2) will be converted into the right to receive Cardinal
Common Shares (as defined in Section 3.3) as more fully provided herein.
B. The Board of Directors of Owen has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of Owen
and Owen desires to combine its pharmacy management services, automated
medication management and other businesses with the healthcare service
businesses operated by Cardinal and for the holders of shares of Owen Common
Stock ("Owen Shareholders") to have a continuing equity interest in the combined
Cardinal/Owen businesses.
C. The parties intend that the Merger constitute a tax-free
"reorganization" within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"), by reason of Section 368(a)(2)(E)
thereof.
D. The parties intend that the Merger be accounted
for as a pooling-of-interests for financial reporting purposes.
E. The respective Boards of Directors of Cardinal, Subcorp and
Owen have determined the Merger in the manner contemplated herein to be
desirable and in the best interests of their respective shareholders and, by
resolutions duly adopted, have approved and adopted this Agreement.
AGREEMENT
Now, therefore, in consideration of these premises and the mutual
and dependent promises hereinafter set forth, the parties hereto agree as
follows:
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ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the provisions of the Texas Business Corporation
Act (the "TBCA"), Subcorp shall be merged with and into Owen at the Effective
Time. As a result of the Merger, the separate corporate existence of Subcorp
shall cease and Owen shall continue its existence under the laws of the State of
Texas. Owen, in its capacity as the corporation surviving the Merger, is
hereinafter sometimes referred to as the "Surviving Corporation."
1.2 EFFECTIVE TIME. As promptly as possible on the Closing Date
(as defined below), the parties shall cause the Merger to be consummated by
filing with the Secretary of State of the State of Texas (the "Texas Secretary
of State") articles of merger (the "Articles of Merger") in such form as is
required by and executed in accordance with Article 5.04 of the TBCA. The Merger
shall become effective (the "Effective Time") when the Articles of Merger has
been filed with the Texas Secretary of State or at such later time as shall be
agreed upon by Cardinal and Owen and specified in the Articles of Merger. Prior
to the filing referred to in this Section 1.2, a closing (the "Closing") shall
be held at the offices of Cardinal, 5555 Glendon Court, Dublin, Ohio 43016, or
such other place as the parties may agree as soon as practicable (but in any
event within three business days) following the date upon which all conditions
set forth in Article VI hereof have been satisfied or waived, or at such other
date as Cardinal and Owen may agree; PROVIDED, that the conditions set forth in
Article VI have been satisfied or waived at or prior to such date. The date on
which the Closing takes place is referred to herein as the "Closing Date." For
all tax purposes, the Closing shall be effective at the end of the day on the
Closing Date.
1.3 EFFECTS OF THE MERGER. From and after the Effective Time,
the Merger shall have the effects set forth in Article 5.06A of the TBCA.
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS. The Articles of
Merger shall provide that at the Effective Time (i) the Certificate of
Incorporation of the Surviving Corporation as in effect immediately prior to the
Effective Time shall be amended as of the Effective Time so as to contain the
provisions, and only the provisions, contained immediately prior thereto in the
Certificate of Incorporation of Subcorp, except for Article I thereof which
shall continue to read "The name of the corporation is 'Owen Healthcare, Inc.'",
and (ii) the Bylaws of Subcorp in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation; in each case until amended in
accordance with applicable law.
1.5 DIRECTORS AND OFFICERS. From and after the Effective Time,
the officers of Owen shall be the officers of the
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Surviving Corporation and the directors of Subcorp shall be the directors of the
Surviving Corporation, in each case until their respective successors are duly
elected and qualified. On or prior to the Closing Date, Owen shall deliver to
Cardinal evidence satisfactory to Cardinal of the resignations of the directors
of Owen, such resignations to be effective as of the Effective Time.
1.6 ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable to
(a) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Owen, or (b) otherwise carry out the provisions of this
Agreement, Owen and its officers and directors shall be deemed to have granted
to the Surviving Corporation an irrevocable power of attorney to execute and
deliver all such deeds, assignments or assurances in law and to take all acts
necessary, proper or desirable to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving Corporation and
otherwise to carry out the provisions of this Agreement, and the officers and
directors of the Surviving Corporation are authorized in the name of Owen or
otherwise to take any and all such action.
ARTICLE II
CONVERSION OF SECURITIES
2.1 CONVERSION OF CAPITAL STOCK. At the Effective
Time, by virtue of the Merger and without any action on the part
of Cardinal, Subcorp or Owen or their respective shareholders:
(a) Each share of common stock, $0.01 par value, of Subcorp
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock, $0.01 par value, of the
Surviving Corporation. Such newly issued shares shall thereafter
constitute all of the issued and outstanding capital stock of the
Surviving Corporation.
(b) Subject to the other provisions of this Article II, each
share of Owen Common Stock issued and outstanding immediately prior to
the Effective Time shall be converted into and represent a number of
Cardinal Common Shares equal to the Exchange Ratio (as defined below).
(c) Each share of capital stock of Owen held in the treasury of
Owen shall be cancelled and retired and no payment shall be made in
respect thereof.
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2.2 EXCHANGE RATIO; FRACTIONAL SHARES. The "Exchange Ratio"
(rounded to the nearest ten-thousandth of a share) shall be equal to (a) the
quotient obtained by dividing (x) $27.25 by (y) the average of the closing
prices per share (or, if the Cardinal Common Shares should not trade on any
trading day, the average of the bid and asked prices therefor on such day), of
the Cardinal Common Shares as reported on the New York Stock Exchange ("NYSE")
Composite Tape ("NYSE Composite Tape") on each of the last ten trading days
ending on the sixth trading day prior to the meeting of Owen Shareholders at
which the vote to approve the Merger occurs (the "Average Share Price");
PROVIDED, HOWEVER, that (i) if the Average Share Price is less than $82.175,
then the Exchange Ratio shall be equal to 0.3316, or (ii) if the Average Share
Price is greater than $90.825, then the Exchange Ratio shall be equal to 0.3000;
or (b) if Cardinal has made an Adjustment Election (as defined in Section 7.1),
then the product of (x) 0.3316 and (y) the quotient obtained by dividing $69.20
by the Average Share Price. No certificates for fractional Cardinal Common
Shares shall be issued as a result of the conversion provided for in Section
2.1(b). In lieu of any such fractional shares, the holder of a certificate
previously evidencing Owen Common Stock, upon presentation of such fractional
interest represented by an appropriate certificate for Owen Common Stock to the
Exchange Agent pursuant to Section 2.3, shall be entitled to receive a cash
payment therefor in an amount equal to the value (determined with reference to
the closing price of Cardinal Common Shares as reported on the NYSE Composite
Tape on the last full trading day immediately prior to the Effective Time) of
such fractional interest. Such payment with respect to fractional shares is
merely intended to provide a mechanical rounding off of, and is not a separately
bargained for, consideration. If more than one certificate representing shares
of Owen Common Stock shall be surrendered for the account of the same holder,
the number of Cardinal Common Shares for which certificates have been
surrendered shall be computed on the basis of the aggregate number of shares
represented by the certificates so surrendered. In the event that prior to the
Effective Time Cardinal shall declare a stock dividend or other distribution
payable in Cardinal Common Shares or securities convertible into Cardinal Common
Shares, or effect a stock split, reclassification, combination or other change
with respect to Cardinal Common Shares (including, without limitation, the
previously announced split of three Cardinal Common Shares for every two
Cardinal Common Shares currently outstanding, payable December 16, 1996 to
holders of record of Cardinal Common Shares at the close of business on December
2, 1996), the Exchange Ratio set forth in this Section 2.2 shall be adjusted to
reflect such dividend, distribution, stock split, reclassification, combination
or other change.
2.3 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Promptly following the Effective Time,
Cardinal shall deposit with Boatmen's Trust Company or such other exchange agent
as may be designated by Cardinal and reasonably acceptable to Owen (the
"Exchange Agent"), for the
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benefit of Owen Shareholders, for exchange in accordance with this Section 2.3,
certificates representing Cardinal Common Shares issuable pursuant to Section
2.1 in exchange for outstanding shares of Owen Common Stock and shall from
time-to-time deposit cash in an amount reasonably expected to be paid pursuant
to Section 2.2 (such Cardinal Common Shares and cash, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund").
(b) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of Owen Common Stock whose shares
were converted into the right to receive Cardinal Common Shares pursuant to
Section 2.1(b) (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other customary provisions as Cardinal may reasonably
specify) and (ii) instructions for effecting the surrender of the Certificates
in exchange for certificates representing Cardinal Common Shares. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together
with a duly executed letter of transmittal, the holder of such Certificate
shall be entitled to receive in exchange therefor (x) a certificate or
certificates representing that whole number of Cardinal Common Shares which such
holder has the right to receive pursuant to Section 2.1 in such denominations
and registered in such names as such holder may request and (y) a check
representing the amount of cash in lieu of fractional shares, if any, and unpaid
dividends and distributions, if any, which such holder has the right to receive
pursuant to the provisions of this Article II, after giving effect to any
required withholding tax. The shares represented by the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or accrued on
the cash in lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, payable to holders of shares of Owen Common Stock. In the
event of a transfer of ownership of shares of Owen Common Stock which is not
registered on the transfer records of Owen, a certificate representing the
proper number of Cardinal Common Shares, together with a check for the cash to
be paid in lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, may be issued to such transferee if the Certificate
representing such shares of Owen Common Stock held by such transferee is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.3, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon surrender a certificate representing
Cardinal Common Shares and cash in lieu of fractional shares, if any, and unpaid
dividends and distributions, if any, as provided in this Article II.
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(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.
Notwithstanding any other provisions of this Agreement, no dividends or other
distributions declared or made after the Effective Time with respect to Cardinal
Common Shares having a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate, and no cash payment in lieu of
fractional shares shall be paid to any such holder, until the holder shall
surrender such Certificate as provided in this Section 2.3. Subject to the
effect of Applicable Laws (as defined in Section 4.9), following surrender of
any such Certificate, there shall be paid to the holder of the certificates
representing whole Cardinal Common Shares issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore payable
with respect to such whole Cardinal Common Shares and not paid, less the amount
of any withholding taxes which may be required thereon, and (ii) at the
appropriate payment date subsequent to surrender, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole Cardinal Common Shares, less the amount of any withholding taxes
which may be required thereon.
(d) NO FURTHER OWNERSHIP RIGHTS IN OWEN COMMON STOCK. All
Cardinal Common Shares issued upon surrender of Certificates in accordance with
the terms hereof (including any cash paid pursuant to this Article II) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Owen Common Stock represented thereby, and there shall be no further
registration of transfers on the stock transfer books of Owen of shares of Owen
Common Stock outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Section 2.3.
Certificates surrendered for exchange by any person constituting an "affiliate"
of Owen for purposes of Rule 145(c) under the Securities Act of 1933, as amended
(the "Securities Act"), shall not be exchanged until Cardinal has received
written undertakings from such person in the form attached hereto as Exhibit
A-1.
(e) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to Owen Shareholders six months after the date
of the mailing required by Section 2.3(b) shall be delivered to Cardinal, upon
demand thereby, and holders of Certificates previously representing shares of
Owen Common Stock who have not theretofore complied with this Section 2.3 shall
thereafter look only to Cardinal for payment of any claim to Cardinal Common
Shares, cash in lieu of fractional shares thereof, or dividends or
distributions, if any, in respect thereof.
(f) NO LIABILITY. None of Cardinal, the Surviving Corporation or
the Exchange Agent shall be liable to any person in respect of any shares of
Owen Common Stock (or dividends or
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distributions with respect thereto) or cash from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to seven
years after the Effective Time of the Merger (or immediately prior to such
earlier date on which any cash, any cash in lieu of fractional shares or any
dividends or distributions with respect to whole shares of Owen Common Stock in
respect of such Certificate would otherwise escheat to or become the property of
any Governmental Authority (as defined in Section 3.4)), any such cash,
dividends or distributions in respect of such Certificate shall, to the extent
permitted by Applicable Laws, become the property of Cardinal, free and clear of
all claims or interest of any person previously entitled thereto.
(g) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Cardinal, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to Cardinal upon termination of the Exchange Fund pursuant to Section
2.3(e).
2.4 TREATMENT OF STOCK OPTIONS.
(a) Prior to the Effective Time, Cardinal and Owen shall take all
such actions as may be necessary to cause each unexpired and unexercised option
under stock option plans of Owen in effect on the date hereof which has been
granted to current or former directors, officers or key employees of Owen by
Owen (each, an "Owen Option") to be automatically converted at the Effective
Time into an option (a "Cardinal Exchange Option") to purchase that number of
Cardinal Common Shares equal to the number of shares of Owen Common Stock
issuable immediately prior to the Effective Time upon exercise of the Owen
Option (without regard to actual restrictions on exercisability) multiplied by
the Exchange Ratio, with an exercise price equal to the exercise price which
existed under the corresponding Owen Option divided by the Exchange Ratio, and
with other terms and conditions that are the same as the terms and conditions of
such Owen Option immediately before the Effective Time; provided that with
respect to any Owen Option that is an "incentive stock option" within the
meaning of Section 422 of the Code, the foregoing conversion shall be carried
out in a manner satisfying the requirements of Section 424(a) of the Code. In
connection with the issuance of Cardinal Exchange Options, Cardinal shall (i)
reserve for issuance the number of Cardinal Common Shares that will become
subject to Cardinal Exchange Options pursuant to this Section 2.4 and (ii) from
and after the Effective Time, upon exercise of Cardinal Exchange Options, make
available for issuance all Cardinal Common Shares covered thereby, subject to
the terms and conditions applicable thereto.
(b) Owen agrees to issue treasury shares of Owen, to the extent
available, upon the exercise of Owen Options prior to the Effective Time.
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(c) Cardinal agrees to use its reasonable efforts to file with
the Securities and Exchange Commission (the "Commission") within ten business
days after the Closing Date a registration statement on Form S-8 or other
appropriate form under the Securities Act to register Cardinal Common Shares
issuable upon exercise of the Cardinal Exchange Options and use its reasonable
efforts to cause such registration statement to remain effective until the
exercise or expiration of such options.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CARDINAL AND SUBCORP
In order to induce Owen to enter into this Agreement, Cardinal
and Subcorp hereby represent and warrant to Owen that the statements contained
in this Article III are true, correct and complete.
3.1 ORGANIZATION AND STANDING. Each of Cardinal and Subcorp is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation with full corporate power and authority to own,
lease, use and operate its properties and to conduct its business as and where
now owned, leased, used, operated and conducted. Each of Cardinal and Subcorp
is duly qualified to do business and in good standing in each jurisdiction in
which the nature of the business conducted by it or the property it owns,
leases or operates, makes such qualification necessary, except where the
failure to be so qualified or in good standing in such jurisdiction would not
have a Material Adverse Effect (as defined in Section 8.3) on Cardinal. Cardinal
is not in default in the performance, observance or fulfillment of any provision
of its Articles of Incorporation, as amended and restated (the "Cardinal
Articles"), or Code of Regulations, as amended and restated (the "Cardinal Code
of Regulations"), and Subcorp is not in default in the performance, observance
or fulfillment of any provisions of its Articles of Incorporation or Bylaws.
Cardinal has heretofore furnished to Owen a complete and correct copy of the
Cardinal Articles and Cardinal Code of Regulations.
3.2 CORPORATE POWER AND AUTHORITY. Each of Cardinal and Subcorp
has all requisite corporate power and authority to enter into and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of each of
Cardinal and Subcorp. This Agreement has been duly executed and delivered by
each of Cardinal and Subcorp, and constitutes the legal, valid and binding
obligation of each of Subcorp and Cardinal enforceable against each of them in
accordance with its terms.
3.3 CAPITALIZATION OF CARDINAL AND SUBCORP.
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(a) As of November 22, 1996, Cardinal's authorized capital stock
consisted solely of (a) 150,000,000 common shares, without par value ("Cardinal
Common Shares"), of which (i) 66,815,619 shares were issued and outstanding,
(ii) 228,631 shares were issued and held in treasury (which does not include the
shares reserved for issuance as set forth in clause (a)(iii) below) and (iii)
4,356,571 shares were reserved for issuance upon the exercise or conversion of
options, warrants or convertible securities granted or issuable by Cardinal, (b)
5,000,000 Class B common shares, without par value, none of which was issued and
outstanding or reserved for issuance, and (c) 500,000 Non-Voting Preferred
Shares, without par value, none of which was issued and outstanding or reserved
for issuance. Each outstanding share of Cardinal capital stock is, and all
Cardinal Common Shares to be issued in connection with the Merger will be, duly
authorized and validly issued, fully paid and nonassessable, and each
outstanding share of Cardinal capital stock has not been, and all Cardinal
Common Shares to be issued in connection with the Merger will not be, issued in
violation of any preemptive or similar rights. As of the date hereof, other than
as set forth in the first sentence hereof or in Section 3.3 to the disclosure
schedule delivered by Cardinal to Owen and dated the date hereof (the "Cardinal
Disclosure Schedule"), there are no outstanding subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or other commitments
or rights of any type relating to the issuance, sale, transfer or registration
by Cardinal of any equity securities of Cardinal, nor are there outstanding any
securities which are convertible into or exchangeable for any shares of capital
stock of Cardinal and Cardinal has no obligation of any kind to issue any
additional securities. The Cardinal Common Shares (including those shares to be
issued in the Merger) are registered under the Securities Exchange Act of 1934,
as amended (together with the rules and regulations thereunder, the "Exchange
Act").
(b) Subcorp's authorized capital stock consists solely of 1,000
shares of Common Stock, par value $.01 per share ("Subcorp Common Stock"), of
which, as of the date hereof, 100 were issued and outstanding and none were
reserved for issuance. As of the date hereof, all of the outstanding shares of
Subcorp Common Stock are owned free and clear of any liens, claims or
encumbrances by Cardinal.
3.4 CONFLICTS; CONSENTS AND APPROVAL. Neither the
execution and delivery of this Agreement by Cardinal or Subcorp
nor the consummation of the transactions contemplated hereby
will:
(a) conflict with, or result in a breach of any provision of the
Cardinal Articles or Cardinal Code of Regulations or the Articles of
Incorporation or Bylaws of Subcorp;
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(b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the
giving of notice, the passage of time or otherwise, would constitute a
default) under, or entitle any party (with the giving of notice, the
passage of time or otherwise) to terminate, accelerate, modify or call a
default under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
Cardinal or any of its subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust,
license, contract, undertaking, agreement, lease or other instrument or
obligation to which Cardinal or any of its subsidiaries is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Cardinal or any of its subsidiaries or their
respective properties or assets; or
(d) require any action or consent or approval of, or review by,
or registration or filing by Cardinal or any of its affiliates with, any
third party or any local, domestic, foreign or multi-national court,
arbitral tribunal, administrative agency or commission or other
governmental or regulatory body, agency, instrumentality or authority (a
"Governmental Authority"), other than (i) authorization for inclusion of
the Cardinal Common Shares to be issued in the Merger and the
transactions contemplated hereby on the NYSE, subject to official notice
of issuance, (ii) actions required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), (iii) registrations or other
actions required under federal and state securities laws as are
contemplated by this Agreement, or (iv) consents or approvals of any
Governmental Authority set forth in Section 3.4 to the Cardinal
Disclosure Schedule;
except in the case of (b), (c) and (d) for any of the foregoing that would not,
individually or in the aggregate, have a Material Adverse Effect on Cardinal or
upon the ability of the parties to consummate the transactions contemplated
hereby.
3.5 BROKERAGE AND FINDER'S FEES. Except for Cardinal's obligation
to Montgomery Securities ("Montgomery"), neither Cardinal nor any shareholder,
director, officer or em ployee thereof has incurred or will incur on behalf of
Cardinal any brokerage, finder's or similar fee in connection with the
transactions contemplated by this Agreement.
3.6 ACCOUNTING MATTERS; REORGANIZATION. Neither Cardinal nor any
of its affiliates has taken or agreed to take any action that (without giving
effect to any actions taken or agreed to be taken by Owen or any of its
affiliates) would (a) prevent Cardinal from accounting for the business
combination to be effected by the Merger as a pooling-of-interests for fi-
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nancial reporting purposes or (b) prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
3.7 CARDINAL SEC DOCUMENTS. Cardinal has timely filed with the
Commission all forms, reports, schedules, statements and other documents
required to be filed by it since December 31, 1993 under the Exchange Act or
the Securities Act (such documents, as supplemented and amended since the time
of filing, collectively, the "Cardinal SEC Documents"). The Cardinal SEC
Documents, including, without limitation, any financial statements or schedules
included therein, at the time filed (and, in the case of registration statements
and proxy statements, on the dates of effectiveness and the dates of mailing,
respectively) (a) 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, and (b) complied in all material respects with
the applicable requirements of the Exchange Act and the Securities Act, as the
case may be. The financial statements of Cardinal included in the Cardinal SEC
Documents at the time filed (and, in the case of registration statements and
proxy statements, on the dates of effectiveness and the dates of mailing,
respectively) complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
Commission with respect thereto, were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q of the Commission), and fairly
present (subject in the case of unaudited statements to normal, recurring audit
adjustments) the consolidated financial position of Cardinal and its
consolidated subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.
3.8 REGISTRATION STATEMENT. None of the information provided by
Cardinal in writing for inclusion in the registration statement on Form S-4
(such registration statement as amended, supplemented or modified, the
"Registration Statement") to be filed with the Commission by Cardinal under the
Securities Act, including the prospectus relating to Cardinal Common Shares to
be issued in the Merger (as amended, supplemented or modified, the "Prospectus")
and the proxy statement and form of proxy relating to the vote of Owen
Shareholders with respect to the Merger (as amended, supplemented or modified,
the "Proxy Statement") at the time the Registration Statement becomes effective
or, in the case of the Proxy Statement, at the date of mailing and at the date
of the Owen Shareholders Meeting (as hereinafter defined) to consider the
Merger, will 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
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which they are made, not misleading. Each of the Registration Statement and
Proxy Statement, except for such portions thereof that relate only to Owen, will
comply as to form in all material respects with the provisions of the Securities
Act and Exchange Act.
3.9 NO MATERIAL ADVERSE CHANGE. Except as set forth in Section
3.9 to the Cardinal Disclosure Schedule, as contemplated by or resulting from
the execution of this Agreement or as disclosed in the Cardinal SEC Documents,
since September 30, 1996, there has been no material adverse change in the
assets, liabilities, results of operations, business or financial condition of
Cardinal taken as a whole or any event, occurrence or development which may
reasonably be expected to have such a change or a material adverse effect on the
ability of Cardinal to consummate the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OWEN
In order to induce Subcorp and Cardinal to enter into this
Agreement, Owen hereby represents and warrants to Cardinal and Subcorp that the
statements contained in this Article IV are true, correct and complete.
4.1 ORGANIZATION AND STANDING. Owen is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas with full corporate power and authority to own, lease, use and operate its
properties and to conduct its business as and where now owned, leased, used,
operated and conducted. Owen is duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business conducted by
it or the property it owns, leases or operates requires it to so qualify, except
where the failure to be so qualified or in good standing in such jurisdiction
would not have a Material Adverse Effect on Owen. Owen is not in default in the
performance, observance or fulfillment of any provision of its Articles of
Incorporation, as amended and restated (the "Owen Articles"), or its Bylaws, as
in effect on the date hereof (the "Owen Bylaws"). Owen has heretofore furnished
to Cardinal a complete and correct copy of the Owen Articles and the Owen
Bylaws. Listed in Section 4.1 to the disclosure schedule delivered by Owen to
Cardinal and dated the date hereof (the "Owen Disclosure Schedule") is each
jurisdiction in which Owen is qualified to do business and in good standing as
of the date of the Agreement.
4.2 SUBSIDIARIES. Owen does not own, directly or indirectly, any
equity or other ownership interest in any corporation, partnership, joint
venture or other entity or enterprise, except for the subsidiaries set forth in
Section 4.2 to the Owen Disclosure Schedule. Except as set forth in Section 4.2
to the Owen Disclosure Schedule, Owen is not subject to any obligation or
requirement to provide funds to or make any
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investment (in the form of a loan, capital contribution or otherwise) in any
such entity. Owen owns directly or indirectly each of the outstanding shares of
capital stock (or other ownership interests having by their terms ordinary
voting power to elect a majority of directors or others performing similar
functions with respect to such subsidiary) of each of Owen's subsidiaries. Each
of the outstanding shares of capital stock of each of Owen's subsidiaries is
duly authorized, validly issued, fully paid and nonassessable, and is owned,
directly or indirectly, by Owen free and clear of all liens, pledges, security
interests, claims or other encumbrances. The following information for each
subsidiary of Owen is set forth in Section 4.2 to the Owen Disclosure Schedule,
as applicable: (i) its name and jurisdiction of incorporation or organization;
(ii) its authorized capital stock or share capital; and (iii) the number of
issued and outstanding shares of capital stock or share capital and the record
owner(s) thereof. Other than as set forth in Section 4.2 to the Owen Disclosure
Schedule, there are no outstanding subscriptions, options, warrants, puts,
calls, agreements, understandings, claims or other commitments or rights of any
type relating to the issuance, sale or transfer of any securities of any
subsidiary of Owen, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital stock of any
subsidiary of Owen, and no subsidiary of Owen has any obligation of any kind to
issue any additional securities or to pay for securities of any subsidiary of
Owen or any predecessor thereof.
4.3 CORPORATE POWER AND AUTHORITY. Owen has all requisite
corporate power and authority to enter into and deliver this Agreement, to
perform its obligations hereunder and, subject to authorization of the Merger
and the transactions contemplated hereby by Owen Shareholders, to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by Owen have been duly authorized by all necessary corporate action on
the part of Owen, subject to authorization of the Merger and the transactions
contemplated hereby by Owen Shareholders. This Agreement has been duly executed
and delivered by Owen and constitutes the legal, valid and binding obligation of
Owen enforceable against it in accordance with its terms.
4.4 CAPITALIZATION OF OWEN. As of November 27, 1996, Owen's
authorized capital stock consisted solely of (a) 40,000,000 shares of common
stock, without par value ("Owen Common Stock"), of which (i) 17,069,094 shares
were issued and outstanding, (ii) 1,776,654 shares were issued and held in
treasury (which does not include the shares reserved for issuance set forth in
clause (iii) below) and (iii) 1,586,213 shares were reserved for issuance upon
the exercise or conversion of outstanding options granted or issued by Owen and
(b) 1,000,000 shares of preferred stock, $0.01 par value per share ("Owen
Preferred Stock"), none of which was issued and outstanding or reserved for
issuance. Each outstanding share of Owen capital stock is duly authorized and
validly issued, fully paid and
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nonassessable, and has not been issued in violation of any preemptive or similar
rights. Other than as set forth in the first sentence hereof, in Section 4.4 to
the Owen Disclosure Schedule or as contemplated by the Owen Stock Option
Agreement (as defined in Section 4.26), there are no outstanding subscriptions,
options, warrants, puts, calls, agreements, understandings, claims or other
commitments or rights of any type relating to the issuance, sale or transfer of
any securities of Owen, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital stock of Owen, and
Owen has no obligation of any kind to issue any additional securities or to pay
for securities of Owen or any predecessor. The issuance and sale of all of the
shares of capital stock described in this Section 4.4 have been in compliance
with federal and state securities laws. The Owen Disclosure Schedule accurately
sets forth the names of, and the number of shares of each class (including the
number of shares issuable upon exercise of Owen Options and the exercise price
with respect thereto) and the number of options held by, all holders of options
to purchase Owen capital stock. Except as set forth in Section 4.4 to the Owen
Disclosure Schedule, Owen has not agreed to register any securities under the
Securities Act or under any state securities law or granted registration rights
to any person or entity.
4.5 CONFLICTS; CONSENTS AND APPROVALS. Neither the execution and
delivery of this Agreement by Owen, nor the consummation of the transactions
contemplated hereby will:
(a) conflict with, or result in a breach of any provision of,
the Owen Articles or the Owen Bylaws;
(b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the
giving of notice, the passage of time or otherwise, would constitute a
default) under, or entitle any party (with the giving of notice, the
passage of time or otherwise) to terminate, accelerate, modify or call a
default under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
Owen under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, contract,
undertaking, agreement, lease or other instrument or obligation to which
Owen or any of its subsidiaries is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Owen or any of its subsidiaries or any of their
respective properties or assets; or
(d) require any action or consent or approval of, or review by,
or registration or filing by Owen or any of its affiliates with, any
third party or any Governmental Authority, other than (i) authorization
of the Merger and the transactions contemplated hereby by Owen
Shareholders, (ii) actions required by the HSR Act, (iii) registrations
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or other actions required under federal and state securities laws as are
contemplated by this Agreement and (iv) consents or approvals of any
Governmental Authority set forth in Section 4.5 to the Owen Disclosure
Schedule;
except in the case of (b) for any of the foregoing that are set forth in Section
4.5 of the Owen Disclosure Schedule and in the case of (b), (c) and (d) for any
of the foregoing that would not, individually or in the aggregate, have a
Material Adverse Effect on Owen.
4.6 NO MATERIAL ADVERSE CHANGE. Except as set forth in Section
4.6 to the Owen Disclosure Schedule as contemplated by or resulting from the
execution of this Agreement or disclosed in the Owen SEC Documents (as defined
in Section 4.7 hereof), since August 31, 1996, there has been no material
adverse change in the assets, liabilities, results of operations, business or
financial condition of Owen and its subsidiaries taken as a whole or any event,
occurrence or development which may reasonably be expected to have such a change
or a material adverse effect on the ability of Owen to consummate the
transactions contemplated hereby.
4.7 OWEN SEC DOCUMENTS. Owen has timely filed with the Commission
all forms, reports, schedules, statements and other documents required to be
filed by it since November 30, 1993 under the Exchange Act or the Securities Act
(such documents, as supplemented and amended since the time of filing,
collectively, the "Owen SEC Documents"). The Owen SEC Documents, including,
without limitation, any financial statements or schedules included therein, at
the time filed (and, in the case of registration statements and proxy
statements, on the dates of effectiveness and the dates of mailing,
respectively) (a) 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, and (b) complied in all material respects with
the applicable requirements of the Exchange Act and the Securities Act, as the
case may be. The financial statements of Owen included in the Owen SEC Documents
at the time filed (and, in the case of registration statements and proxy
statements, on the dates of effectiveness and the dates of mailing,
respectively) complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
Commission with respect thereto, were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q of the Commission), and fairly
present (subject in the case of unaudited statements to normal, recurring audit
adjustments) the consolidated financial position of Owen and its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
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4.8 TAXES.
(a) Owen and its subsidiaries have duly filed all material
federal, state, local and foreign income, franchise, excise, real and personal
property and other Tax Returns and reports (including, but not limited to, those
filed on a consolidated, combined or unitary basis) required to have been filed
by Owen or its subsidiaries prior to the date hereof. All of the foregoing Tax
Returns and reports are true and correct (except for such inaccuracies which are
individually, or in the aggregate, not material), and Owen and its subsidiaries
have within the time and manner prescribed by Applicable Law paid or, prior to
the Effective Time, will pay all Taxes, interest and penalties required to be
paid in respect of the periods covered by such returns or reports or otherwise
due to any federal, state, foreign, local or other taxing authority. Except as
disclosed on Schedule 4.8 to the Owen Disclosure Schedule, neither Owen nor any
of its subsidiaries have any material liability for any Taxes in excess of the
amounts so paid or reserves so established and neither Owen nor any of its
subsidiaries is delinquent in the payment of any material Tax. None of them has
requested or filed any document having the effect of causing any extension of
time within which to file any returns in respect of any fiscal year which have
not since been filed. No deficiencies for any material Tax have been proposed in
writing, asserted or assessed (tentatively or definitely), in each case, by any
taxing authority, against Owen or any of its subsidiaries for which there are
not adequate reserves. Except as set forth in Section 4.8 to the Owen Disclosure
Schedule, neither Owen nor any of its subsidiaries is the subject of any
currently ongoing Tax audit. As of the date of this Agreement, there are no
pending requests for waivers of the time to assess any material Tax, other than
those made in the ordinary course and for which payment has been made or there
are adequate reserves. With respect to any taxable period ended prior to May
1992, all federal income Tax Returns including Owen or any of its subsidiaries
have been audited by the Internal Revenue Service or are closed by the
applicable statute of limitations. Neither Owen nor any of its subsidiaries has
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency. There are no liens with
respect to Taxes upon any of the properties or assets, real or personal,
tangible or intangible of Owen or any of its subsidiaries (other than liens for
Taxes not yet due). No claim has ever been made in writing by an authority in a
jurisdiction where none of Owen and its subsidiaries files Tax Returns that Owen
or any of its subsidiaries is or may be subject to taxation by that
jurisdiction. Owen has not filed an election under Section 341(f) of the Code to
be treated as a consenting corporation.
(b) Neither Owen nor any of its subsidiaries is obligated by any
contract, agreement or other arrangement to indemnify any other person with
respect to material Taxes. Neither Owen nor any of its subsidiaries are now or
have ever been a party to or bound by any agreement or arrangement (whether or
not written and including, without limitation, any arrangement
16
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required or permitted by law) binding Owen or any of its subsidiaries which (i)
requires Owen or any of its subsidiaries to make any Tax payment to or for the
account of any other person, (ii) affords any other person the benefit of any
net operating loss, net capital loss, investment Tax credit, foreign Tax credit,
charitable deduction or any other credit or Tax attribute which could reduce
Taxes (including, without limitation, deductions and credits related to
alternative minimum Taxes) of Owen or any of its subsidiaries, or (iii) requires
or permits the transfer or assignment of income, revenues, receipts or gains to
Owen or any of its subsidiaries, from any other person.
(c) Owen and its subsidiaries have withheld and paid all material
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, shareholder or other
third party.
(d) "Tax Returns" means returns, reports and forms required to be
filed with any Governmental Authority of the United States or any other
jurisdiction responsible for the imposition or collection of Taxes.
(e) "Taxes" means (i) all Taxes (whether federal, state, local or
foreign) based upon or measured by income and any other Tax whatsoever,
including, without limitation, gross receipts, profits, sales, use, occupation,
value added, ad valorem, transfer, franchise, withholding, payroll, employment,
excise, or property Taxes, together with any interest or penalties imposed with
respect thereto and (ii) any obligations under any agreements or arrangements
with respect to any Taxes described in clause (i) above.
4.9 COMPLIANCE WITH LAW.
(a) Except as set forth in Section 4.9 to the Owen Disclosure
Schedule, Owen is in compliance with all applicable laws, statutes, orders,
rules, regulations, policies or guidelines promulgated, or judgments, decisions
or orders entered by any Governmental Authority (collectively, "Applicable
Laws") relating to Owen or its business or properties, including, without
limitation, laws regarding the provision of insurance, third party
administration and primary health care services, the Prescription Drug Marketing
Act, the Federal Controlled Substances Act of 1970, the Food, Drug and Cosmetic
Act, any federal or state pharmacy practice acts, the Good Manufacturing
Practices standards of the Food and Drug Administration, federal Medicare and
Medicaid statutes, including, without limitation, 42 U.S.C. Section 1320a-7b and
42 U.S.C. Section 1395nn or related state or local statutes or regulations,
applicable state laws regulating pharmacy practice, the Occupational Safety and
Health Act and the regulations promulgated thereunder and all rules of
professional conduct applicable to Owen or by which any of its properties are
bound or subject, except where the failure to be in compliance with such
Applicable Laws (individually or in the aggregate) could not reasonably be
expected to have a
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Material Adverse Effect on Owen. Except as disclosed in Section 4.9 to the Owen
Disclosure Schedule, no investigation or review by any Governmental Authority,
including, without limitation, applicable state insurance and health
commissions, with respect to Owen is pending, or, to the knowledge of Owen,
threatened, nor has any Governmental Authority, including, without limitation,
applicable state insurance and health commissions, indicated in writing an
intention to conduct the same, other than those the outcome of which could not
reasonably be expected to have a Material Adverse Effect on Owen.
4.10 INTELLECTUAL PROPERTY.
(a) As set forth in Section 4.10 to the Owen Disclosure Schedule
is a true and complete list of (i) all of Owen's foreign and domestic material
patents, patent applications, invention disclosures, trademarks, service marks,
tradenames (and any registrations or applications for registration for any of
the foregoing trademarks, service marks and tradenames) and all material
copyright applications and registrations and (ii) all agreements to which Owen
is a party which concern any of the material Intellectual Property
("Intellectual Property" shall mean all intellectual property or other
proprietary rights of every kind, including, all domestic or foreign patents,
domestic or foreign patent applications, inventions (whether or not patentable),
processes, products, technologies, discoveries, copyrightable and copyrighted
works, apparatus, trade secrets, trademarks and trademark registration and
trademark registration applications, service marks and service mark
registrations and service mark registration applications, tradenames, trade
dress, copyright registrations, customer lists, marketing and customer
information, mask works rights, know-how, licenses, technical information
(whether confidential or otherwise), software, and all documentation thereof).
Other than the Intellectual Property set forth in Section 4.10 of the Owen
Disclosure Schedule, no name, patent, invention, tradesecret, proprietary right,
computer software, trademark, tradename, service mark, logo, copyright,
franchise, license, sublicense, or other such right is necessary for the
operation of the business of Owen in substantially the same manner as such
business is presently conducted. Except as set forth in Section 4.10 to the Owen
Disclosure Schedule (i) Owen owns, free and clear of any liens, claims or
encumbrances, the material Intellectual Property listed thereon; (ii) no claim
of invalidity of the patents, trademark registrations, service mark
registrations, and copyright registrations included in the Intellectual Property
has been made by a third party; (iii) no claim of infringement of any now
existing domestic or foreign patent, trademark, service mark, tradename,
copyright or design right has been made by any third party; (iv) no person or
entity has asserted that, with respect to the material Intellectual Property,
Owen or a licensee of Owen is infringing or has infringed any domestic or
foreign patent, trademark, service mark, tradename, or copyright or design
right, or has misappropriated or improperly used or disclosed any trade secret,
confidential information or know-how; (v) to Owen's knowledge none of the
Intellectual Property, its use or operation infringe any foreign or domestic
patent,
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trademark, service mark, tradename or copyright of any entity or have involved
the misappropriation or improper use or disclosure of any trade secrets,
confidential information or know-how of any entity; (vi) to Owen's knowledge all
fees, annuities, and other payments which are due from Owen on or before the
effective date of this Agreement for any of the Intellectual Property have been
paid; (vii) the making, using, selling, manufacturing, marketing, licensing,
reproduction, distribution, or publishing of any process, machine, manufacture,
composition of matter, or material pursuant to any part of the Intellectual
Property, does not and will not infringe any domestic or foreign patent,
trademark, service mark, tradename, copyright or other intellectual property
right; (viii) no unexpired foreign or domestic patents or patent applications
exist that are adverse to the material interests of Owen; (ix) the Intellectual
Property is not the subject to any pending Action; (x) to Owen's knowledge there
exists no (a) prior act that would void or invalidate any of the Intellectual
Property or (b) conduct or use by Owen or any third party that would void or
invalidate any of the Intellectual Property; (xi) the execution, delivery and
performance of this Agreement by Owen, and the consummation of the transactions
contemplated thereby, will not breach, violate or conflict with any instrument
or agreement governing or contained within any of the Intellectual Property,
will not cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any of the Intellectual Property or in any way
impair the right of Red or Subcorp to use, sell, license or dispose of, or to
bring any action for the infringement of, any Intellectual Property; (xii) there
are no royalties, honoraria, fees or other payments payable to any third party
by reason of the ownership, use, license, sale or disposition of the
Intellectual Property; (xiii) no substantial part of the source or object code,
algorithms or structure included in any of the Intellectual Property is copied
from, based upon or derived from any source or object code, algorithm or
structure included in any computer software product owned by any third party nor
does any substantial similarity of any of such source or object code, algorithms
or structure being copied from, based upon or derived from any computer software
product owned by any third party.
(a) Owen has taken reasonable and appropriate steps to safeguard
and maintain the secrecy and confidentiality of all material trade secrets,
copyrights and patents contained in the Intellectual Property (including,
entering into appropriate confidentiality, nondisclosure and noncompetition
agreements with all officers, directors, employees and third-party consultants
of Owen).
4.11 TITLE TO AND CONDITION OF PROPERTIES. Owen owns or holds
under valid leases all real property, plants, machinery and equipment necessary
for the conduct of the business of Owen as presently conducted, except where the
failure to own or hold
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such property, plants, machinery and equipment would not have a Material Adverse
Effect on Owen.
4.12 REGISTRATION STATEMENT; PROXY STATEMENT. None of the
information provided in writing by Owen for inclusion in the Registration
Statement at the time it becomes effective or, in the case of the Proxy
Statement, at the date of mailing and at the date of the meeting of the Owen
Shareholders to consider the Merger, will 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. The Registration Statement and Proxy
Statement, except for such portions thereof that relate only to Cardinal and its
subsidiaries, will each comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act.
4.13 LITIGATION. Except as set forth in Section 4.13 to the Owen
Disclosure Schedule, there is no suit, claim, action, proceeding or, to the
knowledge of Owen, investigation (an "Action") pending or, to the knowledge of
Owen (or its executive officers or directors), threatened against Owen or any
executive officer or director of Owen which, individually or in the aggregate,
if adversely determined, would have a Material Adverse Effect on Owen or a
Material Adverse Effect on the ability of Owen to consummate the transactions
contemplated hereby. Owen is not subject to any outstanding order, writ,
injunction or decree which, individually or in the aggregate, insofar as can be
reasonably foreseen, could have a Material Adverse Effect on Owen or a material
adverse effect on the ability of Owen to consummate the transactions
contemplated hereby. Except as set forth in Section 4.13 to the Owen Disclosure
Schedule, since November 30, 1993, Owen has not been subject to any outstanding
order, writ, injunction or decree relating to Owen's method of doing business or
its relationship with past, existing or future customers, lessees, users,
purchasers or licensees of any Intellectual Property, goods or services of Owen.
4.14 BROKERAGE AND FINDER'S FEES; EXPENSES. Except for Owen's
obligations to Smith Barney Inc. ("Smith Barney") and to Rauscher Pierce
Refsnes, Inc. ("RPR") (copies of the written agreements relating to such
obligations having previously been provided to Cardinal), neither Owen nor any
stockholder, director, officer or employee thereof, has incurred or will incur
on behalf of Owen, any brokerage, finder's or similar fee in connection with the
transactions contemplated by this Agreement. Section 4.14 to the Owen Disclosure
Schedule discloses the maximum aggregate amount of all fees and expenses which
will be paid or will be payable by Owen to all attorneys, accountants and
investment bankers in connection with the Merger ("Merger Fees").
4.15 ACCOUNTING MATTERS; REORGANIZATION. Neither Owen nor any of
its affiliates has taken or agreed to take any
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action that (without giving effect to any actions taken or agreed to be taken by
Cardinal or any of its affiliates) would (a) prevent Cardinal from accounting
for the business combination to be effected by the Merger as a
pooling-of-interests for financial reporting purposes or (b) prevent the Merger
from constituting a reorganization qualifying under the provisions of Section
368(a) of the Code.
4.16 EMPLOYEE BENEFIT PLANS.
(a) For purposes of this Section 4.16, the following terms have
the definitions given below:
"Controlled Group Liability" means any and all liabilities under
(i) Title IV of ERISA, (ii) section 302 of ERISA, (iii) sections 412 and
4971 of the Code, (iv) the continuation coverage requirements of section
601 et seq. of ERISA and section 4980B of the Code, and (v)
corresponding or similar provisions of foreign laws or regulations, in
each case other than pursuant to the Plans.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a
group described in Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA that includes the first entity, trade or
business, or that is a member of the same "controlled group" as the
first entity, trade or business pursuant to Section 4001(a)(14) of
ERISA.
"Plans" means all employee benefit plans, programs and other
arrangements providing benefits to any employee or former employee in
respect of services provided to Owen or beneficiary or dependent
thereof, and whether covering one person or more than one person,
sponsored or maintained by Owen or any of its subsidiaries or to which
Owen or any of its subsidiaries contributes or is obligated to
contribute. Without limiting the generality of the foregoing, the term
"Plans" includes all employee welfare benefit plans within the meaning
of Section 3(1) of ERISA and all employee pension benefit plans within
the meaning of Section 3(2) of ERISA.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer
Plan, as those terms are defined in Part I of Subtitle E of Title IV of
ERISA.
(b) Section 4.16 to the Owen Disclosure Schedule lists all Plans.
With respect to each Plan, Owen has made available to Cardinal a true, correct
and complete copy of the following (where applicable): (i) each writing
constituting a part of such Plan, including without limitation all plan
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documents, benefit schedules, trust agreements, and insurance contracts and
other funding vehicles; (ii) the most recent Annual Report (Form 5500 Series)
and accompanying schedule, if any; (iii) the current summary plan description,
if any; (iv) the most recent annual financial report, if any; and (v) the most
recent determination letter from the Internal Revenue Service, if any.
(c) The Internal Revenue Service has issued a favorable
determination letter with respect to each Plan that is intended to be a
"qualified plan" within the meaning of Section 401(a) of the Code (a "Qualified
Plan") and to the knowledge of Owen there are no existing circumstances nor any
events that have occurred that could adversely affect the qualified status of
any Qualified Plan or the related trust.
(d) All contributions required to be made to any Plan by
Applicable Laws or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any Plan,
for any period through the date hereof have been timely made or paid in full and
through the Closing Date will be timely made or paid in full.
(e) Owen and its subsidiaries have complied, and are now in
compliance, in all material respects, with all provisions of ERISA, the Code and
all laws and regulations applicable to the Plans. Each Plan has been operated in
material compliance with its terms. There is not now, and to the knowledge of
Owen there are no existing circumstances that could reasonably be expected to
give rise to, any requirement for the posting of security with respect to a Plan
or the imposition of any lien on the assets of Owen or any of its subsidiaries
under ERISA or the Code.
(f) No Plan is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code. No Plan is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that
has two or more contributing sponsors at least two of whom are not under common
control, within the meaning of Section 4063 of ERISA (a "Multiple Employer
Plan"), nor has Owen or any of its subsidiaries or any of their respective ERISA
Affiliates, at any time within five years before the date hereof, contributed to
or been obligated to contribute to any Multiemployer Plan or Multiple Employer
Plan. With respect to each Multiemployer Plan: (i) Neither Owen nor any of its
ERISA Affiliates has incurred any Withdrawal Liability that has not been
satisfied in full; (ii) if Owen or any of its ERISA Affiliates were to
experience a withdrawal or partial withdrawal from such plan, no Withdrawal
Liability would be incurred; and (iii) neither Owen nor any ERISA Affiliate has
received any notification, nor has any reason to believe, that any such plan is
in reorganization, has been terminated, or may reasonably be expected to be in
reorganization or to be terminated.
(g) There does not now exist, and to the knowledge of Owen there
are no existing circumstances that could reasonably
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be expected to result in any material Controlled Group Liability that would be a
liability of Owen or any of its subsidiaries following the Closing. Without
limiting the generality of the foregoing, neither Owen nor any of its
subsidiaries nor any of their respective ERISA Affiliates has engaged in any
transaction described in Section 4069 or Section 4204 of ERISA.
(h) Except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA, neither Owen nor any of
its subsidiaries has any material liability for life, health, medical or other
welfare benefits to former employees or beneficiaries or dependents thereof.
(i) Except with respect to the acceleration of the non-employee
director options granted under the 1992 Non-Employee Director Stock Option
Plan, neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will result in, cause the accelerated
vesting or delivery of, or increase the amount or value of, any payment or
benefit to any employee, officer, director or consultant of Owen or any of its
subsidiaries. Without limiting the generality of the foregoing, no amount paid
or payable by Owen or any of its subsidiaries in connection with the
transactions contemplated hereby either solely as a result thereof or as a
result of such transactions in conjunction with any other events will be an
"excess parachute payment" within the meaning of Section 280G of the Code.
(j) Except as disclosed in Section 4.16(j) to the Owen Disclosure
Schedule, there are no pending or to the knowledge of Owen threatened claims
(other than claims for benefits in the ordinary course), lawsuits or
arbitrations which have been asserted or instituted against the Plans, any
fiduciaries thereof with respect to their duties to the Plans or the assets of
any of the trusts under any of the Plans which could reasonably be expected to
result in any material liability of Owen or any of its subsidiaries to the
Pension Benefit Guaranty Corporation, the Department of Treasury, the
Department of Labor or any Multiemployer Plan.
(k) Section 4.16(k) to the Owen Disclosure Schedule sets forth
the names of all directors and officers of Owen, the total salary, bonus, fringe
benefits and perquisites each will receive in the fiscal year ending November
30, 1996, and any changes to the foregoing which will occur subsequent to
November 30, 1996; Section 4.16(k) to the Owen Disclosure Schedule also lists
and describes the current compensation of any other employee of Owen whose total
current salary and maximum bonus opportunity exceeds $100,000 annually. Except
as disclosed in Section 4.16(k) to the Owen Disclosure Schedule, there are no
other material forms of compensation paid to any such director, officer or
employee of Owen. Except as set forth in Section 4.16(k) to the Owen Disclosure
Schedule, no officer, director, or employee of Owen or any other affiliate of
Owen, or any immediate family member of any of the foregoing, provides or
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causes to be provided to Owen any material assets, services or facilities and
Owen does not provide or cause to be provided to any such officer, director,
employee or affiliate, or any immediate family member of any of the foregoing,
any material assets, services or facilities.
4.17 CONTRACTS. Section 4.17 to the Owen Disclosure Schedule
lists as of the date hereof all written or oral contracts, agreements,
guarantees, leases and executory commitments other than Plans (each a
"Contract") to which Owen is a party and which fall within any of the following
categories: (a) Contracts not entered into in the ordinary course of Owen's
business other than those that are not material to the business of Owen, (b)
joint venture, partnership and like agreements, (c) Contracts which are service
contracts or equipment leases involving payments by Owen of more than $100,000
per year, (d) Contracts containing covenants purporting to limit the freedom of
Owen to compete in any line of business in any geographic area or to hire any
individual or group of individuals except for confidentiality agreements
executed in connection with potential business combination or sale of any
business division with such covenants consistent with the Confidentiality
Agreement (as defined in Section 5.2(j), (e) Contracts which after the
Effective Time would have the effect of limiting the freedom of Cardinal or its
subsidiaries (other than Owen and its subsidiaries) to compete in any line of
business in any geographic area or to hire any individual or group of
individuals, except for confidentiality agreements executed in connection with
potential business combination or sale of any business division with such
covenants consistent with the Confidentiality Agreement (f) Contracts which
contain minimum purchase conditions (other than such Contracts with
manufacturers of pharmaceutical products) in excess of $100,000 or requirements
or other terms that restrict or limit the purchasing relationships of Owen or
its affiliates, or any customer, licensee or lessee thereof, (g) Contracts
relating to any outstanding commitment for capital expenditures in excess of
$300,000, (h) Contracts relating to the lease or sublease of or sale or purchase
of real or personal property involving any annual expense or price in excess of
$250,000 and not cancellable by Owen (without premium or penalty) within one
month, (i) Contracts with any labor organization, (j) indentures, mortgages,
promissory notes, loan agreements, guarantees of borrowed money in excess of
$50,000, letters of credit or other agreements or instruments of Owen or
commitments for the borrowing or the lending of amounts in excess of $50,000 by
Owen or providing for the creation of any charge, security interest, encumbrance
or lien upon any of the assets of Owen, (k) Contracts involving annual revenues
or expenditures to the business of Owen in excess of 2.5% of Owen's annual
revenues, (l) Contracts providing for "earn-outs" or other contingent payments
by Owen involving more than $20,000 over the term of the Contract and (m)
Contracts with or for the benefit of any affiliate of Owen or immediate family
member thereof (other than subsidiaries of Owen) involving more than $60,000 in
the aggregate per affiliate. All such Contracts are valid and binding
obligations of Owen and, to the knowledge of Owen, the valid and binding
obligation of each other party
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thereto except such Contracts which if not so valid and binding would not,
individually or in the aggregate, have a Material Adverse Effect on Owen.
Neither Owen nor, to the knowledge of Owen, any other party thereto is in
violation of or in default in respect of, nor has there occurred an event or
condition which with the passage of time or giving of notice (or both) would
constitute a default under or permit the termination of, any such Contract
except for payment defaults by client hospitals in the ordinary course of
business except such violations or defaults under or terminations which,
individually or in the aggregate, would not have a Material Adverse Effect on
Owen.
4.18 LABOR MATTERS. Except as set forth in Section 4.18 to the
Owen Disclosure Schedule, neither Owen nor any of its subsidiaries has any labor
contracts, collective bargaining agreements or employment or consulting
agreements with any persons employed by Owen or any persons otherwise
performing services primarily for Owen or any of its subsidiaries (the "Owen
Business Personnel"). There is no labor strike, dispute or stoppage pending or,
to the knowledge of Owen, threatened against Owen or any of its subsidiaries,
and neither Owen nor any of its subsidiaries has experienced any labor strike,
dispute or stoppage or other material labor difficulty involving its employees
since November 30, 1993.
4.19 OPERATION OF OWEN'S BUSINESS; RELATIONSHIPS.
(a) Since August 31, 1996 through the date of this Agreement,
neither Owen nor its subsidiaries has engaged in any transaction which, if done
after execution of this Agreement, would violate Section 5.3(c) hereof except as
set forth in Section 4.20 to the Owen Disclosure Schedule.
(b) The relationships of Owen with its customers and suppliers
are satisfactory as of the date of this Agreement.
(c) No product produced by Owen or produced for Owen by a third
party and bearing an Owen trademark or other Proprietary Right of Owen has been
recalled voluntarily or involuntarily since November 30, 1995, no such recall
is being considered by Owen, and, to the knowledge of Owen, no such recall is
being considered by or has been requested or ordered by any Governmental
Authority.
4.20 PERMITS; COMPLIANCE. Owen is in possession of all material
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease
and operate its properties and to carry on its business as it is now being
conducted (collectively, the "Owen Permits"), and there is no Action pending
or, to the knowledge of Owen, threatened regarding any of the Owen Permits. Owen
is not in conflict with, or in default or violation of any of the Owen Permits,
except for any such conflicts, defaults or violations which, individually or in
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the aggregate, could not reasonably be expected to have a Material Adverse
Effect on Owen.
4.21 PRODUCT WARRANTIES AND LIABILITIES. Except as listed in
Section 4.21 to the Owen Disclosure Schedule, Owen has no forms of warranties or
guarantees of its products and services that are in effect or proposed to be
used by it.
4.22 ENVIRONMENTAL MATTERS. Except for matters disclosed in
Schedule 4.22 of the Owen Disclosure Schedule, (a) the properties, operations
and activities of Owen and its subsidiaries are in compliance in all material
respects with all applicable Environmental Laws (as defined below); (b) Owen and
its subsidiaries and the properties and operations of Owen and its subsidiaries
are not subject to any existing, pending or, to the knowledge of Owen,
threatened action, suit, investigation, inquiry or proceeding by or before any
court or governmental authority under any Environmental Law; (c) there has been
no material release of any hazardous substance, pollutant or contaminant into
the environment by Owen or its subsidiaries or in connection with their
properties or operations; (d) there has been no material exposure of any person
or property to any hazardous substance, pollutant or contaminant in connection
with the properties, operations and activities of Owen and its subsidiaries; and
(e) Owen and its subsidiaries or their counsel have made available to the
Purchaser all internal and external audits (in each case relevant to Owen or any
of its subsidiaries) in the possession of Owen or its subsidiaries or their
counsel. The term "Environmental Laws" means all federal, state, local or
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or industrial, toxic or hazardous
substances or wastes (collectively, "Hazardous Materials") into the environment,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials, as
well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
4.23 OPINION OF FINANCIAL ADVISORS. Owen has received the
opinion of each of Smith Barney and RPR, its financial advisors, to the effect
that, as of the date of this Agreement, the Exchange Ratio is fair to the Owen
Shareholders from a financial point of view, Owen has heretofore provided copies
of such opinions to Cardinal and neither of such opinions have been withdrawn or
revoked or modified in any material respect.
4.24 BOARD RECOMMENDATION. The Board of Directors of Owen, at a
meeting duly called and held, has by unanimous vote of those directors present
(who constituted 100% of the
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directors then in office) (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, and the Owen Stock
Option Agreement and the transactions contemplated thereby, taken together, are
fair to and in the best interests of the Owen Shareholders, and (ii) resolved to
recommend that the holders of the shares of Owen Common Stock approve this
Agreement and the transactions contemplated herein, including the Merger (the
"Owen Board Recommendation").
4.25 STATE TAKEOVER LAWS. No state takeover law or other state
law (including, without limitation, under the TBCA) that purports to limit or
restrict business combinations or the ability to acquire or vote shares nor the
provisions of Article 10 of the Owen Articles are applicable to: (i) the
execution of this Agreement, the Stock Option Agreement dated November 27, 1996
between Cardinal and Owen (the "Owen Stock Option Agreement") and the
Support/Voting Agreements dated as of November 27, 1996 between Cardinal and
certain Owen Shareholders (collectively, the "Support Agreements"), (ii) the
Merger and (iii) the transactions contemplated hereby and by the Owen Stock
Option Agreement and the Support Agreements.
4.26 LEASE ARRANGEMENTS.
(a) Except as set forth in Section 4.26 to the Owen Disclosure
Schedule, there are no lessees ("Master Lessees") who have been granted the
right to use, purchase, lease or license Intellectual Property, goods or
services from Owen and to provide, resell, sublease or relicense same to other
authorized lessees or third parties. The identity of each Master Lessee and a
description of all lessees and third parties to whom such Master Lessee is
entitled to provide, resell, sublease or relicense Intellectual Property, goods
and services of Owen are set forth in Section 4.26 to the Owen Disclosure
Schedule. There are no material agreements between Owen and any Master Lessee
other than those in writing that are set forth in Section 4.26 to the Owen
Disclosure Schedule.
(b) The relationships of Owen with its lessees and licensees are
satisfactory as of the date of this Agreement.
(c) Owen is not a party to any vendor financing arrangement
which (i) requires Owen to use such financing for any particular transaction, or
(ii) cannot be terminated (without premium or penalty) upon less than one
month's notice. Any Meditrol unit that is subject to any vendor financing
arrangement shall, upon expiration of the term of such financing arrangement
(assuming all Owen's obligations thereunder have been met), be owned by Owen
free and clear of any liens, security interests, encumbrances and restrictions
of any kind.
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ARTICLE V
COVENANTS OF THE PARTIES
The parties hereto agree as follows with respect to the period
from and after the execution of this Agreement.
5.1 MUTUAL COVENANTS.
(a) GENERAL. Each of the parties shall use its reasonable
efforts to take all action and to do all things necessary, proper or advisable
to consummate the Merger and the transactions contemplated by this Agreement
(including, without limitation, using its reasonable efforts to cause the
conditions set forth in Article VI for which they are responsible to be
satisfied as soon as reasonably practicable and to prepare, execute and deliver
such further instruments and take or cause to be taken such other and further
action as any other party hereto shall reasonably request).
(b) HSR ACT. As soon as practicable, and in any event no later
than fifteen business days after the date hereof, each of the parties hereto
will file any Notification and Report Forms and related material required to be
filed by it with the Federal Trade Commission and the Antitrust Division of the
United States Department of Justice under the HSR Act with respect to the
Merger, will use its reasonable efforts to obtain an early termination of the
applicable waiting period, and shall promptly make any further filings pursuant
thereto that may be necessary, proper or advisable. Cardinal and Owen agree to
cooperate with respect to, and shall cause each of their respective subsidiaries
to cooperate with respect to, and agree to use all reasonable efforts to contest
and resist, any Action, including legislative, administrative or judicial
Action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) (an "Order") of any Governmental Authority that is in effect and
that restricts, prevents or prohibits the consummation of the Merger or any
other transactions contemplated by this Agreement, including, without
limitation, by pursuing all available avenues of administrative and judicial
appeal and all available legislative action. Upon the terms and subject to the
conditions set forth in this Agreement, in connection with the HSR Act, each of
Owen and Cardinal agrees to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Authorities and the making of all necessary registrations and
filings (including filings with Governmental Authorities, if any) and the taking
of all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Authority;
PROVIDED, HOWEVER, that a party shall not be obligated to take any action
pursuant to the foregoing if the taking of such action or the obtaining
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of any waiver, consent, approval or exemption is reasonably likely (x) to impact
in a materially adverse manner the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger or (y) to result in an Order (i) prohibiting or
limiting the ownership or operation by Cardinal of any material portion of the
business or assets of Owen or compelling Cardinal to dispose of or hold separate
any of the business or assets of Cardinal or any material portion of the
business or assets of Owen as a result of the Merger or any of the other
transactions contemplated by this Agreement, (ii) imposing limitations on the
ability of Cardinal to acquire or hold, or exercise full rights of ownership of,
any shares of capital stock of Owen, including, without limitation, the right to
vote such capital stock on all matters properly presented to the Owen
Shareholders, or (iii) prohibiting Cardinal from effectively controlling in any
material respect the business or operations of Owen.
(c) OTHER GOVERNMENTAL MATTERS. Each of the parties shall use its
reasonable efforts to take any additional action that may be necessary, proper
or advisable in connection with any other notices to, filings with, and
authorizations, consents and approvals of any Governmental Authority that it may
be required to give, make or obtain.
(d) POOLING-OF-INTERESTS. Each of the parties shall use its best
efforts to cause the Merger to qualify for pooling-of-interests accounting
treatment for financial reporting purposes, including without limitation,
appropriate representation letters to Cardinal's accountants.
(e) TAX-FREE TREATMENT. Each of the parties shall
use its best efforts to cause the Merger to constitute a tax-
free "reorganization" under Section 368(a) of the Code and to
permit Vinson & Elkins L.L.P. and Wachtell, Lipton, Rosen & Katz
to issue their opinions provided herein.
(f) PUBLIC ANNOUNCEMENTS. Unless otherwise required by Applicable
Laws or requirements of the NYSE (and in that event only if time does not
permit), at all times prior to the earlier of the Effective Time or termination
of this Agreement pursuant to Section 7.1, Cardinal and Owen shall consult with
each other before issuing any press release with respect to the Merger and shall
not issue any such press release prior to such consultation.
5.2 COVENANTS OF CARDINAL.
(a) PREPARATION OF REGISTRATION STATEMENT. Cardinal shall, as
soon as is reasonably practicable, prepare the Proxy Statement for filing by
Owen with the Commission on a confidential basis. Cardinal shall prepare and
file the Registration Statement with the Commission as soon as is reasonably
practicable following clearance of the Proxy Statement by the Commission and
shall use all reasonable efforts to have the Registra-
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tion Statement declared effective by the Commission as promptly as practicable
and to maintain the effectiveness of the Registration Statement through the
Effective Time. If, at any time prior to the Effective Time, Cardinal shall
obtain knowledge of any information pertaining to Cardinal contained in or
omitted from the Registration Statement that would require an amendment or
supplement to the Registration Statement or the Proxy Statement, Cardinal will
so advise Owen in writing and will promptly take such action as shall be
required to amend or supplement the Registration Statement. Cardinal shall
promptly furnish to Owen all information concerning it as may be required for
supplementing the Proxy Statement. Cardinal shall cooperate with Owen in the
preparation of the Proxy Statement in a timely fashion and shall use all
reasonable efforts to assist Owen in clearing the Proxy Statement with the Staff
of the Commission. Cardinal also shall take such other reasonable actions (other
than qualifying to do business in any jurisdiction in which it is not so
qualified) required to be taken under any applicable state securities laws in
connection with the issuance of Cardinal Common Shares in the Merger.
(b) INDEMNIFICATION. From and after the Effective Time, Cardinal
shall cause (including, providing adequate funding), the Surviving Corporation
to indemnify and hold harmless the present and former officers and directors of
Owen in respect of acts or omissions occurring prior to the Effective Time to
the extent provided under the Owen Certificate of Incorporation, as amended and
restated, and Bylaws in effect on the date hereof.
(c) INSURANCE. From and after this Effective Time Cardinal shall
maintain the current policies of directors' and officers' liability insurance
through the remainder of its term which ends in June 1997.
(d) EMPLOYEE BENEFITS. Cardinal covenants and agrees that, for a
period of one year from and after the Effective Time, it will cause the
Surviving Corporation to provide for the benefit of employees of the Surviving
Corporation benefits that are no less favorable, in the aggregate, than those
provided to employees of Owen immediately prior to the date of this Agreement.
In the event Cardinal satisfies its obligations under this Section 5.2(c) by
adding employees of Owen to Cardinal's medical plan (the "Cardinal Medical
Plan"), then eligibility of such employees for medical benefits under the
Cardinal Medical Plan will not be subject to standard exclusions for
pre-existing conditions.
(e) NOTIFICATION OF CERTAIN MATTERS. Cardinal shall give prompt
notice to Owen of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would cause any Cardinal or Subcorp
representation or warranty contained in this Agreement to be untrue or
inaccurate at or prior to the Effective Time in any material respect and (ii)
any material failure of Cardinal to comply with or
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satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.2(d) shall not limit or otherwise affect the remedies available
hereunder to Owen.
(f) POOLING PRESS RELEASE. Cardinal shall use its best efforts to
prepare and publicly release as soon as practicable (but in any event within
fifteen days) following the end of the first full calendar month completed after
the Effective Time, a report in the form of a quarterly earnings report,
registration statement filed with the Commission, a report filed with the
Commission on Form 10-K, 10-Q or 8-K or any other pub lic filing, statement or
announcement which includes the combined financial results (including combined
sales and net income) of Cardinal and Owen for a period of at least 30 days of
combined operations of Cardinal and Owen following the Effective Time.
(g) MERGER SUB. Prior to the Effective Time, Subcorp shall not
conduct any business or make any investments other than as specifically
contemplated by this Agreement and will not have any assets (other than a de
minimis amount of cash paid to Subcorp for the issuance of its stock to
Cardinal) or any material liabilities.
(h) NYSE LISTING. Cardinal shall use its reasonable efforts to
cause the Cardinal Common Shares issuable pursuant to the Merger to be approved
for listing on the NYSE, subject to official notice of issuance, prior to the
Effective Time.
(i) AFFILIATES OF CARDINAL. Cardinal shall cause each such person
who may be at the Effective Time or was on the date hereof an "affiliate" of
Cardinal for purposes of Rule 145 under the Securities Act, to execute and
deliver to Cardinal no less than 30 days prior to the date of the Owen
Shareholders Meeting, the written undertakings in the form attached hereto as
Exhibit A-2.
(j) ACCESS. Cardinal shall permit representatives of Owen to have
appropriate access at all reasonable times to Cardinal's premises, properties,
books, records, contracts, tax records, documents, customers and suppliers.
Information obtained by Owen pursuant to this Section 5.2(i) shall be subject
to the provisions of the confidentiality agreement between Cardinal and Owen
dated November 12, 1996 (the "Confidentiality Agreement"), which agreement
remains in full force and effect.
5.3 COVENANTS OF OWEN.
(a) OWEN SHAREHOLDERS MEETING. Owen shall take all action in
accordance with the federal securities laws, the TBCA and the Owen Articles and
the Owen Bylaws necessary to convene a special meeting of Owen Shareholders to
be held on the earliest practicable date (the "Owen Shareholders Meeting") to
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consider and vote upon approval of the Merger, this Agreement and the
transactions contemplated hereby.
(b) INFORMATION FOR THE REGISTRATION STATEMENT AND PREPARATION OF
PROXY STATEMENT. Owen shall promptly furnish Cardinal with all information
concerning it as may be required for inclusion in the Registration Statement.
Owen shall cooperate with Cardinal in the preparation of the Registration
Statement in a timely fashion and shall use all reasonable efforts to assist
Cardinal in having the Registration Statement declared effective by the
Commission as promptly as practicable. If, at any time prior to the Effective
Time, Owen obtains knowledge of any information pertaining to Owen that would
require any amendment or supplement to the Registration Statement or the Proxy
Statement, Owen shall so advise Cardinal and shall promptly furnish Cardinal
with all information as shall be required for such amendment or supplement and
shall promptly supplement the Proxy Statement. Owen shall use all reasonable
efforts to cooperate with Cardinal in the preparation and filing of the Proxy
Statement with the Commission on a confidential basis. Owen shall use all
reasonable efforts to mail at the earliest practicable date to Owen Shareholders
the Proxy Statement, which shall include all information required under
Applicable Law to be furnished to Owen Shareholders in connection with the
Merger and the transactions contemplated thereby and shall include the Owen
Board Recommendation to the extent not previously withdrawn in compliance with
Section 5.3(e).
(c) CONDUCT OF OWEN'S OPERATIONS. Owen shall conduct its
operations in the ordinary course except as expressly contemplated by this
Agreement and the transactions contemplated hereby and shall use its reasonable
best efforts to maintain and preserve its business organization and its material
rights and franchises and to retain the services of its officers and key
employees and maintain relationships with customers, suppliers, lessees,
licensees and other third parties, and to maintain all of its operating assets
in their current condition (normal wear and tear excepted), to the end that
their goodwill and ongoing business shall not be impaired in any material
respect. Without limiting the generality of the foregoing, during the period
from the date of this Agreement to the Effective Time, Owen shall not, except as
otherwise expressly contemplated by this Agreement and the transactions
contemplated hereby or as set forth in Section 5.3(c) to the Owen Disclosure
Schedule, without the prior written consent of Cardinal:
(i) do or effect any of the following actions with respect to its
securities: (A) adjust, split, combine or reclassify its capital stock,
(B) make, declare or pay any dividend or distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, (C) grant any person
any right or option to acquire any shares of its capital stock, (D)
issue, deliver or sell or agree to issue, deliver or sell any additional
shares of
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its capital stock or any securities or obligations convertible into or
exchangeable or exercisable for any shares of its capital stock or such
securities (except pursuant to the exercise of Owen Options which are
outstanding as of the date hereof), or (E) enter into any agreement,
understanding or arrangement with respect to the sale or voting of its
capital stock;
(ii) directly or indirectly sell, transfer, lease, pledge,
mortgage, encumber or otherwise dispose of any of its property or assets
other than in the ordinary course of business;
(iii) make or propose any changes in the Owen Articles
or the Owen Bylaws;
(iv) merge or consolidate with any other person or acquire a
material amount of assets or capital stock of any other person (other
than as permitted, in each case, by Section 5.3(e));
(v) incur, create, assume or otherwise become liable for any
indebtedness for borrowed money or assume, guarantee, endorse or
otherwise as an accommodation become responsible or liable for the
obligations of any other individual, corporation or other entity, other
than in the ordinary course of business, consistent with past practice
not in excess of $8 million in the aggregate;
(vi) create any subsidiaries;
(vii) enter into or modify any employment, severance, termination
or similar agreements or arrangements with, or grant any bonuses, salary
increases, severance or termination pay to, any officer, director,
consultant or employee other than in the ordinary course of business
consistent with past practice, or otherwise increase the compensation or
benefits provided to any officer, director, consultant or employee
except as may be required by Applicable Law or in the ordinary course of
business consistent with past practice;
(viii) enter into, adopt or amend any employee benefit
or similar plan except as may be required by Applicable
Law;
(ix) change any method or principle of accounting in a manner that
is inconsistent with past practice except to the extent required by
generally accepted accounting principles;
(x) settle any Actions, whether now pending or hereafter made or
brought involving, individually or in the aggregate, an amount in excess
of $500,000;
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(xi) write up, write down or write off the book value of any
assets, individually or in the aggregate, in excess of $250,000 except
for depreciation and amortization in accordance with generally accepted
accounting principles consistently applied;
(xii) incur or commit to any capital expenditures, obligations or
liabilities in respect thereof which in the aggregate exceed or would
exceed $3 million;
(xiii) pay (or agree to become obligated to pay) any Merger Fees in
excess of the amount set forth in Section 4.14 to the Owen Disclosure
Schedule;
(xiv) take any action to exempt or make not subject to the
provisions of Article 10 of the Owen Articles any per son or entity
(other than Cardinal or its subsidiaries) or any action taken thereby,
which person, entity or action would have otherwise been subject to such
restrictive provisions and not exempt therefrom;
(xv) take any action that could likely result in the
representations and warranties set forth in Article IV becoming false or
inaccurate in any material respect;
(xvi) permit or cause any subsidiary to do any of the
foregoing or agree or commit to do any of the foregoing; or
(xvii) agree in writing or otherwise to take any of the
foregoing actions.
(d) INTELLECTUAL PROPERTY MATTERS. Owen shall use
its reasonable efforts consistent with its past practices to
preserve its ownership rights to the Intellectual Property free
and clear of any liens, claims or encumbrances.
(e) NO SOLICITATION. Owen agrees that, during the term of this
Agreement, it shall not, and shall not authorize or permit any of its
subsidiaries or any of its or its subsidiaries' directors, officers, employees,
agents or representatives, directly or indirectly, to solicit, initiate,
encourage or fa cilitate, or furnish or disclose non-public information in
furtherance of, any inquiries or the making of any proposal with respect to any
recapitalization, merger, consolidation or other business combination involving
Owen, or acquisition of any capital stock (other than upon exercise of Owen
Options which are outstanding as of the date hereof) or any material portion of
the assets (except for acquisition of assets in the ordinary course of business
consistent with past practice) of Owen, or any combination of the foregoing (a
"Competing Transaction"), or negotiate, explore or otherwise engage in
discussions with any person (other than Cardinal, Subcorp or their respective
directors, officers, employees, agents and representatives) with respect to any
Competing Transaction or enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the Merger or any other
transactions contemplated by this Agreement; PROVIDED that, at any time prior
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to the approval of the Merger by the Owen Shareholders, Owen may furnish
information to, and negotiate or otherwise engage in discussions with, any party
who delivers a written proposal for a Competing Transaction which was not
solicited or encouraged after the date of this Agreement if and so long as the
Board of Directors of Owen determines in good faith by a majority vote, based
upon consultation and advice from its outside legal counsel that failing to take
such action is reasonably likely to constitute a breach of the fiduciary duties
of the Board of Directors of Owen under Applicable Law and determines that such
a proposal is, after consulting with Smith Barney or RPR (or any other
nationally recognized investment banking firm), more favorable to Owen's
Stockholders from a financial point of view than the transactions contemplated
by this Agreement (including any adjustment to the terms and conditions proposed
by Cardinal in response to such Competing Transaction). Owen will immediately
cease all existing activities, discussions and negotiations with any parties
conducted heretofore with respect to any proposal for a Competing Transaction.
In the event that prior to the approval of the Merger by the Owen Shareholders
the Board of Directors of Owen receives advice of outside legal counsel that
failure to do so is reasonably like to result in breach of the fiduciary duties
of the Owen Board of Directors under Applicable Law, the Board of Directors of
Owen may (subject to this and the following sentences) withdraw or modify the
Owen Board Recommendation and/or comply with Rule 14e-2 promulgated under the
Exchange Act with respect to a Competing Transaction, provided that it gives
Cardinal two business days prior written notice of its intention to do so
(provided that the foregoing shall no way limit or otherwise affect Cardinal's
right to terminate this Agreement pursuant to Section 7.1(d)). Any such
withdrawal or modification of the Owen Board Recommendation shall not change the
approval of the Board of Directors of Owen for purposes of causing either the
provisions of Article 10 of the Owen Articles or any state takeover statute or
other state law to be inapplicable to the transactions contemplated hereby,
including the Merger, the Owen Stock Option Agreement or the Support Agreements
or change the obligation of Owen to present the Merger for approval at a duly
called Owen Shareholders Meeting on the earliest practicable date. From and
after the execution of this Agreement, Owen shall immediately advise Cardinal in
writing of the receipt, directly or indirectly, of any inquiries, discussions,
negotiations, or proposals relating to a Competing Transaction (including the
specific terms thereof and the identity of the other party or parties involved)
and promptly furnish to Cardinal a copy of any such written proposal in addition
to any information provided to or by any third party relating thereto.
(f) TERMINATION RIGHT. If prior to the approval of the Merger by
the Owen Shareholders the Board of Directors of Owen shall determine in good
faith, after consultation with its financial and legal advisors, that any
written proposal from a third party for a Competing Transaction received after
the date hereof that was not solicited or encouraged by Owen or any of its
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subsidiaries or affiliates in violation of this Agreement is more favorable to
the Owen Shareholders from a financial point of view than the transactions
contemplated by this Agreement (including any adjustment to the terms and
conditions of such transaction proposed in writing by Cardinal in response to
such Competing Transaction) and is in the best interest of the Owen Shareholders
and Owen has received (x) advice of its outside legal counsel that failure to
enter into such a Competing Transaction is reasonably likely to constitute a
breach of the Board of Directors' fiduciary duties under Applicable Law and (y)
a written opinion (a copy of which has been delivered to Cardinal) from Smith
Barney or RPR that the Competing Transaction is more favorable from a financial
point of view to the Owen Shareholders than the transactions contemplated by
this Agreement (including any adjustment to the terms and conditions of such
transaction proposed in writing by Cardinal), Owen may terminate this Agreement
and enter into a letter of intent, agreement-in-principle, acquisition agreement
or other similar agreement (each, an "Acquisition Agreement") with respect to
such Competing Transaction provided that, prior to any such termination, (i)
Owen has provided Cardinal written notice that it intends to terminate this
Agreement pursuant to this Section 5.3(f), identifying the Competing Transaction
then determined to be more favorable and the parties thereto and delivering a
copy of the Acquisition Agreement for such Competing Transaction in the form to
be entered into, and (ii) at least two full business days after Owen has
provided the notice referred to in clause (i) above (provided that the opinions
referred to in clauses (x) and (y) above shall continue in effect without
revision or modification), Owen delivers to Cardinal (A) a written notice of
termination of this Agreement pursuant to this Section 5.3(f), (B) a check in
the amount of Cardinal's Costs (as defined in Section 7.2) as the same may have
been estimated by Cardinal in good faith prior to the date of such delivery
(subject to an adjustment payment between the parties upon Cardinal's definitive
determination of such Costs), plus the amount of the termination fee as
provided in Section 7.2, (C) a written acknowledgment from Owen that (x) the
termination of this Agreement and the entry into the Acquisition Agreement for
the Competing Transaction will be a "Purchase Event" as defined in the Owen
Stock Option Agreement and (y) the Owen Stock Option Agreement shall be honored
in accordance with its terms and (D) a written acknowledgment from each other
party to such Competing Transaction that it is aware of the substance of Owen's
acknowledgment under clause (C) above and waives any right it may have to
contest the matters thus acknowledged by Owen.
(g) AFFILIATES OF OWEN. Owen shall cause each such person who may
be at the Effective Time or was on the date hereof an "affiliate" of Owen for
purposes of Rule 145 under the Securities Act, to execute and deliver to
Cardinal no less than 30 days prior to the date of the Owen Shareholders
Meeting, the written undertakings in the form attached hereto as Exhibit A-1. On
or prior to such date, Owen, after consultation with its outside counsel, shall
provide Cardinal with a letter (reasonably satisfactory to counsel to Cardinal)
specifying all
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of the persons or entities who, in Owen's view, may be deemed to be "affiliates"
of Owen under the preceding sentence.
(h) ACCESS. Owen shall permit representatives of Cardinal to have
appropriate access at all reasonable times to Owen's premises, properties,
books, records, contracts, tax records, documents, customers and suppliers.
Proprietary information obtained by Cardinal pursuant to this Section 5.3(h)
shall be subject to the provisions of the Confidentiality Agreement, which
agreement remains in full force and effect.
(i) NOTIFICATION OF CERTAIN MATTERS. Owen shall give prompt
notice to Cardinal of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would cause any Owen representation or
warranty contained in this Agreement to be untrue or inaccurate at or prior to
the Effective Time in any material respect and (ii) any material failure of Owen
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 5.3(h) shall not limit or otherwise affect the
remedies available hereunder to Cardinal.
(j) SUBSEQUENT FINANCIAL STATEMENTS. Owen shall
consult with Cardinal prior to making publicly available its
financial results for any period.
ARTICLE VI
CONDITIONS
6.1 MUTUAL CONDITIONS. The obligations of the parties hereto
to consummate the Merger shall be subject to fulfillment of the following
conditions:
(a) No temporary restraining order, preliminary or permanent
injunction or other order or decree which prevents the consummation of
the Merger shall have been issued and remain in effect, and no statute,
rule or regulation shall have been enacted by any Governmental Authority
which prevents the consummation of the Merger.
(b) All waiting periods applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(c) The Merger and the transactions contemplated hereby shall
have been approved by the Owen Shareholders in the manner required by
any Applicable Law.
(d) The Commission shall have declared the Cardinal Registration
Statement effective. On the Closing Date and at the Effective Time, no
stop order or similar restraining order shall have been entered by the
Commission or
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proceeding for that purpose initiated or any state securities
administrator prohibiting the Merger.
(e) No Action shall be instituted by any Governmental Authority
which seeks to prevent consummation of the Merger or seeking material
damages in connection with the transactions contemplated hereby which
continues to be outstanding.
(f) Cardinal shall have received a letter, in form and substance
reasonably satisfactory to Cardinal, from Deloitte & Touche L.L.P. dated
the date of the Proxy Statement and confirmed in writing at the
Effective Time stating that the Merger will qualify as a pooling of
interests transaction under Opinion 16 of the Accounting Principles
Board.
6.2 CONDITIONS TO OBLIGATIONS OF OWEN. The obligations of Owen
to consummate the Merger and the transactions contemplated hereby shall be
subject to the fulfillment of the following conditions unless waived by Owen:
(a) The representations and warranties of each of Cardinal and
Subcorp set forth in Article III shall be true and correct on the date
hereof and on and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties made as of a
specified date, which need be true and correct only as of the specified
date), except for such inaccuracies which have not had and could not
reasonably be expected to have in the reasonably foreseeable future a
Material Adverse Effect on Cardinal.
(b) Each of Cardinal and Subcorp shall have performed in all
material respects each obligation and agreement and shall have complied
in all material respects with each covenant to be performed and complied
with by it hereunder at or prior to the Effective Time.
(c) Each of Cardinal and Subcorp shall have furnished Owen with a
certificate dated the Closing Date signed on behalf of it by the
Chairman, President or any Vice President to the effect that the
conditions set forth in Sections 6.2(a) and (b) have been satisfied.
(d) Owen shall have received the legal opinions, dated the
Closing Date, of Wachtell, Lipton, Rosen & Katz in substantially the
form attached hereto as Exhibit B.
(e) The Cardinal Common Shares to be issued in the Merger and the
transactions contemplated hereby shall have been authorized for
inclusion on the NYSE, subject to official notice of issuance.
(f) Owen shall have received the opinion of Vinson & Elkins LLP,
dated on or prior to the effective date of the Registration Statement,
to the effect that (i) the Merger
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will constitute a reorganization under section 368(a) of the Code, (ii)
Owen, Cardinal and Subcorp will each be a party to that reorganization,
and (iii) no gain or loss will be recognized by the shareholders of Owen
upon the receipt of Cardinal Common Shares in exchange for shares of
Owen Common Stock pursuant to the Merger except with respect to cash
received in lieu of fractional share interests in Cardinal Common
Shares.
6.3 CONDITIONS TO OBLIGATIONS OF CARDINAL AND SUBCORP. The
obligations of Cardinal to consummate the Merger and the other transactions
contemplated hereby shall be subject to the fulfillment of the following
conditions unless waived by Cardinal:
(a) The representations and warranties of Owen set forth in
Article IV shall be true and correct on the date hereof and on and as of
the Closing Date as though made on and as of the Closing Date (except
for representations and warranties made as of a specified date, which
need be true and correct only as of the specified date), except for such
inaccuracies which have not had and could not reasonably be expected to
have in the reasonably foreseeable future a Material Adverse Effect on
Owen.
(b) Owen shall have performed in all material respects each
obligation and agreement and shall have complied in all material
respects with each covenant to be performed and complied with by it
hereunder at or prior to the Effective Time.
(c) Owen shall have furnished Cardinal with a certificate dated
the Closing Date signed on its behalf by its Chairman, President or any
Vice President to the effect that the conditions set forth in Sections
6.3(a) and (b) have been satisfied.
(d) Cardinal shall have received the legal opinion, dated the
Closing Date, of Vinson & Elkins, substantially in the form attached
hereto as Exhibit C.
(e) Cardinal shall have received the opinion of Wachtell, Lipton,
Rosen & Katz, dated on or prior to the effective date of the
Registration Statement, to the effect that (i) the Merger will
constitute a reorganization under section 368(a) of the Code, (ii)
Cardinal, Subcorp and Owen will each be a party to that reorganization,
and (iii) no gain or loss will be recognized by Cardinal, Subcorp or
Owen by reason of the Merger.
(f) There shall not have been a breach of the Owen
Stock Option Agreement.
ARTICLE VII
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TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval and adoption of
this Agreement by Owen Shareholders:
(a) by mutual consent of Cardinal and Owen;
(b) by either Cardinal or Owen if any permanent injunction or
other order of a court or other competent Governmental Authority
preventing the consummation of the Merger shall have become final and
nonappealable;
(c) by either Cardinal or Owen if the Merger shall not have been
consummated before May 31, 1997, unless extended by the Boards of
Directors of both Cardinal and Owen (provided that the right to
terminate this Agreement under this Section 7.1(c) shall not be
available to any party whose failure to perform any material covenant or
obligation under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date);
(d) by Cardinal if the Board of Directors of Owen shall withdraw,
modify or change the Owen Board Recommendation in a manner adverse to
Cardinal, or if the Board of Directors of Owen shall have refused to
affirm the Owen Board Recommendation within two business days of any
written request from Cardinal;
(e) by Cardinal or Owen if at the Owen Shareholders Meeting
(including any adjournment or postponement thereof) the requisite vote
of the Owen Shareholders to approve the Merger and the transactions
contemplated hereby shall not have been obtained;
(f) by Owen, pursuant to Section 5.3(f);
(g) by Owen, no earlier than the fifth trading day or later than
the third full trading day immediately preceding the date of the Owen
Stockholders Meeting at which the vote to approve the Merger will be
taken, if the Average Share Price is less than $69.20, provided that
Owen will have no right to terminate pursuant to this paragraph (g)
unless (x) Owen shall have given, during the three trading day period
referred to above, one full trading day's prior written notice of its
intention to terminate pursuant to this Section 7.1(g) and (y) Cardinal
during such one full trading day notice period shall not have given
written notice (an "Adjustment Election") to Owen that the Exchange
Ratio shall be calculated pursuant to clause (b) of Section 2.2;
(h) by Cardinal if Owen shall have breached any of its
obligations under the Owen Stock Option Agreement or if Dian G. Owen
shall have breached any of her obligations under the Support Agreement
with Cardinal;
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7.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement, except for the
provisions of the last sentence of each of Section 5.2(j) and Section 5.3(h) and
the provisions of Sections 7.2 and 8.11, shall become void and have no effect,
without any liability on the part of any party or its directors, officers or
stockholders. Notwithstanding the foregoing, nothing in this Section 7.2 shall
relieve any party to this Agreement of liability for a material breach of any
provision of this Agreement and provided, further, however, that if it shall be
judicially determined that termination of this Agreement was caused by an
intentional breach of this Agreement, then, in addition to other remedies at law
or equity for breach of this Agreement, the party so found to have intentionally
breached this Agreement shall indemnify and hold harmless the other parties for
their respective out-of-pocket costs, fees and expenses of their counsel,
accountants, financial advisors and other experts and advisors as well as fees
and expenses incident to negotiation, preparation and execution of this
Agreement and related documentation and shareholders' meetings and consents
("Costs"). If this Agreement is terminated for any reason pursuant to Section
7.1 (other than a termination pursuant to Section 7.1(a) (prior to the public
announcement of a Competing Transaction), 7.1(b), 7.1(c) (other than a
termination by Cardinal pursuant to Section 7.1(c) if Owen's failure to perform
any material covenant or obligation under this Agreement has been the cause of
or resulted in the failure of the Merger to occur on or before May 31, 1997),
7.1(e), 7.1(g)) or this Agreement is terminated pursuant to Section 7.1(e) and
within 12 months after the date of termination Owen enters into an Acquisition
Agreement for a Business Combination (as defined herein) or consummates a
Business Combination Owen will, in the case of a termination by Cardinal, within
three business days following any such termination or, in the case of a
termination by Owen, (except in each case, if the termination is pursuant to
Section 7.1(e), then, prior to consummation of a Business Combination herein) or
execution of the definitive agreement with respect thereto) concurrently with
such termination, pay to Cardinal in cash by wire transfer in immediately
available funds to an account designated by Cardinal (i) in reimbursement for
Cardinal's expenses an amount in cash equal to the aggregate amount of
Cardinal's Costs incurred in connection with pursuing the transactions
contemplated by this Agreement, including, without limitation, legal,
accounting and investment banking fees, up to but not in excess of an amount
equal to $1.8 million in the aggregate and (ii) a termination fee in an amount
equal to $13 million. For the purposes of this Section 7.2, "Business
Combination" means (i) a merger, consolidation, share exchange, business
combination or similar transaction involving Owen as a result of which the Owen
Shareholders prior to such transaction in the aggregate cease to own at least a
majority of the voting securities of the entity surviving or resulting from such
transaction (or the ultimate parent entity thereof), (ii) a sale, lease,
exchange, transfer or other disposition of more than 50% of the assets of Owen
and its subsidiaries, taken as a
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whole, in a single transaction or a series of related transactions, or (iii) the
acquisition, by a person (other than Cardinal or any affiliate thereof) or group
(as such term is defined under Section 13(d) of the Exchange Act and the rules
and regulations thereunder) of beneficial ownership (as defined in Rule 13d-3
under the Exchange Act) of more than 50% of the Owen Common Stock whether by
tender or exchange offer or otherwise.
7.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after adoption of this Agreement by Owen Shareholders, but
after any such approval, no amendment shall be made which by law requires
further approval or authorization by the Owen Shareholders without such further
approval or authorization. Notwithstanding the foregoing, this Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
Cardinal (with respect to Owen) and Owen (with respect to Cardinal and Subcorp)
by action taken or authorized by their respective Boards of Directors, may, to
the extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of such party, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made herein by the parties hereto shall not
survive the Effective Time. This Section 8.1 shall not limit any covenant or
agreement of the parties hereto, which by its terms contemplates performance
after the Effective Time or after the termination of this Agreement.
8.2 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or dispatched by a nationally recognized overnight courier
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Cardinal or Subcorp:
Cardinal Health, Inc.
5555 Glendon Court
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Dublin, Ohio 43016
Attention: Robert D. Walter
Telecopy No.: (614) 717-8919
with a copy to
David A. Katz
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy No.: (212) 403-2000
(b) if to Owen:
Owen Healthcare, Inc.
9800 Centre Parkway, Suite 1100
Houston, Texas 77036-8279
Attention: Carl Isgren
Telecopy No.: (713) 777-5417
with a copy to
Jeffery B. Floyd
Vinson & Elkins L.L.P.
1001 Fannin
3300 First City Tower
Houston, Texas 77002-6760
Telecopy No.: (713) 615-5660
8.3 INTERPRETATION. When a reference is made in this Agreement to
an Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The headings and the table of contents
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When a reference is
made in this Agreement to Owen, such reference shall be deemed to include any
and all subsidiaries of Owen, individually and in the aggregate, except for
Sections 4.1, 4.2, 4.3, 4.4, 4.6, 4.8, 4.16, 4.19 and 4.23. For the purposes of
any provision of this Agreement, a "Material Adverse Effect" with respect to any
party shall be deemed to occur if (i) in any individual representation or
warranty in this Agreement, if the aggregate consequences of breaches and
inaccuracies of such representation and warranty would have a material adverse
effect on the assets, liabilities, business, results of operations or financial
condition of such party and its subsidiaries taken as a whole, and (ii)
elsewhere in the Agreement, the aggregate consequences of all breaches and
inaccuracies of covenants and representations of such party under this
Agreement, when read without any exception or qualification for a material
adverse effect, would have a material adverse effect on the assets, liabilities,
business, results of operations or financial condition of such party and its
subsidiaries taken as a whole. For purposes of this Agreement, a "subsidiary"
of any person means another person, an amount of
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the voting securities or other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting securities or interests,
50% or more of the equity interests of which) is owned directly or indirectly by
such first person.
8.4 COUNTERPARTS. This Agreement may be executed in counterparts,
which together shall constitute one and the same Agreement. The parties may
execute more than one copy of the Agreement, each of which shall constitute an
original.
8.5 ENTIRE AGREEMENT. This Agreement (including the documents and
the instruments referred to herein), the Support Agreements, the Owen Stock
Option Agreement and the Confidentiality Agreement constitute the entire
agreement among the parties and supersede all prior agreements and
understandings, agreements or representations by or among the parties, written
and oral, with respect to the subject matter hereof and thereof.
8.6 THIRD PARTY BENEFICIARIES. Except for the agreements set
forth in Section 5.2(b) and 5.2(c) nothing in this Agreement, express or
implied, is intended or shall be construed to create any third party
beneficiaries.
8.7 GOVERNING LAW. Except to the extent that the laws of the
jurisdiction of organization of any party hereto, or any other jurisdiction, are
mandatorily applicable to the Merger or to matters arising under or in
connection with this Agreement, this Agreement shall be governed by the laws of
the State of Delaware. All actions and proceedings arising out of or relating to
this Agreement shall be heard and determined in any Delaware state or federal
court sitting in the City of Wilmington.
8.8 CONSENT TO JURISDICTION; VENUE.
(a) Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the state courts of Delaware and to the jurisdiction
of the United States District Court for the District of Delaware, for the
purpose of any action or proceeding arising out of or relating to this Agreement
and each of the parties hereto irrevocably agrees that all claims in respect to
such action or proceeding may be heard and determined exclusively in any
Delaware state or federal court sitting in the City of Wilmington. Each of the
parties hereto agrees that a final judgment in any action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(b) Each of the parties hereto irrevocably consents
to the service of any summons and complaint and any other process in any
other action or proceeding relating to the Merger, on behalf of itself or its
property, by the personal delivery of copies of such process to such party.
Nothing in
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this Section 8.8 shall affect the right of any party hereto to serve legal
process in any other manner permitted by law.
8.9 SPECIFIC PERFORMANCE. The transactions contemplated by this
Agreement are unique. Accordingly, each of the parties acknowledges and agrees
that, in addition to all other remedies to which it may be entitled, each of the
parties hereto is entitled to a decree of specific performance, provided such
party is not in material default hereunder.
8.10 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
8.11 EXPENSES. Subject to the provisions of Section 7.2 and the
Owen Stock Option Agreement, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby and thereby shall be
paid by the party incurring such expenses, except that those expenses incurred
in connection with filing, printing and mailing the Registration Statement and
the Proxy Statement (including filing fees related thereto) will be shared
equally by Cardinal and Owen.
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IN WITNESS WHEREOF, Cardinal, Subcorp and Owen have signed this
Agreement as of the date first written above.
CARDINAL HEALTH, INC.
By:/s/ ROBERT D. WALTER
Name: Robert D. Walter
Title: Chairman
OWL MERGER CORP.
By:/s/ ROBERT D. WALTER
Name: Robert D. Walter
Title: Chairman
OWEN HEALTHCARE, INC.
By:/s/ CARL E. ISGREN
Name: Carl E. Isgren
Title: President and CEO
46
EXHIBIT 10.1
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT ("Option Agreement") dated November 27,
1996, between Cardinal Health, Inc., an Ohio corporation ("Cardinal"), and Owen
Healthcare, Inc., a Texas corporation
("Owen").
WITNESSETH:
WHEREAS, the Board of Directors of Cardinal and the Board of
Directors of Owen have approved an Agreement and Plan of Merger dated as of even
date herewith (the "Merger Agreement") providing for the merger of a wholly
owned subsidiary of Cardinal with and into Owen;
WHEREAS, as a condition to Cardinal's entering into the Merger
Agreement, Cardinal has required that Owen agree, and Owen has agreed, to grant
to Cardinal the option set forth herein to purchase authorized but unissued
shares of Owen Common Stock;
NOW, THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
1. DEFINITIONS.
Capitalized terms used but not defined herein shall have the same
meanings as in the Merger Agreement.
2. GRANT OF OPTION.
Subject to the terms and conditions set forth herein, Owen hereby
grants to Cardinal an option (the "Option") to purchase up to 3,396,750
authorized and unissued shares of Owen Common Stock (the "Option Shares") at a
price per share equal to the lower of (x) $27.25 or (y) the Exchange Ratio
multiplied by the Closing Price (as defined below) of Cardinal Common Shares on
the date of exercise (the "Purchase Price") payable in cash as provided in
Section 4 hereof. As used herein, the term "Closing Price" as of any date with
respect to any Cardinal Common Shares means the average of the closing prices
(or, if such securities should not trade on any trading day, the average of the
bid and asked prices therefor on such day) of such Cardinal Common Shares as
reported on the New York Stock Exchange Composite Tape during the five
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consecutive trading days ending on (and including) the trading day immediately
prior to such date (or, if such Cardinal Common Shares are not traded on the New
York Stock Exchange, on such other exchange or quotation system on which such
Cardinal Common Shares are then traded).
3. EXERCISE OF OPTION.
(a) Cardinal may exercise the Option, in whole or in part, at any
time or from time to time if a Purchase Event (as defined below) shall have
occurred; PROVIDED, HOWEVER, that to the extent the Option shall not have been
exercised, it shall terminate and be of no further force and effect upon the
earlier to occur of (i) the Effective Time of the Merger, (ii) 5:00 p.m. Houston
time, on the date which is one year following the occurrence of a Purchase Event
or (iii) termination of the Merger Agreement in accordance with its terms prior
to the occurrence of a Purchase Event and (iv) if the Option cannot be exercised
before its date of termination as a result of any injunction, order or similar
restraint issued by a court of competent jurisdiction, the Option shall expire
on the 30th business day after such injunction, order or restraint shall have
been dissolved or when such injunction, order or restraint shall have become
permanent and no longer subject to appeal, as the case may be.
(b) As used herein, a "Purchase Event" shall mean any of
the following events:
(i) any person (other than Cardinal or any of its
subsidiaries) shall have commenced (as such term is defined in
Rule 14d-2 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), or shall have filed a registration
statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to, a tender offer or exchange
offer to purchase any shares of Owen Common Stock such that, upon
consummation of such offer, such person would own or control 10%
or more of the then outstanding Owen Common Stock;
(ii)Owen or any of its subsidiaries shall or shall have
entered into, authorized, recommended, proposed or publicly
announced an intention to enter into, authorize, recommend, or
propose, an agreement, arrangement or understanding with any
person (other than Cardinal or any of its subsidiaries) to, or
any person (other than Cardinal or any of its subsidiaries) shall
have publicly announced an intention to, (A) effect any
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Competing Transaction with Owen, (B) purchase, lease or otherwise
acquire 10% or more of the assets of Owen or any of its
subsidiaries or (C) purchase or otherwise acquire (including by
way of merger, consolidation, tender or exchange offer or similar
transaction) Beneficial Ownership (as defined below) of
securities representing 10% or more of the voting power of Owen
or any of its subsidiaries;
(iii) any person (other than Cardinal or any subsidiary
of Cardinal, and other than Dian G. Owen) shall have acquired
Beneficial Ownership or the right to acquire Beneficial Ownership
of 10% or more of the voting power of Owen;
(iv)Owen's Board of Directors shall have withdrawn,
modified or changed in a manner adverse to Cardinal, or refused
to reaffirm within two business days of any written request from
Cardinal, the Owen Board Recommendation;
(v) if Dian G. Owen shall have breached any of her
obligations under that certain Support/Voting Agreement with
Cardinal, dated the date hereof;
(vi)if at the meeting of Owen Stockholders (including
any adjournment or postponement thereof) the requisite vote of
the Owen Stockholders to approve the Merger and the transactions
contemplated by the Merger Agreement shall not have been
obtained; or
(vii) the Merger Agreement shall have been terminated
by either party pursuant to Section 7.1 thereof (other than a
termination pursuant to Sections 7.1(a), 7.1(b), 7.1(c) (other
than a termination by Cardinal pursuant to Section 7.1(c) of the
Merger Agreement if Owen's or Owen's affiliate's failure to
perform any material covenant or obligation under the Merger
Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before May 31, 1997) or 7.1(g)).
(c) As used herein, the terms "Beneficial Ownership", "Beneficial
Owner" and "Beneficially Own" shall have the meanings ascribed to them in Rule
13d-3 under the Exchange Act. As used
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herein, "person" shall have the meaning specified in Sections 3(a)(9) and
13(d)(3) of the Exchange Act.
(d) In the event Cardinal wishes to exercise the Option, it shall
deliver to Owen a written notice (the date of receipt of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than two business days nor later than 60 calendar days from the Notice
Date for the closing of such purchase (the "Closing Date"); PROVIDED that if the
closing of the purchase and sale pursuant to the Option (the "Closing") cannot
be consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and, PROVIDED FURTHER that, without
limiting the foregoing, if prior notification to or approval of any regulatory
authority is required in connection with such purchase, Cardinal and, if
applicable, Owen shall promptly file the required notice or application for
approval and shall expeditiously process the same (and Owen shall cooperate with
Cardinal in the filing of any such notice or application and the obtaining of
any such approval), and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which, as the case may be, (i)
any required notification period has expired or been terminated or (ii) such
approval has been obtained, and in either event, any requisite waiting period
has passed.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) At the closing, referred to in Section 3 hereof, on the
Closing Date, Cardinal shall pay to Owen the aggregate Purchase Price for the
shares of Owen Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated not
later than one business day prior to the Closing Date by Owen.
(b) At such closing, simultaneously with the delivery of cash as
provided in Section 4(a), Owen shall deliver to Cardinal a certificate or
certificates representing the number of shares of Owen Common Stock purchased by
Cardinal, registered in the name of Cardinal or a nominee designated in writing
by Cardinal, which shares shall be fully paid and non-assessable and free and
clear of all liens, claims, charges and encumbrances of any kind whatsoever.
(c) If at the time of issuance of any Owen Common Stock pursuant
to any exercise of the Option, Owen shall have issued any share purchase rights
or similar securities to holders of Owen
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Common Stock, then each such share of Owen Common Stock shall also represent
rights with terms substantially the same as and at least as favorable to
Cardinal as those issued to other holders of Owen Common Stock.
(d) Certificates for Owen Common Stock delivered at any closing
hereunder shall be endorsed with a restrictive legend which shall read
substantially as follows:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, or the
blue sky law of any state. Transfer or sale of such shares shall
not be made until (i) the issuer has been furnished with an
opinion of counsel for the registered owner of these shares,
reasonably satisfactory to counsel for the issuer, that such
transfer or sale will not violate the Securities Act of 1933, as
amended, or applicable securities laws of any state or (ii) such
transfer or sale shall have been registered and qualified
pursuant to the Securities Act of 1933, as amended, and any
applicable state securities laws."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend in connection with a transfer
or sale if (i) Owen has been furnished with an opinion of counsel, reasonably
satisfactory to counsel for Owen , that such transfer or sale will not violate
the Securities Act or applicable securities laws of any state or (ii) such
transfer or sale shall have been registered and qualified pursuant to the
Securities Act and any applicable state securities laws.
5. AUTHORIZATION, ETC.
(a) Owen hereby represents and warrants to Cardinal
that:
(i) Owen has full corporate authority to execute and
deliver this Option Agreement and to consummate the transactions
contemplated hereby;
(ii)such execution, delivery and consummation have been
authorized by the Board of Directors of Owen, and no other
corporate proceedings are necessary therefor;
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(iii) this Option Agreement has been duly and validly
executed and delivered by Owen and represents a valid and legally
binding obligation of Owen, enforceable against Owen in
accordance with its terms; and
(iv)Owen has taken all necessary corporate action to
authorize and reserve and permit it to issue and, at all times
from the date hereof through the date of the exercise in full or
the expiration or termination of the Option, shall have reserved
for issuance upon exercise of the Option, 3,396,750 shares of
Owen Common Stock (subject to adjustment as provided herein), all
of which, upon issuance in accordance with the terms of this
Option Agreement, shall be duly authorized, validly issued, fully
paid and nonassessable, and shall be delivered free and clear of
all claims, liens, encumbrances and security interests and not
subject to any preemptive rights of any shareholder of Owen.
(b) Cardinal hereby represents and warrants to Owen
that:
(i) Cardinal has full corporate authority to execute
and deliver this Option Agreement and to consummate the
transactions contemplated hereby;
(ii) such execution, delivery and consummation have been
authorized by all requisite corporate action by Cardinal, and no
other corporate proceedings are necessary therefor;
(iii) this Option Agreement has been duly and validly
executed and delivered by Cardinal and represents a valid and
legally binding obligation of Cardinal, enforceable against
Cardinal in accordance with its terms;
(iv) any Owen Common Stock acquired by Cardinal upon
exercise of the Option will be acquired for its own account and
not be taken with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in
compliance with the Securities Act; and
(v) any Option Shares acquired by Cardinal upon
exercise of the Option will be acquired for its own account and
not with a view to the sale or distribution thereof within the
meaning of the Securities Act.
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Cardinal has received copies of, or its officers and directors
have had an opportunity to examine, all reports filed by Owen
pursuant to Sections 12, 13 or 14 of the Exchange Act in the
preceding twelve months and Cardinal's employees, officers and
directors have had an opportunity to ask questions concerning the
Option Shares and business and financial affairs of Owen, and to
receive answers concerning the same, from representatives of
Owen. The officers and directors of Cardinal have such knowledge
and experience in business and financial matters as to be capable
of utilizing the information which is available to them to
evaluate the merits and risks of an investment by Cardinal in the
Option Shares and Cardinal is able to bear the economic risks of
any investment in the Option Shares which Cardinal may acquire
upon exercise of the Option.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
In the event of any change in Owen Common Stock by reason of
stock dividends, split-ups, recapitalizations or the like, the type and number
of shares subject to the Option, and the purchase price per share, as the case
may be, shall be adjusted appropriately. In the event that any additional shares
of Owen Common Stock are issued after the date of this Option Agreement (other
than pursuant to an event described in the preceding sentence or pursuant to
this Option Agreement or options granted under employee benefit plans), the
number of shares of Owen Common Stock subject to the Option shall be adjusted so
that, after such issuance, it equals at least 19.9% of the number of shares of
Owen Common Stock then issued and outstanding (without considering any shares
subject to or issued pursuant to the Option).
7. REPURCHASE.
(a) At the request of Cardinal, at any time from and after the
occurrence of a Purchase Event and ending 13 months immediately thereafter (the
"Cardinal Repurchase Period"), Owen (or any successor entity thereof) shall
repurchase the Option from Cardinal together with all (but not less than all)
shares of Owen Common Stock purchased by Cardinal pursuant thereto with respect
to which Cardinal then has Beneficial Ownership, at a price (when calculated on
a per share basis, the "Per Share Repurchase Price") equal to the sum of:
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(i) The difference between (A) the "Market/Tender Offer
Price" for shares of Owen Common Stock (defined as the higher of
(x) the highest price per share at which a tender or exchange
offer has been made for shares of Owen Common Stock or (y) the
highest closing price per share of Owen Common Stock as reported
by the NYSE Composite Tape for any day within that portion of the
Cardinal Repurchase Period which precedes the date Cardinal gives
notice of the required repurchase under this Section 7) and (B)
the exercise price as determined pursuant to Section 2 hereof
(subject to adjustment as provided in Section 6), multiplied by
the number of shares of Owen Common Stock with respect to which
the Option has not been exercised, but only if such Market/Tender
Offer Price is greater than such exercise price;
(ii)The exercise price paid by Cardinal for
any shares of Owen Common Stock acquired pursuant to the
Option;
(iii) The difference between the Market/Tender Offer
Price and the exercise price paid by Cardinal for any shares of
Owen Common Stock purchased pursuant to the exercise of the
Option, multiplied by the number of shares so purchased, but only
if such Market/Tender Offer Price is greater than such exercise
price; and
(iv)Cardinal's out-of-pocket expenses incurred in
connection with pursuing the transactions contemplated by the
Merger Agreement, including, without limitation, legal,
accounting and investment banking fees, less any amounts
previously paid by Owen to Cardinal solely in reimbursement for
Costs pursuant to Section 7.2 of the Merger Agreement.
(b) In the event Cardinal exercises its rights under this Section
7, Owen shall, within 10 business days thereafter, pay the required amount to
Cardinal by wire transfer of immediately available funds to an account
designated by Cardinal and Cardinal shall surrender to Owen the Option and the
certificates evidencing the shares of Owen Common Stock purchased thereunder
with respect to which Cardinal then has Beneficial Ownership.
(c) In determining the Market/Tender Offer Price, the
value of any consideration other than cash shall be determined by
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an independent nationally recognized investment banking firm selected by
Cardinal.
8. REPURCHASE AT OPTION OF OWEN
Except to the extent that Cardinal shall have previously
exercised its rights under Section 7, at the request of Owen during the
six-month period commencing 180 days following the first occurrence of a
Purchase Event, Owen may repurchase from Cardinal, and Cardinal shall sell to
Owen, all (but not less than all) of the Owen Common Stock acquired by Cardinal
pursuant to the Option and with respect to which Cardinal has Beneficial
Ownership at the time of such repurchase at a price per share equal to the
greater of (i) 110% of the Market/Tender Offer Price per share (calculated in
the manner set forth in Section 7(a)(i) hereof but utilizing the period
beginning on the occurrence of a Purchase Event and ending on the date Owen
exercises its repurchase right pursuant to this Section 8), (ii) the Per Share
Repurchase Price or (iii) the sum of (A) the aggregate Purchase Price of the
shares so repurchased plus (B) interest on the aggregate Purchase Price paid for
the shares so repurchased from the date of purchase by Cardinal to the date of
repurchase at the highest rate of interest announced by Bank One, Columbus, NA
as its prime or base lending or reference rate during such period, less any
dividends received on the shares so repurchased, plus (C) Cardinal's
out-of-pocket expenses incurred in connection with pursuing the transactions
contemplated by the Merger Agreement, including, without limitation, legal,
accounting and investment banking fees, less any amounts previously paid by Owen
to Cardinal solely in reimbursement for Costs pursuant to Section 7.2(i) of the
Merger Agreement, which sum shall be divided by the number of shares of Owen
Common Stock to be repurchased by Owen. Any repurchase under this Section 8
shall be consummated in accordance with Section 7(b).
9. REGISTRATION RIGHTS.
At any time after a Closing, Owen shall, if requested by any
holder or Beneficial Owner of shares of Owen Common Stock issued upon exercise
of the Option (each a "Holder"), as expeditiously as possible file a
registration statement on a form for general use under the Securities Act if
necessary in order to permit the sale or other disposition of the shares of Owen
Common Stock that have been acquired upon exercise of the Option in accordance
with the intended method of sale or other disposition requested by any such
Holder. Each such Holder shall provide all information reasonably requested by
Owen for inclusion in any
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registration statement to be filed hereunder. Owen shall use its best efforts to
cause such registration statement first to become effective and then to remain
effective for such period not in excess of 180 days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sales or other dispositions. The registration effected under this
Section 9 shall be at Owen's expense except for underwriting commissions and the
fees and disbursements of such Holders' counsel attributable to the registration
of such Owen Common Stock. In no event shall Owen be required to effect more
than one registration hereunder. The filing of any registration statement
required hereunder may be delayed for such period of time (not to exceed 90
days) as may reasonably be required to facilitate any public distribution by
Owen of Owen Common Stock, if a special audit of Owen would otherwise be
required in connection therewith during which Owen is in possession of material
information concerning it, its business affairs or a material transaction in
each case the public disclosure of which could have a material adverse effect on
Owen or significantly disrupt such material transaction. If requested by any
such Holder in connection with such registration, Owen shall become a party to
any underwriting agreement relating to the sale of such shares on terms and
including obligations and indemnities which are customary for parties similarly
situated. Upon receiving any request for registration under this Section 9 from
any Holder, Owen agrees to send a copy thereof to any other person known to Owen
to be entitled to registration rights under this Section 9, in each case by
promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies.
10. SEVERABILITY.
Any term, provision, covenant or restriction contained in this
Option Agreement held by a court or other Governmental Authority of competent
jurisdiction to be invalid, void or unenforceable, shall be ineffective to the
extent of such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions contained in this Option
Agreement nor the validity or enforceability thereof in any other jurisdiction
shall be affected or impaired thereby. Any term, provision, covenant or
restriction contained in this Option Agreement that is so found to be so broad
as to be unenforceable shall be interpreted to be as broad as is enforceable.
11. MISCELLANEOUS.
(a) EXPENSES. Each of the parties hereto shall pay all
costs and expenses incurred by it or on its behalf in connection
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with the transactions contemplated hereunder, including fees and expenses of its
own financial consultants, investment bankers, accountants and counsel, except
as otherwise provided herein.
(b) ENTIRE AGREEMENT. This Option Agreement, the Support
Agreements, the Merger Agreement (including the documents and the instruments
referred to therein) and the Confidentiality Agreement constitute the entire
agreement among the parties and supersede all prior agreements and
understandings, agreements or representations by or among the parties, written
and oral, with respect to the subject matter hereof and thereof.
(c) SUCCESSORS; NO THIRD PARTY BENEFICIARIES. The terms and
conditions of this Option Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations, or liabilities under or by
reason of this Option Agreement, except as expressly provided herein.
(d) NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
in accordance with Section 8.2 of the Merger Agreement (which is incorporated
herein by reference).
(e) COUNTERPARTS. This Option Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but both such counterparts together shall constitute but one
agreement.
(f) SPECIFIC PERFORMANCE. The parties hereto agree that if for
any reason Cardinal or Owen shall have failed to perform its obligations under
this Option Agreement, then either party hereto seeking to enforce this Option
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 either
party hereto may have against the other party hereto for any failure to perform
its obligations under this Option Agreement.
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(g) GOVERNING LAW. Except to the extent that the laws of the
jurisdiction of organization of any party hereto, or any other jurisdiction, are
mandatorily applicable to matters arising under or in connection with this
Option Agreement, this Option Agreement shall be governed by the laws of the
State of Delaware. All actions and proceedings arising out of or relating to
this Option Agreement shall be heard and determined in any Delaware state or
federal court sitting in the City of Wilmington.
(h) CONSENT TO JURISDICTION; VENUE.
(i) Each of the parties hereto irrevocably submits
to the exclusive jurisdiction of the state courts of Delaware and to the
jurisdiction of the United States District Court for the District of Delaware,
for the purpose of any action or proceeding arising out of or relating to this
Option Agreement and each of the parties hereto irrevocably agrees that all
claims in respect to such action or proceeding may be heard and determined
exclusively in any Delaware state or federal court sitting in the City of
Wilmington. Each of the parties hereto agrees that a final judgment in any
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(ii) Each of the parties hereto irrevocably
consents to the service of any summons and complaint and any other process in
any other action or proceeding relating hereto, on behalf of itself or its
property, by the personal delivery of copies of such process to such party.
Nothing in this Section 11(h) shall affect the right of any party hereto to
serve legal process in any other manner permitted by law.
(i) REGULATORY APPROVALS; SECTION 16(b). If, in connection with
the exercise of the Option under Section 3, prior notification to or approval of
any Governmental Authority is required, then the required notice or application
for approval shall be promptly filed and/or expeditiously processed by Owen and
periods of time that otherwise would run pursuant hereto (if any) shall run
instead from the date on which any such required notification period has
expired or been terminated or such approval has been obtained, and in either
event, any requisite waiting period shall have passed. Periods of time that
otherwise would run pursuant to Sections 3, 7 or 8 shall also be extended to the
extent necessary to avoid liability under Section 16(b) of the Exchange Act.
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(j) WAIVER AND AMENDMENT. Any provision of this Option Agreement
may be waived at any time by the party that is entitled to the benefits of such
provision. This Option Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Option Agreement as of the date first written above.
CARDINAL HEALTH, INC.
By:/s/ ROBERT D. WALTER
Name: Robert D. Walter
Title: Chairman
OWEN HEALTHCARE, INC.
By:/s/ CARL E. ISGREN
Name: Carl E. Isgren
Title: President and CEO
60
