<PAGE> 1
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): May 2, 1995 (April 17, 1995)
CORAM HEALTHCARE CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-11343 33-0615337
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1125 Seventeenth Street, 15th Floor, Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
(303) 292-4973
(Registrant's telephone number, including area code)
Not applicable
(Former name or address, if changed since last report)
Page 1 of 4 Pages
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ITEM 5. OTHER EVENTS.
On April 17, 1995, Coram Healthcare Corporation, a Delaware
corporation (the "Company"), and its wholly-owned subsidiary, CHC Acquisition
Corp., a Delaware corporation (the "Merger Sub"), entered into a merger
agreement with Lincare Holdings Inc. ("Lincare"), a Delaware corporation, and
issued the press release attached hereto as Exhibit A, which is incorporated
herein in its entirety by this reference.
Pursuant to the terms of the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of April 17, 1995, by and among the Company, Merger Sub
and Lincare, attached hereto as Exhibit B and incorporated herein in its
entirety by this reference, Merger Sub will be merged with and into Lincare,
whereupon Lincare will become a wholly-owned subsidiary of the Company (the
"Merger"). The Boards of Directors of the Company and Lincare have agreed to
recommend approval of the Merger to their respective stockholders, subject to
their fiduciary obligations. The obligations of Lincare and the Company to
consummate the Merger are subject to the satisfaction of certain conditions set
forth in the Merger Agreement, including the approval of the Merger by the
stockholders of Lincare and the Company and the expiration or early termination
of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of
1976, as amended.
Under the Merger Agreement, the holders of Common Stock of Lincare
(the "Lincare Common Stock") will receive 1.5354 shares (the "Exchange Ratio")
of Common Stock of the Company ("Coram Common Stock") for each outstanding
share of Lincare Common Stock held by such stockholder and each option to
purchase Lincare Common Stock ("Lincare Option") issued pursuant to Lincare's
stock option plans, will be assumed by the Company and will constitute an
option to acquire, on the same terms and conditions as were applicable under
such Lincare Option, shares of Coram Common Stock, on the basis of the Exchange
Ratio.
The Merger Agreement may be terminated and the Merger abandoned,
before or after approval by the stockholders of Lincare and the Company if the
Merger has not been consummated, or the approval of Coram's stockholders or
Lincare's stockholders has not been obtained, by October 31, 1995. In
addition, the Merger Agreement may be terminated by either Lincare or the
Company if, among other things, (i) the board of directors of either Lincare or
the Company determines that termination is required to comply with its
fiduciary duties to the Company's stockholders with respect to any offer or
proposal to acquire all or a substantial part of its business and properties or
any interest in its securities or debt securities whether by purchase, merger,
purchase of assets, tender offer, exchange offer, business combination or
otherwise (a "Third Party Transaction") or (ii) in response to the board of
directors of the Company modifying or withdrawing its determination to
recommend to its stockholders approval of the Merger Agreement and the
transactions contemplated thereby (other than a modification indicating it is
considering a Third Party Transaction).
If a party terminates the Merger Agreement as a result of (i) a Third
Party Transaction or (ii) as a result of the modification or withdrawal of the
other party's determination to recommend that its stockholders approve the
Merger Agreement and the transactions contemplated thereby, the non-terminating
party in the case of clause (i) and the terminating party in the case of clause
(ii) will receive a fee of $15 million, plus up to $3 million in
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expenses, in immediately available funds. In either case, the party receiving
the termination fee will also receive an additional $15 million from the other
party if the other party consummates a Third Party Transaction within nine
months of the date that the Merger Agreement is terminated.
In connection with the execution of the Merger Agreement, two officers
of Lincare, John P. Byrnes and Howard R. Deutsch, executed employment
agreements with the Company. The effectiveness of the employment agreements is
contingent upon the consummation of the Merger. In addition, following the
consummation of the Merger, James T. Kelly and Frank T. Cary, two members of
the Board of Directors of Lincare, will be appointed to the Company's Board of
Directors, with Mr. Kelly serving as Vice-Chairman of the Board of Directors.
ITEM 7. EXHIBITS.
99.1 Press Release Issued by the Company on April 18, 1995.
99.2 Agreement and Plan of Merger, dated as of April 17, 1995,
by and among Coram Healthcare Corporation, CHC Acquisition
Corp. and Lincare Holdings Inc.
Page 3 of 4 Pages
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: May 2, 1995 CORAM HEALTHCARE CORPORATION
(registrant)
By: /s/ Sam R. Leno
------------------------------------------
Sam R. Leno
Vice President and Chief Financial Officer
Page 4 of 4 Pages
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Exhibit Index
Exhibit
Number Description Page
- - ------- ----------- ----
99.1 Press Release Issued by the Company on April 18, 1995.
99.2 Agreement and Plan of Merger, dated as of April 17, 1995,
by and among Coram Healthcare Corporation, CHC Acquisition
Corp. and Lincare Holdings Inc.
<PAGE> 1
FOR IMMEDIATE RELEASE
Contact: James M. Sweeney
CORAM HEALTHCARE
303-292-4973
or
James T. Kelly
LINCARE HOLDINGS, INC.
813-530-7700
or
Heidi Boenisch/Loree Bowen
PAINE & ASSOCIATES
714-755-0400
CORAM HEALTHCARE CORP. AND LINCARE HOLDINGS, INC.
ANNOUNCE A MERGER CREATING THE NATION S LARGEST
ALTERNATE SITE HEALTH CARE COMPANY
NEW YORK -- APRIL 18, 1995 -- James M. Sweeney, chairman and chief executive
officer of Coram Healthcare Corp. (NYSE:CRH), and James T. Kelly, chairman and
chief executive officer of Lincare Holdings, Inc. (NASDAQ:LNCR) today announced
that the boards of directors of Coram and Lincare have approved a definitive
merger agreement to combine the two companies creating the nation's largest
alternate site health care provider, with combined revenues of $1.1 billion.
Under the terms of the definitive agreement signed by both companies,
Lincare stockholders will receive approximately 1.54 shares of Coram common
stock for each outstanding share of Lincare common stock. The merger is
intended to qualify as a tax free reorganization and a pooling of interests for
accounting and financial reporting purposes.
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CORAM AND LINCARE ANNOUNCE MERGER/2222
The transaction is expected to be accretive to Coram earnings for both
1995 and 1996. Based on the Monday, April 17 closing price of Coram shares on
the New York Stock Exchange, the combined company will have a total market
value of approximately $1.85 billion.
The merger represents the union of the nation's largest provider of
home infusion therapy with the lowest cost and second largest provider of home
respiratory therapy. The combined company will be well-positioned to
cost-effectively market integrated home care services to payors and employers.
The companies believe that the combination will enable them to
accelerate revenue growth through the expansion of Lincare's respiratory
therapy business into existing Coram markets by leveraging existing Coram and
Lincare customer relationships. At the same time, Lincare's extraordinary
financial performance will significantly enhance Coram's financial position in
terms of revenue, earnings, cash flow and strengthen key financial ratios,
including its debt to equity ratio.
Sweeney will remain chairman and chief executive officer of Coram.
Kelly will become vice chairman of Coram. Kelly and Frank T. Cary, former
chairman of the board of IBM and currently a director of Lincare, will become
directors of Coram.
Sweeney and Kelly issued a joint statement describing the merger.
"Lincare is an ideal fit with Coram," said Sweeney. "This merger will combine
the highest quality, lowest cost providers in respiratory therapy and infusion
therapy, the two most clinically intensive alternate site therapies. In
addition to adding significant scale, the merger enhances Coram's strategy of
providing a broad array of alternate site therapies directly. In addition, the
combination will enable Coram to expand its disease management programs beyond
cancer and AIDS to diseases that include respiratory problems."
"We are delighted to be joining forces with Coram, creating the
premier alternate site health care provider," said Kelly. "We envision three
sources of growth: First, managed care organizations are expected to play an
increasing role in respiratory therapy. The combination of Coram's strong
managed care market presence with Lincare's market share and growth prospects
in respiratory therapy
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CORAM AND LINCARE ANNOUNCE MERGER/3333
will permit us to exploit this trend. Second, the combination will enable us
to develop innovative service networks for patients with complex respiratory
diseases such as asthma and cystic fibrosis.
"Patients with these diseases need intravenous drug and nutritional
therapies as well as respiratory therapy. Such patients will definitely
benefit from an integrated system for delivering care, managing utilization and
reporting outcomes. Finally, we will continue to strengthen our traditional
physician and hospital referral sources."
"Lincare's strong market position and excellent management team was a
major attraction for us," said Sweeney. "They have demonstrated the ability to
reduce cost, improve quality and grow profits while continuing to increase
market share. We are fortunate to have this experienced and proven management
team joining Coram. We intend to keep Lincare as a separate operating entity
working hand-in-hand with our infusion therapy business to generate significant
revenue and gains.
"As an example of this opportunity, we intent to expand Lincare's
market presence from approximately 50% of the major metropolitan markets today,
to over 96% of the country as currently served by Coram. New York, Chicago,
Minneapolis and Philadelphia, for instance, represent superb expansion areas for
Lincare services. Other significant revenue synergies are expected through
expanded one-stop shopping to managed care organizations, market share growth
via co-marketing programs and, ultimately, through introduction of respiratory
disease carve-outs. In addition, the combined Company plans to continue
Lincare's aggressive acquisition program in the respiratory field."
On April 6, 1995, Coram announced that it had completed the previously
announced acquisition of Caremark's home IV therapy business. The acquisition
included Caremark's domestic home infusion, acute intravenous immune globulin,
women's health and Home Care Management System (HCMS) businesses.
The HCMS business together with Coram's Resource Network business is
expected to exceed $70 million in one-stop shopping revenues in 1995. With 40%
of the referrals coming from respiratory therapy/durable medical equipment,
Coram has demonstrated the capability to sell bundled infusion therapy and
respiratory
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CORAM AND LINCARE ANNOUNCE MERGER/4444
therapy services. With this merger, we now have the internal capability to
provide these services on a more efficient basis in broader markets," said
Sweeney.
- MORE -
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CORAM AND LINCARE ANNOUNCE MERGER/5555
Consummation of the transaction is subject to approval of stockholders
of both companies and certain regulatory approvals. The transaction is
expected to close in early July 1995. Donaldson, Lukin & Jenrette Securities
Corporation rendered a fairness opinion to Coram in connection with the
proposed transaction. Alex, Brown & Sons, Inc. served as financial advisors to
Lincare and rendered a fairness opinion to Lincare's board of directors with
respect to the proposed transaction.
Lincare, headquartered in Clearwater, Florida, is one of the nation's
largest providers of oxygen and other respiratory therapy services to patients
in the home. The Company provides services and equipment to over 65,000
customers in 35 states.
Coram, headquartered in Denver, is a leading provider of alternate
site patient care. Coram's name, which is Latin for "openly, face-to-face,"
reflects its mission: to work with patients, physicians, managed care, and
other providers to develop new and better models of care, for those with
serious or chronic medical problems.
#####
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AGREEMENT AND PLAN OF MERGER
AMONG
CORAM HEALTHCARE CORPORATION
CHC ACQUISITION CORP.
AND
LINCARE HOLDINGS INC.
DATED AS OF APRIL 17, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Certificate of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . 2
1.6 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF
CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Share Consideration; Conversion or Cancellation of Shares in the Merger . . . 2
2.2 Payment for Shares in the Merger . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Transfer of Shares After the Effective Time . . . . . . . . . . . . . . . . . 6
2.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CORAM AND
MERGER SUB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Options or Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . 8
3.5 Coram Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . 10
3.10 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . 10
3.11 Employee Benefit Plans and Employment Matters . . . . . . . . . . . . . . . . 11
3.12 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.15 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.17 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.18 No Undisclosed Material Liabilities . . . . . . . . . . . . . . . . . . . . . 14
3.19 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
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<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
3.20 Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . . . . 14
3.21 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.22 Representations Complete . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.23 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.24 Certain Cost Savings Estimates . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF LINCARE . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Options or Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Authority Relative to Agreement . . . . . . . . . . . . . . . . . . . . . . 16
4.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.8 Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . 18
4.9 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . 18
4.10 Employee Benefit Plans and Employment Matters . . . . . . . . . . . . . . . 19
4.11 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.16 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . 22
4.17 No Undisclosed Material Liabilities . . . . . . . . . . . . . . . . . . . . 22
4.18 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.19 Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . . . . 23
4.20 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.21 Representations Complete . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.22 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 Joint Proxy Statement/Prospectus; Registration Statement;
Stockholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Conduct of the Business of Lincare Prior to the Effective Time . . . . . . 25
5.3 Conduct of the Business of Coram Prior to the Effective Time . . . . . . . 27
5.4 Access to Properties and Records . . . . . . . . . . . . . . . . . . . . . 29
5.5 No Solicitation, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.6 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.7 Treatment of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.8 Existing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.10 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.11 Certification of Stockholder Vote . . . . . . . . . . . . . . . . . . . . . 32
5.12 Employment/Non-Compete Agreements . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C>
5.13 Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.14 Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.15 Supplemental Disclosure Schedules . . . . . . . . . . . . . . . . . . . . 33
5.16 No Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.17 Conduct of Business of Merger Sub . . . . . . . . . . . . . . . . . . . . 33
5.18 Directors of Coram . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.19 Notification of Certain Matters; Delivery of Financial Information . . . 34
ARTICLE VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . 34
6.2 Conditions to the Obligation of Lincare to Effect the Merger . . . . . . 35
6.3 Conditions to the Obligations of Coram and Merger Sub to Effect
the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1 Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . 38
7.2 Termination by Either Coram or Lincare . . . . . . . . . . . . . . . . . 38
7.3 Termination by Lincare . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.4 Termination by Coram . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.5 Effect of Termination and Abandonment . . . . . . . . . . . . . . . . . . 40
7.6 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.4 Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.11 Invalidity; Severability . . . . . . . . . . . . . . . . . . . . . . . . 43
8.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
EXHIBITS
Exhibit A Form of Affiliate Letters
Exhibit B Opinion of Brobeck, Phleger & Harrison
Exhibit C Opinion of Reboul, MacMurray, Hewitt, Maynard & Kristol
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<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of April
17, 1995 among Coram Healthcare Corporation, a Delaware corporation ("Coram"),
CHC Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Coram ("Merger Sub"), and Lincare Holdings Inc., a Delaware corporation
("Lincare").
WHEREAS, the Boards of Directors of Coram, Merger Sub and
Lincare deem advisable and in the best interests of their respective
stockholders the merger of Merger Sub with and into Lincare (the "Merger") upon
the terms and conditions set forth herein and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") (Lincare, following the
effectiveness of the Merger, being hereinafter sometimes referred to as the
"Surviving Corporation");
WHEREAS, the Boards of Directors of Coram, Merger Sub and
Lincare have approved the Merger pursuant to this Agreement, upon the terms and
subject to the conditions set forth herein;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, Coram and Lincare have each received a fairness
opinion relating to the transactions contemplated hereby as more fully
described herein; and
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a pooling of interests.
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants, agreements and conditions contained
herein, and in order to set forth the terms and conditions of the Merger and
the method of carrying the same into effect, the parties hereby agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and conditions
hereinafter set forth and in accordance with the DGCL, at the Effective Time
(as defined in Section 1.3), Merger Sub shall be merged with and into Lincare
and thereupon the separate existence of Merger Sub shall cease, and Lincare, as
the Surviving Corporation, shall continue to exist under and be governed by the
DGCL.
-1-
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1.2 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at the
offices of Brobeck, Phleger & Harrison, 4675 MacArthur Court, Suite 1000,
Newport Beach, California 92660 as promptly as practicable after satisfaction
or waiver of the conditions set forth in Article VI, or at such other location,
time or date as may be agreed to in writing by the parties hereto. The date on
which the Closing occurs is hereinafter referred to as the "Closing Date."
1.3 Effective Time. If all the conditions to the Merger
set forth in Article VI shall have been satisfied or waived in accordance
herewith and this Agreement shall not have been terminated as provided in
Article VII, the parties hereto shall cause a Certificate of Merger meeting the
requirements of Section 251 of the DGCL to be properly executed and filed in
accordance with such Section on the Closing Date. The Merger shall become
effective at the time of filing of the Certificate of Merger with the Secretary
of State of the State of Delaware in accordance with the DGCL or at such other
time which the parties hereto shall have agreed upon and designated in such
filing as the effective time of the Merger (the "Effective Time").
1.4 Effect of Merger. After the Effective Time, pursuant
to the DGCL, the separate existence of Merger Sub will cease and the Surviving
Corporation shall succeed, without other transfer, to all the rights and
property of Merger Sub and shall be subject to all the debts and liabilities of
Merger Sub in the same manner as if the Surviving Corporation had itself
incurred them.
1.5 Certificate of Incorporation and Bylaws. At the
Effective Time, the Certificate of Incorporation of Lincare shall be the
Certificate of Incorporation of the Surviving Corporation and the Bylaws of
Lincare as in effect on the date hereof shall be the Bylaws of the Surviving
Corporation.
1.6 Directors and Officers. The persons who are
directors of Merger Sub immediately prior to the Effective Time shall, after
the Effective Time, serve as the directors of the Surviving Corporation, to
serve until their successors have been duly elected and qualified in accordance
with the Certificate of Incorporation and Bylaws of the Surviving Corporation.
The persons who are officers of Merger Sub immediately prior to the Effective
Time shall, after the Effective Time, serve as the officers of the Surviving
Corporation at the pleasure of the Board of Directors of the Surviving
Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.1 Share Consideration; Conversion or Cancellation of
Shares in the Merger. Subject to the provisions of this Article II, at the
Effective Time, by virtue of the Merger and without any action on the part of
the holders thereof:
(a) Each issued and outstanding share of the
common stock, $.01 par value, of Lincare (the "Lincare Common Stock"), other
than (i) shares of Lincare Common Stock owned of record by Coram, or a wholly
owned Subsidiary (as hereinafter defined) of
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Coram, and (ii) shares of Lincare Common Stock that are owned by Lincare as
treasury stock (the "Treasury Shares"), shall be automatically converted into
the right to receive 1.5354 shares (the "Exchange Ratio") of the common stock,
$.001 par value, of Coram (the "Coram Common Stock"). If prior to the
Effective Time, Coram or Lincare should split or combine its Common Stock, or
pay a stock dividend or other stock distribution in its Common Stock, or
otherwise change its Common Stock into any other securities, or make any other
dividend or distribution on its Common Stock, then the Exchange Ratio will be
appropriately adjusted to reflect such split, combination, dividend or other
distribution or change. The Exchange Ratio shall, in each case, be rounded to
the nearest ten-thousandth of a share.
(b) All of the shares of the Lincare Common Stock
to be converted into Coram Common Stock pursuant to Section 2.1(a) (the
"Lincare Shares") shall cease to be outstanding, shall be cancelled and retired
and shall cease to exist, and each holder of a certificate representing any
such shares shall thereafter cease to have any rights with respect to such
shares, except the right to receive for each of the shares, upon the surrender
of such certificate in accordance with Section 2.2(b), the number of shares of
Coram Common Stock specified in Section 2.01(a) above (the "Share
Consideration") and cash in lieu of fractional Coram Common Stock as
contemplated by Section 2.4.
(c) The issued and outstanding shares of the
common stock, $1.00 par value, of Merger Sub (the "Merger Sub Common Stock")
shall be converted into one hundred (100) shares of fully paid and
nonassessable shares of common stock, $.01 par value, of the Surviving
Corporation ("Surviving Corporation Common Stock").
(d) All shares of Lincare Common Stock which are
owned of record by Coram or any wholly owned Subsidiary of Coram and all of the
Treasury Shares shall be cancelled and retired and cease to exist, without any
conversion thereof or payment with respect thereto.
(e) Each outstanding option to purchase Lincare
Common Stock (each an, "Lincare Stock Option") shall be assumed by Coram as
provided in Section 5.7.
As used in this Agreement, the term "Subsidiary" shall mean
any corporation of which at least a majority of the securities having by their
terms ordinary voting power to elect a majority of the Board of Directors is
directly or indirectly owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and one or more of its Subsidiaries;
provided, however, that as used in Sections 3.1, 3.3, 3.6, 3.7, 3.8, 3.10,
3.11, 3.12, 3.13, 3.14, 3.15, 3.17, 3.19, 3.20, 3.21, 4.1, 4.5, 4.6, 4.7, 4.9,
4.10, 4.11, 4.12, 4.13, 4.14, 4.16, 4.17, 4.18, 4.19, 4.20, 5.2(c)-(f), 5.3 and
5.16 of this Agreement, the term "Subsidiary" shall also include any
unincorporated organization, including partnerships and joint ventures, of
which such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by
such party or any Subsidiary of such party do not have a majority of the voting
interests in such partnership) or at least a majority of the voting interests
in such organization are directly or indirectly owned or controlled by such
party or by any one or more of its Subsidiaries, or by such party and one or
more of its Subsidiaries (such unincorporated organizations being collectively
referred to herein as the "Joint Ventures");
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2.2 Payment for Shares in the Merger.
(a) At the Effective Time, Coram shall make
available to an exchange agent selected by Coram and reasonably acceptable to
Lincare (the "Exchange Agent"), for the benefit of those persons who
immediately prior to the Effective Time were the holders of Lincare Shares, a
sufficient number of certificates representing shares of Coram Common Stock
required to effect the delivery of the aggregate Share Consideration required
to be issued pursuant to Section 2.1 (the certificates representing Coram
Common Stock comprising such aggregate Share Consideration being hereinafter
referred to as the "Exchange Fund"). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the shares of Coram Common Stock contemplated
to be issued pursuant to Section 2.1 and effect the sales provided for in
Section 2.4 out of the Exchange Fund. The Exchange Fund shall not be used for
any other purpose.
(b) As soon as practicable after the Effective
Time, the Exchange Agent shall send a notice and transmittal form to each
holder of record of the Lincare Shares immediately prior to the Effective Time
advising such holder of the effectiveness of the Merger and the procedure for
surrendering to the Exchange Agent (who may appoint forwarding agents with the
approval of Coram) the certificate or certificates to be exchanged pursuant to
the Merger (the "Certificates"). Upon the surrender for exchange of
Certificates, together with such letter of transmittal duly completed and
properly executed in accordance with instructions thereto and such other
documents as may be required pursuant to such instructions, the holder shall be
paid promptly, without interest thereon and subject to any required withholding
of taxes, the Share Consideration to which such holder is entitled hereunder,
and such Certificates shall forthwith be cancelled. Until so surrendered and
exchanged, the Certificates shall represent solely the right to receive the
Share Consideration pursuant to Section 2.1 and cash in lieu of fractional
shares as contemplated by Section 2.4, subject to any required withholding of
taxes. If any payment for the Lincare Shares is to be made to a person other
than the person in whose name the Certificates for such shares surrendered are
registered, it shall be a condition of the exchange that the person requesting
such exchange shall pay to the Exchange Agent any transfer or other taxes
required by reason of the delivery of such payment to a person other than the
registered owner of the Certificates surrendered or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. To the extent permitted by law, former stockholders of record of
Lincare shall be entitled to vote, after the Effective Time, at any meeting of
Coram stockholders, the number of whole shares of Coram Common Stock into which
their respective Lincare Shares are converted, regardless of whether such
holders have exchanged their Certificates in accordance with this Section 2.2.
(c) No dividends or other distributions with
respect to Coram Common Stock with a record date after the Effective Time shall
be paid to the holders of any unsurrendered Certificates with respect to the
shares of Coram Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.4
until the surrender of such Certificates in accordance with this Section 2.2.
Subject to the effect of applicable laws, following surrender of any such
Certificates, there shall be paid to the holder of the Certificates
representing whole shares of Coram Common Stock issued in exchange therefor,
without interest, (i) at the time of such
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<PAGE> 9
surrender, the amount of any cash payable in lieu of a fractional share of
Coram Common Stock to which such holder is entitled pursuant to Section 2.4 and
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Coram
Common Stock, and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and with a payment date subsequent to such surrender payable
with respect to such whole shares of Coram Common Stock.
(d) In the event any Certificates shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Coram, the posting by such person of a bond in such amount, form
and with such surety as Coram may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
number of shares of the Coram Common Stock and cash in lieu of fractional
shares deliverable (and unpaid dividends and distributions) in respect thereof
pursuant to this Agreement.
(e) Coram, as the sole stockholder of Merger Sub,
shall, upon surrender to the Surviving Corporation of Certificates representing
the Merger Sub Common Stock, receive a Certificate representing the number of
shares of the Surviving Corporation Common Stock into which such Merger Sub
Common Stock shall have been converted pursuant to Section 2.1.
(f) Certificates surrendered for exchange by any
person constituting a Rule 145 Affiliate of Lincare (as defined in Section
5.13) shall not be exchanged for Certificates representing Coram Common Stock
until Coram has received a written agreement from such person as provided in
Section 5.13.
2.3 Exchange Agent. Subject to the agreement of the
Exchange Agent, among other things, (i) the Exchange Agent shall maintain the
Exchange Fund as a separate fund to be held for the benefit of the holders of
the Lincare Shares, which shall be promptly applied by the Exchange Agent to
making the payments provided for in Section 2.2, (ii) any portion of the
Exchange Fund that has not been paid to holders of the Lincare Shares pursuant
to Section 2.2 prior to that date which is six months from the Effective Time
shall be paid to Coram, and any holders of Lincare Shares who shall not have
theretofore complied with Section 2.2 shall thereafter look only to Coram for
payment of the number of shares of Coram Common Stock to which they are
entitled under this Agreement, (iii) the Exchange Fund shall not be used for
any purpose that is not provided for herein; and (iv) all expenses of the
Exchange Agent shall be paid directly by Coram. Promptly following the date
which is six months from the Effective Time, the Exchange Agent shall return to
Coram all cash, securities and any other instruments in its possession relating
to the transactions described in this Agreement, and the Exchange Agent's
duties shall terminate. Thereafter, each holder of Certificates formerly
representing Lincare Shares may surrender such Certificates to Coram and
(subject to applicable abandoned property, escheat and similar laws) receive in
exchange therefor the Share Consideration and cash in lieu of fractional shares
payable with respect thereto pursuant to Sections 2.1 and 2.4 hereof, without
interest, but shall have no greater rights against Coram than may be accorded
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to general creditors of Coram under the DGCL. The Exchange Agent shall not be
entitled to vote or exercise any rights of ownership with respect to the Coram
Common Stock held by it from time to time hereunder.
2.4 Fractional Shares. No fractional shares of Coram
Common Stock shall be issued in the Merger. In lieu of any such fractional
securities, each holder of Lincare Shares who would otherwise have been
entitled to a fractional share of Coram Common Stock upon surrender of
Certificates for exchange pursuant to this Article II will be paid an amount in
cash (without interest) equal to such holder's proportionate interest in the
net proceeds from the sale or sales in the open market by the Exchange Agent,
on behalf of all such holders, of the aggregate fractional shares of the Coram
Common Stock issued pursuant to this Article II. As soon as practicable
following the Effective Time, the Exchange Agent shall determine the excess of
(i) the number of full shares of the Coram Common Stock delivered to the
Exchange Agent by Coram over (ii) the aggregate number of full shares of the
Coram Common Stock to be distributed to holders of Lincare Shares (such excess
being herein called the "Excess Shares"), and the Exchange Agent, as agent for
the former holders of Lincare Shares, shall sell the Excess Shares at the
prevailing prices on the NYSE. The sale of the Excess Shares by the Exchange
Agent shall be executed on the NYSE through one or more member firms of the
NYSE and shall be executed in round lots to the extent practicable. Coram
shall pay all commissions, transfer taxes and other out- of-pocket transaction
costs, including the expenses and compensation of the Exchange Agent, incurred
in connection with such sale of Excess Shares. Until the net proceeds of such
sale have been distributed to the former stockholders of Lincare, the Exchange
Agent will hold such proceeds in trust for such former stockholders (the
"Fractional Securities Fund"). As soon as practicable after the determination
of the amount of cash to be paid to former stockholders of Lincare in lieu of
any fractional interests, the Exchange Agent shall make available in accordance
with this Agreement such amounts to such former stockholders.
2.5 Transfer of Shares After the Effective Time. No
transfers of Lincare Shares shall be made on the stock transfer books of
Lincare after the close of business on the day prior to the date of the
Effective Time.
2.6 Further Assurances. 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, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, the title to any property or right of
Lincare or Merger Sub acquired or to be acquired by reason of, or as a result
of, the Merger, or (b) otherwise to carry out the purposes of this Agreement,
Lincare and Merger Sub agree that the Surviving Corporation and its proper
officers and directors shall and will execute and deliver all such deeds,
assignments and assurances in law and do all acts necessary, desirable or
proper to vest, perfect or confirm title to such property or right in the
Surviving Corporation and otherwise to carry out the purposes of this
Agreement, and that the proper officers and directors of Lincare and Merger Sub
and the proper officers and directors of the Surviving Corporation are fully
authorized in the name of Lincare and Merger Sub or otherwise to take any and
all such action.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CORAM AND MERGER SUB
Coram and Merger Sub, jointly and severally, represent and
warrant to Lincare that, except as set forth in the Disclosure Schedule
delivered herewith (the "Coram Disclosure Schedule"):
3.1 Corporate Organization. Each of Coram and its
Subsidiaries (the "Coram Subsidiaries") is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, with all requisite corporate power and authority to own, operate
and lease its properties and to carry on its business as it is now being
conducted, and is qualified or licensed to do business and is in good standing
in each jurisdiction in which the failure to be so qualified or licensed,
individually or in the aggregate, would have a material adverse effect on the
financial condition, results of operations, business or properties of Coram and
the Coram Subsidiaries taken as a whole (a "Material Adverse Effect on Coram").
The Coram Disclosure Schedule contains a complete and accurate list of all of
the Coram Subsidiaries. Neither Coram nor any Coram Subsidiary is in violation
of any provision of its Certificate of Incorporation or Bylaws which could have
a Material Adverse Effect on Coram. Merger Sub has not engaged in any business
nor has it incurred any liabilities or obligations since it was incorporated
other than relating to this Agreement and the transactions contemplated hereby.
3.2 Capital Stock. The authorized capital stock of Coram
consists in its entirety of (i) 75,000,000 shares of Coram Common Stock, $.001
par value, and (ii) 10,000,000 shares of Preferred Stock, $.001 par value. As
of March 31, 1995, 39,454,218 shares of Coram Common Stock were issued and
outstanding, (ii) options to acquire 7,286,181 shares of Coram Common Stock
were outstanding under all stock option plans of Coram, (iii) 9,600,000 shares
were reserved for issuance pursuant to all employee benefit plans of Coram and
(iv) warrants to purchase 766,076 shares of Coram Common Stock were
outstanding. As of the date hereof, the authorized capital stock of Merger Sub
consists in its entirety of 1,000 shares of common stock, $1.00 par value, of
which 100 shares are issued and outstanding. All of the outstanding shares of
capital stock of each of the Coram Subsidiaries are owned beneficially and of
record by Coram or a Coram Subsidiary free and clear of all liens, charges and
encumbrances of any nature. All of the outstanding shares of capital stock of
Coram, Merger Sub and each of the Coram Subsidiaries have been validly issued
and are fully paid and nonassessable.
3.3 Options or Other Rights. Except as disclosed in
Section 3.2, there is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement or arrangement of any
kind to purchase or otherwise to receive from Coram or any Coram Subsidiary any
of the outstanding authorized but unissued, unauthorized or treasury shares of
the capital stock or any other security of Coram or any Coram Subsidiary, and
there is no outstanding security of any kind convertible into or exchangeable
for such capital stock. No options or rights to acquire equity securities
granted by Coram have provisions which accelerate the vesting or right to
exercise such options or rights or terminate any repurchase rights of Coram
upon the consummation of the Merger.
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3.4 Authority Relative to this Agreement. Each of Coram
and Merger Sub has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated on its part
hereby. The execution and delivery of this Agreement by each of Coram and
Merger Sub and the consummation of the transactions contemplated on its part
hereby have been duly authorized by their respective Board of Directors, and,
other than the approval of Coram's stockholders as provided in Section 5.1
hereof, no other corporate proceedings on the part of Coram or Merger Sub are
necessary to the consummation of the transactions contemplated on its part
hereby. This Agreement has been duly executed and delivered by each of Coram
and Merger Sub, and constitutes a legal, valid and binding obligation of each
of Coram and Merger Sub, enforceable against each of them in accordance with
its terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally or by general equity principles.
3.5 Coram Common Stock. The shares of Coram Common Stock
to be issued in connection with the Merger have been duly authorized and, when
issued as contemplated hereby at the Effective Time, will be validly issued,
fully paid and nonassessable, and not subject to any preemptive rights.
3.6 No Violation. The execution, delivery and
performance of this Agreement by each of Coram and Merger Sub and the
consummation by each of them of the transactions contemplated hereby will not
(i) violate or conflict with any provision of any law applicable to Coram or
any Coram Subsidiary or by which any of their property or assets are bound,
(ii) require the consent, waiver, approval, license or authorization of or any
filing by Coram or any Coram Subsidiary with any public authority (other than
(a) the filing of a pre-merger notification report under The Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") and the expiration of the applicable
waiting period, (b) in connection with or in compliance with the provisions of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Securities Act of 1933, as amended (the "Securities Act"), the DGCL, the Bylaws
of the NYSE or the "takeover" or "blue sky" laws of various states and (c) any
other filings and approvals expressly contemplated by this Agreement) or (iii)
violate, conflict with, result in a breach of or the acceleration of any
obligation under, or constitute a default (or an event which with notice or the
lapse of time or both would become a default) under, or give to others any
right of, or result in any, termination, amendment, acceleration or
cancellation of, or loss of any benefit or creation of a right of first refusal
or result in the creation of a lien or other encumbrance on any property or
asset of Coram or any Coram Subsidiary pursuant to or under any provision of
any charter or bylaw, indenture, mortgage, lien, lease, license, agreement,
contract, instrument, order, judgment, ordinance, Coram Permit (as defined
below), law, regulation or decree to which Coram or any Coram Subsidiary is
subject or by which Coram or any Coram Subsidiary or any of their property or
assets are bound, except where the failure to give such notice, make such
filings, or obtain such authorizations, consents, waivers, licenses or
approvals, or where such violations, conflicts, breaches, defaults,
terminations, amendments, accelerations, cancellations, loss of rights, liens
or encumbrances, individually or in the aggregate, would not have a Material
Adverse Effect on Coram or on Coram's or Merger Sub's ability to consummate the
transactions contemplated hereby.
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3.7 Compliance with Laws.
(a) Coram and each Coram Subsidiary hold all
material licenses, permits and other authorizations necessary to conduct its
business (collectively, "Coram Permits"), are certified as providers under all
applicable Medicare and Medicaid programs to the extent required to be so
certified, and are in compliance with all Coram Permits and all federal, state
and other laws, rules, regulations, ordinances and orders governing its
business, including, without limitation, the requirements, guidelines, rules and
regulations of Medicare, Medicaid and other third-party reimbursement programs,
except where the failure to hold such Coram Permits and other authorizations or
to so comply would not be material to the financial condition, results of
operations, business or properties of Coram and the Coram Subsidiaries taken as
a whole. The Coram Permits are in full force and effect.
(b) All health care personnel employed by Coram
or any Coram Subsidiary are properly licensed to the extent required to perform
the duties of their employment in each jurisdiction where such duties are
performed, except where the failure to be so licensed, would not be material to
the financial condition, results of operations, business or properties of Coram
and the Coram Subsidiaries taken as a whole.
(c) No action or proceeding is pending or, to
Coram's knowledge, threatened that may result in the suspension, revocation or
termination of any Coram Permit, the issuance of any cease-and-desist order, or
the imposition of any administrative or judicial sanction, and neither Coram nor
any Coram Subsidiary has received any notice from any governmental authority in
respect of the suspension, revocation or termination of any Coram Permit, or any
notice of any intention to conduct any investigation or institute any
proceeding, in any such case where such suspension, revocation, termination,
order, sanction, investigation or proceeding would be material to the financial
condition, results of operations, business or properties of Coram and the Coram
Subsidiaries taken as a whole.
(d) Neither Coram nor any Coram Subsidiary has
received notice that Medicare, Medicaid or any other third-party reimbursement
program has any claims for disallowance of costs against any of them which
could result in material offsets against future reimbursement or recovery of
prior payments, which offsets or recoveries have not been reserved for in
Coram's financial statements.
3.8 Litigation. Except as may be disclosed in the Coram
SEC Filings (as defined below) made prior to the date hereof, there are no
suits, arbitrations, mediations, actions, proceedings, unfair labor practice
complaints or grievances pending or, to Coram's knowledge, threatened, or, to
Coram's knowledge, investigations pending or threatened, against Coram or any
Coram Subsidiary or with respect to any property or asset of any of them before
any court, arbitrator, administrator or governmental or regulatory authority or
body which, individually or in the aggregate, would have a Material Adverse
Effect on Coram. Neither Coram nor any Coram Subsidiary nor any property or
asset of any of them is subject to any order, judgment, injunction or decree
which, individually or in the aggregate, would have a Material Adverse Effect on
Coram.
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3.9 Financial Statements and Reports. Coram has made
available to Lincare true and complete copies of (i) its Annual Report on Form
10-K as filed with the Securities and Exchange Commission (the "Commission"),
for the year ended December 31, 1994 (the "Coram Form 10-K"), (ii) all
registration statements filed by Coram and declared effective under the
Securities Act (other than registration statements on Form S-8), and (c) all
other reports, statements and registration statements (including Current Reports
on Form 8-K) filed by it with the Commission subsequent to the filing of the
Coram Form 10-K, if any. The reports, statements and registration statements
referred to in the immediately preceding sentence (including, without
limitation, any financial statements or schedules or other information, included
or incorporated by reference therein) are referred to in this Agreement as the
"Coram SEC Filings." As of the respective times such documents were filed or, as
applicable, became effective, the Coram SEC Filings complied as to form and
content, in all material respects, with the requirements of the Securities Act
and the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder, and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Coram
included in the Coram SEC Filings were prepared in accordance with generally
accepted accounting principles (as in effect from time to time) applied on a
consistent basis and (except as may be indicated therein or in the notes
thereto) present fairly the consolidated financial position, consolidated
results of operations and consolidated cash flows of Coram and the Coram
Subsidiaries as of the dates and for the periods indicated subject, in the case
of unaudited interim consolidated financial statements, to normal recurring
year-end adjustments and any other adjustments described therein.
3.10 Absence of Certain Changes or Events. Since December
31, 1994 and except as disclosed in the Coram SEC Filings made through the date
hereof, the business of Coram and of each of the Coram Subsidiaries has been
conducted in the ordinary course, and there has not been (i) any material
adverse change in the financial condition, results of operations, business or
properties of Coram and the Coram Subsidiaries, taken as a whole; (ii) any
indebtedness incurred by Coram or any Coram Subsidiary for money borrowed;
(iii) any material transaction or commitment, except in the ordinary course of
business or as contemplated by this Agreement, entered into by Coram or any of
the Coram Subsidiaries; (iv) any damage, destruction or loss, whether covered
by insurance or not, which, individually or in the aggregate, would have a
Material Adverse Effect on Coram; (v) any declaration, setting aside or payment
of any dividend (whether in cash, securities or property) with respect to the
Coram Common Stock; (vi) any material agreement to acquire any assets or stock
or other interests of any third-party; (vii) any increase in the compensation
payable or to become payable by Coram or any Coram Subsidiary to any employees,
officers, directors, or consultants or in any bonus, insurance, welfare,
pension or other employee benefit plan, payment or arrangement made to, for or
with any such employee, officer, director or consultant (other than as provided
in employment agreements, consulting agreements and welfare and benefit plans
in existence as of the date hereof, and except for increases consistent with
past practice); (viii) any material revaluation by Coram or any Coram
Subsidiary of any asset (including, without limitation, any writing down of the
value of inventory or writing off of notes or accounts receivable); (ix) any
material change by Coram in accounting principles or methods except insofar as
may be required by a change in generally accepted accounting principles; (x)
any mortgage or pledge of any of
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the assets or properties of Coram or any Coram Subsidiary or the subjection of
any of the assets or properties of Coram or any Coram Subsidiary to any
material liens, charges, encumbrances, imperfections of title, security
interest, options or rights or claims of other with respect thereto; or (xi)
any assumption or guarantee by Coram or an Coram Subsidiary of the indebtedness
of any person or entity.
3.11 Employee Benefit Plans and Employment Matters.
(a) The Coram Disclosure Schedule lists all
employee benefit plans, collective bargaining agreements, labor contracts, and
employment agreements not otherwise disclosed in the Coram SEC Filings which
provide for the annual payment of more than $100,000 in which Coram
participates, or by which it is bound, including, without limitation, (i) any
profit sharing, deferred compensation, bonus, stock option, stock purchase,
pension, welfare, and incentive plan or agreement; (ii) any plan providing for
"fringe benefits" to its employees, including, but not limited to, vacation,
sick leave, medical, hospitalization and life insurance; (iii) any written
employment agreement and any other employment agreement not terminable at will;
and (iv) any other "employee benefit plan" (within the meaning of Section 3(3)
of the Employment Retirement Income Security Act of 1974 ("ERISA")) that is not
exempted from the coverage of ERISA by reason of the Department of Labor
regulations. Coram is in compliance in all material respects with the
requirements prescribed by all laws currently in effect applicable to employee
benefit plans and to any employment agreements, including, but not limited to,
ERISA and the Code. Coram has performed all of its obligations under all such
employee benefit plans and employment agreements in all material respects.
There is no pending or, to the knowledge of Coram, threatened legal action,
proceeding or investigation against or involving any Coram employee benefit
plan which could result in a material amount of liability to such employee
benefit plan or to Coram.
(b) Coram does not sponsor or participate in, and
has not sponsored or participated in, any employee benefit pension plan to
which Section 4021 of ERISA applies that would create a material amount of
liability to Coram under Title IV of ERISA.
(c) Coram does not sponsor or participate in, and
has not sponsored or participated in, any employee benefit pension plan that is
a "multiemployer plan" (within the meaning of Section 3(37) of ERISA) that would
subject Coram to any material amount of liability with respect to any such plan.
(d) All group health plans of Coram have been
operated in compliance with the group health plan continuation coverage
requirements of Section 4980B of the Code in all material respects, to the
extent such requirements are applicable.
(e) There have been no acts or omissions by Coram
that have given rise to or may give rise to a material amount of fines,
penalties, taxes, or related charges under Sections 502(c) or 4071 of ERISA or
under Chapter 43 of the Code.
(f) No "reportable event," as defined in ERISA
Section 4043, other than those events with respect to which the Pension Benefit
Guaranty Corporation has waived
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the notice requirement, has occurred with respect to any of the employee
benefit plans of Coram.
(g) The Coram Disclosure Schedule sets forth the
name of each director, officer or employee of Coram entitled to receive any
material amount of benefit or payment under any existing employment agreement,
severance plan or other benefit plan solely as a result of the consummation of
any transaction contemplated by this Agreement, and with respect to each such
person, the nature of such benefit or the amount of such payment, the event
triggering the benefit or payment, and the date of, and parties to, such
employment agreement, severance plan or other benefit plan.
(h) Coram has made available to Lincare true and
correct copies of all plan documents and employment agreements referred to on
the Coram Disclosure Schedule, including all amendments thereto, and all
related summary plan descriptions to the extent that one is required by law.
(i) For purposes of this Section 3.11, any
reference to "Coram" shall be deemed to include a reference to any entity that
is aggregated with Coram under the provisions of Section 414 of the Code, to
the extent that those aggregation rules apply.
3.12 Labor Matters. Neither Coram nor any Coram Subsidiary
is a party to any collective bargaining agreement with respect to any of their
employees. None of the employees of Coram or any Coram Subsidiary is represented
by any labor union. To the knowledge of Coram, there is no activity involving
any employees of Coram or the Coram Subsidiaries seeking to certify a collective
bargaining unit or engaging in any other organizational activity.
3.13 Insurance. Coram and the Coram Subsidiaries maintain
insurance against such risks and in such amount as Coram reasonably believes
are necessary to conduct its business. Coram and the Coram Subsidiaries are
not in default with respect to any provisions or requirements of any such
policy, nor have any of them failed to give notice or present any claim
thereunder in a due and timely fashion, except for defaults or failures which,
individually or in the aggregate, would not have a Material Adverse Effect on
Coram. Neither Coram nor any Coram Subsidiary has received any notice of
cancellation or termination in respect of any of its insurance policies.
3.14 Environmental Matters. Coram and the Coram
Subsidiaries are in compliance with all environmental laws, and have obtained
all necessary licenses and permits required to be issued pursuant to any
environmental law, except where the failure to so comply or to obtain such
licenses or permits, individually or in the aggregate, would not have a
Material Adverse Effect on Coram. Neither Coram nor any Coram Subsidiary has
received any notice or communication from any governmental agency with, respect
to (i) any hazardous substance relative to its operations, property or assets
or (ii) any investigation, demand or request pursuant to enforcing any
environmental law relating to it or its operations, and no such investigation
is pending or, to the knowledge of Coram threatened, in any case, which would
lead to a Material Adverse Effect on Coram.
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3.15 Tax Matters. Coram has paid, or made adequate
provision for on its balance sheet at December 31, 1994, all federal, state,
local, foreign or other governmental income, payroll, F.I.C.A., unemployment,
withholding, real property, personal property, sales, payroll, disability and,
to its knowledge, franchise and all other taxes imposed on Coram or any Coram
Subsidiary or with respect to any of their respective properties, or otherwise
payable by them, including interest and penalties, if any, in respect thereof
(collectively, "Coram Taxes"), for the Coram taxable period ended September 30,
1994 and all fiscal periods of Coram prior thereto, except such nonpayment, or
failure to make adequate provision, that would not be material to the financial
condition, results of operations, business or properties of Coram and the Coram
Subsidiaries taken as a whole. Coram Taxes paid and/or incurred from September
30, 1994 include only Coram Taxes incurred in the ordinary course of business
determined in the same manner as in the taxable period ended September 30, 1994
and Coram has properly accrued for all such Taxes for such periods. Coram and
each of the Coram Subsidiaries have timely filed all income tax, excise tax,
sales tax, use tax, gross receipts tax, franchise tax, employment and payroll
related tax, property tax, and all other tax returns which Coram and/or such
Coram Subsidiary (as the case may be) are required to file ("Coram Tax
Returns"), and have paid or provided for all the amounts shown to be due
thereon, except where such failure to make such timely filings or the nonpayment
of such amounts would not be material to the financial condition, results of
operations, business or properties of Coram and the Coram Subsidiaries taken as
a whole. Neither Coram nor any Coram Subsidiary (i) has filed or entered into,
or is otherwise bound by, any election, consent or extension agreement that
extends any applicable statute of limitations with respect to taxable periods of
Coram, (ii) is a party to any contractual obligation requiring the
indemnification or reimbursement of any person with respect to the payment of
any Coram Taxes, other than among Coram and the Coram Subsidiaries, or (iii) has
received any claim by an authority in a jurisdiction where neither Coram nor any
Coram Subsidiary files Coram Tax Returns that they are or may be subject to
Coram Taxes by that jurisdiction, except for any such claims as would not be
material to the financial condition, results of operations, business or
properties of Coram and the Coram Subsidiaries taken as a whole. No action or
proceeding is pending or, to Coram's knowledge, threatened by any governmental
authority for any audit, examination, deficiency, assessment or collection from
Coram or any Coram Subsidiary of any Coram Taxes, no unresolved claim for any
deficiency, assessment or collection of any Coram Taxes has been asserted
against Coram or any Coram Subsidiary, and all resolved assessments of Coram
Taxes have been paid or are reflected on the Coram balance sheet at December 31,
1994, except for any of the foregoing which would not be material to the
financial condition, results of operations, business or properties of Coram and
the Coram Subsidiaries taken as a whole.
3.16 Intellectual Property. Coram and the Coram
Subsidiaries own, possess or have the right to use all franchises, patents,
trademarks, service marks, tradenames, licenses and authorizations
(collectively, "Coram Intellectual Property Rights") which are necessary, to the
conduct of their respective businesses. To the knowledge of Coram, neither
Coram nor any Coram Subsidiary is infringing or otherwise violating intellectual
property rights of any person which infringement or violation would subject
Coram or any Coram Subsidiary to liabilities which, individually or in the
aggregate, would have a Material Adverse Effect on Coram or which would prevent
Coram or any Coram Subsidiary from conducting their respective businesses
substantially in the manner in which they are now being conducted. No claim has
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been made or, to Coram's knowledge, threatened against Coram or any Coram
Subsidiary alleging any such violation.
3.17 Related Party Transactions. Except as disclosed in
the Coram SEC Filings made through the date hereof, there have been no material
transactions between Coram or any Coram Subsidiary on the one hand, and any (i)
officer or director of Coram or any Coram Subsidiary, (ii) record or beneficial
owner of five percent or more of the voting securities of Coram, or (iii)
affiliate (as such term is defined in Regulation 12b-2 promulgated under the
Exchange Act) of any such officer, director or beneficial owner, on the other
hand, other than payment of compensation for services rendered to Coram or the
Coram Subsidiaries by any officers of Coram or Coram Subsidiaries.
3.18 No Undisclosed Material Liabilities. Except as
disclosed in the Coram SEC Filings made through the date hereof, neither Coram,
any of the Coram Subsidiaries or, to the knowledge of Coram, any of the Joint
Ventures has incurred any liabilities of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, that, individually
or in the aggregate, would have a Material Adverse Effect on Coram other than
liabilities under or contemplated by this Agreement.
3.19 No Default. Neither Coram nor any of the Coram
Subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of (a) its charter or By-Laws, (b) any note,
bond, mortgage, indenture, license, agreement, contract, lease, commitment or
other obligation to which Coram or any of the Coram Subsidiaries is a party or
by which they or any of their properties or assets may be bound, or (c) any
order, writ, injunction, decree, statute, rule or regulation applicable to Coram
or any of the Coram Subsidiaries, except in the case of clauses (b) and (c)
above for defaults or violations which would not have a Material Adverse Effect
on Coram.
3.20 Title to Properties; Encumbrances. Except as
described in the following sentence, each of Coram and the Coram Subsidiaries
has good, valid and marketable title to, or a valid leasehold interest in, all
of its properties and assets (real, personal and mixed, tangible and
intangible), including, without limitation, all the properties and assets
reflected in the consolidated balance sheet of Coram and the Coram Subsidiaries
at December 31, 1994 (except for properties and assets disposed of in the
ordinary course of business and consistent with past practices since December
31, 1994). None of such properties or assets are subject to any liability,
obligation, claim, lien, mortgage, pledge, security interest, conditional sale
agreement, charge or encumbrance of any kind (whether absolute, accrued,
contingent or otherwise), except for liens for taxes not yet due and payable
and minor imperfections of title and encumbrance, if any, which are not
substantial in amount, do not materially detract from the value of the property
or assets subject thereto and do not impair the operations of Coram and the
Coram Subsidiaries.
3.21 Pooling of Interests. Neither Coram, any of the
Coram Subsidiaries nor, to the knowledge of Coram, any of their respective
directors, officers or stockholders has taken
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<PAGE> 19
any action which would interfere with the parties' ability to account for the
Merger as a pooling of interests.
3.22 Representations Complete. None of the
representations or warranties made by Coram or Merger Sub herein or in any
Schedule hereto, including the Coram Disclosure Schedule, or certificate
furnished by Coram or Merger Sub pursuant to this Agreement, or the Coram SEC
Filings, when all such documents are read together in their entirety, contains
or will contain at the Effective Time any untrue statement of a material fact,
or omits or will omit at the Effective Time to state any material fact
necessary in order to make the statements contained herein or therein, in the
light of the circumstances under which made, not misleading.
3.23 Brokers. Neither Coram nor Merger Sub has paid or is
obligated to pay any fee or commission to any broker, finder, investment banker
or other intermediary in connection with this Agreement, except Donaldson,
Lufkin & Jenrette Securities Corporation.
3.24 Certain Cost Savings Estimates. The information
regarding estimated annualized cost savings of Coram as of December 31, 1994,
derived from the implementation of Coram's consolidation plan as of such date,
which information has been delivered to Alex. Brown & Sons Incorporated on
behalf of Lincare has been prepared in good faith and, to the knowledge of
Coram, is reasonable based on the estimates and assumptions underlying such
information and Coram is not, as of the date hereof, aware that such
information is false or misleading in any material respect; it being understood
that such cost savings are projections and as such are inherently uncertain.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LINCARE
Lincare represents and warrants to Coram and Merger Sub that,
except as set forth in the Disclosure Schedule delivered herewith (the "Lincare
Disclosure Schedule"):
4.1 Corporate Organization. Each of Lincare and its
Subsidiaries (the "Lincare Subsidiaries") is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, with all requisite corporate power and authority to own, operate
and lease its properties and to carry on its business as it is now being
conducted, and is qualified or licensed to do business and is in good standing
in each jurisdiction in which the failure to be so qualified or licensed,
individually or in the aggregate, would have a material adverse effect on the
financial condition, results of operations, business or properties of Lincare
and the Lincare Subsidiaries taken as a whole (a "Material Adverse Effect on
Lincare"). The Lincare Disclosure Schedule contains a complete and accurate
list of all of the Lincare Subsidiaries. Neither Lincare nor any Lincare
Subsidiary is in violation of any provision of its charter or Bylaws which
could have a Material Adverse Effect on Lincare.
4.2 Capital Stock. As of the date hereof, the authorized
capital stock of Lincare consists in its entirety of (i) 100,000,000 shares of
common stock, $.01 par value, and
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(ii) 4,879,238 shares of Preferred Stock, $1.00 par value, none of which shares
of Preferred Stock are issued and outstanding. As of March 31, 1995, 27,472,262
shares of Lincare Common Stock were issued and outstanding, (ii) options to
acquire 2,268,750 shares of Lincare Common Stock were outstanding under the
Lincare Option Plans (as hereinafter defined) and (iii) 68,000 shares of Lincare
Common Stock were reserved for issuance under all of the Lincare Option Plans.
All of the outstanding shares of capital stock of each of the Lincare
Subsidiaries are owned beneficially and of record by Lincare or a Lincare
Subsidiary free and clear of all liens, charges, encumbrances, options, rights
of first refusal or limitations or agreements regarding voting rights of any
nature. All of the outstanding shares of capital stock of Lincare and each of
the Lincare Subsidiaries have been validly issued and are fully paid and
nonassessable.
4.3 Options or Other Rights. Except as disclosed in
Section 4.2, there is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement or arrangement of any
kind to purchase or otherwise to receive from Lincare or any Lincare Subsidiary
any of the outstanding, authorized but unissued, unauthorized or treasury
shares of the capital stock or any other security of Lincare or any Lincare
Subsidiary and there is no outstanding security of any kind convertible into or
exchangeable for such capital stock. No options or rights to acquire equity
securities granted by Lincare have provisions which accelerate the vesting or
right to exercise such options or rights or terminate any rights upon the
consummation of the Merger.
4.4 Authority Relative to Agreement. Lincare has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated on its part hereby. The execution and
delivery of this Agreement by Lincare and the consummation of the transactions
contemplated on its part hereby have been duly authorized by its Board of
Directors, and, other than the approval of Lincare's stockholders as provided
in Section 5.1 hereof, no other corporate proceedings on the part of Lincare
are necessary to authorize the execution and delivery of this Agreement by
Lincare or the consummation of the transactions contemplated on its part
hereby. This Agreement has been duly executed and delivered by Lincare, and
constitutes legal, valid and binding obligations of Lincare, enforceable
against Lincare in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally or by general equity principles.
4.5 No Violation. The execution, delivery and
performance of this Agreement by Lincare and the consummation by it of the
transactions contemplated hereby will not (i) violate or conflict with any
provision of any law applicable to Lincare or any Lincare Subsidiary or by
which any of its property or assets are bound, (ii) require the consent,
waiver, approval, license or authorization of or any filing by Lincare or any
Lincare Subsidiary with any public authority (other than as described in clause
(ii) of the first sentence of Section 3.6) or, (iii) violate, conflict with or
result in a breach of or the acceleration of any obligation under, or
constitute a default (or an event which with notice or the lapse of time or
both would become a default) under, or give to others any right of, or result
in any, termination, amendment, acceleration or cancellation of, or loss of any
benefit or creation of a right of first refusal or result in the creation of a
lien or other encumbrance on any property or asset of Lincare or any
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Lincare Subsidiary pursuant to or under any provision of any charter or bylaw,
indenture, mortgage, lien, lease, license, agreement, contract, instrument,
order, judgment, ordinance, Lincare Permit (as defined below), law, regulation
or decree to which Lincare or Lincare Subsidiary is subject or by which Lincare
or any Lincare Subsidiary or any of their property or assets are bound, except
where the failure to give such notice, make such filings, or obtain such
authorizations, consents, waivers, licenses or approvals, or where such
violations, conflicts, breaches, defaults, terminations, amendments,
accelerations, cancellations, loss of rights, liens or encumbrances,
individually or in the aggregate, would not have a Material Adverse Effect on
Lincare or on Lincare's ability to consummate the transactions contemplated
hereby.
4.6 Compliance with Laws.
(a) Lincare and each Lincare Subsidiary hold all
licenses, permits and other authorizations necessary to conduct its business
(collectively, "Lincare Permits"), are certified as providers under all
applicable Medicare and Medicaid programs to the extent required to be so
certified, and are in compliance with all Lincare Permits and all federal, state
and other laws, rules, regulations, ordinances and orders governing its
business, including, without limitation, the requirements, guidelines, rules and
regulations of Medicare, Medicaid and other third-party reimbursement programs,
except where the failure to hold such licenses, permits and other authorizations
or to so comply would not be material to the financial condition, results of
operations, business or properties of Lincare and the Lincare Subsidiaries taken
as a whole. The Lincare Permits are in full force and effect.
(b) All health care personnel employed by Lincare
or any Lincare Subsidiary are properly licensed to the extent required to
perform the duties of their employment in each jurisdiction where such duties
are performed, except where the failure to be so licensed would not be material
to the financial condition, results of operations, business or properties of
Lincare and the Lincare Subsidiaries taken as a whole.
(c) No action or proceeding is pending or, to
Lincare's knowledge, threatened that may result in suspension, revocation or
termination of any Lincare Permit, the issuance of any cease-and-desist order,
or the imposition of any administrative or judicial sanction, and neither
Lincare nor any Lincare Subsidiary has received any notice from any governmental
authority in respect of the suspension, revocation or termination of any Lincare
Permit, or any notice of any intention to conduct any investigation or institute
any proceeding, in any such case where such suspension, revocation, termination,
order, sanction, investigation, or proceeding would be material to the financial
condition, results of operations, business or properties of Lincare and the
Lincare Subsidiaries taken as a whole.
(d) Neither Lincare nor any Lincare Subsidiary
has received notice that Medicare, Medicaid or any other third-party
reimbursement program has any claims for disallowance of costs against any of
them which could result in material offsets against future reimbursement or
recovery of prior payments, which offsets or recoveries have not been reserved
for in Lincare's financial statements.
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4.7 Litigation. Except as may be disclosed in the
Lincare SEC Filings (as defined below) made as of the date hereof, there are no
suits, arbitrations, mediations, actions, proceedings, unfair labor practice
complaints or grievances pending or, to Lincare's knowledge, threatened or, to
Lincare's knowledge, investigations pending or threatened, against Lincare or
any Lincare Subsidiary or with respect to any property or asset of any of them
before any court, arbitrator, administrator or governmental or regulatory
authority or body which, individually or in the aggregate, would have a
Material Adverse Effect on Lincare. Neither Lincare nor any Lincare Subsidiary
nor any property or asset of any of them is subject to any order, judgment,
injunction or decree which, individually or in the aggregate, would have a
Material Adverse Effect on Lincare.
4.8 Financial Statements and Reports. Lincare has made
available to Coram true and complete copies of (i) its Annual Report on Form
10-K for the year ended December 31, 1994 (the "Lincare 10-K"), as filed with
the Commission, (ii) its proxy statement relating to the annual meetings of its
stockholders held on May 16, 1994, (iii) all registration statements filed by
Lincare and declared effective under the Securities Act since January 1, 1993
(other than registration statements on Form S-8) and (iv) all other reports,
statements and registration statements (including Current Reports on Form 8-K)
filed by it with the Commission subsequent to the filing of the Lincare 10-K,
if any. The reports, statements and registration statements referred to in the
immediately preceding sentence (including, without limitation, any financial
statements or schedules or other information included or incorporated by
reference therein) are referred to in this Agreement as the "Lincare SEC
Filings." As of the respective times such documents were filed or, as
applicable, became effective, the Lincare SEC Filings complied as to form and
content, in all material respects, with the requirements of the Securities Act
and the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder, and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Lincare
included in the Lincare SEC Filings were prepared in accordance with generally
accepted accounting principles (as in effect from time to time) applied on a
consistent basis and (except as may be indicated therein or in the notes
thereto) present fairly the consolidated financial position, consolidated
results of operations and consolidated cash flows of Lincare and the Lincare
Subsidiaries as of the dates and for the periods indicated subject, in the case
of unaudited interim consolidated financial statements, to normal recurring
year-end adjustment and any other adjustment described therein.
4.9 Absence of Certain Changes or Events. Since December
31, 1994, except as disclosed in the Lincare SEC Filings made through the date
hereof, the business of Lincare and of each of the Lincare Subsidiaries has
been conducted in the ordinary course, and there has not been (i) any material
adverse change in the financial condition, results of operations, properties or
business of Lincare and the Lincare Subsidiaries, taken as a whole; (ii) any
indebtedness incurred by Lincare or any Lincare Subsidiary for money borrowed;
(iii) any material transaction or commitment, except in the ordinary course of
business or as contemplated by this Agreement, entered into by Lincare or any
of the Lincare Subsidiaries; (iv) any damage, destruction or loss, whether
covered by insurance or not, which, individually or in the aggregate, would
have a Material Adverse Effect on Lincare; (v) any declaration, setting aside
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or payment of any dividend (whether in cash, securities or property) with
respect to the Lincare Common Stock (vi) any material agreement to acquire any
assets or stock or other interests of any third-party; (vii) any increase in
the compensation payable or to become payable by Lincare or any Lincare
Subsidiary to any employees, officers, directors, or consultants or in any
bonus, insurance, welfare, pension or other employee benefit plan, payment or
arrangement made to, for or with any such employee, officer, director or
consultant (other than as provided in employment agreements, consulting
agreements and welfare and benefit plans set forth on the Lincare Disclosure
Schedule, and except for increases consistent with past practice); (viii) any
material revaluation by Lincare or any Lincare Subsidiary of any asset
(including, without limitation, any writing down of the value of inventory or
writing off of notes or accounts receivable); (ix) any material change by
Lincare in accounting principles or methods except insofar as may be required
by a change in generally accepted accounting principles; (x) any mortgage or
pledge of any of the assets or properties of Lincare or any Lincare Subsidiary
or the subjection of any of the assets or properties of Lincare or any Lincare
Subsidiary to any material liens, charges, encumbrances, imperfections of
title, security interest, options or rights or claims of others with respect
thereto; or (xi) any assumption or guarantee by Lincare or a Lincare Subsidiary
of the indebtedness of any person or entity.
4.10 Employee Benefit Plans and Employment Matters.
(a) The Lincare Disclosure Schedule lists all
employee benefit plans, collective bargaining agreements, labor contracts, and
employment agreements not otherwise disclosed in the Lincare SEC Filings, which
provide for the annual payment of more than $100,000 in which Lincare
participates, or by which it is bound, including, without limitation, (i) any
profit sharing, deferred compensation, bonus, stock option, stock purchase,
pension, welfare, and incentive plan or agreement; (ii) any plan providing for
"fringe benefits" to its employees, including, but not limited to, vacation,
sick leave, medical, hospitalization and life insurance; (iii) any written
employment agreement and any other employment agreement not terminable at will;
and (iv) any other "employee benefit plan" (within the meaning of Section 3(3)
of ERISA) that is not exempted from the coverage of ERISA by reason of the
Department of Labor regulations. Lincare is in compliance in all material
respects with the requirement prescribed by all laws currently in effect
applicable to employee benefit plans and to any employment agreement,
including, but not limited to, ERISA and the Code. Lincare has performed all
of its obligations under all such employee benefit plans and employment
agreements in all material respects. There is no pending or, to the knowledge
of Lincare, threatened legal action, proceeding or investigation against or
involving any Lincare employee benefit plan which could result in a material
amount of liability to such employee benefit plan or to Lincare.
(b) Lincare does not sponsor or participate in,
and has not sponsored or participated in, any employee benefit pension plan to
which Section 4021 of ERISA applies that would create a material amount of
liability to Lincare under Title IV of ERISA.
(c) Lincare does not sponsor or participate in,
and has not sponsored or participated in, any employee benefit pension plan
that is a "multiemployer plan" (within the
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meaning of Section 3(37) of ERISA) that would subject Lincare to any material
amount of liability with respect to any such plan.
(d) All group health plans of Lincare have been
operated in compliance with the group health plan continuation coverage
requirements of Section 4980B of the Code in all material respects, to the
extent such requirements are applicable.
(e) There have been no acts or omissions by
Lincare that have given rise to or may give rise to a material amount of fines,
penalties, taxes, or related charges under Sections 502(c) or 4071 of ERISA or
under Chapter 43 of the Code.
(f) No "reportable event," as defined in ERISA
Section 4043, other than those events with respect to which the Pension Benefit
Guaranty Corporation has waived the notice requirement, has occurred with
respect to any of the employee benefit plans of Lincare.
(g) The Lincare Disclosure Schedule sets forth
the name of each director, officer or employee of Lincare entitled to receive
any material amount of benefit or payment under any existing employment
agreement, severance plan or other benefit plan solely as a result of the
consummation of any transaction contemplated by this Agreement, and with
respect to each such person, the nature of such benefit or the amount of such
payment, the event triggering the benefit or payment, and the date of, and
parties to, such employment agreement, severance plan or other benefit plan.
(h) Lincare has made available to Coram true and
correct copies of all plan documents and employment agreements referred to on
the Lincare Disclosure Schedule, including all amendments thereto, and all
related summary plan descriptions to the extent that one is required by law.
(i) For purposes of this Section 4.10, any
reference to "Lincare" shall be deemed to include a reference to any entity
that is aggregated with Lincare under the provisions of Section 414 of the
Code, to the extent that those aggregation rules apply.
4.11 Labor Matters. Neither Lincare nor any Lincare
Subsidiary is a party to any collective bargaining agreement with respect to
any of their employees. None of the employees of Lincare or any Lincare
Subsidiary is represented by any labor union. To the knowledge of Lincare,
there is no activity involving any employees of Lincare or the Lincare
Subsidiaries seeking to certify a collective bargaining unit or engaging in any
other organizational activity.
4.12 Insurance. Lincare and the Lincare Subsidiaries
maintain insurance against such risks and in such amounts as Lincare reasonably
believes are necessary to conduct its business. Lincare and the Lincare
Subsidiaries are not in default with respect to any provisions or requirements
of any such policy nor have any of them failed to give notice or present any
claim thereunder in a due and timely fashion, except for defaults or failures
which, individually or in the aggregate, would not have a Material Adverse
Effect on Lincare. Neither Lincare nor
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any Lincare Subsidiary has received any notice of cancellation or termination
in respect of any of its insurance policies.
4.13 Environmental Matters. Lincare and the Lincare
Subsidiaries are in compliance with all environmental laws, and have obtained
all necessary licenses and permits required to be issued pursuant to any
environmental law, except where the failure to so comply or to obtain such
licenses or permits, individually or in the aggregate, would not have a
Material Adverse Effect on Lincare. Neither Lincare nor any Lincare Subsidiary
has received any notice or communication from any governmental agency with
respect to (i) any hazardous substance relative to its operations, property or
assets or (ii) any investigation, demand or request pursuant to enforcing any
environmental law relating to it or its operations, and no such investigation
is pending or, to the knowledge of Lincare threatened, in any case, which would
lead to a Material Adverse Effect on Lincare.
4.14 Tax Matters. Lincare has paid, or made adequate
provision for on its December 31, 1994 balance sheet, all federal, state,
local, foreign or other governmental income, franchise, payroll, F.I.C.A.,
unemployment, withholding, real property, personal property, sales, payroll,
disability and all other taxes imposed on Lincare or any Lincare Subsidiary or
with respect to any of their respective properties, or otherwise payable by
them, including interest and penalties, if any, in respect thereof
(collectively, "Lincare Taxes"), for the Lincare taxable period ended December
31, 1994 and all fiscal periods of Lincare prior thereto, except such
nonpayment, or failure to make adequate provision, which would not be material
to the financial condition, results of operations, business or properties of
Lincare and Lincare Subsidiaries taken as a whole. Lincare Taxes paid and/or
incurred from December 31, 1994 include only Lincare Taxes incurred in the
ordinary course of business determined in the same manner as in the taxable
period ending on December 31, 1994 and Lincare has properly accrued for all
such Taxes for such periods. Lincare and each of the Lincare Subsidiaries have
timely filed all income tax, excise tax, sales tax, use tax, gross receipts
tax, franchise tax, employment and payroll related tax, property tax, and all
other tax returns which Lincare and/or such Lincare Subsidiary (as the case may
be) are required to file ("Lincare Tax Returns"), and have paid or provided for
all the amounts shown to be due thereon, except where such failure to make such
timely filings would not be material to the financial condition, results of
operations, business or properties of Lincare and Lincare Subsidiaries taken as
a whole, and except for the nonpayment of such amounts which would not be
material to the financial condition, results of operations, business or
properties of Lincare and the Lincare Subsidiaries taken as a whole. Neither
Lincare nor any Lincare Subsidiary (i) has filed or entered into, or is
otherwise bound by, any election, consent or extension agreement that extends
any applicable statute of limitations with respect to taxable periods of
Lincare, (ii) is a party to any contractual obligation requiring the
indemnification or reimbursement of any person with respect to the payment of
any Lincare Taxes other than among Lincare and the Lincare Subsidiaries, (iii)
has elected to be treated as a consenting corporation under Section 341(f) of
the Code, or (iv) has received any claim by an authority in a jurisdiction
where neither Lincare nor any Lincare Subsidiary files Lincare Tax Returns that
they are or may be subject to Lincare Taxes by that jurisdiction, except for
any such claims as would not be material to the financial condition, results of
operations, business or properties of Lincare and the Lincare Subsidiaries
taken as a whole. No action or proceeding is pending or, to Lincare's
knowledge, threatened by any
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governmental authority for any audit, examination, deficiency, assessment or
collection from Lincare or any Lincare Subsidiary of any Lincare Taxes, no
unresolved claim for any deficiency, assessment or collection of any Lincare
Taxes has been asserted against Lincare or any Lincare Subsidiary, and all
resolved assessments of Lincare Taxes have been paid or are reflected on the
Lincare balance sheet at December 31, 1994 included in its Annual Report on
Form 10-K for the period ended on such date, except for any of the foregoing
which would not be material to the financial condition, results of operations,
business or properties of Lincare and the Lincare Subsidiaries taken as a
whole.
4.15 Intellectual Property. Lincare and the Lincare
Subsidiaries own, possess or have the right to use all franchises, patents,
trademarks, service marks, tradenames, licenses and authorizations
(collectively, "Lincare Intellectual Property Rights") which are necessary to
the conduct of their respective businesses. To the knowledge of Lincare,
neither Lincare nor any Lincare Subsidiary is infringing or otherwise violating
the intellectual property rights of any person which infringement or violation
would subject Lincare or any Lincare Subsidiary to liabilities which,
individually or in the aggregate, would have a Material Adverse Effect on
Lincare or which would prevent Lincare or any Lincare Subsidiary from
conducting their respective businesses substantially in the manner in which
they are now being conducted. No claim has been made or, to Lincare's
knowledge, threatened against Lincare or any Lincare Subsidiary alleging any
such violation.
4.16 Related Party Transactions. Except as disclosed in
the Lincare SEC Filings, there have been no material transactions between
Lincare or any Lincare Subsidiary on the one hand, and any (i) officer or
director of Lincare or any Lincare Subsidiary, (ii) record or beneficial owner
of five percent or more of the voting securities of Lincare or (iii) affiliate
(as such term is defined in Regulation 12b-2 promulgated under the Exchange
Act) of any such officer, director or beneficial owner, on the other hand,
other than payment of compensation for services rendered to Lincare or the
Lincare Subsidiaries by any officer of Lincare or Lincare Subsidiaries.
4.17 No Undisclosed Material Liabilities. Except as
disclosed in the Lincare SEC Filings, neither Lincare nor any of the Lincare
Subsidiaries has incurred any liabilities of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, that,
individually or in the aggregate, would have a Material Adverse Effect on
Lincare other than liabilities under or contemplated by this Agreement.
4.18 No Default. Neither Lincare nor any of the Lincare
Subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of (a) its charter or By-Laws, (b) any note,
bond, mortgage, indenture, license, agreement, contract, lease, commitment or
other obligation to which Lincare or any of the Lincare Subsidiaries is a party
or by which they or any of their properties or assets may be bound, or (c) any
order, writ, injunction, decree, statute, rule or regulation applicable to
Lincare or any of the Lincare Subsidiaries, except in the case of clauses (b)
and (c) above for defaults or violations which would not have a Material
Adverse Effect on Lincare.
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4.19 Title to Properties; Encumbrances. Except as
described in the following sentence, each of Lincare and the Lincare
Subsidiaries has good, valid and marketable title to, or a valid leasehold
interest in, all of its properties and assets (real, personal and mixed,
tangible and intangible), including, without limitation, all the properties and
assets reflected in the consolidated balance sheet of Lincare and the Lincare
Subsidiaries at December 31, 1994 (except for properties and assets disposed of
in the ordinary course of business and consistent with past practices since
December 31, 1994). None of such properties or assets are subject to any
liability, obligation, claim, lien, mortgage, pledge, security interest,
conditional sale agreement, charge or encumbrance of any kind (whether
absolute, accrued, contingent or otherwise), except minor imperfections of
title and encumbrance, if any, which are not substantial in amount, do not
materially detract from the value of the property or assets subject thereto and
do not impair the operations of Lincare and the Lincare Subsidiaries.
4.20 Pooling of Interests. Neither Lincare nor any of the
Lincare Subsidiaries nor, to the knowledge of Lincare, any of their respective
directors, officers or stockholders has taken any action which would interfere
with the parties' ability to account for the Merger as a pooling of interests.
4.21 Representations Complete. None of the
representations or warranties made by Lincare herein or in any Schedule hereto,
including the Lincare Disclosure Schedule, or certificate furnished by Lincare
pursuant to this Agreement, or the Lincare SEC Documents, when all such
documents are read together in their entirety, contains or will contain at the
Effective Time any untrue statement of a material fact, or omits or will omit
at the Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
4.22 Brokers. Neither Lincare nor any Lincare Subsidiary
has paid or is obligated to pay any fee or commission to any broker, finder,
investment banker or other intermediary in connection with this Agreement,
except that Lincare has retained Alex, Brown & Sons Incorporated ("Alex.
Brown") as its financial advisor for the transactions contemplated hereby.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Joint Proxy Statement/Prospectus; Registration Statement;
Stockholders' Meeting.
(a) Coram and Lincare agree that this Agreement
shall be submitted to their respective stockholders for approval at a meeting
(the "Meeting") duly called and held pursuant to applicable state law. As soon
as practicable after the date of this Agreement, each of Lincare and Coram
shall take all action, to the extent necessary in accordance with applicable
law and their respective Certificates of Incorporation and Bylaws, to convene
each Meeting promptly to consider and vote upon the approval of the Merger and
such other matters as may be necessary or desirable to consummate the Merger
and the transactions contemplated hereby.
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As soon as practicable after the date of this Agreement, Lincare and Coram
shall jointly prepare and file with (i) the Commission, subject to the prior
approval of the other party, which approval shall not be unreasonably withheld,
preliminary proxy materials relating to each Meeting as required by the
Exchange Act, and a registration statement on Form S-4 (as amended or
supplemented, the "Registration Statement") relating to the registration under
the Securities Act of the shares of Coram Common Stock issuable to the holders
of the Lincare Shares, and (ii) state securities administrators, such
registration statements or other documents as may be required under applicable
blue sky laws to qualify or register the shares of Coram Common Stock issuable
to the holders of the Lincare Shares (the "Blue Sky Filings"). Lincare, Merger
Sub and Coram will use their reasonable best efforts to cause the Registration
Statement to become effective as soon as practicable. Promptly after the
Registration Statement has become effective and all applicable blue sky laws
have been complied with, Lincare and Coram shall mail the proxy statement to
their respective stockholders. Such joint proxy statement at the time it
initially is mailed to the stockholders of Lincare and the stockholders of
Coram and all duly filed amendments or revisions made thereto, if any,
similarly mailed are hereinafter referred to as the "Proxy Statement." Notice
of the Lincare Meeting shall be mailed to the stockholders of Lincare and
notice of the Coram Meeting shall be mailed to the stockholders of Coram along
with the Proxy Statement.
(b) Each party represents and warrants that the
information supplied or to be supplied by it for and included or incorporated
by reference in the Registration Statement, the Blue Sky Filings, the Proxy
Statement and any other documents to be filed with the Commission or any
regulatory agency in connection with the transactions contemplated hereby will,
at the respective times such documents are filed or, as applicable, declared
effective and, as of the Effective Time, and, with respect to the Proxy
Statement, when first published, sent or given to the stockholders of Lincare
and the stockholders of Coram and at the time of the Meetings, not be false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading.
(c) Each party covenants and agrees that (i) if,
at any time prior to the Effective Time, any event relating to it or any of its
affiliates, officers or directors is discovered that should be set forth in an
amendment to the Registration Statement or Blue Sky Filings or a supplement to
the Proxy Statement, such party will promptly inform the other parties, and
such amendment or supplement will be promptly filed with the Commission and
appropriate state securities administrators and disseminated to the
stockholders of Lincare and Coram, to the extent required by applicable federal
and state securities laws, and (ii) documents which either party files or is
responsible for filing with the Commission and any regulatory agency in
connection with the Merger (including, without limitation, the Proxy Statement)
will comply as to form and content in all material respects with the provisions
of applicable law. Notwithstanding the foregoing, no party makes any
representations or warranties with respect to any information that has been
supplied by the other party or by its auditors, attorneys, financial advisors,
other consultants or advisors specifically for use in the Registration
Statement, Blue Sky Filing, the Proxy Statement, or any other documents to be
filed with the Commission or any regulatory agency in connection with the
transactions contemplated hereby.
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(d) Lincare hereby represents that its Board of
Directors has (i) determined that the Merger is fair to and in the best
interests of Lincare's stockholders, (ii) approved the Merger and (iii)
resolved to and will recommend in the Proxy Statement adoption of this
Agreement and authorization of the Merger by the stockholders of Lincare;
provided, however, that such determination, approval or recommendation may be
amended, modified or withdrawn to the extent required by the fiduciary
obligations of Lincare's Board of Directors under applicable law, as advised in
writing by outside counsel. Coram hereby represents that its Board of
Directors has (i) determined that the Merger is fair to and in the best
interests of Coram's stockholders, (ii) approved the Merger and (iii) resolved
to and will recommend in the Proxy Statement adoption of this Agreement and
authorization of the Merger by the stockholders of Coram, provided, however,
that such determination, approval or recommendation may be amended, modified or
withdrawn to the extent required by the fiduciary obligations of Coram's Board
of Directors under applicable law, as advised in writing by outside counsel.
(e) Lincare shall use all reasonable efforts to
cause to be delivered to Coram (i) a letter of KPMG Peat Marwick, Lincare's
independent accountants, dated a date within two (2) business days before the
date on which the Registration Statement shall become effective and addressed
to Coram, of the kind contemplated by the Statement of Auditing Standards with
respect to Letters to Underwriters promulgated by the American Institute of
Certified Public Accountants (the "AICPA Statement"), in form and substance
reasonably satisfactory to Coram and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement and (ii) the
letter referred to in Section 6.1(f) within two (2) weeks of the date of this
Agreement. Coram shall use all reasonable efforts to cause to be delivered to
Lincare (i) a letter of Ernst & Young, Coram's independent accountants, dated a
date within two (2) business days before the date on which the Registration
Statement shall become effective and addressed to Lincare, of the kind
contemplated by the AICPA Statement, in form and substance reasonably
satisfactory to Lincare and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement and (ii) the letter referred
to in Section 6.1(f) within two (2) weeks of the date of this Agreement.
Lincare shall, and shall cause KPMG Peat Marwick and its other representatives
to fully cooperate with Coram, Ernst & Young and its other representatives in
seeking to obtain confirmation from the Commission that the Merger should be
accounted for as a "pooling of interests."
5.2 Conduct of the Business of Lincare Prior to the
Effective Time. Prior to the Effective Time, except as otherwise consented to
or approved in writing by Coram, which consent shall not be unreasonably
withheld, or expressly permitted by, or required to consummate the transactions
contemplated by, this Agreement:
(a) Lincare and the Lincare Subsidiaries shall
conduct their respective businesses in the ordinary course and consistent in
all material respects with past practice and shall use all reasonable efforts
to preserve substantially intact their respective business organizations, to
keep available the services of their present officers, employees and
consultants and to preserve their present relationships with customers,
suppliers, payors and other persons
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with whom they have a significant business relationship; provided, however,
that the loss of any officer, employee, consultant, customer, payor or supplier
prior to the Effective Time shall not constitute a breach of this covenant;
(b) Neither Lincare nor any Lincare Subsidiary
shall (i) amend its charter or Bylaws, (ii) declare, set aside or pay any
dividend or other distribution or payment in cash, securities or property in
respect of shares of the Lincare Common Stock, (iii) make any direct or
indirect redemption, retirement, purchase or other acquisition of any of its
capital stock (except for repurchases of Lincare Common Stock from employees
pursuant to existing stock subscription agreements between Lincare and certain
of its employees) or (iv) split, combine or reclassify its outstanding shares
of capital stock;
(c) Neither Lincare nor any Lincare Subsidiary
shall, directly or indirectly, (i) issue, grant, sell or pledge or agree or
propose to issue, grant, sell or pledge any shares of, or rights or securities
of any kind to acquire any shares of, the capital stock of Lincare or such
Lincare Subsidiary except that Lincare may issue shares of Lincare Common Stock
upon the exercise of stock options outstanding on the date hereof pursuant to
the terms thereof existing as of the date hereof, (ii) other than in the
ordinary course of business and consistent with past practice, incur any
material indebtedness for borrowed money, except under credit facilities
existing as of the date hereof and as they may be amended from time to time or
pursuant to a substitute credit facility on terms comparable to such existing
credit facilities, (iii) waive, release, grant or transfer any rights of
material value, except in the ordinary course of business, (iv) except as
provided in clause (v) below, merge or consolidate with any person or adopt a
plan of liquidation or dissolution, (v) acquire (or enter into an agreement to
acquire) any assets, stock or other interests of a third-party except for (A)
cash acquisitions utilizing existing cash resources and amounts available under
Lincare's existing credit facilities and (B) transactions pending as of the
date hereof, and in each case which are of a nature so as not to require a
merger or consolidation with Lincare or to cause the filing or the
effectiveness of the Registration Statement or the Proxy Statement to be
delayed or be amended by Coram to include separate or pro forma financial
statements for the acquired entity, (vi) transfer, lease, license, sell or
dispose of a material portion of assets or any material assets, (vii) permit
any material revaluation of any asset (including, without limitation, any
writing down of the value of inventory or writing off of notes or accounts
receivable), (viii) change any accounting principles or methods except insofar
as may be required by changes in generally accepted accounting principles or
(ix) mortgage or pledge any of their assets or properties or subject any of
their assets or properties to any material liens, charges, encumbrances,
imperfections of title, security interests, options or rights or claims of
others with respect thereto;
(d) Neither Lincare nor any Lincare Subsidiary
will, directly or indirectly, (i) increase the cash compensation payable or to
become payable by it to any of its employees, officers, consultants or
directors (except in accordance with employment or consulting agreements, and
welfare and benefit plans set forth on the Lincare Disclosure Schedule, and
except for increases consistent with past practice and which are otherwise
reasonably necessary for the operation of the business of Lincare and the
Lincare Subsidiaries), (ii) enter into, adopt or amend any stock option, stock
purchase, profit sharing, pension, retirement, deferred compensation,
restricted stock or severance plan, agreement or arrangement
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<PAGE> 31
for the benefit of employees, officers, directors or consultants of Lincare or
any Lincare Subsidiary, (iii) enter into or amend any employment or consulting
agreement, except in the ordinary course of business, or (iv) make any loan or
advance to, or enter into any written contract, lease or commitment with, any
officer, employee, consultant or director of Lincare or any Lincare Subsidiary,
except in the ordinary course of business;
(e) Neither Lincare nor any Lincare Subsidiary
shall, directly or indirectly, assume, guarantee, endorse or otherwise become
responsible for the obligations of any other individual, corporation or other
entity, or make any loans or advances to any individual, corporation or other
entity except in the ordinary course of business and consistent with past
practices; and
(f) Neither Lincare nor any Lincare Subsidiary
shall take any action which would interfere with the abilities of the parties
hereto to account for the Merger as a pooling of interests.
(g) Neither Lincare nor any Lincare Subsidiary
shall authorize or enter into any agreement to do any of the things described
in clauses (a) through (f) of this Section 5.2.
5.3 Conduct of the Business of Coram Prior to the
Effective Time. Prior to the Effective Time, except as otherwise consented to
or approved in writing by Lincare, which consent shall not be unreasonably
withheld, or expressly permitted by, or required to consummate the transactions
contemplated by this Agreement:
(a) Coram and the Coram Subsidiaries shall
conduct their respective businesses in the ordinary course and consistent in
all material respects with past practice and shall use all reasonable efforts
to preserve substantially intact their respective business organizations, to
keep available the services of their present officers, employees and
consultants and to preserve their present relationships with customers,
suppliers and other persons with whom they have a significant business
relationship; provided, however, that the loss of any officer, employee,
consultant, customer or supplier prior to the Effective Time shall not
constitute a breach of this covenant;
(b) Neither Coram nor any Coram Subsidiary shall
(i) amend its charter or Bylaws, (ii) declare, set aside or pay any dividend or
other distribution or payment in cash, securities or property in respect of
shares of the Coram Common Stock, (iii) make any direct or indirect redemption,
retirement, purchase or other acquisition of any of its capital stock, except
if required by a written agreement existing as of the date hereof, or (iv)
split, combine or reclassify its outstanding shares of capital stock;
(c) Neither Coram nor any Coram Subsidiary shall,
directly or indirectly, (i) issue, grant, sell or pledge or agree or propose to
issue, grant, sell or pledge any shares of, or rights or securities of any kind
to acquire any shares of, the capital stock of Coram or such Coram Subsidiary,
except that Coram may (A) grant stock options to employees and consultants
under the Coram Option Plans consistent with past practices, (B) issue shares
of
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Coram Common Stock upon the exercise of stock options outstanding on the date
hereof pursuant to the terms thereof existing as of the date hereof, (C) issue
shares of Coram Common Stock pursuant to the terms of other agreements or
instruments outstanding as of the date hereof and (D) issue up to 500,000
additional shares of Coram Common Stock for any other general corporate
purpose, (ii) other than in the ordinary course of business and consistent with
past practice, incur any material indebtedness for borrowed money, except under
credit facilities existing as of the date hereof and as they may be amended
from time to time (other than to increase the availability of credit
thereunder) or pursuant to a substitute credit facility on terms comparable to
such existing credit facilities, (iii) waive, release, grant or transfer any
rights of material value, except in the ordinary course of business, (iv)
except as provided in clause (v) below, merge or consolidate with any person or
adopt a plan of liquidation or dissolution, (v) acquire, propose to acquire or
enter into an agreement to acquire any assets, stock or other interests of a
third-party except for cash transactions permitted under Coram's credit
facilities which are of a nature so as not to require a merger or consolidation
with Lincare or to cause the filing or the effectiveness of the Registration
Statement or the Proxy Statement to be delayed or to be amended by Coram to
include separate or pro forma financial statements for the acquired entity,
(vi) transfer, lease, license, sell or dispose of a material portion of assets
or any material assets except as permitted under Coram's credit facilities,
(vii) permit any material revaluation of any asset (including, without
limitation, any writing down of the value of inventory or writing off of notes
or accounts receivable), (viii) change any accounting principles or methods
except insofar as may be required by changes in generally accepted accounting
principles or (ix) mortgage or pledge any of their assets or properties or
subject any of their assets or properties to any material liens, charges,
encumbrances, imperfections of title, security interests, options or rights or
claims of others with respect thereto.
(d) Neither Coram nor any Coram Subsidiary will,
directly or indirectly, (i) increase the cash compensation payable or to become
payable by it to any of its employees, officers, consultants or directors
(except in accordance with employment or consulting agreements, and welfare and
benefit plans set forth on the Coram Disclosure Schedule, and except for
increases consistent with past practice and which are otherwise reasonably
necessary for the operation of the business of Coram and the Coram
Subsidiaries), (ii) enter into, adopt or amend any stock option, stock
purchase, profit sharing, pension, retirement, deferred compensation,
restricted stock or severance plan, agreement or arrangement for the benefit of
employees, officers, directors or consultants of Coram or any Coram Subsidiary
(other than to increase the number of authorized shares), (iii) enter into or
amend any employment or consulting agreement, except in the ordinary course of
business, or (iv) make any loan or advance to, or enter into any written
contract, lease or commitment with, any officer, employee, consultant or
director of Coram or any Coram Subsidiary, except in the ordinary course of
business;
(e) Neither Coram nor any Coram Subsidiary shall,
directly or indirectly, assume, guarantee, endorse or otherwise become
responsible for the obligations of any other individual, corporation or other
entity, or make any loans or advances to any individual, corporation or other
entity except in the ordinary course of business and consistent with past
practices;
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<PAGE> 33
(f) Neither Coram nor any Coram Subsidiary shall
take any action which would interfere with the abilities of the parties hereto
to account for the Merger as a pooling of interests.
(g) Neither Coram nor any Coram Subsidiary shall
enter into an agreement to do any of the things described in clauses (a)
through (f) of this Section 5.3.
5.4 Access to Properties and Records. Each party shall
afford to the other and their respective accountants, counsel and
representatives ("Respective Representatives"), reasonable access during normal
business hours throughout the period prior to the Effective Time to all of
their respective properties (including, without limitation, books, contracts,
commitments and written records) and shall make reasonably available their
respective officers and employees to answer fully and promptly questions put to
them thereby; provided, however, that no investigation pursuant to this Section
5.4 shall alter any representation or warranty of any party hereto or the
conditions to the obligations of the parties hereto.
5.5 No Solicitation, Etc.
(a) Prior to the Effective Time, each of Coram
and Lincare agrees that it shall not, and shall cause each of its officers,
directors, employees, agents, legal and financial advisors and affiliates not
to, directly or indirectly, make, solicit, encourage, initiate or enter into
any agreement or agreement in principle, or announce any intention to do any of
the foregoing, with respect to any offer or proposal to acquire all or a
substantial part of such party's business and properties or a substantial
amount of such party's equity securities or debt securities whether by
purchase, merger, purchase of assets, tender offer, exchange offer, business
combination or otherwise (any such proposal or offer being hereinafter referred
to as a "Third Party Transaction").
(b) Prior to the Effective Time, each of Coram,
Lincare and their respective Subsidiaries shall not, and shall cause each of
their officers, directors, legal and financial advisors, agents and affiliates
not to, directly or indirectly, participate in any negotiations or discussions
regarding, or furnish any information with respect to, or otherwise cooperate
in any way in connection with, or assist or participate in, facilitate or
encourage, any effort or attempt to effect or seek to effect, a Third Party
Transaction with or involving any other person unless such party shall have
received an unsolicited written offer from a person other than Coram or Lincare
to effect a Third Party Transaction and the Board of Directors of such party
determines in good faith with the advice of outside legal counsel that, in the
exercise of the fiduciary obligations of the Board of Directors under
applicable law, such information is required to be provided to or such
discussions or negotiations are required to be undertaken with the person
submitting such Third Party Transaction. Each of Coram and Lincare represents
it is not currently involved in any existing discussions or negotiations with
any person with respect to any Third Party Transaction.
(c) Prior to the Effective Time, each of Coram
and Lincare will promptly communicate to the other party the terms of any Third
Party Transaction which it may receive and will keep such other party informed
as to the status of any actions, including
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negotiations or discussions, taken pursuant to clause (b) of this Section 5.5.
As soon as practicable following the Effective Time, each of Coram and Lincare
shall promptly request each person who has executed a confidentiality agreement
in connection with its consideration of a Third Party Transaction to return all
confidential information that has been furnished to such person by or on behalf
of Lincare or Coram, as the case may be.
5.6 Employee Benefit Plans. Except as otherwise provided
in this Agreement, the Lincare employee benefit plans listed on the Lincare
Disclosure Schedule which are in effect at the date of this Agreement shall
remain in effect immediately following the Effective Time. Coram and Lincare
shall cooperate in coordinating their respective benefit plans, and any Lincare
employee benefit plan may be terminated after the Effective Time, to the extent
reasonably comparable benefits (including credit for past service), considered
in the aggregate, are made available to employees of Lincare under one or more
employee benefits plans of Coram or any Coram Subsidiary.
5.7 Treatment of Options.
(a) Each Lincare Stock Option issued pursuant to
Lincare's stock option plans (collectively, the "Lincare Option Plans") set
forth in the Lincare Disclosure Schedule, whether or not vested or exercisable,
shall be assumed by Coram and shall constitute an option to acquire, on the
same terms and conditions as were applicable under such assumed Lincare Stock
Option (including the vesting provisions thereof), a number of shares of Coram
Common Stock equal to the product of the Exchange Ratio and the number of
shares of Lincare Common Stock subject to such Lincare Stock Option, at a price
per share equal to the aggregate exercise price for the shares of Lincare
Common Stock subject to such Lincare Stock Option divided by the number of full
shares of Coram Common Stock deemed to be purchasable pursuant to such Lincare
Stock Option; provided, however, that (i) subject to the provisions of clause
(ii) below, the shares of Coram Common Stock that may be purchased upon
exercise of such Lincare Stock Option shall not include any fractional shares
and, upon the last such exercise of such Lincare Stock Option, a cash payment
shall be made for any fractional shares based upon the per share average of the
highest and lowest sale price of the Coram Common Stock as reported on the NYSE
on the date of such exercise, and (ii) in the case of any Lincare Stock Option
to which Section 421 of the Code applies by reason of its qualification under
Section 422 or Section 423 of the Code ("Qualified Stock Options"), the option
price, the number of shares purchasable pursuant to such Lincare Stock Option
and the terms and conditions of exercise of such Lincare Stock Option shall be
determined in order to comply with Section 424 of the Code. As soon as
practicable after the Effective Time, Coram shall deliver to holders of Lincare
Stock Options appropriate option agreements representing the right to acquire
shares of Coram Common Stock on the same terms and conditions as contained in
the outstanding Lincare Stock Options (subject to any adjustments required by
the preceding sentence), upon surrender of the outstanding Lincare Stock
Options. Coram shall comply with the terms of the Lincare Option Plans as they
apply to the Lincare Stock Options assumed as set forth above.
(b) Coram shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Coram Common
Stock for delivery upon exercise of the Lincare Stock Options assumed in
accordance with this Section 5.7. Coram shall file a
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registration statement on Form S-8 (or any successor form) or another
appropriate form, effective as of the Effective Time, with respect to shares of
Coram Common Stock subject to such Lincare Stock Options and shall use all
reasonable efforts to maintain the effectiveness of such registration statement
or registration statements (and maintain the current status of the prospectus
or prospectuses contained therein) for so long as such Lincare Stock Options
remain outstanding. With respect to those individuals who subsequent to the
Merger will be subject to the reporting requirements under Section 16(a) of the
Exchange Act, Coram shall administer the Lincare Option Plans assumed pursuant
to this Section 5.7 in a manner that complies with rule 16b-3 promulgated under
the Exchange Act to the extent the applicable Lincare Option Plan complied with
such rule prior to the Merger.
5.8 Existing Agreements. Coram and the Surviving
Corporation shall insure and guaranty that the provisions with respect to
indemnification by Lincare and the Lincare Subsidiaries now existing in favor
of any present or former director, officer, employee or agent (and their
respective heirs and assigns) of Lincare or any Lincare Subsidiary,
respectively (the "Indemnified Parties"), as set forth in their respective
charters or Bylaws or pursuant to other agreements (including any insurance
policies), shall survive the Merger, shall not be amended, repealed or modified
in any manner as to adversely affect the rights of such Indemnified Parties and
shall continue in full force and effect for a period of at least six years from
the Effective Time; provided, however, that Coram and the Surviving Corporation
shall be required to maintain or obtain such insurance coverage only (i) if it
is available for an annual premium not in excess of two times the last annual
premium paid by Lincare or the Lincare Subsidiaries prior to the date of this
Agreement (but in such case shall purchase as much coverage as possible for an
amount which shall not exceed two times the last annual premium paid by Lincare
or the Lincare Subsidiaries prior to the date of the Agreement), and (ii) for
six years after the Effective Time. This Section 5.8 shall survive the closing
of all of the transactions contemplated hereby, is intended to benefit the
officers and employees of Lincare and of the Lincare Subsidiaries at the
Effective Time and each of the Indemnified Parties (each of which shall be
entitled to enforce this Section 5.8 against Coram and the Surviving
Corporation, as the case may be, as a third-party beneficiary of this
Agreement), and shall be binding on all successors and assigns of the Surviving
Corporation.
5.9 Confidentiality. The Confidentiality Agreement,
dated March 8, 1995 (the "Confidentiality Agreement") between Lincare and
Coram, and the Standstill Agreement dated March 31, 1995 (the "Standstill
Agreement") between Lincare and Coram are each hereby affirmed by Coram and
Lincare and the terms thereof are herewith incorporated herein by reference and
shall continue in full force and effect until the Effective Time shall have
occurred, and if this Agreement is terminated or if the Effective Time shall
not have occurred for any reason whatsoever, each of the Confidentiality
Agreement and the Standstill Agreement shall thereafter remain in full force
and effect in accordance with its terms; provided, however, to the extent there
are any provisions in the Confidentiality Agreement or the Standstill Agreement
inconsistent with the terms of this Agreement, the terms of this Agreement
shall control. Each of Coram and Lincare agrees that it will not, and will
cause its Respective Representatives not to, use any information obtained
pursuant to Section 5.4 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Subject to the requirements of
law, each party hereto will keep confidential, and will cause its Respective
Representatives
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to keep confidential, all information and documents obtained pursuant to
Section 5.4 except as otherwise consented to by the other party; provided,
however, that neither Coram nor Lincare shall be precluded from making any
disclosure which it deems required by law in connection with the Merger. In
the event that any party is required to disclose any information or documents
pursuant to the immediately preceding sentence, such party shall promptly give
written notice of such disclosure that is proposed to be made to the other
party so that the parties can work together to limit the disclosure to the
greatest extent possible and, in the event that either party is legally
compelled to disclose any information, to seek a protective order or other
appropriate remedy or both. Upon any termination of this Agreement, each of
Coram and Lincare will collect and deliver to the other party all documents
obtained pursuant to Section 5.4 or otherwise from such party or its Respective
Representatives by it or any of its Respective Representatives then in their
possession and any copies thereof.
5.10 Reasonable Best Efforts. Subject to the terms and
conditions herein provided, the parties hereto shall: (i) promptly make their
respective filings and thereafter make any other required submissions under the
HSR Act with respect to the Merger; (ii) use all reasonable efforts to
cooperate with one another in (A) determining which filings are required to be
made prior to the Effective Time with, and which consents, approvals, permits
or authorizations ("Third Party Consents") are required to be obtained prior to
the Effective Time from, governmental or regulatory authorities of the United
States and the several states in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby and
(B) timely making all such filings and timely seeking all such Third Party
Consents; and (iii) use all reasonable efforts to take, or cause to be taken,
all other action and do, or cause to be done, all other things necessary,
proper or appropriate to consummate and make effective the transactions
contemplated by this Agreement. If, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purpose of this
Agreement, the proper officers and directors of the parties hereto shall take
all such necessary action. No party hereto shall (i) take any action for the
purpose of delaying, impairing or impeding the receipt of any Third Party
Consent, or the making of any required filing or registration or the mailing of
the Proxy Statement or (ii) take any action that could reasonably have the
effect of preventing Coram from accounting for the Merger as a pooling of
interests.
5.11 Certification of Stockholder Vote. At or prior to
the closing of the transactions contemplated by this Agreement, Lincare and
Coram shall deliver to each other a certificate of their respective Secretary
setting forth the number of shares of Lincare Common Stock or Coram Common
Stock, as the case may be, voted in favor of adoption of this Agreement and
consummation of the Merger and the number of shares of Lincare Common Stock or
Coram Common Stock voted against adoption of this Agreement and consummation of
the Merger.
5.12 Employment/Non-Compete Agreements. Each of the
executive officers of Lincare listed on the schedule provided by Coram to
Lincare shall have, as of the date of this Agreement, executed and delivered
Employment/Non-Compete Agreements in substantially the form provided to Lincare
(the "Employment Agreements").
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5.13 Affiliate Letters. At least 30 days prior to the
Closing Date, Coram and Lincare shall each deliver to the other a list of names
and addresses of those persons who were, in the reasonable judgment of Coram
or Lincare, as the case may be, at the record date for their respective
stockholders' meeting to approve the Merger, "affiliates" (each such person a
"Rule 145 Affiliate") of such party within the meaning of Rule 145 of the rules
and regulations promulgated under the Securities Act. Each party shall provide
to the other such information and documents as the other may reasonably request
for purposes of reviewing such list. Each party shall use all reasonable
efforts to deliver or cause to be delivered to the other, prior to the Closing
Date, from each of its Rule 145 Affiliates identified in the foregoing list, an
Affiliate Letter. Rule 145 Affiliates of Coram shall deliver Affiliate letters
in the form attached hereto as Exhibit A-1 and Affiliates of Coram shall
deliver Affiliate Letters in the form attached hereto as Exhibit A-2. Coram
shall be entitled to place legends as specified in such Affiliate Letters on
the certificates evidencing any Coram Common Stock to be received by Rule 145
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for such Coram Common Stock,
consistent with the terms of such Affiliate Letters.
5.14 Listing Application. Coram will use its reasonable
best efforts to cause the Coram Common Stock to be issued pursuant to this
Agreement in the Merger, to be listed for trading on the NYSE.
5.15 Supplemental Disclosure Schedules. Each of Coram and
Lincare shall supplement their respective Disclosure Schedules delivered in
connection with this Agreement as of the Effective Time to the extent necessary
to reflect matters permitted by, or consented to by, the other party under this
Agreement. In addition, from time to time prior to the Effective Time, each of
Coram and Lincare will promptly deliver to the other party such amended or
supplemental Disclosure Schedules as may be necessary to make the Schedules
accurate and complete in all material respects as of the Effective Time;
provided, however, that no such disclosure shall have any effect for the
purpose of determining the satisfaction of the conditions set forth in Article
VI of this Agreement.
5.16 No Action. Except as contemplated by this Agreement,
no party hereto will, nor will either such party permit any of its Subsidiaries
to, take or agree or commit to take any action that is reasonably likely to
make any of its representations or warranties hereunder inaccurate in any
material respect at the date made (to the extent so limited), or as of the
Effective Time.
5.17 Conduct of Business of Merger Sub. Merger Sub shall
not conduct any business from the date of this Agreement, other than to
consummate the Merger and the transactions contemplated by this Agreement.
5.18 Directors of Coram. Coram agrees that promptly after
the Effective Time, Coram shall take such action as may be necessary to cause
James T. Kelly and Frank T. Cary to be appointed to the Board of Directors of
Coram. Mr. Kelly shall also serve as Vice-Chairman of Coram's Board of
Directors.
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5.19 Notification of Certain Matters; Delivery of
Financial Information.
(a) Coram and Merger Sub agree that they shall
give prompt notice to Lincare, and Lincare agrees that it shall give prompt
notice to Coram and Merger Sub, of (i) any known breach of any representations
or warranties contained in this Agreement at any time from the date hereof to
the Effective Time and (ii) any material failure of Coram, Merger Sub or
Lincare, as the case may be, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that failure to
give such notice shall not constitute a waiver of any defense that may be
validly asserted.
(b) Each of Coram and Lincare shall furnish the
other with all financial, operating and other information and data as Coram or
Lincare, as the case may be, through its officers, employees or agents, may
reasonably request and shall promptly furnish to the other party a copy of (i)
each report, schedule and other document filed or received by it during such
period pursuant to the requirements of the federal securities laws and (ii)
monthly operating and financial reports as such party shall reasonably request
from time to time, when such reports become available.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The Registration Statement shall have been
declared effective, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the Commission or shall be
continuing to be in effect, and no proceedings for that purpose shall have been
initiated or threatened by the Commission. Coram shall have received all state
securities laws or "blue sky" permits and authorizations necessary to issue the
Share Consideration pursuant to the Merger and the transactions contemplated
hereby.
(b) This Agreement and the Merger contemplated
hereby and any other action necessary to consummate the transactions
contemplated hereby shall have been approved and adopted by the requisite vote
of (i) the holders of the outstanding shares of the Lincare Common Stock
entitled to vote thereon at the Lincare Meeting and (ii) the holders of the
outstanding shares of Coram Common Stock entitled to vote thereon at the Coram
Meeting.
(c) No governmental authority or other agency,
commission or court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, injunction or
other order (whether temporary, preliminary or permanent) which is in effect
and has the effect of making the Merger illegal or otherwise prohibiting
consummation of the transactions contemplated by this Agreement; provided,
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however, that, prior to invoking this condition, each party hereto shall use
all reasonable efforts to have such statute, rule, regulation, injunction or
order vacated.
(d) Any waiting period applicable to the Merger
under the HSR Act shall have expired or been terminated without action by the
Justice Department or the Federal Trade Commission to prevent consummation of
the Merger.
(e) The shares of Coram Common Stock issuable to
Lincare's stockholders and option holders in the Merger or thereafter shall
have been authorized for listing on the NYSE, upon official notice of issuance.
(f) Coram and Lincare shall have each received
from Ernst & Young and KPMG Peat Marwick, respectively, a letter to the effect
that the Merger qualifies for "pooling of interests" treatment for financial
reporting purposes and that such treatment is in accordance with generally
accepted accounting practices.
6.2 Conditions to the Obligation of Lincare to Effect the
Merger. The obligation of Lincare to effect the Merger shall be subject to the
fulfillment or waiver by Lincare at or prior to the Effective Time of the
following additional conditions:
(a) Each of Coram and Merger Sub shall have
performed in all material respects its obligations under this Agreement
required to be performed by it on or prior to the Effective Time pursuant to
the terms hereof.
(b) All representations or warranties of Coram
and Merger Sub in this Agreement which are qualified with respect to a Material
Adverse Effect on Coram or materiality shall be true and correct, and all such
representations or warranties that are not so qualified shall be true and
correct in all material respects, in each case as if such representation or
warranty was made as of the Effective Time, except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of such
specified date and, with respect to Section 3.3, to the extent it is permitted
to change by the provisions of this Agreement.
(c) All material federal, state, local and
foreign governmental consents, approvals and filings required to permit the
Merger and the consummation of the transactions contemplated by this Agreement
shall have been received or made and any applicable waiting period shall have
expired or been terminated without the imposition of conditions that are or
would become applicable to Lincare or the Lincare Subsidiaries or Coram or the
Coram Subsidiaries and which would have a Material Adverse Effect on Lincare or
a Material Adverse Effect on Coram.
(d) Coram and Merger Sub shall have obtained all
Third Party Consents (applicable to Coram, any Coram Subsidiary or Merger Sub)
contemplated by subsection (ii) of Section 5.10, except for such Third Party
Consents which, if not obtained, would not, individually or in aggregate, have
a Material Adverse Effect on Coram.
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(e) From the date hereof through the Effective
Time, there shall have been no material adverse change in the financial
condition, results of operations, properties or business of Coram and the Coram
Subsidiaries taken as a whole.
(f) Each of Coram and Merger Sub shall have
delivered a certificate of its President or Vice President and its Chief
Financial Officer to the effect set forth in clauses (a), (b), (c) and (e) of
this Section 6.2.
(g) Lincare shall have received from Brobeck,
Phleger & Harrison, counsel to Coram, opinion or opinions dated as of the
Effective Time covering the matters set forth in Exhibit B hereto.
(i) Lincare shall have received the opinion of
Reboul, MacMurray, Hewitt, Maynard & Kristol, counsel to Lincare, in form and
in substance reasonably satisfactory to Lincare and dated as of the Effective
Time, substantially to the effect that (i) the Merger will constitute a
reorganization for United States Federal income tax purposes within the meaning
of Section 368(a) of the Code, (ii) Coram, Merger Sub and Lincare will each be
a party to the reorganization within the meaning of Section 368(b) of the Code,
(iii) no gain or loss will be recognized by Coram, Merger Sub or Lincare
pursuant to the Merger and (iv) no gain or loss will be recognized by
stockholders of Lincare to the extent their shares of the capital stock of
Lincare are converted into and exchanged solely for Coram Common Stock (except
to the extent that cash is received in lieu of a fractional share interest and
except with respect to the conversion and exchange of any shares of the capital
stock of Lincare that were acquired by the holder thereof pursuant to any
employee stock option, employee stock purchase plan or otherwise as
compensation). In rendering such opinion, Reboul, MacMurray, Hewitt, Maynard &
Kristol may require and rely upon representations contained in certificates of
officers of Coram, Merger Sub, Lincare and others.
6.3 Conditions to the Obligations of Coram and Merger Sub
to Effect the Merger. The obligations of Coram and Merger Sub to effect the
Merger shall be subject to the fulfillment or waiver by Coram at or prior to
the Effective Time of the following additional conditions:
(a) Lincare shall have performed in all material
respects each of its obligations under this Agreement required to be performed
by it on or prior to the Effective Time pursuant to the terms hereof.
(b) All representations or warranties of Lincare
in this Agreement which are qualified with respect to a Material Adverse Effect
or materiality shall be true and correct, and all such representations or
warranties that are not so qualified shall be true and correct in all material
respects, in each case as if such representation or warranty were made as of
the Effective Time except to the extent that any such representation or
warranty is made as of a specified date, in which case such representation or
warranty shall have been true and correct as of such specified date and with
respect to Section 4.3, to the extent permitted to change by the provisions of
this Agreement.
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(c) All material federal, state, local and
foreign governmental consents, approvals and filings required to permit the
Merger and the consummation of the transactions contemplated by this Agreement
shall have been received or made and any applicable waiting period shall have
expired or been terminated without the imposition of conditions that are or
would become applicable to Lincare or the Lincare Subsidiaries or Coram or the
Coram Subsidiaries and which would have a Material Adverse Effect on Lincare or
a Material Adverse Effect on Coram.
(d) Lincare shall have obtained all Third Party
Consents (applicable to Lincare or any Lincare Subsidiary) contemplated by
subsection (ii) of Section 5.10, except for such Third Party Consents which, if
not obtained, would not, individually or in aggregate, have a Material Adverse
Effect on Lincare.
(e) From the date hereof through the Effective
Time, there shall have been no material adverse change in the financial
condition, results of operations, properties or business of Lincare and the
Lincare Subsidiaries taken as a whole.
(f) Lincare shall have delivered a certificate of
its President or Vice President and its Chief Financial Officer to the effect
set forth in paragraphs (a), (b), (c) and (e) to this Section 6.3.
(g) Coram shall have received from Reboul,
MacMurray, Hewitt, Maynard & Kristol, counsel to Lincare, an opinion or
opinions dated as of the Effective Time covering the matters set forth in
Exhibit C hereto.
(h) Coram shall have received the opinion of
Brobeck, Phleger & Harrison, counsel to Coram, in form and in substance
reasonably satisfactory to Coram and dated as of the Effective Time,
substantially to the effect that (i) the Merger will constitute a
reorganization for United States Federal income tax purposes within the meaning
of Section 368(a) of the Code, (ii) Coram, Merger Sub and Lincare will each be
a party to the reorganization within the meaning of Section 368(b) of the Code,
(iii) no gain or loss will be recognized by Coram, Merger Sub or Lincare
pursuant to the Merger and (iv) no gain or loss will be recognized by
stockholders of Lincare to the extent their shares of the capital stock of
Lincare are converted into and exchanged solely for Coram Common Stock (except
to the extent that cash is received in lieu of a fractional share interest and
except with respect to the conversion and exchange of any shares of the capital
stock of Lincare that were acquired by the holder thereof pursuant to any
employee stock option, employee stock purchase plan or otherwise as
compensation). In rendering such opinion, Brobeck, Phleger & Harrison may
require and rely upon representations contained in certificates of officers of
Coram, Merger Sub, Lincare and others.
(i) Merger Sub shall have received letters of
resignation addressed to Lincare from the members of Lincare's board of
directors, which resignations shall be effective as of the Effective Time.
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(j) Each of Coram and Lincare shall have received
the Affiliate Letters from each of the Rule 145 Affiliates, as provided in
Section 5.13.
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval of this Agreement by the stockholders of
Lincare or Coram, by the mutual consent of Coram and Lincare.
7.2 Termination by Either Coram or Lincare. This
Agreement may be terminated and the Merger may be abandoned by action of the
Board of Directors of either Coram or Lincare if:
(a) The Merger shall not have been consummated by
October 31, 1995;
(b) The approval of the stockholders of each of
Lincare and Coram required by Section 6.1(b) shall not have been obtained at a
meeting duly convened therefor or at any adjournment thereof; or
(c) A United States federal or state court of
competent jurisdiction or United States federal or state governmental
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
non-appealable; provided, that the party seeking to terminate this Agreement
pursuant to this clause (d) shall have used all reasonable efforts to remove
such injunction, order or decree; provided, in the case of a termination
pursuant to clauses (a) or (b) above, the terminating party shall not have
breached in any material respect its obligations under this Agreement in any
manner that shall have proximately contributed to the failure to consummate the
Merger by September 30, 1995 and; provided further, that if any condition to
this Agreement shall fail to be satisfied by reason of the existence of an
injunction or order of any court or governmental or regulatory body resulting
from an action or proceeding commenced by any party which is not a government
or governmental authority, then at the request of either party the deadline
date referred to above shall be extended for a reasonable period of time, not
in excess of 120 days, to permit the parties to have such injunction vacated or
order reversed.
7.3 Termination by Lincare. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the adoption and approval by the stockholders of Lincare
referred to in Section 6.1(b), by action of the Board of Directors of Lincare,
if:
(a) The Board of Directors of Lincare determines
in good faith with the advice of outside legal counsel that, in the exercise of
the fiduciary obligations of the Board
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of Directors under applicable law, such termination is required by reason of a
Third Party Transaction;
(b) The Board of Directors of Coram shall have
withdrawn or modified in a manner adverse to Lincare (other than a modification
indicating that the Board of Directors of Coram, in accordance with Section
5.5, is considering a Third Party Transaction) its approval or recommendation
of this Agreement or the Merger due to the existence of a Third Party
Transaction, or shall have recommended a Third Party Transaction to Coram
stockholders;
(c) There has been a breach by Coram or Merger
Sub of any representation or warranty contained in this Agreement the effect of
which is a Coram Material Adverse Effect; or
(d) There has been a breach in any material
respect of any of the covenants or agreements set forth in this Agreement on
the part of Coram, which breach is not curable or, if curable, is not cured
within 30 days after written notice of such breach is given by Lincare to
Coram.
7.4 Termination by Coram. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, by action of the Board of Directors of Coram, if:
(a) The Board of Directors of Lincare shall have
withdrawn or modified in a manner adverse to Coram (other than a modification
indicating that the Board of Directors of Lincare, in accordance with Section
5.5, is considering a Third Party Transaction) its approval or recommendation
of this Agreement or the Merger due to the existence of a Third Party
Transaction, or shall have recommended a Third Party Transaction to Lincare
stockholders;
(b) The Board of Directors of Coram determines in
good faith with the advice of outside legal counsel that, in the exercise of
the fiduciary obligations of the Board of Directors under applicable law, such
termination is required by reason of a Third Party Transaction;
(c) There has been a breach by Lincare of any
representation or warranty contained in this Agreement the effect of which is a
Lincare Material Adverse Effect; or
(d) There has been a breach in any material
respect of any of the covenants or agreements set forth in this Agreement on
the part of Lincare, which breach is not curable or, if curable, is not cured
within 30 days after written notice of such breach is given by Coram to
Lincare.
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7.5 Effect of Termination and Abandonment.
(a) In the event that this Agreement is
terminated by Lincare pursuant to Section 7.3(a) or by Coram pursuant to
Section 7.4(a), then Lincare shall promptly, but in no event later than ten
days after the date of such request, pay Coram a fee of $15,000,000 plus
reasonable out-of-pocket fees and expenses up to $3,000,000, which amount shall
be payable by wire transfer of same day funds. If, within nine months of the
date this Agreement is terminated by Lincare pursuant to Section 7.3(a) or by
Coram pursuant to Section 7.4(a), a Third Party Transaction is consummated by
Lincare, then Lincare shall promptly, and in no event later than ten days
following the closing date of such Third Party Transaction, pay to Coram an
additional $15,000,000 by wire transfer of same day funds. Lincare
acknowledges that the agreements contained in this Section 7.5(a) are an
integral part of the transactions contemplated in this Agreement, and that,
without these agreements, Coram and Merger Sub would not enter into this
Agreement.
(b) In the event that this Agreement is
terminated by Lincare pursuant to Section 7.3(b) or by Coram pursuant to
Section 7.4(b), then Coram shall promptly, but in no event later than ten days
after the date of such request, pay Lincare a fee of $15,000,000 plus
reasonable out-of-pocket fees and expenses up to $3,000,000, which amount shall
be payable by wire transfer of same day funds. If, within nine months of the
date this Agreement is terminated by Coram pursuant to Section 7.4(b) or by
Lincare pursuant to Section 7.3(b), a Third Party Transaction is consummated by
Coram, then Coram shall promptly, and in no event later than ten days following
the closing date of such Third Party Transaction, pay to Lincare an additional
$15,000,000 by wire transfer of same day funds. Coram acknowledges that the
agreements contained in this Section 7.5(b) are an integral part of the
transactions contemplated in this Agreement, and that, without these
agreements, Lincare would not enter into this Agreement.
(c) In the event of termination of this Agreement
and the abandonment of the Merger pursuant to this Article 7, all obligations
of the parties hereto shall terminate, except the obligations of the parties
pursuant to this Section 7.5 and except as provided in Section 8.3. Moreover,
in the event of termination of this Agreement pursuant to Section 7.3 or 7.4,
nothing herein shall prejudice the ability of the non-breaching party from
seeking damages from any other party for any breach of this Agreement,
including without limitation, attorneys' fees and the right to pursue any
remedy at law or in equity.
7.6 Extension; Waiver. At any time prior to the
Effective Time, any party hereto, by action taken by its Board of Directors,
may, to the extent allowed by law, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive
any inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions for the benefit of such
party 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 an instrument in
writing signed on behalf of such party.
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ARTICLE VIII
MISCELLANEOUS
8.1 Amendment. Subject to the applicable provisions of
state law, this Agreement may be amended by the parties hereto solely by action
taken by their respective Boards of Directors. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.2 Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by their respective Boards of Directors, may
(i) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties of the other party contained herein or in any documents
delivered pursuant hereto, and (iii) waive compliance by the other party with
any of the agreements or conditions herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. No waiver by
either party of any default with respect to any provision, condition or
requirement hereof shall be deemed to be a waiver of any other provision,
condition or requirement hereof; nor shall any delay or omission of either
party to exercise any right hereunder in any manner impair the exercise of any
such right accruing to it thereunder.
8.3 Survival. All representations, warranties and
agreements contained in this Agreement or in any instrument delivered pursuant
to this Agreement shall terminate and be extinguished at the Effective Time or
the earlier date of termination of this Agreement pursuant to Section 7, as the
case may be, except that the agreements set forth in Article I, Article II and
in Sections 5.5, 5.8, 5.9, 8.4 and 8.7 will survive the Effective Time
indefinitely and those set forth in Sections 7.5 and 8.7 will survive the
termination of this Agreement indefinitely, and other than any covenant the
breach of which has resulted in the termination of this Agreement.
8.4 Expenses and Fees. Whether or not the Merger is
consummated, all costs and expenses incurred by the parties hereto in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses except as expressly provided
herein and except that (i) the filing fee in connection with the HSR Act
filing, (ii) the filing fee in connection with the filing of the Registration
Statement or Proxy Statement with the Commission and (iii) the expenses
incurred in connection with printing and mailing the Registration Statement and
the Proxy Statement, shall be shared equally by Coram and Lincare.
8.5 Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
given or made if in writing and delivered personally or sent by registered or
certified mail (postage prepaid, return receipt requested) or by telecopier to
the parties at the following addresses:
If to Merger Sub or Coram: Coram Healthcare Corporation
1125 Seventeenth Street, Suite 1500
Denver, Colorado 80202
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<PAGE> 46
Attention: Chief Executive Officer
Telecopier: (303) 298-0043
With copies to: Brobeck, Phleger & Harrison
4675 MacArthur Court, Suite 1000
Newport Beach, California 92660
Attention: Richard A. Fink, Esq.
Telecopier: (714) 752-7522
If to Lincare: Lincare Holdings Inc.
19337 U.S. 19 North
Clearwater, Florida 34624
Attention: Chief Executive Officer
Telecopier: (813) 532-9692
With copies to: Reboul, MacMurray, Hewitt, Maynard
& Kristol
45 Rockefeller Plaza
New York, New York 10111
Attention: Robert A. Schwed, Esq.
Telecopier: (212) 841-5725
or at such other addresses as shall be furnished by the parties by like notice,
and such notice or communication shall be deemed to have been given or made as
of the date so delivered or mailed.
8.6 Headings. The headings contained in this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
8.7 Publicity. The parties hereto shall not, and shall
cause their affiliates not to, issue or cause the publication of any press
release or other announcement with respect to the Merger or this Agreement
without consulting with all other parties and their respective counsel;
provided, however, that to the extent either party believes on the advice of
counsel that it is obligated under federal or state law to issue or cause the
publication of any press release or other announcement, such party shall only
be obligated to so consult if it is possible to do so without violating any
such legal obligation.
8.8 Entire Agreement. This Agreement and the other
agreements referred to herein constitute the entire agreement among the parties
and supersede all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof.
8.9 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefits of the parties hereto
and their respective successors and permitted assigns. Neither this Agreement
nor any of the rights, interests or obligations shall be assigned by any of the
parties hereto without the prior written consent of the other parties.
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This Agreement is not intended to confer upon any other person any rights or
remedies hereunder.
8.10 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and each of which shall be deemed an original.
8.11 Invalidity; Severability. In the event that any
provision of this Agreement shall be deemed contrary to law or invalid or
unenforceable in any respect by a court of competent jurisdiction, the
remaining provisions shall remain in full force and effect to the extent that
such provisions can still reasonably be given effect in accordance with the
intentions of the parties, and the invalid and unenforceable provisions shall
be deemed, without further action on the part of the parties, modified, amended
and limited solely to the extent necessary to render the same valid and
enforceable.
8.12 Governing Law. The validity and interpretation of
this Agreement shall be governed by the laws of the State of Delaware, without
reference to the conflict of laws principles thereof.
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IN WITNESS WHEREOF, Coram, Merger Sub and Lincare have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
LINCARE HOLDINGS INC. CORAM HEALTHCARE
CORPORATION
By: /s/ JAMES T. KELLY By: /s/ JAMES M. SWEENEY
James T. Kelly, Chairman and James M. Sweeney, Chairman
Chief Executive Officer and Chief Executive Officer
CHC ACQUISITION CORP.
By: /s/ JAMES M. SWEENEY
James M. Sweeney, Chairman
and Chief Executive Officer
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