-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C0QBbeKuTpLLtledQsPCLoletGb9HegS4zG51It8qstOQh29ai8PutYnL4YWQRv7 J1F9VUuNa3UxR3PzwAadQg== 0000950123-97-006893.txt : 19970815 0000950123-97-006893.hdr.sgml : 19970815 ACCESSION NUMBER: 0000950123-97-006893 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19970814 SROS: NYSE GROUP MEMBERS: OMNICARE ACQUISITION CORP. GROUP MEMBERS: OMNICARE INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN MEDSERVE CORP CENTRAL INDEX KEY: 0001018411 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 363925637 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-47901 FILM NUMBER: 97661391 BUSINESS ADDRESS: STREET 1: 184 SHUMAN BLVD STREET 2: STE 200 CITY: NAPERVILLE STATE: IL ZIP: 60563 BUSINESS PHONE: 7087172904 MAIL ADDRESS: STREET 1: 184 SHUMAN BLVD STREET 2: STE 200 CITY: NAPERVILLE STATE: IL ZIP: 60563 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: OMNICARE INC CENTRAL INDEX KEY: 0000353230 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 311001351 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 50 E RIVERCENTER BLVD STREET 2: STE 1530 CITY: COVINGTON STATE: KY ZIP: 41011 BUSINESS PHONE: 5137626666 MAIL ADDRESS: STREET 1: 2800 CHEMED CENTER STREET 2: 255 EAST FIFTH ST CITY: CINCINNATI STATE: OH ZIP: 45202-4728 SC 14D1 1 TENDER OFFER STATEMENT 1 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ AMERICAN MEDSERVE CORPORATION (NAME OF SUBJECT COMPANY) OMNICARE ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF OMNICARE, INC. (BIDDERS) COMMON STOCK, PAR VALUE $0.01 PER SHARE (TITLE OF CLASS OF SECURITIES) 027448109 (CUSIP NUMBER OF CLASS OF SECURITIES) ------------------------ JOEL F. GEMUNDER PRESIDENT OMNICARE, INC. 50 EAST RIVERCENTER BOULEVARD COVINGTON, KENTUCKY 41011 (606) 291-6800 (NAMES, ADDRESSES AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS) ------------------------ WITH COPIES TO: MORTON A. PIERCE DEWEY BALLANTINE 1301 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019 (212) 259-8000 CALCULATION OF FILING FEE
============================================================================================================ TRANSACTION VALUATION* AMOUNT OF FILING FEE - ------------------------------------------------------------------------------------------------------------ $229,230,950 $45,846 ============================================================================================================
* Estimated for purposes of calculating fee only. The calculation assumes the purchase of (i) 12,217,936 shares of Common Stock par value $0.01 per share (the "Shares"), issued and outstanding as of August 7, 1997, and (ii) 517,117, Shares issuable upon the exercise of presently outstanding stock options, in each case, at a price per Share of $18.00 in cash. [ ] Check box if any part of the fee is offset by Rule O-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: NOT APPLICABLE Form or Registration No.: NOT APPLICABLE Filing Party: NOT APPLICABLE Date Filed: NOT APPLICABLE
=============================================================================== 2 CUSIP No. 027448109 - --------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: OMNICARE ACQUISITION CORP. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 31-1554409 - --------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - --------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - --------------------------------------------------------------------------------------------------------- 4 SOURCES OF FUNDS AF - --------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) [ ] - --------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION STATE OF DELAWARE - --------------------------------------------------------------------------------------------------------- 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON NONE - --------------------------------------------------------------------------------------------------------- 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ] - --------------------------------------------------------------------------------------------------------- 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A - --------------------------------------------------------------------------------------------------------- 10 TYPE OF REPORTING PERSON CO - ---------------------------------------------------------------------------------------------------------
2 3 CUSIP No. 027448109 - --------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: OMNICARE, INC. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 31-1001351 - --------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - --------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - --------------------------------------------------------------------------------------------------------- 4 SOURCES OF FUNDS WC/BK - --------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) [ ] - --------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION STATE OF DELAWARE - --------------------------------------------------------------------------------------------------------- 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON NONE - --------------------------------------------------------------------------------------------------------- 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ] - --------------------------------------------------------------------------------------------------------- 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A - --------------------------------------------------------------------------------------------------------- 10 TYPE OF REPORTING PERSON CO - ---------------------------------------------------------------------------------------------------------
3 4 This Statement relates to a tender offer by Omnicare Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Omnicare, Inc., a Delaware corporation ("Parent"), to purchase all outstanding shares of common stock, par value $0.01 per share (the "Shares"), of American Medserve Corporation, a Delaware corporation (the "Company"), at a purchase price of $18.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 14, 1997 (the "Offer to Purchase") and in the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer"). Copies of the Offer to Purchase and the Letter of Transmittal are annexed to and filed with this Statement as Exhibits (a)(1) and (a)(2), respectively. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is American Medserve Corporation, a Delaware corporation. The principal executive offices of the Company are located at 184 Shuman Boulevard, Naperville, Illinois 60563. (b) The exact title of the class of equity securities being sought in the Offer is the common stock, par value $0.01 per share, of the Company. The information set forth in the Introduction to the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Shares; Dividends on the Shares") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a) through (d) and (g). This Statement is being filed by the Purchaser and Parent. The information set forth in the "Introduction," Section 9 ("Certain Information Concerning the Purchaser and Parent") and Schedule I of the Offer to Purchase, is incorporated herein by reference. (e) and (f). None of the Purchaser or Parent, nor, to the best of their knowledge, any of the persons listed in Schedule I of the Offer to Purchase, has during the last five years (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) and (b). The information set forth in the "Introduction," Section 9 ("Certain Information Concerning the Purchaser and Parent"), Section 11 ("Background of the Offer") and Section 12 ("Purpose of the Offer and the Merger; Plans for the Company; Proposed Merger") of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) and (b). The information set forth in Section 10 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF BIDDER. (a) through (e). The information set forth in the "Introduction," Section 11 ("Background of the Offer") and Section 12 ("Purpose of the Offer and the Merger; Plans for the Company; Proposed Merger") of the Offer to Purchase is incorporated herein by reference. (f) and (g). The information set forth in Section 7 ("Effect of the Offer on the Market for the Shares; Nasdaq Stock Market Listing; Exchange Act Registration; Margin Regulations") of the Offer to Purchase is incorporated herein by reference. 4 5 ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) and (b). The information set forth in the "Introduction," Section 9 ("Certain Information Concerning the Purchaser and Parent") and Schedule I of the Offer to Purchase is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the "Introduction," Section 9 ("Certain Information Concerning the Purchaser and Parent"), Section 11 ("Background of the Offer"), Section 12 ("Purpose of the Offer and the Merger, Plans for the Company; Proposed Merger") and Schedule I of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the "Introduction" and Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 9 ("Certain Information Concerning the Purchaser and Parent") of the Offer to Purchase is incorporated herein by reference. The incorporation by reference herein of the above-mentioned financial information does not constitute an admission that such information is material to a decision by a security holder of the Company whether to sell, tender or hold securities being sought in the Offer. ITEM 10. ADDITIONAL INFORMATION. (a) None. (b) and (c). The information set forth in Section 15 ("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 7 ("Effect of the Offer on the Market for the Shares; Nasdaq Stock Market Listing; Exchange Act Registration; Margin Regulations") and Section 15 ("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (e) None. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal is incorporated herein by reference in its entirety. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase, dated August 14, 1997. (a)(2) Form of Letter of Transmittal. (a)(3) Form of Letter from Credit Suisse First Boston Corporation, as Dealer Manager, to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(4) Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees to Clients. (a)(5) Notice of Guaranteed Delivery. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Form of summary advertisement, dated August 14, 1997. (a)(8) Form of press release issued by Parent on August 8, 1997. 5 6 (b) None. (c)(1) Agreement and Plan of Merger, dated as of August 7, 1997, among Parent, the Purchaser and the Company. (d) None. (e) Not Applicable. (f) None. 6 7 SIGNATURE After due inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: August 14, 1997 OMNICARE ACQUISITION CORP. By: /s/ Joel F. Gemunder ------------------------------------ Joel F. Gemunder President OMNICARE, INC. By: /s/ Joel F. Gemunder ------------------------------------ Joel F. Gemunder President 7 8 EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE - -------- ----------------------------------------------------------------------------- ---- (a)(1) Offer to Purchase, dated August 14, 1997..................................... (a)(2) Form of Letter of Transmittal................................................ (a)(3) Form of Letter from Credit Suisse First Boston Corporation, as Dealer Manager, to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees..................................................................... (a)(4) Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees to Clients.................................................... (a)(5) Notice of Guaranteed Delivery................................................ (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9..................................................................... (a)(7) Form of summary advertisement, dated August 14, 1997......................... (a)(8) Form of press release issued by Parent on August 8, 1997..................... (b) None......................................................................... (c)(1) Agreement and Plan of Merger, dated as of August 7, 1997, among Parent, the Purchaser and the Company.................................................... (d) None......................................................................... (e) Not Applicable............................................................... (f) None.........................................................................
8 EX-99.A.1 2 OFFER TO PURCHASE 1 Offer to Purchase for Cash All Outstanding Shares of Common Stock of AMERICAN MEDSERVE CORPORATION at $18.00 NET PER SHARE by OMNICARE ACQUISITION CORP. a wholly owned subsidiary of OMNICARE, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED. ------------------ THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE "SHARES"), OF AMERICAN MEDSERVE CORPORATION (THE "COMPANY") WHICH REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS AND (2) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF THE SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. SEE SECTION 14. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER DESCRIBED HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. IMPORTANT Any stockholder desiring to tender all or any portion of such stockholder's Shares should either (1) complete and sign the Letter of Transmittal (or a facsimile thereof) in accordance with the instructions in the Letter of Transmittal and mail or deliver it and any other required documents to the Depositary (as defined below) and either deliver the certificates for such Shares to the Depositary along with the Letter of Transmittal (or a manually signed facsimile) or deliver such Shares pursuant to the procedures for book-entry transfer set forth in Section 3 hereof or (2) request his or her broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. A stockholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person if such stockholder desires to tender such Shares. If a stockholder desires to tender Shares and such stockholder's certificates for such Shares are not immediately available, or the procedures for book-entry transfer, if applicable, cannot be completed on a timely basis, or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such stockholder may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained from the Information Agent, the Dealer Manager or from brokers, dealers, commercial banks or trust companies. The Dealer Manager for the Offer is: [CREDIT SUISSE FIRST BOSTON LOGO] August 14, 1997 2 TABLE OF CONTENTS
PAGE ----- INTRODUCTION.......................................................................... 1 1. Terms of the Offer............................................................... 2 2. Acceptance for Payment and Payment for Shares.................................... 3 3. Procedure for Tendering Shares................................................... 4 4. Withdrawal Rights................................................................ 6 5. Certain Federal Income Tax Consequences of the Offer and the Merger.............. 7 6. Price Range of Shares; Dividends on the Shares................................... 8 7. Effect of the Offer on the Market for the Shares; Nasdaq Stock Market Listing; 8 Exchange Act Registration; Margin Regulations.................................... 8. Certain Information Concerning the Company....................................... 9 9. Certain Information Concerning the Purchaser and Parent.......................... 14 10. Source and Amounts of Funds...................................................... 16 11. Background of the Offer.......................................................... 16 12. Purpose of the Offer and the Merger; Plans for the Company; Proposed Merger...... 17 13. Dividends and Distributions...................................................... 25 14. Certain Conditions to the Offer.................................................. 26 15. Certain Legal Matters; Regulatory Approvals...................................... 27 16. Fees and Expenses................................................................ 29 17. Miscellaneous.................................................................... 30 Schedule I -- Directors and Executive Officers of Parent and the Purchaser............ I-1
3 To the Holders of Common Stock of American Medserve Corporation: INTRODUCTION Omnicare Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Omnicare, Inc., a Delaware corporation ("Parent"), hereby offers to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of American Medserve Corporation, a Delaware corporation (the "Company"), at a purchase price of $18.00 per Share net to the seller in cash, without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer"). The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of August 7, 1997 (the "Merger Agreement"), by and among Parent, the Purchaser and the Company. The Merger Agreement provides, among other things, for the commencement of the Offer by the Purchaser and further provides that upon the terms and subject to the conditions therein, as soon as practicable after the consummation of the Offer and any required approval of the Merger Agreement by the stockholders of the Company (the "Stockholders"), the Purchaser will be merged with and into the Company (the "Merger"), with the Company being the corporation surviving the Merger (the "Surviving Corporation"). Each outstanding Share (other than Dissenting Shares (as hereinafter defined)) not owned by the Company, Parent, the Purchaser or any other wholly owned subsidiary of Parent will be converted into and represent the right to receive $18.00 in cash or any higher price that may be paid per Share pursuant to the Offer, without interest. See Section 12. THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF DIRECTORS" OR THE "BOARD") HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER DESCRIBED HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), financial advisor to the Company, has delivered to the Board of Directors its written opinion to the effect that, as of the date of the Merger Agreement, the $18.00 in cash to be received by the Stockholders in the Offer and the Merger, is fair to such Stockholders from a financial point of view. A copy of such opinion is included with the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") with respect to the Offer, and Stockholders are urged to read the opinion in its entirety for a description of the assumptions made, factors considered and procedures followed by DLJ. A copy of the Schedule 14D-9 is being furnished herewith. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT NUMBER OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION") AND (2) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR ACT") APPLICABLE TO THE PURCHASE OF THE SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 14, WHICH SETS FORTH THE CONDITIONS TO CONSUMMATION OF THE OFFER, AND SECTION 15, WHICH DISCUSSES CERTAIN LEGAL MATTERS AND REGULATORY CONSENTS AND APPROVALS. Pursuant to the Merger Agreement, the Company has represented and warranted that as of August 7, 1997, 12,217,936 Shares were issued and outstanding and 1,310,790 Shares were reserved for issuance pursuant to employee options, of which 517,117 shares are subject to outstanding, unexercised options. Tendering Stockholders who have Shares registered in their names will not be obligated to pay brokerage fees or commissions to the Dealer Manager, the Depositary or the Information Agent or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. The Purchaser will pay all charges and expenses of Credit Suisse First Boston Corporation ("Credit 1 4 Suisse First Boston"), which is acting as Dealer Manager for the Offer (in such capacity, the "Dealer Manager"), First Chicago Trust Company of New York, which is acting as Depositary (the "Depositary"), and D.F. King & Co., Inc., which is acting as the Information Agent (the "Information Agent"), incurred in connection with the Offer. See Section 16. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 1. TERMS OF THE OFFER Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any extension or amendment), the Purchaser will accept for payment and pay for all Shares that have been validly tendered prior to the Expiration Date and not withdrawn as permitted by Section 4. The term "Expiration Date" means 12:00 Midnight, New York City time, on Thursday, September 11, 1997, unless and until the Purchaser, in its sole discretion, shall have extended the period of time for which the Offer is open, subject to the terms of the Merger Agreement, in which event the term "Expiration Date" shall refer to the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. Subject to the terms of the Merger Agreement and the applicable rules and regulations of the Securities and Exchange Commission (the "Commission"), the Purchaser reserves the right, in its sole discretion, at any time or from time to time, and regardless of whether any of the events set forth in Section 14 hereof shall have occurred or shall have been determined by the Purchaser to have occurred, (a) if, immediately prior to the Expiration Date of the Offer, the Shares tendered and not withdrawn pursuant to the Offer equal less than 90% of the outstanding Shares but more than 80% of the outstanding Shares, to extend the Offer for a period not to exceed seven business days, notwithstanding that all conditions to the Offer are satisfied as of such date, and thereby delay acceptance for payment of and the payment for any Shares, by giving oral or written notice of such extension to the Depositary and (b) prior to the Expiration Date, to waive any of the conditions set forth in Section 14 (other than the Minimum Condition) and to make any other changes in the terms and conditions of the Offer by giving oral or written notice of such waiver or amendment to the Depositary; provided, however, that unless previously approved by the Company in writing, no change may be made which decreases the Offer Price, which reduces the maximum number of Shares to be purchased in the Offer or which otherwise adversely affects the Stockholders. During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the right of a tendering Stockholder to withdraw such Stockholder's Shares. See Section 4. If by the Expiration Date any or all of the conditions to the Offer have not been satisfied or waived, the Purchaser reserves the right (but shall not be obligated), in its sole discretion, subject to the terms of the Merger Agreement and the applicable rules and regulations of the Commission, (a) to terminate the Offer and not accept for payment or pay for any Shares and return all tendered Shares to tendering Stockholders, (b) prior to the Expiration Date, to waive all the unsatisfied conditions (other than the Minimum Condition) and accept for payment and pay for all Shares validly tendered prior to the Expiration Date, or (c) extend the Offer and, subject to the right of Stockholders to withdraw Shares during such extension, retain the Shares that have been tendered during the period or periods for which the Offer is extended. The rights reserved by the Purchaser in the two preceding paragraphs are in addition to the Purchaser's rights pursuant to Section 14. There can be no assurance that the Purchaser will exercise its rights to extend the Offer. Any extension, amendment or termination will be followed as promptly as practicable by a public announcement. In the case of an extension, Rule 14e-l(d) under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), requires that the announcement be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date in accordance with the public announcement requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that any material change in the information published, sent or given to Stockholders be promptly disseminated in a manner reasonably designed to inform the Stockholders of such change) and without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser currently intends to make announcements by issuing a release to the Dow 2 5 Jones News Service. For purposes of the Offer, "business day" has the meaning set forth in Rule 14d-1 under the Exchange Act. If the Purchaser extends the Offer, or if the Purchaser (whether before or after its acceptance for payment of Shares) is delayed in its purchase of or payment for Shares or is unable to pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Purchaser's right under the Offer, the Depositary may retain tendered Shares on behalf of the Purchaser, and such Shares may not be withdrawn except to the extent tendering Stockholders are entitled to withdrawal rights as described in Section 4. If the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer or waives a material condition of the Offer, the Purchaser will extend the Offer and disseminate additional tender offer materials to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which the Offer must remain open following material changes in the terms of the Offer, other than a change in price or a change in the percentages of securities sought, will depend on the facts and circumstances, including the materiality, of the changes. With respect to a change in price or, subject to certain limitations, a change in the percentage of securities sought, a minimum ten business day period from the day of such change is generally required to allow for adequate dissemination to stockholders. Accordingly, if prior to the Expiration Date, the Purchaser decreases the number of Shares being sought or increases or decreases the Offer Price and if the Offer is scheduled to expire at any time earlier than the period ending on the tenth business day from the date on which that notice of such increase or decrease is first published, sent or given to Stockholders, then the Offer will be extended at least until the expiration of such ten business day period. The Company has provided the Purchaser with the Company's Stockholder lists and security position listings for the purpose of disseminating the Offer to Stockholders. This Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares, and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the securityholder lists or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment, and will pay for, all Shares validly tendered and not withdrawn prior to the Expiration Date promptly after the Expiration Date. All questions as to the satisfaction of such terms and conditions will be determined in good faith by the Purchaser. Subject to the applicable rules of the Commission, the Purchaser expressly reserves the right to delay acceptance for payment of or payment for Shares in order to comply, in whole or in part, with any applicable law or government regulation. Any such delays will be effected in compliance with Rule 14e-l(c) under the Exchange Act (relating to a bidder's obligation to pay for or return tendered securities promptly after the termination or withdrawal of such bidder's offer). In all cases, Shares accepted for payment pursuant to the Offer will be paid for only after timely receipt by the Depositary of (i) certificates evidencing (or a timely Book-Entry Confirmation (as defined in Section 3 below) with respect to) such Shares, (ii) a Letter of Transmittal (or a facsimile thereof), properly completed and duly executed with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message (as defined below), and (iii) any other documents required by the Letter of Transmittal. See Section 3 below. For purposes of the Offer, the Purchaser shall be deemed to have accepted for payment tendered Shares when, as and if the Purchaser gives oral or written notice to the Depositary of its acceptance of the tenders of such Shares. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price with the Depositary, which will act as agent for the tendering Stockholders for the purpose of receiving payments from the Purchaser and transmitting such payments to tendering Stockholders. For a description of the procedure for tendering Shares pursuant to the Offer, see Section 3. Accordingly, payment may be made to tendering Stockholders at different times if delivery of the Shares and other required documents occur at different times. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE PURCHASER ON THE CONSIDERATION PAID FOR SHARES PURSUANT TO THE OFFER, WHETHER OR NOT 3 6 THE PURCHASER EXERCISES ITS RIGHTS TO EXTEND THE OFFER OR DELAYS IN MAKING SUCH PAYMENT. If the Purchaser increases the consideration to be paid for Shares pursuant to the Offer, the Purchaser will pay such increased consideration for all Shares purchased pursuant to the Offer, whether or not such Shares were tendered prior to such increase in consideration. The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to Parent or any direct or indirect wholly owned subsidiary or subsidiaries of Parent the right to purchase Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer or prejudice the rights of tendering Stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. If any tendered Shares are not purchased pursuant to the Offer for any reason, or if certificates are submitted for more Shares than are tendered, certificates for such unpurchased or untendered Shares will be returned (or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to an account maintained at one of the Book-Entry Transfer Facilities (as defined in Section 3)), without expense to the tendering Stockholder, as promptly as practicable following the expiration or termination of the Offer. 3. PROCEDURE FOR TENDERING SHARES Valid Tenders. For a Stockholder validly to tender Shares pursuant to the Offer, either (a) a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) and any other documents required by the Letter of Transmittal must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and either (i) Certificates for the Shares to be tendered must be received by the Depositary at one of such addresses or (ii) such Shares must be delivered pursuant to the procedures for book-entry transfer described below (and a confirmation of such delivery received by the Depositary, including an Agent's Message (as defined below) if the tendering Stockholder has not delivered a Letter of Transmittal (or a facsimile thereof)), in each case prior to the Expiration Date, or (b) the guaranteed delivery procedure described below must be complied with. As used herein, "Certificates" shall mean certificates representing Shares. Book-Entry Transfer. The Depositary will establish accounts with respect to the Shares at The Depository Trust Company and the Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility") for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant of the Book-Entry Transfer Facilities' systems may make book-entry delivery of Shares by causing a Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with such Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Shares may be effected through book-entry transfer at a Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message, and any other required documents, must, in any case, be transmitted to, and received by, the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the tendering Stockholder must comply with the guaranteed delivery procedures described below. The confirmation of a book-entry transfer into the Depositary's account at a Book-Entry Facility as described herein is referred to herein as a "Book-Entry Confirmation". DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. The term "Agent's Message" means a message transmitted by a Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgement from the participant in such Book-Entry Transfer Facility tendering the Shares, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against the participant. THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, 4 7 AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK ENTRY TRANSFER, A BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Signature Guarantees. No signature guarantee is required on the Letter of Transmittal (a) if the Letter of Transmittal is signed by a registered holder (which term, for purposes of this Section, includes any participant in any of the Book-Entry Transfer Facilities' systems whose name appears on a security position listing as the owner of the applicable security) of Shares tendered therewith and such registered Stockholder has not completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the Letter of Transmittal or (b) if the Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each, an "Eligible Institution"). In all other cases, all signatures on the Letter of Transmittal must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If the Certificates are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made or Certificates not tendered or not accepted for payment are to be returned to a person other than the registered Stockholder, then the tendered Certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the Certificates, with the signatures guaranteed as described above. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. If a Stockholder desires to tender Shares pursuant to the Offer and such Stockholder's Certificates are not immediately available or time will not permit all required documents to reach the Depositary prior to the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, such Shares may nevertheless be tendered if all the following conditions are satisfied: (i) the tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Purchaser herewith, is received by the Depositary prior to the Expiration Date; and (iii) the appropriate Certificates (or, if applicable, a Book-Entry Confirmation) representing all tendered Shares, in proper form for transfer, together with the appropriate Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by the Letter of Transmittal, are received by the Depositary within three trading days after the execution of such Notice of Guaranteed Delivery. A trading day is any day on which the Nasdaq National Market is open for business. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution and a representation that the stockholder owns the Shares tendered within the meaning of, and the tender of Shares effected thereby complies with, Rule 14e-4 under the Exchange Act, each in the form set forth in the Notice of Guaranteed Delivery. IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) IS RECEIVED BY THE DEPOSITARY. Notwithstanding any other provision of this Offer to Purchase, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of Certificates for (or a timely Book-Entry Confirmation with respect to) such Shares, a Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other documents required by the Letter of Transmittal (or in the case of a book-entry transfer, an Agent's Message). 5 8 The Purchaser's acceptance for payment of Shares validly tendered pursuant to the Offer will constitute a binding agreement between the tendering Stockholder and the Purchaser upon the terms and subject to the conditions of the Offer. Appointment as Proxy. By executing a Letter of Transmittal as set forth above (including through delivery of an Agent's Message), a tendering Stockholder irrevocably appoints designees of the Purchaser as the Stockholder's attorneys-in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of the Stockholder's rights with respect to the Shares tendered by the Stockholder and accepted for payment by the Purchaser (and any and all other securities issued or issuable in respect of such Shares on or after the date of this Offer to Purchase). All such powers of attorney and proxies shall be considered coupled with an interest in the tendered Shares. This appointment will be effective when, and only to the extent that, the Purchaser accepts the tendered Shares for payment pursuant to the Offer. Upon such acceptance for payment, all prior powers of attorney, proxies or consents given by the Stockholder with respect to the tendered Shares will, without further action, be revoked, and no subsequent powers of attorney, proxies or consents may be given (and, if given, will not be deemed to be effective) with respect thereto. The designees of the Purchaser will, with respect to the tendered Shares, be empowered to exercise all voting and other rights of such Stockholder as they in their sole discretion may deem proper at any annual, special or adjourned meeting of the Company's Stockholders, by written consent or otherwise. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser must be able to exercise full voting and other rights of a record and beneficial Stockholder, including action by written consent, with respect to such Shares. Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tendered Shares pursuant to any of the procedures described above will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding on all parties. The Purchaser reserves the absolute right to reject any or all tenders of any Shares determined by it not to be in proper form or if the acceptance for payment of or payment for such Shares may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right to waive any defect or irregularity in any tender with respect to Shares of any particular Stockholder, whether or not similar defects or irregularities are waived in the case of other Stockholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of the Purchaser, Parent, the Depositary, the Information Agent, the Dealer Manager or any other person will be under any duty to give notification of any defects or irregularities in tenders or will incur any liability for failure to give any such notification. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding on all parties. 4. WITHDRAWAL RIGHTS Except as otherwise provided in this Section 4, tenders of Shares made pursuant to the Offer are irrevocable, provided that such Shares tendered pursuant to the Offer may be withdrawn pursuant to the procedures set forth below at any time prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after October 12, 1997. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the securities to be withdrawn, the number of Shares to be withdrawn and the name of the registered Stockholder, if different from that of the person who tendered such Shares. If Certificates have been delivered or otherwise identified to the Depositary, then, prior to the release of such Certificates, the serial numbers of the particular Certificates evidencing the Shares to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Institution, except in the case of Shares tendered for the account of an Eligible Institution, must also be furnished to the Depositary as described above. If Shares have been tendered pursuant to the procedures for book-entry transfer as set forth in Section 3, any notice of withdrawal must also specify the reference number assigned to such transfer along with the name and number of the account at the appropriate Book-Entry Transfer Facility to be credited with the withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's procedures. 6 9 Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will not be deemed to be validly tendered for purposes of the Offer and the satisfaction of the Minimum Condition. Withdrawn Shares may, however, be retendered for purposes of the Offer by following one of the procedures described in Section 3 at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding on all parties. None of the Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER The following is a summary of certain federal income tax consequences of the Offer and the Merger to Stockholders whose Shares are purchased pursuant to the Offer or whose Shares are converted, in accordance with the Merger Agreement, into the right to receive the price per Share paid pursuant to the Offer (the "Merger Consideration") (including any cash amounts received by dissenting Stockholders pursuant to the exercise of appraisal rights). This discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the applicable Treasury Regulations promulgated and proposed thereunder, judicial authority and administrative rulings and practice. Legislative, judicial or administrative actions or interpretations are subject to change, possibly on a retroactive basis, at any time and therefore could alter or modify the statements and conclusions set forth below. This discussion assumes that the Stockholders hold the Shares as "capital assets" within the meaning of Section 1221 of the Code (i.e., property held for investment). This discussion does not address all aspects of federal income taxation that may be important to a particular Stockholder in light of such Stockholder's personal investment circumstances or tax consequences to Stockholders subject to special treatment under the federal income tax laws (for example, life insurance companies, tax-exempt organizations, foreign corporations and nonresident alien individuals) or Stockholders who acquired their Shares through the exercise of employee stock options or other compensation arrangements. In addition, the discussion does not address any aspect of foreign, state, local or estate and gift taxation that may be applicable to a Stockholder. Consequences of the Offer and the Merger to Stockholders. The receipt of the Offer Price or the Merger Consideration (including any cash amounts received by dissenting Stockholders pursuant to the exercise of appraisal rights) will be a taxable transaction for federal income tax purposes and also may be a taxable transaction under applicable state, local and other income tax laws. In general, for federal income tax purposes, a Stockholder will recognize gain or loss equal to the difference between the Stockholder's adjusted tax basis in the Shares and the amount of cash received therefor. Gain or loss must be determined separately for each block of Shares (i.e., Shares acquired at the same cost in a single transaction). Such gain or loss will be capital gain or loss and will be long-term gain or loss if on the date of sale (or, if applicable, the date of the Merger), the Shares were held for more than one year. If on that date the Shares were held for more than 18 months, any such gain or loss will be taken into account in determining a Stockholder's adjusted net capital gain, which is subject to a reduced maximum rate of federal income tax under a recent amendment to the Code. A portion of amounts received by dissenting Stockholders pursuant to the exercise of appraisal rights, may be deemed to be interest income for federal income tax purposes. Backup Withholding. A Stockholder may be subject to "backup withholding" at a 31% rate with respect to payments made in connection with the Offer or the Merger. Backup withholding generally applies if the Stockholder (i) fails to furnish his or her Social Security Number or taxpayer identification number ("TIN"), (ii) furnishes an incorrect TIN, (iii) fails properly to report interest or dividends or (iv) in certain circumstances, fails to provide a statement, under penalties of perjury, that the TIN provided is correct and that he or she is not subject to backup withholding. Backup withholding is not an additional tax but an advance payment, which may be refunded to the extent it results in an overpayment of tax. Certain persons generally are exempt from backup withholding, including corporations and financial institutions. Penalties apply for failure to furnish correct information and for failure to include the reportable payments in income. Foreign Stockholders should consult their own tax advisors regarding withholding taxes in general. See Instruction 10 of the Letter of Transmittal. 7 10 THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM IN VIEW OF THEIR PARTICULAR CIRCUMSTANCES. 6. PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES The Shares are quoted on the Nasdaq National Market under the symbol AMCI. The following table sets forth the reported high and low sales prices per Share for the Shares on the Nasdaq National Market as published in financial sources for each of the periods indicated since public trading commenced on November 13, 1996.
HIGH LOW --- --- 1996 Fourth Quarter (from November 13, 1996)......................... $18 1/4 $15 1/4 1997 First Quarter................................................... 19 10 7/8 Second Quarter.................................................. 15 9 Third Quarter (through August 13, 1997)......................... 17 3/4 13
On August 7, 1997, the last full trading day prior to the public announcement of the execution of the Merger Agreement and the Purchaser's intention to commence the Offer, the reported closing price per Share on the Nasdaq National Market was $15 1/2. On August 13, 1997, the last full trading day prior to the commencement of the Offer, the reported closing sales price per Share on the Nasdaq National Market was $17 9/16. According to the Company, the Company did not declare any cash dividends on the Shares during the periods set forth above. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. 7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ STOCK MARKET LISTING; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS Market for the Shares. The purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and the number of holders of Shares which could adversely affect the liquidity and market value of the remaining Shares held by Stockholders other than the Purchaser. The Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Shares or whether such reduction would cause future market prices to be greater or less than the Offer price. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the standards of the National Association of Securities Dealers, Inc. (the "NASD") for continued inclusion in the Nasdaq National Market, which require that an issuer have at least 200,000 publicly held shares with a market value of $1 million held by at least 400 stockholders or 300 stockholders holding round lots, and have net tangible assets of at least either $1 million, $2 million or $4 million depending on profitability levels during the issuer's four most recent fiscal years. If these standards are not met, the Shares might nevertheless continue to be included in the NASD's Nasdaq Stock Market with quotations published in the Nasdaq over-the-counter "additional list" or in one of the "local lists", but if the number of Stockholders were to fall below 300, or if the number of publicly held Shares were to fall below 100,000, or if there are not at least two registered and active market makers for such Shares, the NASD's rules provide that the Shares would no longer be "qualified" for Nasdaq Stock Market reporting, and the Nasdaq Stock Market would cease to provide any quotations. Shares held directly or indirectly by an officer or director of the Company, or by any beneficial owner of more than 10% of the Shares, ordinarily will not be considered as being publicly held for this purpose. According to the Company, as of August 12, 1997, there were approximately 41 holders of record and 12,217,936 Shares were outstanding. 8 11 If, as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet the NASD requirements for continued inclusion in the Nasdaq National Market or in any other tier of the Nasdaq Stock Market, and the Shares are no longer included in the Nasdaq National Market or any other tier of the Nasdaq Stock Market, the market for such Shares could be adversely affected. In the event the Shares no longer meet the requirements of the NASD for inclusion in any tier of the Nasdaq Stock Market, quotations might still be available from other sources. The extent of the public market for Shares and availability of such quotations would, however, depend upon the number of Stockholders of Shares remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration under the Exchange Act, as described below, and other factors. Exchange Act Registration. The Shares are currently registered under the Exchange Act. The purchase of the Shares pursuant to the Offer may result in the Shares becoming eligible for deregistration under the Exchange Act. Registration of the Shares under the Exchange Act may be terminated upon application of the Company to the Commission if such class is not listed on a national securities exchange and there are fewer than 300 record holders of such Shares. Termination of registration of the Shares under the Exchange Act would reduce substantially the information required to be furnished by the Company to its Stockholders and to the Commission and would make certain provisions of the Exchange Act no longer applicable to the Company, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy statement or information statement pursuant to Section 14(a) or (c) of the Exchange Act in connection with stockholders' meetings and the related requirement of furnishing an annual report to Stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions. Furthermore, if the Purchaser acquires a substantial number of Shares or the registration of the Shares under the Exchange Act were to be terminated, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 or 144A under the Securities Act of 1933, as amended (the "Securities Act"), may be impaired or eliminated. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or be eligible for listing or Nasdaq reporting. It is the present intention of the Purchaser to seek to cause the Company to make an application for termination of registration of the Shares as soon as possible following the consummation of the Offer if the requirements for termination of registration are met. Margin Regulations. The Shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. Depending upon factors similar to those described above regarding listing and market quotations, following the Offer it is possible that the Shares would no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board and therefore could no longer be used as collateral for loans made by brokers. In addition, if registration of the Shares under the Exchange Act were terminated, the Shares would no longer constitute "margin securities." 8. CERTAIN INFORMATION CONCERNING THE COMPANY The Company is a Delaware corporation, with its principal executive offices located at 184 Shuman Boulevard, Suite 200, Naperville, Illinois 60563, and, through its subsidiaries, is a leading independent provider of pharmacy services to long-term care institutions, including skilled nursing facilities, assisted living facilities and other long-term health care settings. The Company purchases, repackages and dispenses pharmaceuticals to patients or residents in its client facilities and provides such facilities with related consultant pharmacist and information services, including formulary management (i.e., management of pharmaceuticals dispensed to minimize cost and maximize therapeutic benefit), automated medical record-keeping, drug therapy evaluation and assistance with regulatory compliance. The Company also provides infusion therapy (i.e., intravenous introduction of fluids containing medications and/or nutrients), parenteral and enteral nutrition therapy (i.e., introduction, either intravenously or directly into a patient's digestive system, of nutrient fluids or other fluids), inhalation and respiratory therapy and wound care management services, as well as medical supplies and devices. The Company was formed by Timothy L. Burfield (the Company's President and Chief Executive Officer) and an investment fund affiliated with Golder, Thoma, Cressey, Rauner, Inc. to participate in the consolidation of 9 12 the long-term care pharmacy industry. To meet this objective, the Company has pursued an acquisition program designed to expand its presence in selected geographic markets. Since commencing operations in August 1994, the Company has completed 30 acquisitions. Selected Consolidated Financial Data. Set forth below is certain selected consolidated financial data with respect to the Company and its consolidated subsidiaries excerpted or derived from financial information contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (the "Company 10-K"), and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 (the "Company 10-Q"). More comprehensive financial information is included in the Company 10-K and the Company 10-Q and other documents filed by the Company with the Commission. The financial information that follows is qualified in its entirety by reference to the Company 10-K, the Company 10-Q and such other documents, including the financial statements and related notes therein. The Company 10-K, the Company 10-Q and such other documents should be available for inspection and copies thereof should be obtainable from the offices of the Commission in the manner set forth below. 10 13 AMERICAN MEDSERVE CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PREDECESSOR(1) PERIOD -------------- FROM PERIOD YEAR ENDED AUGUST 3, FROM SIX MONTHS ENDED --------------------------- 1994 TO JANUARY 1, ------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, 1994 TO AUGUST JUNE 30, JUNE 30, 1996 1995 1994 2, 1994 1997 1996 ------------ ------------ ------------ -------------- -------- -------- (UNAUDITED) STATEMENT OF OPERATIONS DATA: Revenues................... $ 82,027 $ 44,049 $ 8,091 $ 6,917 $ 75,563 $ 32,357 Cost of revenues........... 58,807 31,464 5,991 4,963 54,484 23,259 -------- ------- ------- ------ -------- ------- Gross Profit............... 23,220 12,585 2,100 1,954 21,079 9,098 Selling, general and administrative expenses................ 19,605 10,029 1,909 1,315 17,413 7,290 Nonrecurring charges(2).... 3,019 -- -- -- -- -- -------- ------- ------- ------ -------- ------- Operating income........... 596 2,556 191 639 3,666 1,808 Interest expense........... 2,741 1,762 292 78 389 1,213 Other (income) expense..... (84) (312) (69) -- (39) (75) Minority interest.......... (89) 32 6 -- (200) (4) -------- ------- ------- ------ -------- ------- Income (loss) before income taxes and extraordinary item.................... (1,972) 1,074 (38) 561 3,516 674 Provision (benefit) for income taxes............ 162 669 (21) 24 1,499 324 -------- ------- ------- ------ -------- ------- Income (loss) before extraordinary item...... (2,134) 405 (17) 537 2,017 350 Write off of deferred financing costs, net of income tax benefit of $404.................... 437 -- -- -- -- 437 -------- ------- ------- ------ -------- ------- Net income (loss).......... $ (2,571) $ 405 $ (17) $ 537 $ 2,017 $ (87) ======== ======= ======= ====== ======== ======= Income (loss) per share before extraordinary item.................... $ (0.29) $ 0.06 $ 0.17 $ 0.05 Extraordinary item per share................... 0.06 -- -- 0.06 -------- ------- -------- ------- Net income (loss) per share................... $ (0.35) $ 0.06 $ 0.17 $ (0.01) ======== ======= ======== ======= Weighted average shares outstanding............. 7,311 6,467 12,212 6,466 BALANCE SHEET DATA (AT PERIOD END): Working capital............ $ 38,494 $ 9,540 $ 3,517 $ 216 $ 29,385 $ 9,818 Total assets............... 113,298 44,997 16,965 5,240 133,508 61,830 Long-term debt, excluding current portion......... 6,087 23,505 8,071 264 13,219 28,167 Stockholders' equity (net capital deficiency)..... 92,999 14,573 5,596 1,205 97,303 (1,995)
- --------------- (1) Represents results of operations of Gatti LTC Services Inc., which was acquired by the Company on August 2, 1994. (2) Represents (a) a noncash, nonrecurring charge of $2.5 million (with no tax benefit) related to (i) the sale of 310,208 shares of Common Stock of the Company to certain directors and officers at a price less than the 11 14 initial public offering price of the Common Stock on November 13, 1996, and (ii) the conversion of options to purchase shares of common stock of certain subsidiaries into options to purchase 146,635 shares of Common Stock of the Company at a weighted average exercise price less than the initial public offering price of the Common Stock on November 13, 1996, (b) a charge of $0.3 million ($0.2 million net of tax) related to the termination of a professional services agreement with an affiliate of the Company's principal stockholder and (c) a charge of $0.2 million ($0.1 million net of tax) related to special bonuses paid to management in connection with the Company's initial public offering. Projected Financial Information. During the course of discussions between Parent, the Purchaser and the Company that led to the execution of the Merger Agreement (see Section 11), the Company provided Parent with certain projected financial data for the year ending December 31, 1997 relating to the Company (the "Projections"). THE COMPANY DOES NOT, AS A MATTER OF COURSE, PUBLICLY DISCLOSE FORWARD-LOOKING INFORMATION (SUCH AS THE PROJECTIONS REFERRED TO ABOVE) AS TO FUTURE REVENUES, EARNINGS OR OTHER FINANCIAL INFORMATION. PROJECTIONS OF THIS TYPE ARE BASED ON ESTIMATES AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC, INDUSTRY AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE PROJECTED RESULTS WOULD BE REALIZED OR THAT ACTUAL RESULTS WOULD NOT BE SIGNIFICANTLY HIGHER OR LOWER THAN THOSE PROJECTED. IN ADDITION, THESE PROJECTIONS WERE PREPARED BY THE COMPANY SOLELY FOR INTERNAL USE AND NOT FOR PUBLICATION OR WITH A VIEW TO COMPLYING WITH THE PUBLISHED GUIDELINES OF THE COMMISSION REGARDING PROJECTIONS OR WITH THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS GUIDE FOR PROSPECTIVE FINANCIAL STATEMENTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE THEY WERE FURNISHED TO PARENT. THE PROJECTIONS NECESSARILY MAKE NUMEROUS ASSUMPTIONS WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS AND ECONOMIC CONDITIONS, ACCESS TO MARKETS AND DISTRIBUTION CHANNELS, PRICING OF PHARMACEUTICAL PRODUCTS AND OTHER MATTERS, ALL OF WHICH ARE INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES AND MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL. ONE CANNOT PREDICT WHETHER THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS WILL BE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY HIGHER OR LOWER THAN THOSE CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THIS FORWARD-LOOKING INFORMATION SHOULD NOT BE REGARDED AS FACT OR AN INDICATION THAT PARENT, THE PURCHASER, THE COMPANY OR ANYONE WHO RECEIVED THIS INFORMATION CONSIDERED IT A RELIABLE PREDICTOR OF FUTURE RESULTS, AND THIS INFORMATION SHOULD NOT BE RELIED ON AS SUCH. NONE OF PARENT, THE PURCHASER OR THE COMPANY ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS OF THE PROJECTIONS AND THE COMPANY HAS MADE NO REPRESENTATION TO PARENT OR THE PURCHASER REGARDING THE PROJECTIONS. 12 15 The following information has been excerpted from the materials presented by the Company to Parent and the Purchaser: AMERICAN MEDSERVE CORPORATION MANAGEMENT PROJECTIONS FOR YEAR ENDING DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDING ------------ DECEMBER 31, 1997 ------------ Revenues........................................................................ $169,657 Cost of revenues................................................................ 120,052 -------- Gross profit.................................................................... 49,605 Gross profit percentage....................................................... 29.2% Operating expenses.............................................................. 33,217 -------- Operating expenses percentage................................................. 19.6% EBITDA.......................................................................... 16,388 Depreciation.................................................................... 1,906 -------- EBITA........................................................................... 14,482 EBITA percentage.............................................................. 8.5% Amortization.................................................................... 2,393 -------- EBIT............................................................................ 12,089 EBIT percentage............................................................... 7.1% Interest........................................................................ 2,078 -------- Earnings before income taxes and minority interest.............................. 10,012 Income taxes (benefit).......................................................... 4,381 Other income.................................................................... 104 Minority interest............................................................... 161 Net income (loss)............................................................... 5,573 Average number of shares outstanding............................................ 12,231 -------- Earnings per share, primary..................................................... $ 0.46
Other Information. The Company is subject to the information filing requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities, any material interests of such persons in transactions with the Company and other matters is required to be described in proxy statements distributed to the Company's Stockholders and filed with the Commission. These reports, proxy statements and other information should be available for inspection at the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available for inspection and copying at prescribed rates at the regional offices of the Commission located at Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material may also be obtained by mail, upon payment of the Commission's customary fees, from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a site on the World Wide Web at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. Except as otherwise noted in this Offer to Purchase, all of the information concerning the Company contained in this Offer to Purchase, including financial information, has been taken from or based upon publicly available documents and records on file with the Commission and other publicly available information. Although 13 16 neither the Purchaser nor Parent has any knowledge that any such information is untrue, neither the Purchaser nor Parent nor the Dealer Manager takes any responsibility for the accuracy or completeness of such information or for any failure by the Company to disclose events that may have occurred or may affect the significance or accuracy of such information. 9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT The Purchaser is a newly incorporated Delaware corporation and a wholly owned subsidiary of Parent. To date, the Purchaser has not conducted any business other than in connection with the Offer. Until immediately prior to the time the Purchaser purchases Shares pursuant to the Offer, it is not anticipated that the Purchaser will have any significant assets or liabilities or engage in activities other than those incident to its formation and capitalization and the transactions contemplated by the Offer. Because the Purchaser is a newly formed corporation and has minimal assets and capitalization, no meaningful financial information regarding the Purchaser is available. Parent was incorporated in Delaware on May 19, 1981 to conduct certain health care businesses contributed to it by W. R. Grace & Co. and Chemed Corporation, and in July 1981 public trading of Parent's common stock commenced. As part of a multi-year restructuring program undertaken in 1985, Parent, through a series of divestitures and acquisitions, redeployed all of its capital in the long-term pharmacy business. As a result, Parent is today a leading independent provider of pharmacy services to long-term care institutions such as nursing homes, retirement centers and other institutional health care facilities. Parent operates principally in one business segment, institutional pharmacy services for the long-term care market. Currently, Parent provides these services to approximately 361,400 residents in 4,400 nursing facilities located principally in the states of Alabama, Connecticut, Georgia, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Utah, Washington, West Virginia and Wisconsin. Parent does not make any export sales. The name, citizenship, business address, principal occupation or employment and five year employment history of each of the directors and executive officers of the Purchaser and Parent are set forth in Schedule I hereto. The principal executive offices of Parent and the Purchaser are located at 50 East RiverCenter Boulevard, Covington, Kentucky 41011. Set forth below is a summary of certain consolidated financial information with respect to Parent and its consolidated subsidiaries excerpted or derived from the information contained in or incorporated by reference in Parent's Annual Report on Form 10-K for the year ended December 31, 1996, as amended on Form 10-K/A on August 6, 1997 (the "Parent 10-K"), and Parent's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997 (the "Parent 10-Q"), in each case, as filed with the Commission by Parent. More comprehensive financial information is included in or incorporated by reference in the Parent 10-K, the Parent 10-Q and other documents filed by Parent with the Commission, and the financial information summary set forth below is qualified in its entirety by reference to the Parent 10-K, the Parent 10-Q and such other documents and all the financial information and related notes contained therein. 14 17 OMNICARE, INC. SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FISCAL YEAR ENDED SIX MONTHS ENDED ---------------------------------------------- ----------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30, 1996 1995 1994 1997 1996 ------------ ------------ ------------ --------- --------- (UNAUDITED) INCOME STATEMENT DATA: (A) Sales............................... $536,604 $399,636 $307,655 $384,668 $239,018 Net income.......................... $ 43,450(b) $ 24,760(c) $ 13,531(d) $ 28,581 (e) $ 18,525 Earnings per share data: Primary: Net income.......................... $ .64(b) $ .47(c) $ .30(d) $ .36 (e) $ .30 Fully diluted: Net income.......................... $ .61(b) $ .43(c) $ .30(d) $ .36 (e) $ .28 Dividends per share................. $ .06 $ .05 $ 0.045 $ .035 $ .03
AS OF AS OF AS OF AS OF AS OF DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30, 1996 1995 1994 1997 1996 ------------ ------------ ------------ --------- --------- BALANCE SHEET DATA: Working capital..................... $329,002 $106,384 $125,550 $271,191 $394,642 Total assets........................ 721,697 360,836 317,205 817,166 663,669 Long-term debt (f).................. 1,992 82,692 85,323 1,211 78,071 Stockholders' equity (g) (h)........ 634,378 214,761 180,104 715,674 523,753
- --------------- (a) The Company has had an active acquisition program in effect since 1989. (b) Includes acquisition expenses related to the 1996 pooling-of-interests transaction of $690,000. Such expenses, on an after-tax basis, were $534,000, or $.01 per primary and fully diluted share. Net income, excluding these expenses, was $43,984,000, or $.65 per primary share ($.61 fully diluted). (c) Includes acquisition expenses related to the 1995 Specialized pooling-of-interests transaction of $1,292,000. Such expenses, on an after-tax basis, were $989,000, or $.02 per primary share ($.01 fully diluted). Net income, excluding these expenses, was $25,749,000 or $.49 per primary share ($.44 fully diluted). (d) Includes acquisition expenses related to the 1994 Evergreen pooling-of-interests transaction of $2,380,000. Such expenses, on an after-tax basis, were $1,860,000, or $.04 per primary share ($.03 fully diluted). Net income, excluding these expenses, was $15,391,000, or $.34 per primary share ($.33 fully diluted). (e) Includes acquisition expenses related to the 1997 pooling-of-interests transactions of $1,671,000. Such expenses, on an after tax basis, were $1,429,000, or $.02 per primary and fully diluted share. Net income, excluding these expenses, was $30,010,000, or $.38 per primary and fully diluted share. (f) In 1993, the Company issued $80.5 million of Convertible Subordinated Notes due 2003 ("Notes"). In 1996, all of the remaining Notes were converted into common stock. (g) In 1994, the Company sold 6,494,964 shares of common stock, in a public offering, resulting in net proceeds of $59,211,000. (h) In 1996, the Company sold 5,750,000 (pre-1996 stock split) shares of its common stock in a public offering, resulting in net proceeds of $279,159,000. Parent is subject to the informational filing requirements of the Exchange Act and is required to file reports and other information with the Commission relating to its business, financial condition and other matters. Information, as of particular dates, concerning Parent's directors and officers, their remuneration, the principal holders of Parent's securities and any material interest of such persons in transactions with Parent is required to be described in periodic statements filed with the Commission. Such reports and other information, including the Parent 10-K and the Parent 10-Q, may be inspected and copies may be obtained from the offices of the Commission in the same manner as set forth in Section 8. 15 18 Except as set forth in this Offer to Purchase, none of Parent, the Purchaser or any of their affiliates (collectively, the "Purchaser Entities"), nor, to the best knowledge of any of the Purchaser Entities, any of the persons listed on Schedule I, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Company, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, none of the Purchaser Entities, nor, to the best knowledge of any of the Purchaser Entities, any of the persons listed on Schedule I, has had any business relationships or transactions with the Company or any of its executive officers, directors or affiliates that would require reporting under the rules of the Commission. Except as set forth in this Offer to Purchase, there have been no contacts, negotiations or transactions between the Purchaser Entities, or their respective subsidiaries or, to the best knowledge of any of the Purchaser Entities, any of the persons listed on Schedule I, and the Company or its affiliates, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, election of directors or a sale or other transfer of a material amount of assets. Except as set forth in this Offer to Purchase, during the last five years, none of the Purchaser Entities, nor, to the best knowledge of any of the Purchaser Entities, any of the persons listed in Schedule I hereto, (i) has been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. Except as set forth in this Offer to Purchase, none of the Purchaser Entities, nor, to the best knowledge of the Purchaser Entities, any of the persons listed on Schedule I hereto, beneficially owns any equity securities of the Company. Except as set forth in this Offer to Purchase, none of the Purchaser Entities, nor, to the best knowledge of the Purchaser Entities, any of the persons listed on Schedule I, beneficially owns any Shares or has effected any transaction in such equity securities during the past 60 days. 10. SOURCE AND AMOUNTS OF FUNDS The offer is not conditioned upon any financing arrangements. The total amount of funds required by the Purchaser to consummate the Offer and the Merger is expected to be approximately $222.6 million, which amount excludes related fees and expenses. Purchaser expects to obtain these funds in the form of capital contributions and/or loans from Parent. Parent expects to fund the capital contributions and/or loans provided to Purchaser from existing cash balances and/or from an existing credit facility. 11. BACKGROUND OF THE OFFER In the past, Parent reviewed certain properties currently owned by the Company in connection with Parent's consideration of purchasing such properties prior to the Company's acquisition of such properties. In June, 1997, representatives of DLJ contacted Joel F. Gemunder, President of Parent, to inquire as to Parent's interest in pursuing a transaction with the Company. Parent indicated such an interest and entered into a confidentiality agreement with the Company on June 4, 1997, which provided, among other things, that Parent would treat confidentially certain information to be provided to it concerning the Company. On June 12, 1997, DLJ sent a preliminary bid request letter to Parent. Parent engaged Credit Suisse First Boston to serve as its financial advisor in connection with the potential acquisition of the Company. On June 18, 1997, Parent submitted a written proposal to acquire the Company at a price range of $17.00-$19.00 per share, payable in cash. Parent then received an initial draft of the proposed Merger Agreement together with a letter from DLJ inviting Parent to submit a final proposal for the acquisition of the Company. On June 30, 1997, Parent and its advisors met with advisors of the Company and DLJ and conducted a preliminary review of certain non-public information. During the period from June 30, 1997 through July 9, 1997, Parent and its advisors continued a review of the Company's business, financial results and related data. From 16 19 July 2, 1997, through July 9, 1997, Parent, Parent's advisors, the Company's senior management and the Company's advisors engaged in various discussions regarding the business of the Company. On July 10, 1997, Parent submitted, along with a proposed Merger Agreement, a written offer to acquire the Company at a price of $17.75 per Share, subject to certain conditions, but not subject to a financing condition. On July 11, 1997, DLJ informed Parent that it was one of the final bidders and invited the Company to submit a revised offer. On July 15, 1997, Parent submitted a revised written offer at a price of $18.00 per Share. Shortly thereafter, DLJ informed Credit Suisse First Boston that Parent had been selected by the Company to attempt to consummate an acquisition of the Company. During the period from July 18, 1997 through August 7, 1997, Parent, Parent's advisors, the Company's senior management and the Company's advisors negotiated the terms of the Merger Agreement. After approval of such Merger Agreement by the Board of Directors of Parent, on August 7, 1997, the Board of Directors of the Company met and approved the proposed transaction and the Merger Agreement. The Merger Agreement was executed on August 7, 1997. Prior to the commencement of trading on August 8, 1997, each of the Company and Parent issued a press release regarding the execution of the Merger Agreement. 12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; PROPOSED MERGER Purpose of the Offer. The purpose of the Offer is for Parent, through the Purchaser, to acquire control of the Board of Directors of, and the entire equity interest in, the Company. The Purchaser intends to acquire all outstanding Shares not tendered and purchased pursuant to the Offer. The acquisition of the entire equity interest in the Company has been structured as a cash tender offer followed by a cash merger in order to provide a prompt and orderly transfer of ownership of the Company from the public Stockholders to Parent and to provide Stockholders with cash for all their Shares. THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OR A SOLICITATION OF CALLS FOR A SPECIAL MEETING OF THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WHICH PARENT OR THE PURCHASER MIGHT MAKE WOULD BE MADE ONLY PURSUANT TO SEPARATE PROXY OR SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. Plans for the Company. Except as otherwise set forth in this Offer to Purchase, it is expected that, initially following the Merger, the business and operations of the Company will be continued by the Surviving Corporation substantially as they are being conducted. Initially upon consummation of the Merger (the "Effective Time"), the directors of the Purchaser will be the directors of the Surviving Corporation and the officers of the Company immediately prior to the Effective Time will be the officers of the Surviving Corporation. Parent will continue to evaluate the business and operations of the Company during the pendency of the Offer and after the consummation of the Offer and the Merger, and will take such actions as it deems appropriate under the circumstances then existing. Parent intends to seek additional information about the Company during this period. Thereafter, Parent intends to review such information as part of a comprehensive review of the Company's business, operations, capitalization and management with a view to optimizing the Company's potential in conjunction with the business of Parent. Except as described in this Offer to Purchase, neither Parent nor the Purchaser has any present plans or proposals that would relate to or would result in (i) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries, (ii) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries, (iii) any other material change in the Company's corporate structure or business, (iv) a class of securities of the Company being delisted from a national securities exchange or ceasing to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association or (v) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act. 17 20 Proposed Merger. The Merger Agreement. The following is a summary of certain provisions of the Merger Agreement, a copy of which has been filed as an exhibit to the Schedule 14D-1 filed by the Purchaser with the Commission and is available for copying and inspection at the Commission in the manner set forth in Section 8. Such summary is qualified in its entirety by reference to the Merger Agreement. The Offer. The Merger Agreement provides for the making of the Offer by the Purchaser. The obligation of Purchaser to accept for payment and pay for Shares tendered pursuant to the Offer is subject to the satisfaction of the Minimum Condition and certain other conditions that are described in Section 14. The Purchaser has agreed that, without the written consent of the Company, Purchaser shall not amend or waive the Minimum Condition or decrease the Offer Price or the number of Shares sought in the Offer or amend any other condition of the Offer in any manner adverse to the Stockholders. If, immediately prior to the Expiration Date of the Offer, the Shares tendered and not withdrawn pursuant to the Offer equal less than 90% of the outstanding Shares but more than 80% of the outstanding Shares, the Purchaser may extend the Offer for a period not to exceed seven business day, notwithstanding that all conditions to the Offer are satisfied as of such date. The Merger. The Merger Agreement provides that, following the purchase of Shares pursuant to the Offer, and if required by applicable law in order to consummate the Merger, the approval of the Merger Agreement by the Stockholders of the Company and the satisfaction or waiver of the other conditions to the Merger, the Purchaser will be merged with and into the Company. The Merger shall become effective at such time as a certificate of merger is filed with the Secretary of State of the State of Delaware, or at such later time as is specified in such certificate of merger. As a result of the Merger, all of the properties, rights, privileges, immunities, powers and franchises of the Company and the Purchaser shall vest in the Surviving Corporation and all debts, liabilities and duties of the Company and the Purchaser shall become the debts, liabilities and duties of the Surviving Corporation. The Merger Agreement provides that the certificate of incorporation of the Purchaser at the Effective Time will be the certificate of incorporation of the Surviving Corporation. The by-laws of the Purchaser at the Effective Time will be the by-laws of the Surviving Corporation. The Merger Agreement also provides that the initial directors of the Purchaser at the Effective Time will be the directors of the Surviving Corporation and the initial officers of the Company at the Effective Time will be the officers of the Surviving Corporation. Conversion of Securities. At the Effective Time, (i) each issued and outstanding Share held in the treasury of the Company, by Parent, the Purchaser or any other wholly owned subsidiary of Parent shall be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor; (ii) each share of common stock of the Purchaser then issued and outstanding immediately prior to the Effective Time shall be converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation; and (iii) each Share issued and outstanding immediately prior to the Effective Time shall, except as otherwise provided in (i) above and except for Shares held by any Stockholder who has not voted in favor of the Merger or consented thereto in writing and who has demanded appraisal for such Shares in accordance with Section 262 of the DGCL, be converted into the right to receive $18.00 in cash or any higher price per Share that may be paid pursuant to the Offer, without interest. Dissenting Shares. Shares that are outstanding immediately prior to the Effective Time and which are held by Stockholders who shall not have voted in favor of the Merger or consented thereto in writing and who shall have demanded properly in writing appraisal for such Shares in accordance with Section 262 of the DGCL (collectively, the "Dissenting Shares"), shall not be converted into or represent the right to receive the Merger Consideration. Such Shares instead will, from and after the Effective Time, represent only the right to receive payment of the appraised value of such Shares held by them in accordance with the provisions of such Section 262, except that all Dissenting Shares held by Stockholders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such Shares under such Section 262 shall thereupon be deemed to have been converted into and to have become exchangeable, as of the Effective Time, for the right to receive, without any interest thereon, the Merger Consideration upon surrender, in the manner provided in the Merger Agreement, of the Certificate or Certificates that, immediately prior to the Effective Time, evidenced such Shares. 18 21 Options. The Merger Agreement provides that on the Expiration Date, immediately prior to the acceptance for payment of Shares pursuant to the Offer, each outstanding employee stock option to purchase Shares (a "Company Option") granted under any stock option or compensation plan or arrangement of the Company or its subsidiaries (collectively, the "Option Plan"), shall be surrendered to the Company and shall be forthwith canceled and the Company shall pay to each holder of a Company Option, by check, an amount equal to (i) the product of the number of the Shares which are issuable upon exercise of such Company Option, multiplied by the Offer Price, less (ii) the aggregate exercise price of such Company Option. Except as may be otherwise agreed to by Parent or the Purchaser and the Company, the Company's Option Plan shall terminate as of the Effective Time and the provisions in any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any of its subsidiaries shall be deleted as of the Effective Time and no holder of Company Options or any participant in the Option Plan or any other plans, programs or arrangements shall have any rights thereunder to acquire any equity securities of the Company, the Surviving Corporation or any subsidiary thereof. Recommendation. The Board of Directors has unanimously (i) determined that the terms of the Offer and the Merger are fair, to and in the best interests of, the Stockholders, (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, and (iii) resolved to recommend that the Stockholders accept the Offer, tender their Shares pursuant to the Offer and approve and adopt the Merger Agreement and the Merger; provided, that such recommendation may be withdrawn, modified or amended, if, in the opinion of the Board of Directors, after receipt of advice from outside legal counsel, failure to withdraw, modify or amend such recommendation would reasonably be expected to result in the Board of Directors violating its fiduciary duties to the Company's shareholders under applicable law and the Company pays the fees and expenses required by the Merger Agreement. Stockholders' Meeting. The Merger Agreement provides that the Company shall, if required in accordance with applicable law, in order to consummate the Merger, duly call, give notice of, convene and hold a special meeting of its Stockholders as promptly as practicable following consummation of the Offer for the purpose of considering and taking action on the Merger Agreement and the transactions contemplated thereby. If required by applicable law, the Company will file with the Commission a proxy statement including the recommendation of the Board of Directors that the Stockholders vote in favor of the approval of the Merger Agreement and the transactions contemplated thereby. The Company agrees to respond promptly to all Commission comments with respect to the proxy statement and to cause the proxy statement to be mailed to the Stockholders at the earliest practicable time. Notwithstanding the preceding paragraph, in the event that Parent, the Purchaser and any other subsidiaries of Parent shall acquire in the aggregate at least 90% of the outstanding shares of each class of capital stock of the Company, pursuant to the Offer or otherwise, the Company has agreed, at the request of Parent, to take all necessary and appropriate action to cause the Merger to become effective, as soon as practicable after such acquisition, without a meeting of Stockholders, in accordance with Section 253 of the DGCL. Representation on the Board of Directors. Promptly upon the purchase of and payment for any Shares by Parent or any of its subsidiaries which represents at least a majority of the outstanding Shares, Parent shall be entitled to designate such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as is equal to the product of the total number of directors on such Board (giving effect to the directors designated by Parent pursuant to this sentence) multiplied by the percentage that the number of Shares so accepted for payment bears to the total number of Shares then outstanding. In furtherance thereof, the Company shall, upon request of the Purchaser, promptly increase the size of its Board of Directors or exercise its best efforts to secure the resignations of such number of directors, or both, as is necessary to enable Parent's designees to be so elected to the Company's Board, and shall cause Parent's designees to be so elected. At such time, the Company shall, if requested by Parent, also cause persons designated by Parent to constitute at least the same percentage (rounded up to the next whole number) as is on the Company's Board of Directors of (i) each committee of the Company's Board of Directors, (ii) each board of directors (or similar body) of each subsidiary of the Company and (iii) each committee (or similar body) of each such board. In the event that Parent's designees are elected to the Company's Board of Directors, until the Effective Time, the Company's Board shall have at least two directors who are directors on the date of the Merger Agreement (the "Independent Directors"); 19 22 provided that, in such event, if the number of Independent Directors shall be reduced below two for any reason whatsoever, any remaining Independent Directors (or Independent Director, if there be only one remaining) shall be entitled to designate persons to fill such vacancies who shall be deemed to be Independent Directors for purposes of the Merger Agreement or, if no Independent Director then remains, the other directors shall designate two persons to fill such vacancies who shall not be stockholders, affiliates or associates of Parent or the Purchaser and such persons shall be deemed to be Independent Directors for purposes of the Merger Agreement. In the event that Parent's designees are elected to the Company's Board, after the acceptance for payment of Shares pursuant to the Offer and prior to the Effective Time, the affirmative vote of a majority of the Independent Directors shall be required to (a) amend or terminate the Merger Agreement by the Company or (b) exercise or waive any of the Company's rights, benefits or remedies thereunder. Interim Operations of the Company. Pursuant to the Merger Agreement, the Company has covenanted and agreed that, except as otherwise expressly provided in the Merger Agreement or as agreed in writing by the Parent, during the period from the date of the Merger Agreement until such time as directors of the Purchaser have been elected to, and shall constitute a majority of, the Board of Directors of the Company (a) the business of the Company and its subsidiaries shall be conducted only in the ordinary and usual course of business and consistent with past practice and, to the extent consistent therewith, each of the Company and its subsidiaries shall use its reasonable efforts to preserve its business organizations and business organizations of its subsidiaries intact and maintain its existing relations with customers, suppliers, employees, creditors and business partners, (b) the Company will not directly or indirectly (i) except upon exercise of employee stock options, pursuant to which up to 517,117 Shares may be issued, outstanding on the date of the Merger Agreement, issue, sell, transfer or pledge or agree to sell, transfer or pledge any treasury stock of the Company or any capital stock of any of its subsidiaries beneficially owned by it, (ii) amend its certificate of incorporation or by-laws or similar organizational documents, or (iii) split, subdivide, combine or reclassify the outstanding Shares or preferred stock or any outstanding capital stock of any of the subsidiaries of the Company, (c) neither the Company nor any of its subsidiaries shall (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock other than dividends paid by subsidiaries of the Company to the Company or any of its wholly owned subsidiaries in the ordinary course of business, (ii) issue, sell, pledge, grant, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its subsidiaries, other than Shares reserved for issuance on the date hereof pursuant to the exercise of employee stock options outstanding on the date of the Merger Agreement pursuant to which up to 517,117 shares may be issued, (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any assets other than in the ordinary and usual course of business and consistent with past practice, or (iv) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock, (d) neither the Company nor any of its subsidiaries shall (i) grant any increase in the compensation payable or to become payable by the Company or any of its subsidiaries to any of its executive officers or employees, enter into any contract or other binding commitment in respect of any such increase with any of its directors, officers or other employees or any director, officer or other employee of its subsidiaries, and not establish, adopt, enter into, make any new grants or awards under or amend, any collective bargaining agreement; (ii)(A) adopt any new, or (B) amend or otherwise increase, or accelerate the payment or vesting of the amounts payable or to become payable under an existing, bonus, incentive compensation, deferred compensation, severance, profit sharing, stock option, stock purchase, insurance, pension, retirement or other employee benefit plan, agreement or arrangement, or (iii) enter into any employment or severance agreement with or, except in accordance with the existing written policies of the Company, grant any severance or termination pay to any officer, director or employee of the Company or any of its subsidiaries; provided however, that (i) prior to consummation of the Offer, the Company may enter into severance agreements with certain individuals set forth in the Company Disclosure Schedule (the "Designated Employees") in the form as approved by the Company's Board of Directors, (ii) the aggregate cost of payments and benefits provided to the Designated Employees pursuant to the terms of such severance agreements (unless otherwise amended with the written consent of, or at the written direction of, Parent or Purchaser) shall not exceed $2,000,000 in the aggregate, and (iii) with respect to the severance plan described in the Company Disclosure Schedule that covers individuals other than the Designated Employees (the "Nondesignated Employees"): (a) the implementation of such plan and the entering into of agreements with Nondesignated Employees shall be subject to the prior written consent 20 23 of the Purchaser, which consent shall not be unreasonably withheld (with reasonableness to be determined based upon Purchaser's reasonable business objectives and consistent with Purchaser's past practice), and (b) the aggregate cost of payments and benefits provided to the Nondesignated Employees pursuant to the terms of such severance agreements (unless otherwise amended with the written consent of, or at the written direction of, Parent or Purchaser) shall not exceed $1,000,000 in the aggregate; (e) neither the Company nor any of its subsidiaries shall permit any insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except in the ordinary course of business and consistent with past practice; (f) neither the Company nor any of its subsidiaries shall enter into any contract or transaction relating to the purchase of assets that exceed $1,000,000 in the aggregate; (g) neither the Company nor any of its subsidiaries shall change any of the accounting methods used by it unless required by GAAP, neither the Company nor any of its subsidiaries shall make any material tax election except in the ordinary course of business consistent with past practice, change any material tax election already made, adopt any material tax accounting method except in the ordinary course of business consistent with past practice, change any material tax accounting method unless required by GAAP, enter into any closing agreement, settle any tax claim or assessment or consent to any tax claim or assessment or any waiver of the statute of limitations for any such claim or assessment, (h) neither the Company nor any of its subsidiaries shall (i) incur or assume any long-term debt, (ii) except in the ordinary course of business and consistent with past practice and in an aggregate amount not to exceed $3,000,000, incur or assume any short-term indebtedness, (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person, (iv) make any loans, advances or capital contributions to, or investment in, any other person (other than to wholly owned subsidiaries of the Company), (v) enter into any material commitment or transaction (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets), or (vi) modify, amend or terminate any of its material contracts or waive, release or assign any material rights, (i) neither the Company nor any of its subsidiaries shall settle or compromise any claim, lawsuit, liability or obligation, and neither the Company nor any of its subsidiaries shall pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of any such claims, liabilities or obligation, (x) to the extent reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company and its consolidated subsidiaries, (y) incurred in the ordinary course of business and consistent with past practice or (z) which are legally required to be paid, discharged or satisfied, (j) neither the Company nor any of its subsidiaries will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained in the Merger Agreement inaccurate in any respect at, or as of any time prior to, the Effective Time, (k) except as otherwise required by the fiduciary duties of the board to the Stockholders under applicable law, neither the Company nor any of its subsidiaries will take any action with the intent of causing any of the conditions to the Offer not to be satisfied, and (l) except as otherwise required by the fiduciary duties of the board to the Stockholders under applicable law, neither the Company nor any of its subsidiaries will enter into an agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or announce an intention to do any of the foregoing. Other Agreements of Parent, the Purchaser and the Company. The Merger Agreement provides that neither the Company nor any of its subsidiaries shall (and the Company shall use its best efforts to cause its officers, directors, employees, representatives and agents, including, but not limited to, investment bankers, attorneys and accountants, not to), directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent and any of its affiliates or representatives) concerning any proposal or offer to acquire all or a substantial part of the business and properties of the Company or any of its subsidiaries or any capital stock of the Company or any of its subsidiaries, whether by merger, tender offer, exchange offer, sale of assets or similar transactions involving the Company or any subsidiary, division or operating or principal business unit of the Company (an "Acquisition Proposal"), except that the Merger Agreement does not prohibit the Company or the Company's Board from (i) taking and disclosing to the Company's stockholders a position with respect to a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such disclosure to the Company's stockholders as, in the good faith judgment of the Board, after receiving advice from outside counsel, is required under applicable law, provided that the Company may not, except as described below, withdraw or modify, or propose to withdraw or modify, its position with respect 21 24 to the Offer or the Merger or approve or recommend, or propose to approve or recommend any Acquisition Proposal, or enter into any agreement with respect to any Acquisition Proposal. The Merger Agreement provides that the Company will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. The Merger Agreement provides that notwithstanding the foregoing, prior to the acceptance of Shares pursuant to the Offer, the Company may furnish information concerning the Company and its subsidiaries to any corporation, partnership, person or other entity or group pursuant to appropriate confidentiality agreements, and may negotiate and participate in discussions and negotiations with such entity or group concerning an Acquisition Proposal if (x) such entity or group has submitted a bona fide written proposal to the Company relating to any such transaction which the Board determines in good faith, after consulting with a nationally recognized investment banking firm, represents a superior transaction to the Offer and the Merger and (y) in the opinion of the Board of Directors of the Company, only after receipt of advice from outside legal counsel to the Company, the failure to provide such information or access or to engage in such discussions or negotiations would reasonably be expected to cause the Board of Directors to violate its fiduciary duties to the Company's shareholders under applicable law (an Acquisition Proposal which satisfies clauses (x) and (y) being referred to herein as a "Superior Proposal"). The Merger Agreement provides that the Company will immediately notify Parent of the existence of any proposal or inquiry received by the Company, the identity of the party making such proposal or inquiry, and the terms (both initial and modified) of any such proposal or inquiry (and will disclose any written materials delivered in connection therewith) and the Company will keep Parent reasonably informed of the status (including amendments or proposed amendments) of any such proposal or inquiry. The Merger Agreement provides that the Company will promptly provide to Parent any material non-public information regarding the Company provided to any other party which was not previously provided to Parent. The Merger Agreement provides that at any time following notification to Parent of the Company's intent to do so (which notification shall include the identity of the bidder and the material terms and conditions of the proposal) and if the Company has otherwise complied with the terms of the foregoing, the Board of Directors may withdraw or modify its approval or recommendation of the Offer and may enter into an agreement with respect to a Superior Proposal, provided it shall (i) take no such action unless it shall notify Parent promptly of its intention, and in no event shall such notice be given less than two business days prior to the earlier of the public announcement of such withdrawal or modification of its recommendation or the Company's termination of the Merger Agreement, and (ii) concurrently with entering into such agreement pay or cause to be paid to Parent the Break-Up Amount (as defined below) plus any amount payable at the time for reimbursement of expenses pursuant to the Merger Agreement. If the Company shall have notified Parent of its intent to enter into an agreement with respect to a Superior Proposal in compliance with the preceding sentence and has otherwise complied with such sentence, the Company may enter into an agreement with respect to such Superior Proposal. From the date of the Merger Agreement, upon reasonable notice, the Company shall (and shall cause each of its subsidiaries to) afford to the officers, employees, accountants, counsel, financing sources and other representatives of Parent, access, during normal business hours during the period prior to the time that the directors of the Purchaser have been elected to, and shall constitute a majority of the Board of Directors of the Company, (the "Appointment Date"), to all its properties, employees, books, contracts, commitments and records and, during such period, the Company shall (and shall cause each of its subsidiaries to) furnish promptly to the Parent (a) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws and (b) all other information concerning its business, properties and personnel as Parent may reasonably request. After the Appointment Date, the Company shall provide Parent and such persons as Parent shall designate with all such information, at such time as Parent shall request. Unless otherwise required by law and until the Appointment Date, Parent will hold any such information which is nonpublic in confidence in accordance with the provisions of a letter agreement dated June 4, 1997, between the Company and the Parent. Pursuant to the Merger Agreement, for five years after the Effective Time, the Surviving Corporation (or any successor to the Surviving Corporation) shall indemnify, defend and hold harmless the present and former officers and directors of the Company and its subsidiaries, determined as of the Effective Time (each an 22 25 "Indemnified Party") against all losses, claims, damages, liabilities, costs, fees and expenses (including reasonable fees and disbursements of counsel and judgments, fines, losses, claims, liabilities and amounts paid in settlement (provided that any such settlement is effected only upon receipt of the written consent of the Parent or the Surviving Corporation which consent shall not unreasonably be withheld)) arising out of actions or omissions occurring at or prior to the Effective Time to the full extent required under applicable Delaware law, the terms of the Company's certificate of incorporation or bylaws, as in effect at the date of the Merger Agreement, and the terms of any indemnification agreement entered into with the Company prior to the date of the Merger Agreement; provided, that in the event any claim or claims are asserted or made within such five-year period, all rights to indemnification in respect of any such claim or claims shall continue until disposition of any and all such claims. Parent or the Surviving Corporation shall maintain the Company's existing officers and directors' liability insurance ("D&O Insurance") for a period of not less than three years after the Effective Time; provided, that the Parent may substitute therefor policies of substantially equivalent coverage and amounts containing terms no less favorable to such former directors or officers; provided, further, if the existing D&O Insurance expires, is terminated or canceled during such period, Parent or the Surviving Corporation will use all reasonable efforts to obtain substantially similar D&O Insurance; provided, further, however, that in no event shall Parent, the Surviving Corporation or the Company be required to pay aggregate premiums for insurance in excess of 150% of the aggregate premiums paid by the Company in 1996 on an annualized basis for such purpose (the "1996 Premium"); and provided, further, that if the Parent or the Surviving Corporation is unable to obtain the amount of insurance required by this sentence for such aggregate premium, Parent or the Surviving Corporation shall obtain as much insurance as can be obtained for an annual premium not in excess of 150% of the 1996 Premium. The Merger Agreement provides that the Company, the Purchaser and Parent will each use all reasonable efforts to consummate and make effective the transactions contemplated by the Merger Agreement as soon as practicable. Representations and Warranties. The Merger Agreement contains various customary representations and warranties made by the Company to Parent and the Purchaser including, but not limited to, representations and warranties relating to the Company's organization and qualification, its capitalization, its authority to enter into the Merger Agreement and to carry out the related transactions, the absence of conflicts with applicable laws and existing obligations of the Company and its subsidiaries, financial statements of the Company, compliance with applicable law, filings made by the Company with the Commission under the Securities Act or the Exchange Act, undisclosed liabilities, certain changes or events concerning its businesses, litigation, employee benefits and labor matters, tax matters, intellectual property, environmental matters, disclosure documents filed with the Commission in connection with the Offer and the Merger, brokerage fees and commissions and other fees, certain business practices, insurance and product warranties. The Merger Agreement contains various customary representations and warranties made by Parent and the Purchaser to the Company, including, but not limited to, representations and warranties relating to Parent's and the Purchaser's organization and qualification, their authority to enter into the Merger Agreement and to carry out the related transactions, the absence of conflicts with applicable laws and existing obligations of Parent and the Purchaser, certain information provided to the Company by Parent and the Purchaser for inclusion in disclosure documents filed with the Commission in connection with the Offer and Merger and the financing of the Offer and Merger. Conditions to the Merger. The obligations of each of Parent, the Purchaser and the Company to effect the Merger are subject to the satisfaction of certain conditions, including that (a) the Merger Agreement shall have been adopted and the Merger shall have been approved by the requisite vote of the holders of the Shares, if required by applicable law, in order to consummate the Merger, (b) no federal or state governmental or regulatory body or court of competent jurisdiction shall have enacted, issued, promulgated or enforced any statute, rule, regulation, executive order, decree, judgment, preliminary or permanent injunction or other order that is in effect and that prohibits, enjoins or otherwise restrains the consummation of the Merger; provided, however, that the parties shall use all commercially reasonable efforts to cause any such decree, judgment, injunction or order to be vacated or lifted, (c) Parent, the Purchaser or their affiliates shall have purchased Shares pursuant to the Offer, except that this condition shall not apply if Parent, the Purchaser or their affiliates shall have failed to purchase Shares pursuant to the Offer in breach of their obligations under the Merger Agreement, and (d) the waiting 23 26 period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired. The obligation of the Parent and Purchaser and the Company to effect the Merger is also subject to the satisfaction or waiver of the condition that all representations and warranties made by the Company or Parent and Purchaser, respectively, in the Merger Agreement shall be true and correct on and as of the Effective Time, unless the inaccuracies (without giving effect to any materiality or material adverse effect qualifications or materiality exceptions contained therein) under such representations and warranties, taking all the inaccuracies under all such representations and warranties together in their entirety, do not, individually or in the aggregate, result in any event, change or effect that has, or is reasonably likely to have, a material adverse effect (A) on the condition (financial or otherwise), business, assets, liabilities, results of operations or cash flows of the Company and its subsidiaries or Parent and its subsidiaries, respectively, taken as a whole, or (B) on the ability of the Company or the ability of Parent or the Purchaser to perform its obligations under the Merger Agreement or to consummate the transactions contemplated by the Merger Agreement. Termination. The Merger Agreement may be terminated, (a) by the mutual written consent of Parent and the Company, (b) by either of the Company or Parent (i) if the Offer shall have expired without any Shares being purchased therein; provided, however, that the right to terminate the Merger Agreement under this clause (b)(i) shall not be available to any party whose failure to fulfill any obligation under the Merger Agreement has been the cause of, or resulted in, the failure of Parent or the Purchaser, as the case may be, to purchase the Shares pursuant to the Offer on or prior to such date, (ii) if any court, arbitrator, tribunal, administrative agency or commission or other governmental or other regulatory authority or agency shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties to the Merger Agreement shall use their reasonable efforts to lift), which permanently restrains, enjoins or otherwise prohibits the consummation of the Offer or the Merger and such order, decree, ruling or other action shall have become final and nonappealable, or (iii) if the Offer has not been consummated prior to October 5, 1997; provided, that the right to terminate the Merger Agreement under this clause (b)(iii) shall not be available to any party whose misrepresentation in the Merger Agreement or whose failure to perform any of its covenants and agreements or to satisfy any obligation under the Merger Agreement has been the cause of, or resulted in, the failure of Parent or the Purchaser, as the case may be, to purchase Shares pursuant to the Offer on or prior to such date, (c) by the Company (i) if Parent, the Purchaser or any of their affiliates shall have failed to commence the Offer on or prior to five business days following the date of the initial public announcement of the Offer; provided, that the Company may not terminate the Merger Agreement pursuant to this clause (c)(i) if the Company is at such time in breach of its obligations under the Merger Agreement such as to cause a material adverse effect on the condition (financial or otherwise), business, assets, liabilities, results of operations or cash flows of the Company and its subsidiaries, taken as a whole, or on the ability of the Company to perform its obligations under the Merger Agreement or to consummate the transactions contemplated by the Merger Agreement (a "Company Material Adverse Effect"), (ii) in connection with entering into an agreement with respect to a Superior Proposal, provided it has complied with all provisions relating thereto contained in the Merger Agreement, including the notice provisions, and that it makes simultaneous payment of the Break-Up Amount (as defined below), or (iii) if Parent or the Purchaser shall have breached in any material respect any of their respective representations, warranties, covenants or other agreements contained in the Merger Agreement, which is not cured, in all material respects, within 30 days after the giving of written notice by the Company to Parent or the Purchaser, as applicable, (d) by Parent (i) if either Parent or the Purchaser is entitled to terminate the Offer as a result of (A) the Board of Directors of the Company or any committee thereof having modified in a manner adverse to Parent or the Purchaser or withdrawn its approval or recommendation of the Offer, the Merger or the Merger Agreement, or approved or recommended any Acquisition Proposal, (B) the Company entering into any agreement with respect to any Superior Proposal in accordance with the terms of the Merger Agreement, or (C) the Board of Directors of the Company resolving to do any of the foregoing, (ii) if the Offer is not commenced as a result of actions or inaction by the Company that result in the failure of a condition specified in Section 14 hereof or the Offer is terminated or expires as a result of the failure of a condition specified in Section 14 hereof, unless such termination or expiration has been caused by or resulted from the failure of Parent or Purchaser to perform any covenants and agreements of Parent or Purchaser contained in the Merger Agreement, or (iii) if (A) the Company shall have breached in any respect any of its representations or warranties contained in the Merger Agreement, 24 27 unless the inaccuracies (without giving effect to any materiality or material adverse effect qualifications or materiality exceptions contained therein) under such representations and warranties taking all the inaccuracies under all such representations and warranties together in their entirety, do not, individually or in the aggregate, result in a Company Material Adverse Effect or (B) the Company shall have breached or failed to perform any obligation or to comply with any agreement or covenant to be performed or complied with by it under the Merger Agreement, other than, any breach or failure which would not have, either individually or in the aggregate, a Company Material Adverse Effect (in each of cases (A) and (B), which breach or failure has not been cured within thirty (30) days following receipt of written notice thereof by Parent specifying in reasonable detail the basis of such alleged breach or failure. Termination Fee. If (i) the Company terminates the Merger Agreement in connection with entering into an agreement with respect to a Superior Proposal, (ii) Parent terminates the Merger Agreement as a result of (A) the Board of Directors of the Company or any committee thereof having modified in a manner adverse to Parent or the Purchaser or withdrawn its approval or recommendation of the Offer, the Merger or the Merger Agreement, or approved or recommended any Acquisition Proposal, (B) the Company entering into any agreement with respect to any Superior Proposal in accordance with the terms of the Merger Agreement, or (C) the Board of Directors of the Company resolving to do any of the foregoing, or (iii) either the Company or Parent terminates the Merger Agreement if the Offer shall have expired without any Shares being purchased therein (provided, however, that such right to terminate is not available to any party whose failure to fulfill any obligation under the Merger Agreement has been the cause of, or resulted in, the failure of Parent or the Purchaser, as the case may be, to purchase the Shares pursuant to the Offer on or prior to such date) and (1) prior to such termination there shall have been publicly announced another Acquisition Proposal or (2) the Company shall have entered into a definitive agreement relating to an Acquisition Proposal or a business combination or other transaction contemplated by an Acquisition Proposal shall have been consummated in either case prior to or within six months following such termination, then the Company agrees that it will immediately thereafter pay to Parent in same day funds, an amount (the "Break-Up Amount") equal to $6,700,000. Pursuant to the Merger Agreement, in the event of the termination of the Merger Agreement, the Merger Agreement will become null and void and have no further force or effect, without any liability on the part of any party or its affiliates, directors, officers, agents or representatives, other than (a) certain provisions of the Merger Agreement relating to the termination fee, expenses of the parties and confidentiality of information, publicity and effect of termination and (b) to the extent that such termination results from the breach by such party of any of its representations, warranties, covenants or agreements contained in the Merger Agreement, provided, however, that a party's damages for any such breach shall be limited to such party's actual damages and neither party shall be entitled to seek consequential or special damages for any such breach. Costs and Expenses. Except as discussed above, the Merger Agreement provides that all costs and expenses incurred in connection with the Merger Agreement and the consummation of the transactions contemplated by the Merger Agreement shall be paid by the party incurring such costs and expenses. Amendment and Waivers. Subject to applicable law, the Merger Agreement may be amended, modified and supplemented in any and all respects, whether before or after any vote of the shareholders of the Company contemplated by the Merger Agreement, by written agreement of the Parent and Purchaser and the Company, by action taken by their respective Boards of Directors, at any time prior to the date of the closing of the Merger with respect to any of the terms contained therein; provided, however, that after the approval of the Merger Agreement by the stockholders of the Company, no such amendment, modification or supplement shall reduce the amount or change the form of the Merger Consideration. 13. DIVIDENDS AND DISTRIBUTIONS The Merger Agreement provides that neither the Company nor its subsidiaries shall, after the date of the execution and delivery of the Merger Agreement and until the Appointment Date, declare, set aside, or pay any dividend in cash, stock or property with respect to its capital stock other than dividends paid by subsidiaries of the Company to the Company or any of its wholly owned subsidiaries in the ordinary course of business or issue, sell, pledge, grant, dispose of or encumber any additional shares of, or securities convertible into or exchangeable 25 28 for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its subsidiaries, other than Shares reserved for issuance on the date of the Merger Agreement pursuant to the exercise of company options outstanding on the date of the Merger Agreement, pursuant to which up to 517,117 Shares may be issued. 14. CERTAIN CONDITIONS TO THE OFFER Notwithstanding any other provisions of the Offer, and in addition to (and not in limitation of) the Purchaser's rights to extend and amend the Offer at any time in its sole discretion (subject to the provisions of the Merger Agreement), the Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and may delay the acceptance for payment of or, subject to the restriction referred to above, the payment for, any tendered Shares, and may terminate or amend the Offer as to any Shares not then paid for, if (i) the Minimum Condition has not been satisfied, (ii) any applicable waiting period for the Offer under the HSR Act has not expired, or (iii) at any time on or after the date of the Merger Agreement and before the time of acceptance for payment for any such Shares, any of the following events shall have occurred: (a) there shall be threatened, instituted, or pending any suit, action or proceeding by, or before any court, arbitrator, tribunal, administrative agency or commission or other governmental or other regulatory authority or agency (collectively, a "Governmental Entity") against the Purchaser, Parent, the Company or any subsidiary of the Company (i) seeking to prohibit or impose any material limitations on Parent's or the Purchaser's ownership or operation (or that of any of their respective subsidiaries or affiliates) of all or a material portion of their or the Company's businesses or assets, or to compel Parent or the Purchaser or their respective subsidiaries and affiliates to dispose of or hold separate any material portion of the business or assets of the Company or Parent and their respective subsidiaries, in each case taken as a whole, (ii) challenging the acquisition by Parent or the Purchaser of any Shares under the Offer, seeking to restrain or prohibit the making or consummation of the Offer or the Merger or the performance of any of the other transactions contemplated by the Merger Agreement, or seeking to obtain from the Company, Parent or the Purchaser any material damages, (iii) seeking to impose material limitations on the ability of the Purchaser, or render the Purchaser unable, to accept for payment, pay for or purchase some or all of the Shares pursuant to the Offer and the Merger, (iv) seeking to impose material limitations on the ability of Purchaser or Parent effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by them on all matters properly presented to the Company's stockholders, or (v) which otherwise is reasonably likely to have a material adverse effect (A) on the condition (financial or otherwise), business, assets, liabilities, results of operations or cash flows of the Company or its subsidiaries, taken as a whole, or (B) on the ability of the Company to perform its obligations under the Merger Agreement or to consummate the transactions contemplated by the Merger Agreement (a "Company Material Adverse Effect"); (b) there shall be any action taken by a Governmental Entity or any statute, rule, regulation, judgment, administrative interpretation, order or injunction enacted, entered, enforced, promulgated, or deemed applicable, to the Company, Parent, Purchaser, the Offer or the Merger, or any other action shall be taken by any Governmental Entity that is reasonably expected to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; (c) there shall have occurred any other event, change or effect after the date of the Merger Agreement which, either individually or in the aggregate, would have, or be reasonably likely to have, a Company Material Adverse Effect; (d) (i) the Board of Directors of the Company or any committee thereof shall have modified in a manner adverse to Parent or the Purchaser or withdrawn its approval or recommendation of the Offer, the Merger or the Merger Agreement, or approved or recommended any Acquisition Proposal, (ii) the Company shall have entered into any agreement with respect to any Superior Proposal in accordance with the Merger Agreement or (iii) the Board of Directors of the Company resolves to do any of the foregoing; 26 29 (e) the representations and warranties of the Company set forth in the Merger Agreement shall not be true and correct, in each case (i) as of the date referred to in any representation or warranty which addresses matters as of a particular date, or (ii) as to all other representations and warranties, as of the date of the Merger Agreement and as of the scheduled expiration of the Offer, unless the inaccuracies (without giving effect to any materiality or material adverse effect qualifications or materiality exceptions contained therein) under such representations and warranties, taking all the inaccuracies under all such representations and warranties together in their entirety, do not, individually or in the aggregate, result in a Company Material Adverse Effect; (f) the Company shall have breached or failed to perform any obligation or to comply with any agreement or covenant to be performed or complied with by it under the Merger Agreement other than any breach or failure which would not have, either individually or in the aggregate, a Company Material Adverse Effect (which breach or failure has not been cured within thirty (30) days following receipt of written notice thereof by Parent specifying in reasonable detail the basis of such alleged breach or failure); (g) any person entity or "group" (as such term is used in Section 13(d)(3) of the Exchange Act) other than Parent or any of its affiliates acquires beneficial ownership (as defined in Rule 13d-3 promulgated under the Exchange Act), of at least 30% of the outstanding Shares of the Company; (h) the Merger Agreement shall have been terminated in accordance with its terms, which, in the sole judgment of Parent or the Purchaser, in any such case, and regardless of the circumstances (including any action or inaction by Parent or the Purchaser) giving rise to such condition makes it inadvisable to proceed with the Offer and/or with such acceptance for payment of or payment for Shares; or (i) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in securities on any national securities exchange or in the over-the-counter market in the United States, (ii) the declaration of any banking moratorium or any suspension of payments in respect of banks or any limitation (whether or not mandatory) on the extension of credit by lending institutions in the United States, (iii) the commencement of a war, material armed hostilities or any other material international or national calamity involving the United States, (iv) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof, or (v) any decline, measured from the date of the Merger Agreement, in the Standard and Poor's 500 Index by an amount in excess of 25%. The foregoing conditions are for the sole benefit of Parent and the Purchaser, may be asserted or waived by Parent or the Purchaser regardless of the circumstances giving rise to such condition (including any action or inaction by Parent or the Purchaser not in violation of the Merger Agreement) and may be asserted or waived by Parent or the Purchaser in whole or in part at any time and from time to time in the sole discretion of Parent or the Purchaser, subject in each case to the terms of the Merger Agreement. The failure by Parent or the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. 15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS Except as described in this Section 15, based on a review of publicly available filings by the Company with the Commission and other publicly available information concerning the Company, neither Parent nor the Purchaser is aware of any license or regulatory permit that appears to be material to the business of the Company and its subsidiaries, taken as a whole, that might be adversely affected by the acquisition of Shares by the Purchaser pursuant to the Offer, the Merger or otherwise or of any approval or other action by any governmental, administrative or regulatory agency or authority, domestic or foreign, that would be required prior to the acquisition of Shares by the Purchaser pursuant to the Offer, the Merger or otherwise. Should any such approval or other action be required, Parent and the Purchaser currently contemplate that it will be sought. While the Purchaser does not currently intend to delay the acceptance for payment of Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that adverse consequences might not result to the business of the Company or the Purchaser or Parent or that certain parts of the business of the Company or the Purchaser or Parent might not have to be disposed of in the event that such approvals were 27 30 not obtained or any other actions were not taken. The Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions, including conditions relating to the legal matters discussed in this Section 15. See Section 14. State Takeover Statutes. A number of states throughout the United States have enacted takeover statutes that purport, in varying degrees, to be applicable to attempts to acquire securities of corporations that are incorporated or have assets, stockholders, executive offices or places of business in those states. In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States held that the Illinois Business Takeover Act, which involved state securities laws that made the takeover of certain corporations more difficult, imposed a substantial burden on interstate commerce and was therefore unconstitutional. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court of the United States held that a state may, as a matter of corporate law and, in particular, those laws concerning corporate governance, constitutionally disqualify a potential acquirer from voting on the affairs of a target corporation without prior approval of the remaining stockholders; provided that the laws were applicable only under certain conditions. Section 203 of the DGCL prohibits business combination transactions involving a Delaware corporation and an "interested stockholder" (defined generally as any person that directly or indirectly beneficially owns 15% or more of the outstanding voting stock of the subject corporation) for three years following the date such person became an "interested stockholder," unless certain exceptions apply, including that before such person became an interested stockholder the board of directors of the subject corporation approved the transaction in which such person became an interested stockholder or approved the business combination. Since the Board, at the special meeting held on August 7, 1997, approved the Merger Agreement and the transactions contemplated thereby, Section 203 is inapplicable to Parent and the Purchaser in connection with the Offer and the Merger. The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted "takeover" statutes. The Purchaser does not know whether any of these statutes will, by their terms, apply to the Offer, and has not complied with any such statutes. To the extent that certain provisions of these statutes purport to apply to the Offer, the Purchaser believes that there are reasonable bases for contesting such statutes. If any person should seek to apply any state takeover statute, the Purchaser would take such action as then appears desirable, which action may include challenging the validity or applicability of any such statute in appropriate court proceedings. If it is asserted that one or more takeover statutes apply to the Offer, and it is not determined by an appropriate court that such statute or statutes do not apply or are invalid as applied to the Offer, the Purchaser might be required to file certain information with, or receive approvals from, the relevant state authorities, and the Purchaser might be unable to purchase or pay for Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer. In such case, the Purchaser may not be obligated to accept for payment or pay for Shares tendered. Antitrust. The Offer and the acquisition of Shares pursuant to the Merger Agreement are subject to the HSR Act, which provides that certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the Federal Trade Commission ("FTC") and certain waiting period requirements have been satisfied. Parent intends to file on or before August 18, 1997, a Notification and Report Form with respect to the Offer. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer and the Merger may not be consummated until the expiration of a 15-calendar day waiting period following the filing by Parent. Accordingly, in the event such filing is made on August 18, 1997, the waiting period with respect to the Offer will expire at 11:59 p.m., New York City time, on September 2, 1997, unless the Antitrust Division and the FTC terminate the waiting period or Parent receives a request for additional information or documentary material prior thereto. If, within such 15-day waiting period, either the Antitrust Division or the FTC requests additional information or material from Parent concerning the Offer, the waiting period will be extended and would expire at 11:59 p.m., New York City time, on the tenth calendar day after the date of substantial compliance by Parent with such request. Only one extension of the waiting period pursuant to a request for additional information is authorized by the HSR Act. Thereafter, such waiting period may be extended only by court order or with the consent of Parent. The Purchaser will not accept for payment Shares tendered pursuant to 28 31 the Offer unless and until the waiting period requirements imposed by the HSR Act with respect to the Offer have been satisfied. See Section 14. No separate HSR Act waiting period requirements with respect to the Merger Agreement will apply, so long as the 15-day waiting period expires or is terminated. Thus, all Shares may be acquired pursuant to the Offer upon the expiration or termination of the 15-day waiting period or the tenth calendar day after the date of substantial compliance with a request for additional information. The FTC and the Antitrust Division frequently scrutinize the legality under the antitrust laws of transactions such as the Purchaser's acquisition of Shares pursuant to the Offer and the Merger Agreement. At any time before or after the Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the acquisition of Shares pursuant to the Offer or otherwise or seeking divestiture of Shares acquired by the Purchaser or divestiture of substantial assets of Parent or its subsidiaries, or the Company or its subsidiaries. Private parties and state attorneys general may also bring legal action under the antitrust laws under certain circumstances. There can be no assurance that a challenge to the Offer or other acquisition of Shares by the Purchaser on antitrust grounds will not be made or, if such a challenge is made, of the result. See Section 14 for certain conditions to the Offer, including conditions with respect to litigation and certain governmental actions. Appraisal Rights. No appraisal rights are available in connection with the Offer. If the Merger is consummated, Stockholders of the Company would have the right to dissent and demand appraisal of their Shares under the DGCL. Under the DGCL, dissenting Stockholders who comply with the applicable statutory procedures will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of such merger or similar business combination) and to receive payment of such fair value in cash. In addition, such dissenting Stockholders would be entitled to receive payment of a fair rate of interest from the date of consummation of the Merger on the amount determined to be the fair value of their Shares. Any such judicial determination of the fair value of the Shares could be based upon considerations other than or in addition to the price paid in the Offer and the market value of the Shares. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among other things, that "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court" should be considered in an appraisal proceeding. Stockholders should recognize that the value so determined could be higher or lower or the same as the price per Share paid pursuant to the Offer or the consideration per Share in the Merger. 16. FEES AND EXPENSES Parent and the Purchaser have engaged Credit Suisse First Boston as the Dealer Manager in connection with the Offer. Parent has agreed to pay Credit Suisse First Boston a fee of $1.5 million that will be payable to Credit Suisse First Boston upon the closing of any acquisition of the Company by Parent. Parent and the Purchaser also have agreed to indemnify Credit Suisse First Boston against certain liabilities and expenses, including certain liabilities under the federal securities laws. The Purchaser has retained D.F. King & Co., Inc. to act as the Information Agent and First Chicago Trust Company of New York to act as the Depositary in connection with the Offer. The Information Agent may contact by mail, telephone, telex, facsimile, telegraph and personal interview and may request brokers, dealers, commercial banks, trust companies and other nominees to forward the Offer material to beneficial owners. The Information Agent and Depositary each will receive reasonable and customary compensation for their services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under the federal securities laws. Neither the Information Agent nor the Depositary has been retained to make solicitations or recommendations in connection with the Offer. Neither the Purchaser nor Parent will pay any fees or commissions to any broker or dealer or other persons for soliciting tenders of Shares pursuant to the Offer (other than the fees of the Dealer Manager and the Information Agent). Brokers, dealers, commercial banks and trust companies will be reimbursed by the Purchaser for reasonable expenses incurred by them in forwarding material to their customers. 29 32 17. MISCELLANEOUS The Offer is not being made to (nor will tenders be accepted from or on behalf of) Stockholders in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. Neither the Purchaser nor Parent is aware of any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. To the extent the Purchaser or Parent becomes aware of any state law that would limit the class of offerers in the Offer, the Purchaser will amend the Offer and, depending on the timing of such amendment, if any, will extend the Offer to provide adequate dissemination of such information to such Stockholders prior to the expiration of the Offer. In any jurisdiction where the securities, blue sky or other laws of which require the Offer to be made by a licensed broker or dealer, the Offer is being made on behalf of the Purchaser by the Dealer Manager or one or more registered brokers or dealers licensed under the laws of such jurisdiction. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. The Purchaser has filed with the Commission the Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional information with respect to the Offer, and may file amendments thereto. The Schedule 14D-1 and any amendments thereto, including exhibits, may be inspected and copies may be obtained at the same places and in the same manner as set forth in Section 8 (except they will not be available at the regional offices of the Commission). OMNICARE ACQUISITION CORP. August 14, 1997 30 33 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER 1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth in the table below are the name and the present principal occupations or employment and the name, principal business and address of any corporation or other organization in which such occupation or employment is conducted, and the five-year employment history of each of the directors and executive officers of Parent. Parent directly owns 100% of the equity interest in the Purchaser. Unless otherwise indicated, each person identified below is employed by Parent. The principal business address of Parent and, unless otherwise indicated, the business address of each person identified below, is 50 East RiverCenter Boulevard, Covington, Kentucky 41011. Directors are identified by an asterisk. All persons identified below are United States citizens.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR NAME EMPLOYMENT HISTORY - --------------------------------- ---------------------------------------------------------- EDWARD L. HUTTON*................ Director since 1981 Age: 78 Mr. Hutton is Chairman of Parent and has held this position since May 1981. Additionally, he is Chairman and Chief Executive Officer and a director of Chemed Corporation, Cincinnati, Ohio (a diversified public corporation with interests in plumbing and drain cleaning services, janitorial supplies and health care services) (hereinafter "Chemed") and has held these positions since November 1993 and April 1970, respectively. Previously, he was President and Chief Executive Officer of Chemed, positions he had held from April 1970 to November 1993. He is also Chairman and a director of National Sanitary Supply Company, Cincinnati, Ohio (sanitary and maintenance supplies distributor) (hereinafter "National Sanitary"). Mr. Hutton is the father of Thomas C. Hutton, who is a director of the Parent. JOEL F. GEMUNDER*................ Director since 1981 Age: 58 Mr. Gemunder is President of Parent and has held this position since May 1981. From January 1981 until July 1981, he served as Chief Executive Officer of the partnership organized as a predecessor to Parent for the purpose of owning and operating certain health care businesses of Chemed and Daylin, Inc., each then a subsidiary of W.R. Grace & Co. Mr. Gemunder was an Executive Vice President of Chemed and Group Executive of its Health Care Group from May 1981 through July 1981 and a Vice President of Chemed from 1977 until May 1981. Mr. Gemunder is a director of Chemed. RONALD K. BAUR*.................. Director since 1994 Age: 56 Mr. Baur is Regional Vice President-Operations of Parent, a position he has held since February 1994. Previously, he was Regional Vice President-Operations of Parent's Pharmacy Services Group (a group of subsidiaries engaged in providing pharmacy services to long-term care facilities) (hereinafter "Pharmacy Services Group") from March 1993 to February 1994 when the Pharmacy Services Group was integrated into the corporate management structure of the Parent. He is also President of Interlock Pharmacy Systems, Inc., St. Louis, Missouri (pharmacy services for long-term care facilities) (hereinafter "Interlock"), a subsidiary of the Parent. He has held this position since Parent's acquisition of Interlock in July 1992. From 1973 to July 1992, he was the sole stockholder and the President of Interlock. TIMOTHY E. BIEN.................. Age: 46 Mr. Bien is Senior Vice President -- Professional Services and Purchasing of Parent. He has held that position since 1996. Prior to that, Mr. Bien was Vice President of Professional Services for Parent, a position he had held since 1992.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR NAME EMPLOYMENT HISTORY - --------------------------------- ---------------------------------------------------------- KENNETH W. CHESTERMAN*........... Director since 1984 Age: 57 Mr. Chesterman is a consultant to the Parent. Prior to his retirement in July 1997, he was an Executive Vice President of Parent and had held this position since 1984. He had also served as President of the Pharmacy Services Group from August 1989 to February 1994. From August 1984 to August 1989, he held the position of President of Parent's subsidiary, HPI Health Care Services, Inc., Los Angeles, California (health care services (hereinafter "HPI"), which was sold in August 1989. CHARLES H. ERHART, JR.*.......... Director since 1981 Age: 72 Mr. Erhart retired as President of W.R. Grace & Co., Boca Raton, Florida (international specialty chemicals and health care) (hereinafter "Grace") in August 1990. He had held this position since July 1989. From November 1986 to July 1989, he was Chairman of the Executive Committee of Grace. From May 1981 to November 1986, he served as Vice Chairman and Chief Administrative Officer of Grace. Mr. Erhart is a director of Chemed and National Sanitary. MARY LOU FOX*.................... Director since 1993 Age: 66 Ms. Fox is Senior Vice President-Marketing of Parent and has held this position since May 1996. Previously she served as Vice President-Marketing for Parent since February 1994. From July 1993 to February 1994, she was Vice President-Marketing of the Pharmacy Services Group. She is also President of Westhaven Services Co., Toledo, Ohio (pharmacy services for long-term care facilities) (hereinafter "Westhaven"), a subsidiary of Parent. She has held this position since Parent's acquisition of Westhaven in October 1992. From 1976 to October 1992, she was the sole stockholder and the President of Westhaven. DAVID W. FROESEL, JR............. Age: 45 Mr. Froesel is Senior Vice President and Chief Financial Officer of Parent. He has held that position since joining Parent in March 1996. Mr. Froesel was Vice President of Finance and Administration at Mallinckrodt Veterinary, Inc. from May 1993 to February 1996. From July 1989 to April 1993, he was worldwide corporate controller of Mallinckrodt Medical Inc. CHERYL D. HODGES*................ Director since 1992 Age: 45 Ms. Hodges is Senior Vice President and Secretary of Parent and has held these positions since February 1994. From August 1986 to February 1994, she was Vice President and Secretary of Parent. From August 1982 to August 1986, she served as Vice President-Corporate and Investor Relations. Ms. Hodges has also served as a director of Parent for four prior terms: 1984-85; 1986-87; 1988-89 and 1990-91. THOMAS C. HUTTON*................ Director since 1983 Age: 46 Mr. Hutton is a Vice President of Chemed and has held this position since February 1988. Mr. Hutton is a director of Chemed and National Sanitary. He is the son of Edward L. Hutton, Chairman of Parent.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR NAME EMPLOYMENT HISTORY - --------------------------------- ---------------------------------------------------------- PATRICK E. KEEFE*................ Director since 1993 Age: 52 Mr. Keefe is Executive Vice President-Operations of Parent and has held this position since February 1997. Previously he was Senior Vice President-Operations since February 1994. From April 1993 to February 1994, he was Vice President-Operations of Parent. From April 1992 to April 1993, he served as Vice President-Pharmacy Management Programs of Diagnostek, Inc., Albuquerque, New Mexico (mail-service pharmacy and health care services) (hereinafter "Diagnostek"). From September 1990 to April 1992, Mr. Keefe served as president of HPI, a subsidiary of Diagnostek, which was acquired from Parent in August 1989. From August 1984 to September 1990, he served as Executive Vice President of HPI. SANDRA E. LANEY*................. Director since 1987 Age: 53 Ms. Laney is Senior Vice President and Chief Administrative Officer of Chemed and has held these positions since November 1993 and May 1991, respectively. From May 1984 to November 1993, she was a Vice President of Chemed. Ms. Laney is a director of Chemed and National Sanitary. ANDREA R. LINDELL, DNSc, RN*..... Director since 1992 Age: 53 Dr. Lindell is Dean and Professor in the College of Nursing and Health at the University of Cincinnati, a position she has held since December 1990. She also serves as Director -- Center for Allied Health at the University of Cincinnati. From August 1981 to August 1990, Dr. Lindell served as Dean and a Professor in the School of Nursing at Oakland University, Rochester, Michigan. SHELDON MARGEN, M.D.*............ Director since 1983 Age: 78 Dr. Margen is a Professor Emeritus in the School of Public Health, University of California, Berkeley, a position he has held since May 1989. He had served as a Professor of Public Health at the University of California, Berkeley, since 1979. KEVIN J. MCNAMARA*............... Director since 1986 Age: 44 Mr. McNamara is President of Chemed and has held this position since August 1994. From November 1993 to August 1994, Mr. McNamara was Executive Vice President, Secretary and General Counsel of Chemed. Previously, from May 1992 to November 1993, he held the positions of Vice Chairman, Secretary and General Counsel of Chemed. From August 1986 to May 1992, he served as Vice President, Secretary and General Counsel of Chemed. From November 1990 to December 1992, Mr. McNamara served as an Executive Vice President and Chief Operating Officer of the Company. Mr. McNamara also served as Vice Chairman of National Sanitary. He is a director of Chemed and National Sanitary. JOHN M. MOUNT*................... Director since 1994 Age: 55 Mr. Mount is a Principal of Lynch-Mount Associates, Cincinnati, Ohio (management consulting) and has held this position since November 1993. From April 1991 to November 1993, Mr. Mount was Senior Vice President of Diversey Corporation, Detroit, Michigan (specialty chemicals) (hereinafter "Diversey"), and President of Diversey's DuBois Industrial Division. Previously, from May 1989 to April 1991, Mr. Mount was an Executive Vice President of Chemed and President of Chemed's then wholly owned subsidiary, DuBois Chemicals, Inc. He held the latter position from September 1986 to April 1991. He is a director of National Sanitary and Chemed. Mr. Mount has also served as a director of Parent from 1988 to 1991.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR NAME EMPLOYMENT HISTORY - --------------------------------- ---------------------------------------------------------- D. WALTER ROBBINS, JR.*.......... Director since 1981 Age: 77 Mr. Robbins retired as Vice Chairman of Grace in January 1987 and thereafter became a consultant to Grace until July 1995. He is a director of Chemed and National Sanitary.
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. Set forth in the table below are the name and the present principal occupations or employment and the name, principal business and address of any corporation or other organization in which such occupation or employment is conducted, and the five-year employment history of each of the directors and executive officers of the Purchaser. Each person identified below is employed by Parent. The principal business address of the Purchaser and each person identified below, is 50 East RiverCenter Boulevard, Covington, Kentucky 41011. Directors are identified by an asterisk. All persons identified below are United States citizens.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND FIVE-YEAR EMPLOYMENT HISTORY - --------------------------------- ---------------------------------------------------------- JOEL F. GEMUNDER*................ Age: 58 Mr. Gemunder is President of the Purchaser. He has served as President of Parent since 1981 and has been a Director of Parent since 1981. BRADLEY S. ABBOTT................ Age: 30 Mr. Abbott is Treasurer of the Purchaser and is Assistant Corporate Controller of Parent, a position he has held since joining Parent in 1996. Prior to that, he worked for eight years at Price Waterhouse LLP, most recently as a manager. LEO P. (TRACY) FINN III.......... Age: 39 Mr. Finn is Vice President of the Purchaser and is Vice President-Strategic Planning and Development of Parent, a position he has held since February 1997. He previously served as Regional Vice President-Operations for Parent in Chicago from 1995 through January 1997. Prior to that, Mr. Finn was Vice President-Development of Parent, a position he had held since 1989. DAVID W. FROESEL, JR.*........... Age: 45 Mr. Froesel is Senior Vice President and Chief Financial Officer of Parent. He has held that position since joining Parent in March 1996. Mr. Froesel was Vice President of Finance and Administration at Mallinckrodt Veterinary, Inc. from May 1993 to February 1996. From July 1989 to April 1993, he was worldwide corporate controller of Mallinckrodt Medical Inc. JEFFREY A. GLANCY................ Age: 40 Mr. Glancy is Assistant Secretary of the Purchaser and is Vice President-Taxation of Parent, a position he has held since 1994. Prior to that, he served as Assistant Treasurer and Director of Taxation of Parent, a position he had held since 1985. CHERYL D. HODGES*................ Age: 45 Ms. Hodges is Senior Vice President and Secretary of Parent and has held these positions since 1994. From August 1986 to February 1994, she was Vice President and Secretary of Parent and has been a Director of Parent since 1992. THOMAS R. MARSH.................. Age: 50 Mr. Marsh is Assistant Treasurer of the Purchaser and is Vice President-Financial Services and Treasurer of Parent, a position he has held since 1994. Prior to that, he served as Controller of Parent, a position he had held since 1987. JANICE M. RICE................... Age: 36 Ms. Rice is Secretary of the Purchaser and is Vice President-Risk Management and Employee Benefits of Parent, a position she has held since 1994. Prior to that, she was Assistant Treasurer and Corporate Risk Manager of Parent, a position she had held since 1990.
I-4 37 Facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each Stockholder or his or her broker, dealer, commercial bank or other nominee to the Depositary at one of its addresses set forth below. The Depositary for the Offer is: FIRST CHICAGO TRUST COMPANY OF NEW YORK By Mail: By Hand: By Overnight Delivery: First Chicago Trust Company First Chicago Trust Company of New York of New York First Chicago Trust Company Tenders & Exchanges Tenders & Exchanges of New York Suite 4660 c/o The Depository Trust Company Tenders & Exchanges P.O. Box 2569 55 Water Street, DTC TAD Suite 4680-AMC Jersey City, New Jersey Vietnam Veterans Memorial Plaza 14 Wall Street, 8th Floor 07303-2569 New York, New York 10041 New York, New York 10005 By Facsimile Transmission To Confirm Receipt of (For Eligible Institutions Only): Notice of Guaranteed Delivery: (201) 222-4720 (201) 222-4707 or (201) 222-4721
Any questions or requests for assistance or additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and locations listed below. You may also contact your broker, dealer, commercial bank or trust company or nominee for assistance concerning the Offer. The Information Agent for the Offer is: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 Call Toll Free: (800) 697-6975 The Dealer Manager for the Offer is: [CREDIT SUISSE FIRST BOSTON LOGO] Eleven Madison Avenue New York, New York 10010 Call Toll Free: (800) 881-8320 EX-99.A.2 3 FORM OF LETTER OF TRANSMITTAL 1 LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK of AMERICAN MEDSERVE CORPORATION PURSUANT TO THE OFFER TO PURCHASE DATED AUGUST 14, 1997 by OMNICARE ACQUISITION CORP. a wholly owned subsidiary of OMNICARE, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED. THE DEPOSITARY FOR THE OFFER IS: FIRST CHICAGO TRUST COMPANY OF NEW YORK By Mail: By Hand: By Overnight Delivery: First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company of New York of New York of New York Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges Suite 4660 c/o The Depository Trust Company Suite 4680-AMC P.O. Box 2569 55 Water Street, DTC TAD 14 Wall Street, 8th Floor Jersey City, New Jersey 07303-2569 Vietnam Veterans Memorial Plaza New York, New York 10005 New York, New York 10041 By Facsimile Transmission To Confirm Receipt of (For Eligible Institutions Only): Notice of Guaranteed Delivery: (201) 222-4720 (201) 222-4707 or (201) 222-4721
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by stockholders if certificates evidencing Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in Section 3 of the Offer to Purchase (as defined below)) is utilized, if delivery of Shares is to be made by book-entry transfer to the account of First Chicago Trust Company of New York, as Depositary, at The Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company ("PDTC") (each, a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer Facilities") pursuant to the book-entry transfer procedure described in Section 3 of the Offer to Purchase. As used herein, "Certificates" shall mean certificates representing Shares. Stockholders whose Certificates are not immediately available or who cannot deliver their Certificates and all other documents required hereby to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) or who cannot complete the procedure for delivery by book-entry transfer, if applicable, on a timely basis and who wish to tender their Shares must do so pursuant to the guaranteed delivery procedure described in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. 2
DESCRIPTION OF SHARES TENDERED NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATES(S)) CERTIFICATE(S) AND SHARE(S) TENDERED (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY) ------------------------------------------ TOTAL NUMBER OF SHARES EVIDENCED CERTIFICATE BY NUMBER OF NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED** ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- TOTAL SHARES--------------------------------------
* Need not be completed by stockholders delivering Shares by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Certificate delivered to the Depositary are being tendered hereby. See Instruction 4. [ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN ONE OF THE BOOK-ENTRY TRANSFER FACILITIES MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution Check Box of Applicable Book-Entry Transfer Facility: (check one) [ ] DTC [ ] PDTC Account Number Transaction Code Number
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY: Name(s) of Registered Holder(s) Window Ticket No. (if any) Date of Execution of Notice of Guaranteed Delivery Name of Institution which Guaranteed Delivery 3 NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to Omnicare Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Omnicare, Inc., a Delaware corporation, the above described shares of Common Stock, par value $0.01 per share (the "Shares"), of American Medserve Corporation, a Delaware corporation (the "Company"), at the price of $18.00 per Share net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated as of August 14, 1997 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer"). The undersigned understands that the Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates, the right to purchase all or any portion of the Shares tendered pursuant to the Offer. Subject to, and effective upon, acceptance for payment of the Shares tendered herewith in accordance with the terms of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the undersigned hereby sells, assigns and transfers to, or upon the order of, the Purchaser, all right, title and interest in and to all the Shares that are being tendered hereby and all dividends, distributions (including, without limitation, distributions of additional Shares), paid or distributed in respect of such Shares on or after August 14, 1997 (collectively, "Distributions"), and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and all Distributions, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver Certificates for such Shares and all Distributions, or transfer ownership of such Shares and all Distributions on the account books maintained by a Book-Entry Transfer Facility, together, in either case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser, (ii) present such Shares and all Distributions for transfer on the books of the Company and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and all Distributions, all in accordance with the terms and subject to the conditions of the Offer. By executing this Letter of Transmittal, the undersigned irrevocably appoints designees of the Purchaser and each of them, the attorneys-in-fact and proxies of the undersigned, each with full power of substitution, to the full extent of the undersigned's rights with respect to the Shares tendered by the undersigned and accepted for payment by the Purchaser (and any and all Distributions). This proxy and power of attorney shall be considered coupled with an interest in the tendered Shares. This appointment will be effective if, when, and only to the extent that, the Purchaser accepts such Shares for payment pursuant to the Offer. Upon such acceptance for payment, all prior proxies given by the undersigned with respect to such Shares will, without further action, be revoked, and no subsequent proxies may be given nor any subsequent written consent executed by the undersigned (and, if given or executed, will not be deemed to be effective) with respect thereto. The designees of the Purchaser will, with respect to the Shares (and any Distributions) for which the appointment is effective, be empowered to exercise all voting and other rights of the undersigned as they in their sole discretion may deem proper at any annual or special meeting of the stockholders of the Company or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise, and the Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser must be able to exercise full voting rights with respect to such Shares. The powers of attorney and proxies granted hereby are irrevocable and are granted in consideration of the acceptance for payment of such Shares in accordance with the terms of the Offer. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby and all Distributions, and that when such Shares are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and 4 unencumbered title thereto and to all Distributions, free and clear of all liens, restrictions, charges and encumbrances, and that none of such Shares and Distributions will be subject to any adverse claim. The undersigned, upon request, shall execute and deliver all additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby and all Distributions. In addition, the undersigned shall remit and transfer promptly to the Depositary for the account of the Purchaser all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer, and, pending such remittance and transfer or appropriate assurance thereof, the Purchaser shall be entitled to all rights and privileges as owner of each such Distribution and may withhold the entire purchase price of the Shares tendered hereby or deduct from such purchase price, the amount or value of such Distribution as determined by the Purchaser in its sole discretion. No authority herein conferred or agreed to be conferred shall be affected by, and all such authority shall survive, the death or incapacity of the undersigned. All obligations of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as otherwise stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that tenders of Shares pursuant to any of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the Offer, as well as the undersigned's representation and warranty that (a) the undersigned owns the Shares being tendered within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b) the tender of such Shares complies with Rule 14e-4, and (c) the undersigned has the full power and authority to tender and assign the Shares tendered, as specified in the Letter of Transmittal. The Purchaser's acceptance of such Shares for payment will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer, including, without limitation, the undersigned's representation and warranty that the undersigned owns the Shares being tendered. The undersigned recognizes that, under certain circumstances set forth in the Offer to Purchase, Purchaser may not be required to accept for payment any of the Shares tendered hereby. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please issue the check for the purchase price of all Shares purchased, and return all Certificates evidencing Shares not purchased or not tendered, in the name(s) of the registered holder(s) appearing above under "Description of Shares Tendered." Similarly, unless otherwise indicated in the box entitled "Special Delivery Instructions," please mail the check for the purchase price of all Shares purchased and all Certificates evidencing Shares not tendered or not purchased (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under "Description of Shares Tendered." In the event that the boxes entitled "Special Payment Instructions" and "Special Delivery Instructions" are both completed, please issue the check for the purchase price of all Shares purchased and return all Certificates evidencing Shares not purchased or not tendered in the name(s) of, and mail such check and Certificates to, the person(s) so indicated. The undersigned recognizes that the Purchaser has no obligation, pursuant to the Special Payment Instructions, to transfer any Shares from the name of the registered holder(s) if the Purchaser does not purchase any of the Shares tendered hereby. 5 - ------------------------------------------------------------ SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if the check for the purchase price of Shares purchased or Certificates evidencing Shares not tendered or not purchased are to be issued in the name of someone other than the undersigned. Issue: [ ] Check [ ] Certificate(s) to: Name: ----------------------------------------------------- (PRINT) Address: -------------------------------------------------- ------------------------------------------------------------ (ZIP CODE) ------------------------------------------------------------ (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER) (SEE SUBSTITUTE FORM W-9) ============================================================ SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if the check for the purchase price of Shares purchased or Certificates evidencing Shares not tendered or not purchased are to be mailed to someone other than the undersigned, or to the undersigned at an address other than that shown under either "Description of Shares Tendered." Mail: [ ] Check [ ] Certificate(s) to: Name: ----------------------------------------------------- (PRINT) Address: -------------------------------------------------- ------------------------------------------------------------ (ZIP CODE) - ------------------------------------------------------------ 6 IMPORTANT STOCKHOLDER: SIGN HERE (ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN) X - -------------------------------------------------------------------------------- SIGNATURE(S) OF STOCKHOLDER(S) X - -------------------------------------------------------------------------------- SIGNATURE(S) OF STOCKHOLDER(S) Dated: - ------------------------1997 (Must be signed by registered holder(s) exactly as name(s) appear(s) on Certificates or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please provide the following information. See Instruction 5.) Name(s): - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (PLEASE PRINT) Capacity (full title): - ------------------------------------------------------------------------------- Address: - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (ZIP CODE) Area Code and Tel. No.: - ------------------------------------------------------------------------------- Taxpayer Identification or Social Security No.: - ------------------------------------------------------------------------------- (SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN) GUARANTEE OF SIGNATURE(S) (IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5) FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE BELOW 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal must be guaranteed by a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or by a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (an "Eligible Institution"), unless (i) this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this document, shall include any participant in a Book-Entry Transfer Facility whose name appears on a security position listing as the owner of applicable security) of the Shares tendered hereby and such holder(s) has (have) completed neither the box entitled "Special Payment Instructions" nor the box entitled "Special Delivery Instructions" above or (ii) such Shares are tendered for the account of an Eligible Institution. If the Shares are registered in the name of a person other than the signer of this Letter of Transmittal, or if payment is to be made or delivered to, or Certificates evidencing unpurchased Shares are to be issued or returned to, a person other than the registered owner, then the tendered Certificates must be endorsed or accompanied by duly executed stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the Certificates, with the signatures on the Certificates or stock powers guaranteed by an Eligible Institution as provided in this Letter of Transmittal. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of Transmittal is to be used either if Certificates are to be forwarded herewith or if Shares are to be delivered by book-entry transfer pursuant to the procedure set forth in Section 3 of the Offer to Purchase. Certificates evidencing all physically tendered Shares, or a confirmation of a book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility of all Shares delivered by book-entry transfer as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof), unless an Agent's Message is utilized, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth above prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). If Certificates are forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. Holders whose Certificates are not immediately available, who cannot deliver their Certificates and all other required documents to the Depositary prior to the Expiration Date or who cannot complete the procedure for delivery by book-entry transfer, if applicable, on a timely basis may tender their Shares pursuant to the guaranteed delivery procedure described in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, must be received by the Depositary prior to the Expiration Date; and (iii) the Certificates evidencing all physically delivered Shares in proper form for transfer by delivery, or a confirmation of a book-entry transfer, if applicable, into the Depositary's account or a Book-Entry Transfer Facility of all Shares delivered by book-entry transfer, in each case together with a Letter of Transmittal (or a facsimile thereof), unless an Agent's Message is utilized, properly completed and duly executed, with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery. A trading day is any day on which the Nasdaq National Market is open for business. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. 8 No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. By execution of this Letter of Transmittal (or facsimile hereof), all tendering holders waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein under "Description of Shares Tendered" is inadequate, the Certificate numbers, the number of Shares evidenced by such Certificates and the number of Shares tendered should be listed on a separate schedule and attached hereto. 4. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS OF SHARES WHO TENDER BY BOOK-ENTRY TRANSFER). If fewer than all the Shares evidenced by any Certificate delivered to the Depositary herewith are to be tendered hereby, fill in the number of Shares which are to be tendered in the boxes entitled "Number of Shares Tendered." In such cases, new Certificate(s) evidencing the remainder of the Shares that were evidenced by the Certificates delivered to the Depositary herewith will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the box entitled "Special Delivery Instructions" above, as soon as practicable after the expiration or termination of the Offer. All Shares evidenced by Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the Certificates evidencing such Shares without alteration, enlargement or any other change whatsoever. If any Share tendered hereby is owned of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Shares tendered hereby are registered in the names of different holders, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of such Shares. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of Certificates or separate stock powers are required, unless payment is to be made to, or Certificates evidencing Shares not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), in which case, the Certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Certificate(s). Signatures on such Certificate(s) and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, the Certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Certificate(s). Signatures on such Certificate(s) and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any Certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Purchaser of such person's authority so to act must be submitted. 6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6, the Purchaser will pay all stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price of any Shares purchased is to be made to, or Certificate(s) evidencing Shares not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such other person will be deducted from the purchase price of such Shares or purchased, unless evidence satisfactory to the Purchaser of the payment of such taxes, or exemption therefrom, is submitted. 9 EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES EVIDENCING THE SHARES TENDERED HEREBY. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase price of any Shares tendered hereby is to be issued, or Certificate(s) evidencing Shares not tendered or not purchased are to be issued, in the name of a person other than the person(s) signing this Letter of Transmittal or if such check or any such Certificate is to be sent to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal but at an address other than that shown in the box entitled "Description of Shares Tendered" above, the appropriate box on this Letter of Transmittal must be completed. 8. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by the Purchaser (subject to certain limitations in the Merger Agreement (as defined in the Offer to Purchase)), in whole or in part at any time and from time to time in Purchaser's sole discretion. 9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance may be directed to the Dealer Manager or the Information Agent at their respective addresses or telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained from the Information Agent or from brokers, dealers, commercial banks or trust companies. 10. SUBSTITUTE FORM W-9. In order to avoid "backup withholding" of Federal income tax on payments of cash pursuant to the Offer, a stockholder surrendering Shares in the Offer must (a) provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") on the Substitute Form W-9 provided below and (b) certify under penalty of perjury that such TIN is correct and that such stockholder is not subject to backup withholding. If a stockholder does not provide its correct TIN or fails to provide the certifications described above, the Internal Revenue Service ("IRS") may impose a penalty on such stockholder and any payment of cash to such stockholder pursuant to the Offer may be subject to backup withholding of 31%. Certain stockholders (including, among others, all corporations and financial institutions) are not subject to backup withholding. Such stockholders should nevertheless complete the attached Substitute Form W-9 and return it to the Depositary to avoid possible erroneous back-up withholding. A foreign person may qualify as an exempt recipient by submitting a properly completed IRS Form W-8, signed under penalties of perjury, attesting to that stockholder's exempt status. A Form W-8 may be obtained from the Depositary. Please consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which stockholders are exempt from backup withholding. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the stockholder or other payee. Backup withholding is not an additional tax. Rather the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld, provided that the required information is given to the IRS. If withholding results in an overpayment of taxes, a refund may be obtained from the IRS. The box in Part II of the Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN but has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part II is checked, the stockholder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. Notwithstanding that the box in Part II is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Depositary will withhold 31% on all payments made prior to the time a properly certified TIN is provided to the Depositary. The stockholder is required to give the Depositary the TIN (e.g., social security number or employer identification number) of the record owner of the Shares or of the last transferee appearing on the transfers attached to, or endorsed on, the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. 10 11. LOST OR DESTROYED CERTIFICATES. If any Certificates representing Shares have been lost or destroyed, the holders should promptly notify the Company's transfer agent, LaSalle National Bank, at (312) 904-2553. The holders will then be instructed as to the procedure to be followed to replace the Certificates. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed Certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION 1 OF THE OFFER TO PURCHASE). 11 ALL TENDERING STOCKHOLDERS MUST COMPLETE THE FOLLOWING: PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK - -------------------------------------------------------------------------------- SUBSTITUTE PART I -- PLEASE PROVIDE YOUR TIN IN THE BOX ______________________________ FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING Social Security Number(s) BELOW. --------------------------------------------- OR ___________________________ DEPARTMENT OF THE TREASURY Name (Please Print)_________________________ INTERNAL REVENUE SERVICE Employer Identification Number Address ____________________________________ City __________ State _______ Zip Code ________ --------------------------------------------------------------------------- PAYER'S REQUEST FOR TAXPAYER PART II -- Awaiting TIN [ ] IDENTIFICATION NUMBER ("TIN") ------------------------------------------------------------------------- Certifications--Under the penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding; (b) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of failure to report all interest or dividends; or (c) the IRS has notified me that I am no longer subject to backup withholding; and (3) Any other information provided on this form is true, correct and complete. ------------------------------------------------------------------------- Certificate Instructions -- You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item 2.
- -------------------------------------------------------------------------------- Signature ________________________________ Date __________ 1997 - -------------------------------------------------------------------------------- NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART II OF SUBSTITUTE FORM W-9. - -------------------------------------------------------------------------------- CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under the penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all reportable payments made to me will be withheld until I provide this number. _________________________________________ _________________________ Signature Date - -------------------------------------------------------------------------------- 12 Questions and requests for assistance or additional copies of the Offer to Purchase, this Letter of Transmittal and other tender offer materials may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth below. The Information Agent for the Offer is: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 Call Toll Free (800) 697-6975 The Dealer Manager for the Offer is: [CREDIT SUISSE FIRST BOSTON LOGO] Eleven Madison Avenue New York, New York 10010-3629 Call Toll Free (800) 881-8320 August 14, 1997 EX-99.A.3 4 FORM OF BROKER-DEALER LETTER 1 [CREDIT SUISSE FIRST BOSTON LOGO] CREDIT SUISSE FIRST BOSTON CORPORATION Eleven Madison Avenue New York, New York 10010 Telephone 212 325 2000 Offer to Purchase For Cash All Outstanding Shares of Common Stock of AMERICAN MEDSERVE CORPORATION at $18.00 NET PER SHARE by OMNICARE ACQUISITION CORP. a wholly owned subsidiary of OMNICARE, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED August 14, 1997 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been engaged by Omnicare Acquisition Corp. (the "Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Omnicare, Inc., a Delaware corporation ("Parent"), to act as Dealer Manager in connection with the Purchaser's offer to purchase for cash all of the outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of American Medserve Corporation, a Delaware corporation (the "Company"), at a purchase price of $18.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer") enclosed herewith. The Offer is being made in connection with the Agreement and the Plan of Merger, dated as of August 7, 1997, by and among Parent, the Purchaser and the Company. Holders whose certificates evidencing such Shares (the "Certificates") are not immediately available or who cannot deliver their Certificates and all other required documents to the Depositary (as defined below) prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or who, if applicable, cannot complete the procedures for book-entry transfer on a timely basis, must tender their Certificates according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. The Offer is subject to there being validly tendered and not withdrawn prior to the Expiration Date that number of Shares which represents at least a majority of the Shares outstanding on a fully diluted basis. The Offer is also subject to other terms and conditions. See the "Introduction" and Section 14 of the Offer to Purchase. 2 The following are enclosed herewith: 1. The Offer to Purchase, dated August 14, 1997. 2. The Letter of Transmittal to tender Shares for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal may be used to tender Shares. 3. The Notice of Guaranteed Delivery for Shares to be used to accept the Offer if Share Certificates are not immediately available, if such Certificates and all other required documents cannot be delivered to First Chicago Trust Company of New York (the "Depositary") prior to the Expiration Date, or, if applicable, the procedure for book-entry transfer cannot be completed by the Expiration Date. 4. A printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining your clients' instructions with regard to the Offer. 5. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9 providing information relating to backup federal income tax withholding. 6. A return envelope addressed to First Chicago Trust Company of New York, the Depositary. YOUR PROMPT ACTION IS REQUIRED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED. Please note the following: 1. The Offer price is $18.00 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer. 2. The board of directors of the Company has unanimously determined that the Offer and the Merger (as defined in the Offer to Purchase) are fair to, and in the best interests of, the Company's stockholders, has approved the Merger Agreement (as defined in the Offer to Purchase) and the transactions contemplated thereby, including the Offer and the Merger, and recommends that the Company's stockholders accept the Offer and tender their Shares pursuant to the Offer. 3. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the Expiration Date that number of Shares which represents at least a majority of the Shares outstanding on a fully diluted basis. The Offer also is subject to certain other conditions, which are set forth in the Offer to Purchase. 4. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Thursday, September 11, 1997, unless the Offer is extended. 5. The Offer is being made for all of the outstanding Shares. 6. Tendering stockholders who hold Shares in their names will not be obligated to pay brokerage fees or commissions to the Dealer Manager, the Depositary or the Information Agent or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. However, backup federal income tax withholding at a rate of 31% may be required, unless an exemption applies or unless the required taxpayer identification information is provided. See Instruction 10 of the Letter of Transmittal. 7. Notwithstanding any other provision of the Offer, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry Confirmation (as defined in Section 3 to the Offer to Purchase) with respect to) such Shares, (b) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry transfer, and (c) any other documents required by the Letter of Transmittal. Accordingly, payment to all tendering stockholders may not be 3 made at the same time depending upon when certificates for Shares or Book-Entry Confirmation with respect to Shares are actually received by the Depositary. In order to take advantage of the Offer, (i) a duly executed and properly completed Letter of Transmittal with any required signature guarantees, or an Agent's Message (as defined in Section 3 of the Offer to Purchase) in connection with a book-entry delivery of Shares, and any other required documents should be sent to the Depositary, and (ii) Certificates representing the tendered Shares should be delivered to the Depositary, or, if applicable, Shares should be tendered by book-entry transfer into the Depositary's account maintained at one of the Book-Entry Transfer Facilities (as described in Section 3 of the Offer to Purchase), all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. If Holders of Shares wish to tender, but it is impracticable for them to forward their Certificates or other required documents on or prior to the Expiration Date or, if applicable, to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. The Purchaser will not pay any commissions or fees to any broker, dealer or other person (other than the Information Agent and the Dealer Manager) in connection with the solicitation of tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse you for customary clerical and mailing expenses incurred by you in forwarding any of the enclosed materials to your clients. The Purchaser will pay or cause to be paid any stock transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to Credit Suisse First Boston Corporation, the Dealer Manager, at its address and telephone numbers set forth on the back cover of the Offer to Purchase. Requests for additional copies of the enclosed materials may be directed to the Information Agent, D.F. King & Co., Inc. at its address and telephone numbers set forth on the back cover of the Offer to Purchase. Very truly yours, Credit Suisse First Boston Corporation NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE COMPANY, THE DEPOSITARY OR THE DEALER MANAGER, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. EX-99.A.4 5 FORM OF CLIENT LETTER 1 Offer to Purchase For Cash All Outstanding Shares of Common Stock of AMERICAN MEDSERVE CORPORATION at $18.00 NET PER SHARE by OMNICARE ACQUISITION CORP. a wholly owned subsidiary of OMNICARE, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED. August 14, 1997 To Our Clients: Enclosed for your consideration is an Offer to Purchase dated August 14, 1997 (the "Offer to Purchase") and the related Letter of Transmittal relating to an offer by Omnicare Acquisition Corp. (the "Purchaser"), a Delaware corporation and a wholly owned subsidiary of Omnicare, Inc., a Delaware corporation ("Parent"), to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of American Medserve Corporation, a Delaware corporation (the "Company"), at a purchase price of $18.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer"). Holders of Shares whose certificates for such Shares are not immediately available or who cannot deliver their certificates and all other required documents to the Depositary (as defined in the Offer to Purchase), or complete the procedures for book-entry transfer, if applicable, prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to have us tender on your behalf any or all of such Shares held by us for your account, pursuant to the terms and subject to the conditions set forth in the Offer. Please note the following: 1. The Offer price is $18.00 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer. 2. The board of directors of the Company has unanimously determined that the Offer and the Merger (as defined in the Offer to Purchase) are fair to, and in the best interests of, the Company's stockholders, has approved the Merger Agreement (as defined in the Offer to Purchase) and the transactions contemplated thereby, including the Offer and the Merger, and recommends that the Company's stockholders accept the Offer and tender their Shares pursuant to the Offer. 3. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the Expiration Date that number of Shares which represents at least a majority of the 2 Shares outstanding on a fully diluted basis. The Offer also is subject to certain other conditions, which are set forth in the Offer to Purchase. 4. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Thursday, September 11, 1997, unless the Offer is extended. 5. The Offer is being made for all of the outstanding Shares. 6. Tendering stockholders who hold Shares in their names will not be obligated to pay brokerage fees or commissions to the Dealer Manager, the Depositary or the Information Agent or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. However, backup federal income tax withholding at a rate of 31% may be required, unless an exemption applies or unless the required taxpayer identification information is provided. See Instruction 10 of the Letter of Transmittal. 7. Notwithstanding any other provision of the Offer, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry Confirmation (as defined in Section 3 to the Offer to Purchase) with respect to) such Shares, (b) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry transfer, and (c) any other documents required by the Letter of Transmittal. Accordingly, payment to all tendering stockholders may not be made at the same time depending upon when certificates for Shares or Book-Entry Confirmation with respect to Shares are actually received by the Depositary. If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing and returning to us the instructions form contained in this letter. An envelope in which to return your instructions to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified on the instruction form contained in this letter. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the expiration of the Offer. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares residing in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. However, the Purchaser may, in its discretion, take such action as it may deem necessary to make the Offer to holders of Shares in such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. 3 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF AMERICAN MEDSERVE CORPORATION The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated August 14, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer"), in connection with the Offer by Omnicare Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Omnicare, Inc., a Delaware corporation, to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of American Medserve Corporation, a Delaware corporation (the "Company"), at a price of $18.00 per Share, net to the seller in cash, without interest thereon. This will instruct you to tender to the Purchaser the number of Shares indicated below (or, if no number is indicated below, all Shares) held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase. Number of Shares Tendered:* - -------------------------------------------------------------------------------- Certificate Nos. (if available): - -------------------------------------------------------------------------------- Check ONE box if Shares will be tendered by book-entry transfer: [ ] The Depository Trust Company [ ] Philadelphia Depository Trust Company Account No: - -------------------------------------------------------------------------------- Dated: - -------------------------------------------------------------------------------- SIGN HERE Signature(s): - -------------------------------------------------------------------------------- Please type or print address(es): - ----------------------------------------------------------------------------- Area Code and Telephone Number: - -------------------------------------------------------------------------- Taxpayer Identification or Social Security Number(s): - -------------------------------------------------------- * Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. EX-99.A.5 6 NOTICE OF GUARANTEED DELIVERY 1 NOTICE OF GUARANTEED DELIVERY for TENDER OF SHARES OF COMMON STOCK of AMERICAN MEDSERVE CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED. As set forth in Section 3 of the Offer to Purchase described below, this instrument or one substantially equivalent hereto must be used to accept the Offer (as defined below) if (i) certificates evidencing shares of Common Stock, par value $0.01 per share (the "Shares"), of American Medserve Corporation, a Delaware corporation, are not immediately available, (ii) the certificates evidencing Shares and all other required documents cannot be delivered to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or (iii) the procedure for delivery by book-entry transfer for the Shares cannot be completed on a timely basis. This instrument may be transmitted by facsimile transmission or delivered by hand or mail to the Depositary. The Depositary for the Offer is: FIRST CHICAGO TRUST COMPANY OF NEW YORK By Mail: By Hand: By Overnight Delivery: First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company of New York of New York of New York Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges Suite 4660 c/o The Depository Trust Company Suite 4680-AMC P.O. Box 2569 55 Water Street, DTC TAD 14 Wall Street, 8th Floor Jersey City, New Jersey 07303-2569 Vietnam Veterans Memorial Plaza New York, New York 10005 New York, New York 10041
By Facsimile Transmission (For Eligible Institutions Only): (201) 222-4720 or (201) 222-4721 To Confirm Receipt of Notice of Guaranteed Delivery: (201) 222-4707 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, the signature guarantee must appear in the applicable space provided in the signature box in the Letter of Transmittal. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to the Eligible Institution. THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED. 2 Ladies and Gentlemen: The undersigned hereby tender(s) to Omnicare Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Omnicare, Inc., a Delaware corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 14, 1997 (the "Offer to Purchase") and in the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer"), receipt of which is hereby acknowledged, the number of Shares indicated below of American Medserve Corporation, a Delaware corporation, pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Signature(s)________________________ Address(es)_________________________ ____________________________________ ____________________________________ Name(s) of Record Holders___________ Area Code and Tel. No.(s)___________ ____________________________________ PLEASE TYPE OR PRINT ____________________________________ Check one box if Shares will be tendered by book-entry transfer Number of Shares____________________ / /The Depository Trust Company Certificate No.(s) (If Available)___ / /Philadelphia Depository Trust ____________________________________ Company Dated_______________________ , 1997 Account Number____________________ THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States that is a member in good standing of the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program, or an "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, (a) represents that the above named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents that the tender of those Shares complies with Rule 14e-4, and (c) guarantees to deliver to the Depositary either the certificates evidencing all tendered Shares, in proper form for transfer, or confirmation of book-entry transfer of such shares into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility"), in either case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed with any required signature guarantees, or an Agent's Message (as defined in Section 3 of the Offer to Purchase) in the case of a book-entry delivery, and any other required documents, all within three Nasdaq National Market trading days after the date hereof. ___________________________________ ____________________________________ NAME OF FIRM AUTHORIZED SIGNATURE ___________________________________ Name________________________________ ADDRESS __________________________ZIP CODE Title_______________________________ Area Code and Tel. No.____________ Date__________________________,1997 NOTE: DO NOT SEND CERTIFICATES EVIDENCING SHARES WITH THIS NOTICE. CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.A.6 7 GUIDELINES FOR CERTIFICATION OF TAXPAYER ID ON W9 1 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Guidelines for Determining the Proper Identification Number to Give the Payer -- Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.
- -------------------------------------------------- FOR THIS TYPE OF GIVE THE SOCIAL ACCOUNT: SECURITY NUMBER OF: - ---- 1. Individual The individual 2. Two or more The actual owner of individuals (joint the account or, if account) combined funds, any one of the individuals(1) 3. Husband and wife The actual owner of (joint account) the account or, if joint funds, either person(1) 4. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult or, if the account) minor is the only contributor, the minor(1) 6. Account in the name of The ward, minor, or guardian or committee incompetent person(3) for a designated ward, minor, or incompetent person 7. a. The usual revocable The grantor-trustee(1) savings trust account (grantor is also trustee) b. So-called trust The actual owner(1) account that is not a legal or valid trust under State law 8. Sole proprietorship The owner(4) account - --------------------------------------------------
- -------------------------------------------------- GIVE THE EMPLOYER FOR THIS TYPE OF IDENTIFICATION NUMBER ACCOUNT: OF: - ---- 9. Sole proprietorship The owner(4) account 10. A valid trust, estate, Legal entity(5) or pension trust 11. Corporate The corporation 12. Association, club, The organization religious, charitable, educational or other tax-exempt organization 13. Partnership The partnership 14. A broker or registered The broker or nominee nominee 15. Account with the The public entity Department of Agriculture in the name of a public entity (such as a State or local government school district, or prison) that receives agricultural program payments - --------------------------------------------------
(1) List all names first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Provide the name of the owner. You may also enter your business or "doing business as" name. You may use either your Social Security Number or Taxpayer Identification Number (if you have one). (5) List all names first and circle the name of the legal trust, estate, or pension trust. Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - - A corporation. - - A financial institution. - - An organization exempt from tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), or an individual retirement plan. - - The United States or any agency or instrumentality thereof. - - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - - An international organization or any agency, or instrumentality thereof. - - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - - A real estate investment trust. - - A common trust fund operated by a bank under Section 584(a) of the Code. - - An exempt charitable remainder trust, or a non-exempt trust described in Section 4947(a)(1) of the Code. - - An entity registered at all times under the Investment Company Act of 1940. - - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - - Payments to nonresident aliens subject to withholding under Section 1441 of the Code. - - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - - Payments of patronage dividends where the amount received is not paid in money. - - Payments made by certain foreign organizations. Payments of interest not generally subject to backup withholding include the following: - - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - - Payments of tax-exempt interest (including exempt interest dividends under Section 852). - - Payments described in Section 6049(b)(5) to non-resident aliens. - - Payments on tax-free covenant bonds under Section 1451. - - Payments made by certain foreign organizations. - - Payments made to a nominee. EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THE SUBSTITUTE FORM W-9 WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. Certain payments other than interest, dividends, and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under Sections 6041, 6041A(a), 6045, and 6050A of the Code. PRIVACY ACT NOTICE--Section 6109 of the Code requires most recipients of dividends, interest, or other payments to give correct taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers may be required to withhold 31% of taxable interest, dividends and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail to furnish your correct taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS -- If you fail to include any portion of an includible payment for interest, dividends, or patronage dividends in gross income and such failure is due to negligence, a penalty of 20% is imposed on any portion of an under-payment attributable to that failure. (3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.A.7 8 FORM OF SUMMARY ADVERTISEMENT 1 This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made solely by the Offer to Purchase dated August 14, 1997 and the related Letter of Transmittal and any amendments or supplements thereto, and is being made to all holders of Shares. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdictions where securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Purchaser (as defined below) by Credit Suisse First Boston Corporation (the "Dealer Manager") or one or more registered brokers or dealers licensed under the laws of such jurisdiction. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF AMERICAN MEDSERVE CORPORATION AT $18.00 NET PER SHARE BY OMNICARE ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF OMNICARE, INC. Omnicare Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Omnicare, Inc., a Delaware corporation (the "Parent"), is offering to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of American Medserve Corporation, a Delaware corporation (the "Company"), at a price of $18.00 per Share, net to the seller in cash, without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 14, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer"). Tendering stockholders who hold Shares in their name will not be obligated to pay brokerage fees or commissions to the Dealer Manager, the Depository (as defined below) or the Information Agent (as defined below) or, subject to Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The purpose of the Offer is to acquire for cash as many outstanding Shares as possible as the first step in a negotiated acquisition of the entire equity interest in the Company. Following the consummation of the Offer, the Purchaser intends to effect the Merger (as defined below). THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED. The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of August 7, 1997 (the "Merger Agreement"), by and among the Parent, the Purchaser and the Company. The Merger Agreement provides, among other things, for the commencement of the Offer by the Purchaser, and further provides that, following the purchase of Shares pursuant to the Offer and promptly after the satisfaction or waiver of certain conditions and in accordance with the Delaware General Corporation Law, the Purchaser will be merged with and into the Company (the "Merger"). Following consummation of the Merger, the Company will continue as the surviving corporation and will be a wholly owned subsidiary of the Parent. At the effective time of the Merger, each outstanding Share (except for Shares held in the treasury of the Company or owned by the Purchaser, Parent or any of Parent's other wholly owned subsidiaries and Shares held by stockholders properly exercising their appraisal rights under the Delaware General Corporation Law) will be converted into the right to receive the Offer Price (or any higher price per Share paid for Shares pursuant to the Offer). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT NUMBER OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY-DILUTED BASIS (THE "MINIMUM CONDITION") AND (2) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF THE SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not properly withdrawn as, if and when the Purchaser gives oral or written notice to First Chicago Trust Company of New York, as the Depositary (the "Depositary"), of the Purchaser's acceptance of such Shares for payment pursuant to the Offer. In all cases, upon the terms and subject to the conditions of the Offer, payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting payment to validly tendering stockholders. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility"), pursuant to the procedures set forth in the Offer to Purchase and the Letter of Transmittal), (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase), in connection with a book-entry transfer and (iii) all other documents required by the Letter of Transmittal. Under no circumstances will interest on the purchase price for Shares be paid by the Purchaser by reason of any delay in making such payment. The term "Expiration Date" shall mean 12:00 Midnight, New York City Time, on Thursday, September 11, 1997, unless and until the Purchaser, in accordance with the terms of the Offer and the Merger Agreement, shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. Subject to the terms of the Merger Agreement and the applicable rules and regulations of the Securities and Exchange Commission (the "Commission"), the Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, and regardless of whether any of the events set forth in Section 14 of the Offer to Purchase shall have occurred or shall have been determined by the Purchaser to have occurred, (a) if, immediately prior to the Expiration Date of the Offer, the Shares tendered and not withdrawn pursuant to the Offer equal less than 90% of the outstanding Shares but more than 80% of the outstanding Shares, to extend the Offer for a period not to exceed seven business days, notwithstanding that all conditions to the Offer are satisfied as of such date, and thereby delay acceptance for payment of and the payment for any Shares, by giving oral or written notice of such extension to the Depositary and (b) prior to the Expiration Date, to waive any of the conditions set forth in Section 14 of the Offer to Purchase (other than the Minimum Condition) and to make any other changes in the terms and conditions of the Offer by giving oral or written notice of such waiver or amendment to the Depositary. There can be no assurance that the Purchaser will exercise its right to extend the Offer. The Offer is subject to certain conditions set forth in the Offer to Purchase. If, by the Expiration Date any or all of the conditions to the Offer have not been satisfied or waived, the Purchaser reserves the right (but shall not be obligated), in its sole discretion, subject to the terms of the Merger Agreement and the applicable rules and regulations of the Commission, (a) to terminate the Offer and not accept for payment or pay for any Shares and return all tendered Shares to tendering stockholders, (b) prior to the Expiration Date, to waive all the unsatisfied conditions (other than the Minimum Condition) and accept for payment and pay for all Shares validly tendered prior to the Expiration Date, or (c) extend the Offer and, subject to the right of stockholders to withdraw Shares during such extension, retain the Shares that have been tendered during the period or periods for which the Offer is extended. Any extension, delay in payment, termination or amendment will be followed as promptly as practicable by public announcement thereof, the announcement in the case of an extension to be issued not later than 9:00 A.M., New York City Time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser currently intends to make announcements by issuing a press release to the Dow Jones News Service. During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw such stockholder's Shares. Tenders of Shares made pursuant to the Offer are irrevocable except as otherwise provided below. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after October 12, 1997. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at its address set forth on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in the Offer to Purchase), unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth under Section 3 in the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. No withdrawal of Shares shall be deemed to have been properly made until all defects and irregularities have been cured or waived. None of the Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failing to give such notification. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company is providing to the Purchaser its list of stockholders and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees appear on the Company's stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Requests for copies of the Offer to Purchase, the Letter of Transmittal and other tender offer documents may be directed to the Information Agent as set forth below, and copies will be furnished promptly at the Purchaser's expense. Questions and requests for assistance may be directed to the Dealer Manager or the Information Agent at their respective addresses and telephone numbers set forth below. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager and the Information Agent) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 Call Toll Free (800) 697-6975 The Dealer Manager for the Offer is: [CREDIT SUISSE FIRST BOSTON LOGO] Eleven Madison Avenue New York, New York 10010-3629 Call Toll Free (800) 881-8320 August 14, 1997 EX-99.A.8 9 FORM OF PRESS RELEASE 1 [OMNICARE NEWS RELEASE LETTERHEAD] [GRAPHIC] FOR IMMEDIATE RELEASE OMNICARE ANNOUNCES DEFINITIVE AGREEMENT TO ACQUIRE AMERICAN MEDSERVE CORPORATION CINCINNATI, OHIO, AND NAPERVILLE, ILLINOIS, AUGUST 8, 1997 . . . Omnicare, Inc. (NYSE:OCR) and American Medserve Corporation (NASDAQ:AMCI) today announced the execution of a definitive merger agreement pursuant to which Omnicare will acquire for cash all of the outstanding shares of American Medserve Corporation. Under terms of the agreement, a wholly owned subsidiary of Omnicare will commence a cash tender offer of $18.00 per share for all of the outstanding shares of American Medserve Corporation, representing a purchase price of approximately $222.6 million. Additionally, Omnicare will assume American Medserve Corporation's liabilities, including long-term debt of approximately $11.6 million. The acquisition will be accounted for as a purchase transaction. Given the economics of scale and cost synergies anticipated from the merger, the acquisition of American Medserve Corporation is expected to be non-dilutive to Omnicare's earnings per share in 1997 and accretive in 1998. American Medserve Corporation, based in Naperville, Illinois, provides comprehensive pharmacy and related services to approximately 51,400 residents in 720 long-term care facilities in 11 states. Additionally, American Medserve Corporation is a joint venture partner with an affiliate of The Evangelical Lutheran Good Samaritan Society, which ranks as the nation's fifth-largest nursing home operator, serving 27,000 residents. Based on revenues reported for the quarter ended March 31, 1997, American Medserve Corporation's annualized revenues are approximately $144.0 million. The transaction, which has been approved by the boards of 1 2 directors of both Omnicare and American Medserve Corporation, is subject to the tender of at least a majority of the outstanding shares of American Medserve Corporation on a fully diluted basis, customary regulatory approval and the satisfaction of certain other conditions. The tender offer will commence within five business days and will remain open for 20 business days, unless extended. Following the consummation of the tender offer, Omnicare will acquire any of the remaining outstanding shares of American Medserve Corporation in a cash merger transaction valued at $18.00 per share. With the completion of this acquisition, Omnicare will provide pharmacy and related consulting services to approximately 413,000 residents in over 5,100 long-term care facilities in 35 states. Based on revenues for the quarter ended June 30, 1997, Omnicare's annualized revenues, following the transaction, will be in excess of $950.0 million. "We believe the combination of Omnicare and American Medserve Corporation, two companies recognized as leading consolidators in the institutional pharmacy industry, will create a dynamic organization with the resources, clinical programs and pharmacy management experience necessary to capitalize on the major growth opportunities in geriatric pharmaceutical care," said Joel F. Gemunder, Omnicare president. "The addition of American Medserve Corporation will significantly expand Omnicare's core business of providing high-quality pharmaceutical care to the nation's elderly and will create economies of scale that allow both of our organizations to operate more efficiently," he said. The acquisition of American Medserve Corporation will mark Omnicare's entry into six new states and will broaden Omnicare's network of existing pharmacies in five other states, including Illinois, Pennsylvania and New York, which rank among the nation's largest in terms of nursing home population. "American Medserve Corporation has built a well-managed group of entrepreneurial pharmacy operations and has developed important strategic alliances, including its partnership with The Evangelical Lutheran Good Samaritan Society. We look forward to the opportunity to bring our broad array of clinical programs, 2 3 including the Omnicare Geriatric Pharmaceutical Care Guidelines(R), to American Medserve Corporation's pharmacy operations and their client nursing facilities. Together, we can provide the basis for outstanding geriatric pharmaceutical are in the most cost-effective manner," Mr. Gemunder concluded. "American Medserve Corporation and Omnicare have become strong, successful long-term care providers by meeting the increasingly complex needs of their client facilities with innovative services, and this transaction will provide both organizations with the resources to expand those programs even further," said Timothy L. Burfield, American Medserve Corporation president and chief executive officer. "We also believe this agreement provides our shareholders with an attractive value for their investment in our company," Mr. Burfield said. Omnicare is a leading independent provider of professional pharmacy and related consulting services for long-term care facilities such as nursing homes, retirement centers and other institutional health care facilities. Omnicare currently provides pharmacy and related consulting services to approximately 361,400 residents in over 4,400 long-term care facilities. (Statements in this press release concerning Omnicare's and American Medserve Corporation's business outlook or future economic performances, anticipated profitability, revenues, expenses or other financial items, anticipated cost synergies, economies of scale and product or service line growth, together with other statements that are not historical facts, are forward-looking statements that are estimates reflecting the best judgment of Omnicare and American Medserve Corporation based on currently available information. Such forward-looking statements involve risks, uncertainties and other factors that could cause results to differ materially from those stated. These include trends for the continued growth of the pharmacy businesses of Omnicare and American Medserve Corporation, the realization of anticipated revenues, profitability and cost synergies of the combined companies, and other risks and uncertainties described in Omnicare's and American Medserve Corporation's reports and filings with the Securities and Exchange Commission. There can 3 4 be no assurance that such factors will not affect the accuracy of such forward-looking statements, and neither Omnicare nor American Medserve Corporation assumes any obligation to update the information in this release.) For more information on Omnicare, Inc. via the Internet, including a full menu of news releases, visit our Corporate News on The Net site at http://www.businesswire.com/cnn/ocr.htm ### OMNICARE CONTACTS: AMERICAN MEDSERVE CORPORATION: Cheryl D. Hodges Charles R. Wallace (513) 762-6967 (630) 717-2904 or Gary L. Rhodes (513) 762-6660 4 EX-99.C.1 10 AGREEMENT AND PLAN OF MERGER 1 AGREEMENT AND PLAN OF MERGER by and among OMNICARE, INC. OMNICARE ACQUISITION CORP. and AMERICAN MEDSERVE CORPORATION dated as of August 7, 1997 2 Table of Contents
Page ---- ARTICLE I. THE OFFER AND MERGER................................................ 1 Section 1.1. The Offer........................................................... 1 Section 1.2. Company Actions..................................................... 2 Section 1.3. Directors........................................................... 3 Section 1.4. The Merger.......................................................... 4 Section 1.5. Effective Time...................................................... 4 Section 1.6. Closing............................................................. 4 Section 1.7. Directors and Officers of the Surviving Corporation................. 4 Section 1.8. Shareholders' Meeting............................................... 5 ARTICLE II. CONVERSION OF SECURITIES............................................ 5 Section 2.1. Conversion of Capital Stock......................................... 5 Section 2.2. Exchange of Certificates............................................ 6 Section 2.3. Appraisal Rights.................................................... 7 Section 2.4. Company Plans....................................................... 8 ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................... 8 Section 3.1. Organization........................................................ 8 Section 3.2. Capitalization...................................................... 9 Section 3.3. Authorization; Validity of Agreement; Company Action................ 10 Section 3.4. Consents and Approvals; No Violations............................... 10 Section 3.5. SEC Reports and Financial Statements................................ 10 Section 3.6. Absence of Certain Changes.......................................... 11 Section 3.7. No Undisclosed Liabilities.......................................... 11 Section 3.8. Litigation.......................................................... 11 Section 3.9. Employee Benefit Plans.............................................. 11 Section 3.10. Tax Matters; Government Benefits.................................... 13 Section 3.11. Intellectual Property............................................... 14 Section 3.12. Employment Matters.................................................. 15 Section 3.13. Compliance with Laws................................................ 15 Section 3.14. Vote Required....................................................... 16 Section 3.15. Environmental Laws.................................................. 16 Section 3.16. Schedule 14D-9: Offer Documents and Proxy Statement................ 18 Section 3.17. Opinion of Financial Advisor........................................ 18 Section 3.18. Brokers and Finders................................................. 18 Section 3.19. Certain Business Practices.......................................... 18 Section 3.20. Insurance........................................................... 18 Section 3.21. Product Warranties.................................................. 19 ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER......... 19 Section 4.1. Organization........................................................ 19 Section 4.2. Authorization; Validity of Agreement; Necessary Action.............. 19 Section 4.3. Consents and Approvals; No Violations............................... 19 Section 4.4. Offer Documents; Proxy Statement; Schedule 14D-9.................... 20 Section 4.5. Financing........................................................... 20 Section 4.6. Litigation.......................................................... 20 ARTICLE V. COVENANTS........................................................... 20 Section 5.1. Interim Operations of the Company................................... 20 Section 5.2. Access; Confidentiality............................................. 22
-i- 3 Section 5.3. Proxy Statement..................................................... 23 Section 5.4. Cooperation......................................................... 23 Section 5.5. State Takeover Statutes............................................. 24 Section 5.6. No Solicitation..................................................... 24 Section 5.7. Additional Agreements............................................... 25 Section 5.8. Publicity........................................................... 25 Section 5.9. Notification of Certain Matters..................................... 25 Section 5.10. Directors, and Officers' Insurance and Indemnification.............. 25 ARTICLE VI. CONDITIONS.......................................................... 26 Section 6.1. Conditions to Obligations of Each Party to Effect the Merger........ 26 Section 6.2. Conditions Precedent to the Obligations of the Company.............. 27 Section 6.3. Conditions Precedent to the Obligations of Parent and Purchaser..... 27 ARTICLE VII. TERMINATION......................................................... 27 Section 7.1. Termination......................................................... 27 Section 7.2. Effect of Termination............................................... 29 ARTICLE VIII. MISCELLANEOUS....................................................... 29 Section 8.1. Fees and Expenses................................................... 29 Section 8.2. Amendment and Modification.......................................... 29 Section 8.3. Nonsurvival of Representations and Warranties....................... 30 Section 8.4. Notices............................................................. 30 Section 8.5. Interpretation...................................................... 31 Section 8.6. Counterparts........................................................ 31 Section 8.7. Entire Agreement; No Third Party Beneficiaries...................... 31 Section 8.8. Severability........................................................ 31 Section 8.9. Governing Law....................................................... 31 Section 8.10. Assignment.......................................................... 31 Section 8.11. Waivers............................................................. 31 Section 8.12. Captions............................................................ 32
Annex A Certain Conditions of the Offer -ii- 4 Index of Defined Terms
Defined Term Section No. - ------------ ----------- Agreement................................................. Recitals Acquisition Proposal...................................... 5.6(a) Appointment Date.......................................... 5.1 Balance Sheet............................................. 3.10(a) Beds...................................................... 3.22 Break-Up Amount........................................... 8.1(b) By-Laws................................................... 1.4 Certificate of Incorporation.............................. 1.4 Certificates.............................................. 2.2(b) Closing................................................... 1.6 Closing Date.............................................. 1.6 Code...................................................... 2.2(f) Company................................................... Recitals Company Agreements........................................ 3.4 Company Disclosure Schedule............................... 3.0 Company Material Adverse Effect........................... 3.1(a) Company SEC Documents..................................... 3.5 Company Option............................................ 2.4(a) Computer Software......................................... 3.11(c) Confidentiality Agreement................................. 5.2(b) Copyrights................................................ 3.11(c) DGCL...................................................... l.4 Dissenting Shareholders................................... 2.1(c) Dissenting Shares......................................... 2.3 DLJ....................................................... 3.17 D&O Insurance............................................. 5.10(b) Effective Time............................................ 1.5 Encumbrances.............................................. 3.2(b) Environmental Claim....................................... 3.15(g) Environmental Laws........................................ 3.15(g) ERISA..................................................... 3.9(a) ERISA Affiliate........................................... 3.9(a) Exchange Act.............................................. 1.1(a) Expiration Date........................................... 1.1(a) Financial Statements...................................... 3.5 GAAP...................................................... 3.5 Governmental Authority.................................... 3.13(a) Governmental Entity....................................... 3.4 Hazardous Materials....................................... 3.15(g) Healthcare Laws........................................... 3.13(a) HSR Act................................................... 3.4 Indemnified Party......................................... 5.10(a) Independent Directors..................................... 1.3(c)
5 Intellectual Property..................................... 3.11(c) Licenses.................................................. 3.11(c) Merger.................................................... 1.4 Merger Consideration...................................... 2.1(c) Minimum Condition......................................... 1.1(a) Offer..................................................... 1.1(a) Offer Documents........................................... 1.1(b) Offer Price............................................... 1.1(a) Offer to Purchase......................................... 1.1(a) Option Plan............................................... 2.4(a) Parent.................................................... Recitals Parent Disclosure Schedule ............................... 4.0 Parent Material Adverse Effect............................ 4.1 Patents................................................... 3.11(c) Paying Agent.............................................. 2.2(a) PCBs...................................................... 3.15(e) Personnel................................................. 3.13(a) Plans..................................................... 3.9(a) Preferred Stock........................................... 3.2(a) Preliminary Proxy Statement............................... 5.3 Proxy Statement........................................... 1.8(a) Purchaser................................................. Recitals Purchaser Common Stock.................................... 2.1 Schedule 14D-1............................................ 1.1(b) Schedule 14D-9............................................ 1.2(b) SEC....................................................... 1.1(b) Secretary of State........................................ 1.5 Securities Act............................................ 3.5 Shares.................................................... 1.1(a) Special Meeting........................................... 1.8(a) Subsidiary................................................ 3.1(a) Superior Proposal......................................... 5.6(b) Surviving Corporation..................................... l.4 Tax....................................................... 3.10(k) Taxes..................................................... 3.10(k) Tax Return................................................ 3.10(k) Title IV Plan............................................. 3.9(a) Trademarks................................................ 3.11(c) Transactions.............................................. 1.2(a) Voting Debt............................................... 3.2(a) 1996 Premium.............................................. 5.10(b)
6 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this "Agreement"), dated as of August 7, 1997, by and among OMNICARE, INC., a Delaware corporation ("Parent"), OMNICARE ACQUISITION CORP., a Delaware corporation and a wholly-owned subsidiary of Parent (the "Purchaser"), and AMERICAN MEDSERVE CORPORATION, a Delaware corporation (the "Company"). WHEREAS, the Board of Directors of each of Parent, the Purchaser and the Company has approved, and deems it advisable and in the best interests of its respective stockholders to consummate, the acquisition of the Company by Parent upon the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements set forth herein, the parties hereto agree, as follows: ARTICLE I. THE OFFER AND MERGER Section 1.1. The Offer. (a) As promptly as practicable (but in no event later than five business days after the public announcement of the execution hereof), the Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer (the "Offer") for all of the outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of the Company at a price of $18.00 per Share, net to the seller in cash (such price, as it may be amended in accordance with the terms of this Agreement, being referred to herein as the "Offer Price"), subject to there being validly tendered and not withdrawn prior to the expiration of the Offer, that number of Shares which represents at least a majority of the Shares outstanding on a fully diluted basis (the "Minimum Condition") and to the other conditions set forth in Annex A hereto, and shall consummate the Offer in accordance with its terms. For purposes of this Agreement, "fully diluted basis" means issued and outstanding Shares and Shares subject to issuance under employee stock options and other outstanding rights to acquire Shares. The Company agrees that no Shares held by the Company or any of its Subsidiaries (as defined herein) will be tendered to the Purchaser pursuant to the Offer. The obligations of the Purchaser to accept for payment and to pay for any Shares validly tendered on or prior to the expiration of the Offer and not withdrawn shall be subject only to the Minimum Condition and the other conditions set forth in Annex A hereto. The Offer shall be made by means of an offer to purchase (the "Offer to Purchase") containing the terms set forth in this Agreement, the Minimum Condition and the other conditions set forth in Annex A hereto. The Purchaser shall not amend or waive the Minimum Condition and shall not decrease the Offer Price or decrease the number of Shares sought, or amend any other condition of the Offer in any manner adverse to the holders of the Shares without the written consent of the Company, except that Purchaser may, in its sole discretion, waive any of the conditions to the Offer set forth in Annex A hereto. The Purchaser shall, on the terms and subject to the prior satisfaction or waiver of the conditions of the Offer, accept for payment and pay for Shares validly tendered and not withdrawn as soon as practicable after expiration of the Offer; provided, however, that if, immediately prior to the expiration date of the Offer the Shares tendered and not withdrawn pursuant to the Offer equal less than 90% of the outstanding Shares but more than 80% of the outstanding Shares, 7 the Purchaser may extend the Offer for a period not to exceed seven business days, notwithstanding that all conditions to the Offer are satisfied as of such expiration date of the Offer. (b) As soon as practicable on the date the Offer is commenced, Parent and the Purchaser shall file or cause to be filed with the United States Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Offer (together with all amendments and supplements thereto and including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will include, as exhibits, the Offer to Purchase and a form of letter of transmittal and other ancillary Offer documents and instruments (collectively, together with any amendments and supplements thereto, the "Offer Documents"). (c) Parent and the Purchaser will cause the Offer Documents to be filed with the SEC and to be disseminated to holders of the Shares, in each case as and to the extent required by applicable federal securities laws. Each of Parent and the Purchaser, on the one hand, and the Company, on the other hand, will promptly correct any information provided by it for use in the Offer Documents if and to the extent that it shall have become false or misleading in any material respect and the Purchaser will cause the Offer Documents as so corrected to be filed with the SEC and to be disseminated to holders of the Shares, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review the Schedule 14D-1 (including, without limitation, all documents filed therewith as exhibits) before it is filed with the SEC. In addition, Parent and the Purchaser will provide the Company and its counsel with any comments, whether written or oral, Parent, the Purchaser or their counsel may receive from time to time from the SEC or its staff with respect to the Offer Documents promptly after the receipt of such comments. Section 1.2. Company Actions. (a) The Company hereby approves of and consents to the Offer and represents and warrants that the Company's Board of Directors, at a meeting duly called and held, has (i) unanimously determined that the terms of the Offer and the Merger (as defined in Section 1.4) are fair to and in the best interests of the shareholders of the Company, (ii) approved this Agreement and the transactions contemplated hereby, including the Offer and Merger (collectively, the "Transactions"), and (iii) resolved to recommend that the shareholders of the Company accept the Offer, tender their Shares thereunder to the Purchaser and approve and adopt this Agreement and the Merger; provided, that such recommendation may be withdrawn, modified or amended if, in the opinion of the Board of Directors, only after receipt of advice from outside legal counsel, failure to withdraw, modify or amend such recommendation would reasonably be expected to result in the Board of Directors violating its fiduciary duties to the Company's shareholders under applicable law and the Company pays the fees and expenses required by Section 8.1 hereof. (b) Concurrently with the commencement of the Offer, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto and including the exhibits thereto, the "Schedule 14D-9") which shall, subject to the provisions of Section 5.6(b), contain the recommendation referred to in clause (iii) of Section 1.2(a) hereof. The Company further agrees to take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of the Shares, in each case as and to the extent required by applicable federal securities laws. Each of the Company, on the one hand, and Parent and the Purchaser, on the other hand, will promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become false and misleading in any material respect and the Company further agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to holders of the Shares, in each case as and to the extent 2 8 required by applicable federal securities laws. Parent and its counsel shall be given a reasonable opportunity to review and comment upon the Schedule 14D-9 before it is filed with the SEC. In addition, the Company agrees to provide Parent, the Purchaser and their counsel with any comments, whether written or oral, that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt of such comments or other communications. (c) In connection with the Offer, the Company will promptly furnish or cause to be furnished to the Purchaser mailing labels, security position listings and any available listing, or computer file containing the names and addresses of all recordholders of the Shares as of a recent date, and shall furnish the Purchaser with such additional information (including, but not limited to, updated lists of holders of the Shares and their addresses, mailing labels and lists of security positions) and assistance, and cause its representatives and advisors to provide such assistance, as the Purchaser or its agents may reasonably request in communicating the Offer to the record and beneficial holders of the Shares. Subject to the requirements of applicable law and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer and the Merger, Parent and the Purchaser shall hold in confidence the information contained in any of such labels and lists and the additional information referred to in the preceding sentence, will use such information only in connection with the Offer, and, if this Agreement is terminated, will upon request of the Company deliver or cause to be delivered to, the Company all copies of such information then in its possession or the possession of its agents or representatives. Section 1.3. Directors. (a) Promptly upon the purchase of and payment for any Shares by Parent or any of its subsidiaries which represents at least a majority of the outstanding Shares, Parent shall be entitled to designate such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as is equal to the product of the total number of directors on such Board (giving effect to the directors designated by Parent pursuant to this sentence) multiplied by the percentage that the number of Shares so accepted for payment bears to the total number of Shares then outstanding. In furtherance thereof, the Company shall, upon request of the Purchaser, promptly increase the size of its Board of Directors or exercise its best efforts to secure the resignations of such number of directors, or both, as is necessary to enable Parent's designees to be so elected to the Company's Board, and shall cause Parent's designees to be so elected. At such time, the Company shall, if requested by Parent, also cause persons designated by Parent to constitute at least the same percentage (rounded up to the next whole number) as is on the Company's Board of Directors of (i) each committee of the Company's Board of Directors, (ii) each board of directors (or similar body) of each Subsidiary (as defined in Section 3.1) of the Company and (iii) each committee (or similar body) of each such board. (b) The Company shall promptly take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under Section 1.3(a), including mailing to stockholders together with Schedule 14D-9 the information required by such Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be elected to the Company's Board of Directors. Parent or the Purchaser will supply the Company and be solely responsible for any information with respect to either of them and their nominees, officers, directors and affiliates required by such Section 14(f) and Rule 14f-1. The provisions of this Section 1.3 are in addition to and shall not limit any rights which the Purchaser, Parent or any of their affiliates may have as a holder or beneficial owner of Shares as a matter of law with respect to the election of directors or otherwise. (c) In the event that Parent's designees are elected to the Company's Board of Directors, until the Effective Time (as defined below), the Company's Board shall have at least two directors who 3 9 are directors on the date hereof (the "Independent Directors"), provided that, in such event, if the number of Independent Directors shall be reduced below two for any reason whatsoever, any remaining Independent Directors (or Independent Director, if there be only one remaining) shall be entitled to designate persons to fill such vacancies who shall be deemed to be Independent Directors for purposes of this Agreement or, if no Independent Director then remains, the other directors shall designate two persons to fill such vacancies who shall not be stockholders, affiliates or associates of Parent or the Purchaser and such persons shall be deemed to be Independent Directors for purposes of this Agreement. Notwithstanding anything in this Agreement to the contrary, in the event that Parent's designees are elected to the Company's Board, after the acceptance for payment of Shares pursuant to the Offer and prior to the Effective Time, the affirmative vote of a majority of the Independent Directors shall be required to (a) amend or terminate this Agreement by the Company or (b) exercise or waive any of the Company's rights, benefits or remedies hereunder. Section 1.4. The Merger. Subject to the terms and conditions of this Agreement, and in accordance with the relevant provisions of the Delaware General Corporation Law ("DGCL"), at the Effective Time, the Company and the Purchaser shall consummate a merger (the "Merger") pursuant to which (a) the Purchaser shall be merged with and into the Company and the separate corporate existence of the Purchaser shall thereupon cease, (b) the Company shall be the successor or surviving corporation in the Merger (sometimes hereinafter referred to as the "Surviving Corporation") and shall continue to be governed by the laws of the State of Delaware, and (c) the separate corporate existence of the Company with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger, except as set forth in this Section 1.4. Pursuant to the Merger, (x) the Company's Amended and Restated Certificate of Incorporation ("Certificate of Incorporation") shall be amended in its entirety to read as the Certificate of the Purchaser, in effect immediately prior to the Effective Time, except that Article FIRST thereof shall promptly be amended to read as follows: "FIRST: The name of the corporation is American Medserve Corporation" and, as so amended, shall be the Certificate of the Surviving Corporation until thereafter amended as provided by law and such Certificate, and (y) the By-Laws of the Purchaser (the "By-Laws"), as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation until thereafter amended as provided by law, by such Certificate or by such Bylaws. The Merger shall have the effects specified in the DGCL. Section 1.5. Effective Time. Parent, the Purchaser and the Company will cause a Certificate of Merger to be executed and filed on the Closing Date (as defined in Section 1.6) (or on such other date as Parent and the Company may agree) with the Secretary of State of Delaware (the "Secretary of State") as provided in the DGCL. The Merger shall become effective on the date on which the Certificate of Merger is duly filed with the Secretary of State or such time as is agreed upon by the parties and specified in the Certificate of Merger, and such time is hereinafter referred to as the "Effective Time". Section 1.6. Closing. The closing of the Merger (the "Closing") shall take place at 10:00 a.m. on a date to be specified by the parties, which shall be no later than the second business day after satisfaction or waiver of all of the conditions set forth in Article VI hereof (the "Closing Date"), at the offices of Dewey Ballantine, 1301 Avenue of the Americas, New York, New York 10019, unless another date or place is agreed to in writing by the parties hereto. Section 1.7. Directors and Officers of the Surviving Corporation. The directors of the Purchaser and the officers of the Company at the Effective Time shall, from and after the Effective Time, be the directors and officers, respectively, of the Surviving Corporation until their successors shall have been duly elected or appointed or qualified or until their earlier death, resignation or removal in accordance with the Certificate and the By-Laws. 4 10 Section 1.8. Shareholders' Meeting. (a) If required by applicable law in order to consummate the Merger, the Company, acting through its Board of Directors, shall, in accordance with applicable law: (i) duly call, give notice of, convene and hold a special meeting of its shareholders (the "Special Meeting") as promptly as practicable following the acceptance for payment and purchase of Shares by the Purchaser pursuant to the Offer for the purpose of considering and taking action upon the approval of the Merger and the adoption of this Agreement; (ii) prepare and file with the SEC a preliminary proxy or information statement relating to the Merger and this Agreement and (x) obtain and furnish the information required to be included by the SEC in the Proxy Statement (as hereinafter defined) and, after consultation with Parent, to respond promptly to any comments made by the SEC with respect to the preliminary proxy or information statement and cause a definitive proxy or information statement, including any amendment or supplement thereto (the "Proxy Statement") to be mailed to its shareholders, provided that no amendment or supplement to the Proxy Statement will be made by the Company without consultation with Parent and its counsel and (y) use its best efforts to obtain the necessary approvals of the Merger and this Agreement by its shareholders; and (iii) include in the Proxy Statement the recommendation of the Board that shareholders of the Company vote in favor of the approval of the Merger and the adoption of this Agreement. (b) Parent shall vote, or cause to be voted, all of the Shares then owned by it, the Purchaser or any of its other subsidiaries and affiliates in favor of the approval of the Merger and the approval and adoption of this Agreement. Section 1.9. Merger Without Meeting of Shareholders. Notwithstanding Section 1.8 hereof, in the event that Parent, the Purchaser and any other Subsidiaries of Parent shall acquire in the aggregate at least 90% of the outstanding shares of each class of capital stock of the Company, pursuant to the Offer or otherwise, the parties hereto shall, at the request of Parent and subject to Article VI hereof, take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after such acquisition, without a meeting of shareholders of the Company, in accordance with Section 253 of the DGCL. ARTICLE II. CONVERSION OF SECURITIES Section 2.1. Conversion of Capital Stock. As of the Effective Time, by virtue of the Merger and without any action on the part of the holders of any Shares or holders of common stock, par value $.01 per share, of the Purchaser (the "Purchaser Common Stock"): (a) The Purchaser Common Stock. Each issued and outstanding share of the Purchaser Common Stock shall be converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation. 5 11 (b) Cancellation of Treasury Stock and Parent-Owned Stock. All Shares that are owned by the Company as treasury stock and any Shares owned by Parent, the Purchaser or any other wholly owned Subsidiary of Parent shall be canceled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor. (c) Exchange of Shares. Each issued and outstanding Share (other than Shares to be canceled in accordance with Section 2.1(b) and any Shares which are held by stockholders exercising appraisal rights pursuant to Section 262 of the DGCL ("Dissenting Shareholders")) shall be converted into the right to receive the Offer Price, payable to the holder thereof, without interest (the "Merger Consideration"), upon surrender of the certificate formerly representing such Share in the manner provided in Section 2.2. All such Shares, when so converted, shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon the surrender of such certificate in accordance with Section 2.2, without interest, or the right, if any, to receive payment from the Surviving Corporation of the "fair value" of such Shares as determined in accordance with Section 262 of the DGCL. Section 2.2. Exchange of Certificates. (a) Paying Agent. Parent shall designate a bank or trust company reasonably acceptable to the Company to act as agent for the holders of the Shares in connection with the Merger (the "Paying Agent") to receive in trust from time to time, as necessary, the funds to which holders of the Shares shall become entitled pursuant to Section 2.1(c). Such funds shall be invested by the Paying Agent as directed by Parent or the Surviving Corporation. (b) Exchange Procedures. As soon as reasonably practicable after the Effective Time, the Paying Agent shall mail to each holder of record, as of the Effective Time, of a certificate or certificates, which immediately prior to the Effective Time represented outstanding Shares (the "Certificates"), whose Shares were converted pursuant to Section 2.1 into the right to receive the Merger Consideration (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent and shall be in such form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for payment of the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly represented by such Certificate and the Certificate so surrendered shall forthwith be canceled. No interest will be paid or accrued on the cash payable upon the surrender of the Certificates. If payment of the Merger Consideration is to be made to a person other than the person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such payment shall have paid any transfer and other taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not applicable. Until surrendered as contemplated by this Section 2.2, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration in cash as contemplated by this Section 2.2. (c) Transfer Books; No Further Ownership Rights in the Shares. At the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration 6 12 of transfers of the Shares on the records of the Company. From and after the Effective Time, the holders of Certificates evidencing ownership of the Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares, except as otherwise provided for herein or by applicable law. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article II. (d) Termination of Fund; No Liability. At any time following six months after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) which had been made available to the Paying Agent and which have not been disbursed to holders of Certificates, and thereafter such holders shall be entitled to look to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the Merger Consideration payable upon due surrender of their Certificates, without any interest thereon. Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Certificate for Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. (e) Lost, Stolen or Destroyed Certificates. In the event any Certificate for Shares 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 Parent, the posting by such Person of a bond in customary amount as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration pursuant to Section 2.2(b) upon due surrender of and deliverable in respect of the Shares represented by such Certificate pursuant to this Agreement. (f) Withholding Taxes. Parent and Purchaser shall be entitled to deduct and withhold, or cause the Paying Agent to deduct and withhold, from the consideration otherwise payable to a holder of Shares pursuant to the Offer or the Merger any stock transfer taxes and such amounts as are required under the Internal Revenue Code of 1986, as amended (the "Code"), or any applicable provision of state, local or foreign tax law, as specified in the Offer Documents. To the extent that amounts are so withheld by Parent or Purchaser, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made by Parent or Purchaser, in the circumstances described in the Offer Documents. Section 2.3. Appraisal Rights. Notwithstanding anything in this Agreement to the contrary, Shares that are issued and outstanding immediately prior to the Effective Time and which are held by stockholders who did not vote in favor of the Merger and comply with all of the relevant provisions of Section 262 of the DGCL (the "Dissenting Shares") shall not be converted into or be exchangeable for the right to receive the Merger Consideration, unless and until such holders shall have failed to perfect or shall have effectively withdrawn or lost their rights to appraisal under the DGCL. If any Dissenting Stockholder shall have failed to perfect or shall have effectively withdrawn or lost such right, such holder's Shares shall thereupon be converted into and become exchangeable for the right to receive, as of the Effective Time, the Merger Consideration without any interest thereon. The Company shall give Parent (i) prompt notice of any written demands for appraisal of any Shares, attempted withdrawals of such demands, and any other instruments served pursuant to the DGCL and received by the Company relating to stockholders' rights of appraisal and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the DGCL. Neither the Company nor the Surviving Corporation shall, except with the prior written consent of Parent, voluntarily make any payment with respect to, or settle or offer to settle, any such demand for payment. If any Dissenting Shareholder shall fail to perfect or shall have effectively withdrawn or lost the right to dissent, the Shares 7 13 held by such Dissenting Shareholder shall thereupon be treated as though such Shares had been converted into the Merger Consideration pursuant to Section 2.1. Section 2.4. Company Plans. (a) On the expiration date of the Offer, immediately prior to the acceptance for payment of Shares pursuant to the Offer, each outstanding employee stock option to purchase Shares (a "Company Option") granted under any stock option or compensation plan or arrangement of the Company or its Subsidiaries (collectively, the "Option Plan"), shall be surrendered to the Company and shall be forthwith canceled and the Company shall pay to each holder of a Company Option, by check, an amount equal to (i) the product of the number of the Shares which are issuable upon exercise of such Company Option, multiplied by the Offer Price, less (ii) the aggregate exercise price of such Company Option. Prior to the Closing, the Company shall use its best efforts to take all actions (including, without limitation, soliciting any necessary consents from the holders of the Company Options) required to effect the matters set forth in this Section 2.4, including the surrender, cancellation and payment in consideration for the Company Options described in this Section 2.4(a). The Company shall withhold all income or other taxes as required under applicable law prior to distribution of the cash amount received under this Section 2.4(a) to the holders of Company Options. (b) Except as may be otherwise agreed to by Parent or the Purchaser and the Company, the Company's Option Plan shall terminate as of the Effective Time and the provisions in any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any of its Subsidiaries shall be deleted as of the Effective Time and no holder of Company Options or any participant in the Option Plan or any other plans, programs or arrangements shall have any rights thereunder to acquire any equity securities of the Company, the Surviving Corporation or any subsidiary thereof. ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth in the schedule attached to this Agreement setting forth exceptions to the Company's representations and warranties set forth herein (the "Company Disclosure Schedule"), the Company represents and warrants to Parent and the Purchaser as set forth below. The Company Disclosure Schedule will be arranged in sections corresponding to sections of this Agreement to be modified by such disclosure schedule. Section 3.1. Organization. (a) Each of the Company and its Subsidiaries, all of which are listed in Section 3.1 of the Company Disclosure Schedule, is a corporation, limited liability company or partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. Complete and correct copies of the Certificate of Incorporation and the By-Laws and all amendments thereof to date, have been delivered to Parent. Each of the Company and its Subsidiaries has all requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power, authority, and governmental approvals would not, individually or in the aggregate, have a Company Material Adverse Effect (as defined below). As used in this Agreement, the term "Subsidiary" shall mean all corporations or other entities in which the Company or the Parent, as the case may be, owns, directly or indirectly, a majority of the issued and outstanding capital stock or similar interests or has the right to elect a majority of the members of the Board of Directors or similar governing body. As used in this Agreement, (i) 8 14 "Company Material Adverse Effect" shall mean any event, change or effect that has, or is reasonably likely to have, a material adverse effect (A) on the condition (financial or otherwise), business, assets, liabilities, results of operations or cash flows of the Company and its Subsidiaries, taken as a whole or (B) on the ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement, and (ii) the phrase "to the Company's knowledge", or words of comparable import, shall mean facts or circumstances within the personal knowledge, after due inquiry, of any of Timothy L. Burfield, Charles R. Wallace and Michael B. Freedman. (b) The Company and each of its Subsidiaries is duly qualified or licensed to do business and in good standing as a foreign corporation in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not individually or in the aggregate have a Company Material Adverse Effect. Except as set forth in Section 3.1 of the Company Disclosure Schedule, the Company does not own (i) any equity interest in any corporation or other entity or (ii) marketable securities where the Company's equity interest in any entity exceeds five percent of the outstanding equity of such entity on the date hereof. Section 3.2. Capitalization. (a) The authorized capital stock of the Company consists of 30,000,000 Shares and 1,000,000 shares of preferred stock, par value $.01 per share (the "Preferred Stock"). As of the date hereof, (i) 12,217,936 Shares are issued and outstanding, (ii) no Shares are issued and held in the treasury of the Company, (iii) no shares of Preferred Stock are issued and outstanding, and (iv) 1,310,790 Shares are reserved for issuance to employees pursuant to the Option Plan, of which 517,117 Shares are subject to outstanding, unexercised options. Section 3.2(a) of the Company Disclosure Schedule sets forth a true and complete list of the holders of Company Options, including such person's name, the number of options (vested, unvested and total) held by such person and the exercise price for each such option. Since the date hereof, the Company has not issued or granted additional options under the Option Plan. All the outstanding shares of the Company's capital stock are, and all Shares which may be issued pursuant to the exercise of outstanding Company Options will be, when issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and non-assessable. Except as disclosed in Section 3.2 of the Company Disclosure Schedule, there are no bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) ("Voting Debt") of the Company or any of its Subsidiaries issued and outstanding. Except as set forth above, except as described in Section 3.2 of the Company Disclosure Schedule and except for the transactions contemplated by this Agreement, as of the date hereof, (i) there are no shares of capital stock of the Company authorized, issued or outstanding, (ii) there are no outstanding options, warrants, calls, preemptive rights, subscriptions or other rights, agreements, arrangements or commitments of any character, relating to the issued or unissued capital stock of the Company or any of its Subsidiaries, obligating the Company or any of its Subsidiaries to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, or obligating the Company or any of its Subsidiaries to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment and (iii) except as set forth in Section 3.2(a) of the Company Disclosure Schedule, there are no outstanding contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or the capital stock of the Company, or any Subsidiary or affiliate of the Company or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Subsidiary or any other entity other than loans to Subsidiaries in the ordinary course of business. (b) All of the outstanding shares of capital stock of each of the Subsidiaries are beneficially owned by the Company, directly or indirectly, and all such shares have been validly issued 9 15 and are fully paid and nonassessable and are owned by either the Company or one of its Subsidiaries free and clear of all liens, charges, claims or encumbrances of whatever nature ("Encumbrances"). (c) There are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of the capital stock of the Company or any of the Subsidiaries. Section 3.3. Authorization; Validity of Agreement; Company Action. The Company has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the Transactions. The execution, delivery and performance by the Company of this Agreement, and the consummation by it of the Transactions, have been duly authorized by its Board of Directors and, except for obtaining the approval of its shareholders as contemplated by Section 1.8 hereof, no other corporate action on the part of the Company is necessary to authorize the execution and delivery by the Company of this Agreement and the consummation by it of the Transactions. This Agreement has been duly executed and delivered by the Company and, assuming that this Agreement constitutes the legal, valid and binding obligations of Parent and the Purchaser, constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors' rights generally or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Section 3.4. Consents and Approvals; No Violations. Except for the filings set forth in Section 3.4 of the Company Disclosure Schedule and the filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), state securities or blue sky laws, and the DGCL, none of the execution, delivery or performance of this Agreement by the Company, the consummation by the Company of the Transactions or compliance by the Company with any of the provisions hereof will (i) conflict with or result in any breach of any provision of the Certificate, the By-Laws or similar organizational documents of the Company or any of its Subsidiaries, (ii) require any filing with, or permit, authorization, consent or approval of, any court, arbitrator, tribunal, administrative agency or commission or other governmental or other regulatory authority or agency (a "Governmental Entity"), (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound (the "Company Agreements") or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company, any of its Subsidiaries or any of their properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults which would not, individually or in the aggregate, have a Company Material Adverse Effect. Section 3.4 of the Company Disclosure Schedule sets forth a list of all third party consents and approvals required to be obtained in connection with this Agreement under the Company Agreements prior to the consummation of the transactions contemplated by this Agreement, except such third party consents and approvals the failure of which to obtain would not have a Company Material Adverse Effect. Section 3.5. SEC Reports and Financial Statements. The Company has timely filed with the SEC, and has heretofore made available to Parent, true and complete copies of, all forms, reports, schedules, statements and other documents required to be filed by it since November 13, 1996 and prior to the date hereof, under the Exchange Act or the Securities Act of 1933, as amended (the "Securities Act"), and the SEC's rules and regulations thereunder (as such documents have been amended since the 10 16 time of their filing, collectively, the "Company SEC Documents"). As of their respective dates or, if amended prior to the date hereof, as of the date of the last such amendment, the Company SEC Documents, including, without limitation, any financial statements or schedules included therein (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (b) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, and the applicable rules and regulations of the SEC thereunder. None of the Company's Subsidiaries is required to file any forms, reports or other documents with the SEC. The consolidated financial statements of the Company included in the Company SEC Documents (the "Financial Statements") have been prepared from, and are in accordance with, the books and records of the Company and its consolidated Subsidiaries, comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis during the period involved (except in the case of unaudited statements, as permitted by Form 10-Q under the Exchange Act and as may be otherwise indicated in the notes thereto) and fairly present (subject, in the case of unaudited statements, to normal recurring year-end adjustments and any other adjustments described therein) the consolidated financial position and the consolidated results of operations and cash flows (and changes in financial position, if any) of the Company and its consolidated Subsidiaries as of the times and for the periods referred to therein. Section 3.6. Absence of Certain Changes. Except as disclosed in Section 3.6 of the Company Disclosure Schedule or in the Company SEC Documents filed prior to the date hereof, since March 31, 1997, the Company and its Subsidiaries have conducted their respective businesses only in the ordinary and usual course and there has not occurred any events or changes (including the incurrence of any liabilities of any nature, whether or not accrued, contingent or otherwise) having, individually or in the aggregate, a Company Material Adverse Effect and the Company has not taken any action which would have been prohibited under Section 5.1 hereof. Section 3.7. No Undisclosed Liabilities. Except (a) as disclosed in the Financial Statements and (b) for liabilities and obligations (i) incurred in the ordinary course of business and consistent with past practice since December 31, 1996, or (ii) as otherwise disclosed in Section 3.7 of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature, whether or not accrued, absolute, contingent or otherwise, whether due or to become due and whether required to be reflected on a balance sheet under GAAP that have, or would be reasonably likely to have, a Company Material Adverse Effect or that would be required by GAAP to be reflected in, reserved against or otherwise described in a consolidated balance sheet of the Company (including the notes thereto). Section 3.8. Litigation. Except as set forth in Section 3.8 of the Company Disclosure Schedule, there are no suits, claims, actions, proceedings, including, without limitation, arbitration proceedings or alternative dispute resolution proceedings, or investigations pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries by or before any Governmental Entity that, either individually or in the aggregate, if adversely determined, would be reasonably likely to have a Company Material Adverse Effect. Section 3.9. Employee Benefit Plans. (a) For purposes of this Agreement, the term "Plans" shall include: each deferred compensation and each incentive compensation, stock purchase, stock option and other equity compensation plan, program, agreement or arrangement; each severance or termination pay, medical, 11 17 surgical, hospitalization, life insurance and other "welfare" plan, fund or program (within the meaning of section 3(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or other "pension" plan, fund or program (within the meaning of section 3(2) of ERISA); each employment, termination or severance agreement; and each other employee benefit plan, fund, program, agreement or arrangement, in each case, that is sponsored, maintained or contributed to or required to be contributed to by the Company or by any trade or business, whether or not incorporated (an "ERISA Affiliate"), that together with the Company would be deemed a "single employer" within the meaning of section 4001(b) of ERISA, or to which the Company or an ERISA Affiliate is party, whether written or oral, for the benefit of any employee or former employee of the Company or any Subsidiary (the "Plans"). Each of the Plans that is subject to section 302 or Title IV of ERISA or section 412 of the Code is hereinafter referred to in this Section 3.9 as a "Title IV Plan." Section 3.9 of the Company Disclosure Schedule sets forth all of the Plans. Neither the Company, any Subsidiary nor any ERISA Affiliate has any commitment or formal plan, whether legally binding or not, to create any additional employee benefit plan or modify or change any existing Plan that would affect any employee or former employee of the Company or any Subsidiary. (b) Except as disclosed in Section 3.9 of the Company Disclosure Schedule, no liability under Title IV or section 302 of ERISA has been incurred by the Company or any ERISA Affiliate that has not been satisfied in full, and no condition exists that presents a material risk to the Company or any ERISA Affiliate of incurring any such liability. No Plan is a Title IV Plan. (c) Except as disclosed in Section 3.9 of the Company Disclosure Schedule, neither the Company or any Subsidiary, any Plan, any trust created thereunder, nor any trustee or administrator thereof has engaged in a transaction in connection with which the Company or any Subsidiary, any Plan, any such trust, or any trustee or administrator (as defined in Section 3(16)(A) of ERISA) thereof, or any party in interest (as defined in ERISA Section 3(14)) or fiduciary with respect to any Plan or any such trust could be subject to either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA or a tax imposed pursuant to section 4975 or 4976 of the Code, which would be material in amount. (d) Except as disclosed in Section 3.9 of the Company Disclosure Schedule, each Plan has been operated and administered in all material respects in accordance with its terms and applicable law, including but not limited to ERISA and the Code. (e) Except as disclosed in Section 3.9 of the Company Disclosure Schedule, each Plan intended to be "qualified" within the meaning of section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service with respect to the qualified status of such Plan under the Code, including all amendments to the Code effected by the Tax Reform Act of 1986, and nothing has occurred since the issuance of such letter which could reasonably be expected to cause the loss of the tax-qualified status of such Plan and the related trust maintained thereunder. The Company has no Plans intended to satisfy the requirements of Section 501(c)(9). (f) Except as disclosed in Section 3.9 of the Company Disclosure Schedule, no Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of the Company or any Subsidiary for periods extending beyond their retirement or other termination of service, other than (i) coverage mandated by applicable law, (ii) death benefits under any "pension plan," or (iii) benefits the full cost of which is borne by the current or former employee (or his beneficiary) or (iv) post-death exercise periods in effect under outstanding Company Options. (g) Except as disclosed in Section 3.9 of the Company Disclosure Schedule, or as set forth in Section 5.11 of this Agreement, the consummation of the transactions contemplated by this Agreement 12 18 will not, either alone or in combination with another event, (i) entitle any current or former employee or officer of the Company or any ERISA Affiliate to severance pay, unemployment compensation or any other payment, except as expressly provided in this Agreement, or (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee or officer. (h) There are no pending, or to the knowledge of the Company, threatened or anticipated claims by or on behalf of any Plan, by any employee or beneficiary covered under any such Plan, or otherwise involving any such Plan (other than routine claims for benefits) which would have a material adverse effect upon the Plans or a Company Material Adverse Effect. Section 3.10. Tax Matters; Government Benefits. (a) The Company and each of its Subsidiaries have duly filed all Tax Returns (as hereinafter defined) that are required to be filed and have duly paid or caused to be duly paid in full or made adequate provision in accordance with GAAP (or there has been paid or provision has been made on their behalf) for the payment of all Taxes (as hereinafter defined) shown due on such Tax Returns and all other Taxes for which the Company or any of its Subsidiaries is or might be liable. All such Tax Returns are correct and complete in all material respects and accurately reflect all liability for Taxes for the periods covered thereby. All Taxes owed and due by the Company and each of its Subsidiaries for results of operations through December 31, 1996 (whether or not shown on any Tax Return) have been paid or have been adequately reflected on the Company's balance sheet as of December 31, 1996 included in the Financial Statements (the "Balance Sheet"). Since December 31, 1996, the Company has not incurred liability for any Taxes other than in the ordinary course of business. Neither the Company nor any of its Subsidiaries has received notice of any claim made by an authority in a jurisdiction where neither the Company nor any of its Subsidiaries file Tax Returns that the Company is or may be subject to taxation by that jurisdiction. (b) The federal income Tax Returns of the Company and its Subsidiaries have not been examined by the Internal Revenue Service (or the applicable statutes of limitation for the assessment of federal income Taxes for such periods have expired) for any period. Neither the Company nor any of its Subsidiaries has waived any statute of limitations in any jurisdiction in respect of Taxes or Tax Returns or agreed to any extension of time with respect to a Tax assessment or deficiency. (c) Except as set forth on Section 3.10 of the Company Disclosure Schedule, no federal, state, local or foreign audits, examinations or other administrative proceedings have been commenced or, to the Company's knowledge, are pending with regard to any Taxes or Tax Returns of the Company or of any of its Subsidiaries. No written notification has been received by the Company or by any of its Subsidiaries that such an audit, examination or other proceeding is pending or threatened with respect to any Taxes due from or with respect to or attributable to the Company or any of its Subsidiaries or any Tax Return filed by or with respect to the Company or any of its Subsidiaries. To the Company's knowledge, there is no dispute or claim concerning any Tax liability of the Company or any of its Subsidiaries either claimed or raised by any taxing authority. (d) Neither the Company nor any of its Subsidiaries is a party to any agreement, plan, contract or arrangement that could result, separately or in the aggregate, in a payment of any "excess parachute payments" within the meaning of Section 280G of the Code. (e) Neither the Company nor any of its Subsidiaries has filed a consent pursuant to Section 341(f) of the Code (or any predecessor provision) concerning collapsible corporations, or agreed to have Section 341(f)(2) of the Code apply to any disposition of a "subsection (f) asset" (as such term is defined in Section 341(f)(4) of the Code) owned by the Company or any of its Subsidiaries. 13 19 (f) No taxing authority is asserting or, to the knowledge of the Company, threatening to assert a claim against the Company or any of its Subsidiaries under or as a result of Section 482 of the Code or any similar provision of state, local or foreign law. (g) Neither the Company nor any of its Subsidiaries is a party to any material tax sharing, tax indemnity or other agreement or arrangement with any entity not included in the Company's consolidated financial statements most recently filed by the Company with the SEC. (h) None of the Company or any of its Subsidiaries has been a member of any affiliated group within the meaning of Section 1504(a) of the Code, or any similar affiliated or consolidated group for tax purposes under state, local or foreign law (other than a group the common parent of which is the Company), or has any liability for Taxes of any person (other than the Company and its Subsidiaries) under Treasury Regulation Section 1.1502-E or any similar provision of state, local or foreign law as a transferee or successor, by contract or otherwise. (i) No liens for Taxes exist with respect to any of the assets or properties of any of the Company or its Subsidiaries, except for statutory liens for Taxes not yet due or payable. (j) Neither the Company nor any of its Subsidiaries is or has been a United States real property holding company within the meaning of Section 897(c)(2) of the Code. (k) As used in this Agreement, the following terms shall have the following meanings: (i) "Tax" or "Taxes" shall mean all taxes, charges, fees, duties, levies, penalties or other assessments imposed by any federal, state, local or foreign governmental authority, including, but not limited to, income, gross receipts, excise, property, sales, gain, use, license, custom duty, unemployment, capital stock, transfer, franchise, payroll, withholding, social security, minimum estimated, and other taxes, and shall include interest, penalties or additions attributable thereto; and (ii) "Tax Return" shall mean any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. Section 3.11. Intellectual Property. (a) The Company and its Subsidiaries own or have valid rights to use all items of Intellectual Property (as defined below) utilized in the conduct of the business of the Company and its Subsidiaries as presently conducted or as currently proposed to be conducted, free and clear of all Encumbrances (other than Encumbrances which, individually or in the aggregate, are not expected to have a Company Material Adverse Effect). (b) To the best knowledge of the Company, the conduct of the Company's and its Subsidiaries, business and the Intellectual Property owned or used by the Company and its Subsidiaries, do not infringe any Intellectual Property rights or any other proprietary right of any person other than infringements which, individually or in the aggregate, are not expected to have a Company Material Adverse Effect. The Company and its Subsidiaries have received no notice of any allegations or threats that the Company's and its Subsidiaries, use of any of the Intellectual Property infringes upon or is in conflict with any Intellectual Property or proprietary rights of any third party other than infringements or conflicts which individually or in the aggregate are not expected to have a Company Material Adverse 14 20 Effect. To the Company's knowledge, no person is infringing on or violating, in any material respect, any of the Intellectual Property rights of others. (c) As used in this Agreement, "Intellectual Property" means all of the following: (i) U.S. and foreign registered, unregistered and pending trademarks, trade dress, service marks, logos, trade names, corporate names, assumed names, business names and logos and all registrations and applications to register the same (the "Trademarks"); (ii) issued U.S. and foreign patents and pending patent applications, patent disclosures, and any and all divisions, continuations, continuations-in-part, reissues, reexaminations, and extension thereof, any counterparts claiming priority therefrom, utility models, patents of importation/confirmation, certificates of invention and like statutory rights (the "Patents"); (iii) U.S. and foreign registered and unregistered copyrights (including, but not limited to, those in computer software and databases) rights of publicity and all registrations and applications to register the same (the "Copyrights"); (iv) all categories of trade secrets as defined in the Uniform Trade Secrets Act including, but not limited to, business information; (v) all licenses and agreements pursuant to which the Company has acquired rights in or to any Trademarks, Patents, Computer Software (as defined below), rights of publicity or Copyrights, or licenses and agreements pursuant to which the Company has licensed or transferred the right to use any of the foregoing ("Licenses"); and (vi) all computer software, data files, source and object codes, user interfaces, manuals and other specifications and documentation and all know-how relating thereto (collectively, "Computer Software"). Section 3.12. Employment Matters. Neither the Company nor any of its Subsidiaries has experienced any strikes, collective labor grievances, other collective bargaining disputes or Claims of unfair labor practices in the last five years. To the Company's knowledge, there is no organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of the Company and its Subsidiaries. Section 3.13. Compliance with Laws. (a) The Company and its Subsidiaries and, to the knowledge of the Company and its Subsidiaries, all of their respective officers, directors, employees, consultants or agents (collectively, the "Personnel") have complied in all respects with all applicable statutes, regulations, rules, orders, ordinances and other laws of the United States of America, all state, local and foreign governments and other governmental bodies and authorities, and agencies of any of the foregoing ("Governmental Authority") to which it is subject with respect to healthcare regulatory matters (including, without limitation, The Social Security Act, as amended, Sections 1128, 1128A and 1128B, 42 U.S.C. Sections 1320a-7, 7(a) and 7(b) including Criminal Penalties Involving Medicare or State Health Care Programs, commonly referred to as the "Federal Anti-Kickback Statute" and The Social Security Act, as amended, Section 1877, 42 U.S.C. Section 1395nn (Prohibition Against Certain Referrals), commonly referred to as the "Stark Statute", and all statutes and regulations related to the possession, distribution, maintenance and documentation of controlled substances) ("Healthcare Laws")), except to the extent noncompliance would not have a Company Material Adverse Effect. The Company and its Subsidiaries have maintained all records required to be maintained by the FDA, DEA and State Board of Pharmacy and the Medicare and Medicaid programs as required by applicable Healthcare Laws, except to the extent that the failure to do so would not have a Company Material Adverse Effect. There are no presently existing circumstances which would result or would be likely to result in violations of any such Healthcare Laws, except to the extent such violations would not have a Company Material Adverse Effect. (b) Except with respect to Healthcare Laws, the Company and its Subsidiaries are and, to the knowledge of the Company and its Subsidiaries, all Personnel is, in compliance with all applicable statutes, laws, ordinances, rules, orders and regulations of any Governmental Authority (including 15 21 without limitation, Environmental Laws (as such term is hereinafter defined in Section 3.15) applicable to the business of the Company and its Subsidiaries), except to the extent noncompliance would not have a Company Material Adverse Effect. Except as set forth in Section 3.13 of the Company Disclosure Schedule, neither the Company nor its Subsidiaries have received any notice or other communication to the effect that, or otherwise been advised that, they are not in compliance with any of such statutes, regulations and orders, ordinances, other laws or undertakings, and the Company and its Subsidiaries have no reason to anticipate that any presently existing circumstances are likely to result in violations of any such regulations which could, in any one case or in the aggregate, have a Company Material Adverse Effect. (c) The Company and its Subsidiaries hold all permits necessary for the lawful conduct of their business under and pursuant to all applicable statutes, laws, ordinances, rules and regulations of all Federal, state, local and foreign governmental bodies, agencies and subdivisions having, asserting or claiming jurisdiction over it or any part of their operations, except to the extent that the failure to do so would not have a Company Material Adverse Effect. The Company and its Subsidiaries have correctly maintained in all respects all records required to be maintained by the FDA, DEA and State Boards of Pharmacy and pursuant to the requirements of the Medicare and Medicaid programs, except to the extent that the failure to do so would not have a Company Material Adverse Effect. (d) The Company and its Subsidiaries are qualified for participation in the Medicare and Medicaid programs. The Company and its Subsidiaries have timely filed all claims or other reports required to be filed with respect to the purchase of services by third-party payors, and all such claims or reports are complete and accurate, except to the extent that the failure to timely file or the failure of such claims or reports to be complete and accurate would not have a Company Material Adverse Effect. The Company and its Subsidiaries have no liability to any payor with respect thereto, except for liabilities incurred in the ordinary course of business. There are no pending appeals, overpayment determinations, adjustments, challenges, audit, litigation or notices of intent to open Medicare or Medicaid claim determinations or other reports required to be filed by the Company or its Subsidiaries. To the Company's knowledge, no Personnel have been convicted of, or pled guilty or nolo contendere to any Medicare or Medicaid program related offense or committed any offense which may reasonably serve as the basis for suspension or exclusion from the Medicare and Medicaid programs. (e) There are no pharmaceutical or other products now being sold or distributed by the Company or its Subsidiaries which, at the date hereof, would require any approval of any governmental or administrative body, whether federal, state, local or foreign, prior to commercial distribution of such products, for which approval has not been obtained, except where the failure to obtain such approval would not have a Company Material Adverse Effect. All pharmaceutical or other products now being distributed by the Company or its Subsidiaries and all products included in the inventories of the Company or its Subsidiaries on the date hereof comply with applicable legal requirements of all jurisdictions in which such pharmaceutical or other products are now being distributed, except where the failure to so comply would not have a Company Material Adverse Effect. Section 3.14. Vote Required. The affirmative vote of the holders of a majority of the outstanding Shares is the only vote of the holders of any class or series of the Company's capital stock which may be necessary to approve this Agreement or any of the Transactions. Section 3.15. Environmental Laws. (a) The Company and its Subsidiaries are in compliance with all applicable Environmental Laws (as defined below) (which compliance includes, without limitation, the possession by the Company and its Subsidiaries of all permits and other governmental authorizations required under applicable 16 22 Environmental Laws, and compliance with the terms and conditions thereof), except where failure to be in compliance, either individually or in the aggregate, would not have a Company Material Adverse Effect. (b) There is no Environmental Claim (as defined below) pending or, to the Company's knowledge, threatened against the Company or any of the Subsidiaries or, to the Company's knowledge, against any person or entity whose liability for any Environmental Claim the Company or any of its Subsidiaries has or may have retained or assumed either contractually or by operation of law except for such Environmental Claim which would not have, either individually or in the aggregate, a Company Material Adverse Effect. (c) There are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release or presence of any Hazardous Material at any location, which would reasonably be expected to form the basis of any Environmental Claim against the Company or any of its Subsidiaries, or to the Company's knowledge, against any person or entity whose liability for any Environmental Claim the Company or any of its Subsidiaries has or may have retained or assumed either contractually or by operation of law, except for such Environmental Claim which would not have, either individually or in the aggregate, a Company Material Adverse Effect. (d) The Company and its Subsidiaries have not, and to the Company's knowledge, no other person has, generated, treated, placed, stored, deposited, discharged, buried, dumped or disposed of Hazardous Materials at, on, beneath or adjacent to any property currently or formerly owned, operated or leased by the Company or any of its Subsidiaries, except which would not have, either individually or in the aggregate, a Company Material Adverse Effect. (e) Without in any way limiting the generality of the foregoing, none of the properties owned, operated or leased by the Company or any of its Subsidiaries contain any: underground storage tanks; asbestos; polychlorinated biphenyls ("PCBs"); underground injection wells; radioactive materials; or septic tanks or waste disposal pits in which any Hazardous Materials have been discharged or disposed except which would not have, individually or in the aggregate, a Company Material Adverse Effect. (f) There are no environmental reports, assessments, audits or studies relating to the Company or any of its Subsidiaries or to any property currently or formerly owned, operated or leased by the Company or any of its Subsidiaries (i) in the possession or control of the Company or any of its Subsidiaries, or (ii) of which the Company otherwise has knowledge. (g) For purposes of this Agreement, (i) "Environmental Laws" means all federal, state, local and foreign laws, statutes, codes, ordinances, rules, directives, orders, common law, judgments, decrees, consent or settlement agreements, permits and other governmental authorizations, and regulations relating to pollution or protection of human health or the environment, including, without limitation, laws relating to releases or threatened releases of Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, release, disposal, transport or handling of Hazardous Materials or recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials; (ii) "Environmental Claim" means any claim, action, cause of action, proceeding, suit, investigation or written notice by any person or entity alleging potential liability (including, without limitation, potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising under or pursuant to any Environmental Law; (iii) "Hazardous Materials" means all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency 17 23 Plan, 40 C.F.R. Section 300.5, and any other substance (including, without limitation, wastes, including medical waste) regulated under any Environmental Law. Section 3.16. Schedule 14D-9: Offer Documents and Proxy Statement. None of the Schedule 14D-9, the Proxy Statement, nor any other document filed or to be filed by or on behalf of the Company with the SEC or any other Governmental Entity in connection with the transactions contemplated by this Agreement, nor any information supplied by or on behalf of the Company specifically for inclusion in the Offer Documents will, at the respective times filed with the SEC or other Governmental Entity or first published, sent or given to stockholders, as the case may be, or, in the case of the Proxy Statement, at the date mailed to the Company Stockholders and at the time of the Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Schedule 14D-9 and the Proxy Statement will, when filed by the Company with the SEC or other Governmental Entity, comply as to form in all material respects with the applicable provisions of the Exchange Act and the rules and regulations thereunder. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to the statements made in any of the foregoing documents based on and in conformity with information supplied by or on behalf of Parent or Purchaser or any of their respective affiliates specifically for inclusion therein. Section 3.17. Opinion of Financial Advisor. The Board of Directors of the Company has received the opinion of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") addressed to such Board, dated the date hereof, to the effect that, as of such date, the $18.00 per Share to be received by the holders of Shares pursuant to this Agreement is fair to such holders, a copy of which opinion has been delivered to Parent and the Purchaser for information purposes only. Each of Parent and Purchaser acknowledges and agrees that it may not, and is not entitled to, rely on the opinion of DLJ delivered to the Board of Directors of the Company. The Company will obtain the consent of DLJ to include the opinion of DLJ in the Offering Documents. Section 3.18. Brokers and Finders. No broker, finder or investment bank has acted directly or indirectly for the Company, nor has the Company incurred any obligation to pay any brokerage, finder's or other fee or commission in connection with the transactions contemplated hereby, other than DLJ and William Blair & Company, L.L.C., the fees and expenses of which have been previously disclosed to Parent and which shall be borne by the Company. Section 3.19. Certain Business Practices. None of the Company or any of its Subsidiaries has made, or to the Company's knowledge, no Personnel or representative of the Company or its Subsidiaries (in their capacities as such) has made, directly or indirectly with respect to the business of the Company, any bribes, kickbacks, or other illegal payments or illegal political contributions, illegal payments from corporate funds to governmental officials in their individual capacities, or illegal payments from corporate funds to obtain or retain business either within the United States or abroad. Section 3.20. Insurance. True and complete copies of all material insurance policies maintained by the Company have been made available to the Parent. Such policies provide coverage for the operations of the Company and its Subsidiaries in amounts and covering such risks as are adequate in accordance with customary industry practice to protect the assets and the business of the Company and its Subsidiaries. Neither the Company nor any of its Subsidiaries has received notice that any such policy is invalid or unenforceable or that substantial capital improvements or other expenditures will have to be made in order to continue such insurance and, so far as known to the Company and its Subsidiaries, no such improvements or expenditures are required. 18 24 Section 3.21. Product Warranties. Except as set forth in Section 3.21 of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has made any express warranties with respect to products sold or distributed by the Company and its Subsidiaries (other than passing on warranties made by the manufacturers thereof) and, to the best of the Company's knowledge, no other warranties have been made by Personnel. The Company has no knowledge of any presently existing circumstances that would constitute a valid basis for any voluntary or governmental recall of any pharmaceutical or other product sold or distributed by the Company. ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER Except as set forth in the schedule attached to this Agreement setting forth exceptions to the Parent's and Purchaser's representations and warranties set forth herein (the "Parent Disclosure Schedule"), the Parent and Purchaser represent and warrant to the Company as set forth below. The Parent Disclosure Schedule will be arranged in sections corresponding to sections of this Agreement to be modified by such disclosure schedule. Section 4.1. Organization. Each of Parent and the Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Delaware and has all requisite corporate or other power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power, authority, and governmental approvals would not have, individually or in the aggregate, a Parent Material Adverse Effect. As used in this Agreement, "Parent Material Adverse Effect," shall mean any event, change or effect that has, or is reasonably likely to have, a material adverse effect (A) on the condition (financial or otherwise), business, assets, liabilities, results of operations or cash flows of Parent and its Subsidiaries, taken as a whole, or (B) on the ability of Parent or the Purchaser to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement. Section 4.2. Authorization; Validity of Agreement; Necessary Action. Each of Parent and the Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the Transactions. The execution, delivery and performance by Parent and the Purchaser of this Agreement and of the Transactions have been duly authorized by the Board of Directors of Parent and the Purchaser and no other corporate action on the part of Parent and the Purchaser is necessary to authorize this Agreement or the Transactions. This Agreement has been duly executed and delivered by Parent and the Purchaser, as the case may be, and, assuming that this Agreement constitutes the legal, valid and binding obligation of the Company, constitutes the legal, valid and binding obligation of each of Parent and the Purchaser, as the case may be, enforceable against each of them in accordance with its respective terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors' rights generally or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Section 4.3. Consents and Approvals; No Violations. Except for the filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act, the HSR Act, state securities or blue sky laws, and the DGCL, none of the execution, delivery or performance of this Agreement by Parent or the Purchaser, the consummation by Parent or the Purchaser of the Transactions or compliance by Parent or the Purchaser with any of the provisions 19 25 hereof will (i) conflict with or result in any breach of any provision of the respective certificate of incorporation or by-laws of Parent or Purchaser, (ii) require any filing with, or permit, authorization, consent or approval of, any Governmental Entity, (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both a default or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Parent or the Purchaser is a party or by which any of them or any of their respective properties or assets may be bound, or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Parent, any of its Subsidiaries or any of their respective properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults which would not, individually or in the aggregate have a Parent Material Adverse Effect. Section 4.4. Offer Documents; Proxy Statement; Schedule 14D-9. Neither the Offer Documents nor any other document filed or to be filed by or on behalf of Parent or Purchaser with the SEC or any other Governmental Entity in connection with the transactions contemplated by this Agreement nor any information supplied by or on behalf of Parent or Purchaser specifically for inclusion in the Schedule 14D-9 or Proxy Statement will, at the respective times filed with the SEC or other Governmental Entity, or at any time thereafter when the information included therein is required to be updated pursuant to applicable law, or, in the case of the Proxy Statement, at the date mailed to the Company's stockholders and at the time of the Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Offer Documents will, when filed by Parent or Purchaser with the SEC or other Governmental Entity, comply as to form in all material respects with the applicable provisions of the Exchange Act and the rules and regulations thereunder. Notwithstanding the foregoing, Parent and Purchaser make no representation or warranty with respect to the statements made in the foregoing documents based on and in conformity with information supplied by or on behalf of the Company or any of its affiliates specifically for inclusion therein. Section 4.5. Financing. At the closing of the Offer, and at the Effective Time, Parent and Purchaser will have sufficient cash resources available to finance the transactions contemplated hereby. Section 4.6. Litigation. Except as set forth in Parent's Annual Report on Form 10-K for the year ended December 31, 1996, there are no suits, claims, actions, proceedings, including without limitation arbitration proceedings or alternative dispute resolution proceedings, or investigations pending or, to the knowledge of Parent, threatened against Parent or any of its Subsidiaries before any Governmental Entity that, either individually or in the aggregate, would be reasonably likely to have a material adverse effect on the ability of Parent or the Purchaser to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement. ARTICLE V. COVENANTS Section 5.1. Interim Operations of the Company. The Company covenants and agrees that, except (i) as expressly contemplated by this Agreement, or (ii) as agreed in writing by Parent, after the date hereof, and prior to the time the directors of the Purchaser have been elected to, and shall constitute a majority of, the Board of Directors of the Company pursuant to Section 1.3 (the "Appointment Date"): 20 26 (a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business and consistent with past practice and, to the extent consistent therewith, each of the Company and its Subsidiaries shall use its reasonable efforts to preserve its business organizations and business organizations of its Subsidiaries intact and maintain its existing relations with customers, suppliers, employees, creditors and business partners; (b) the Company will not, directly or indirectly, (i) except upon exercise of employee stock options, pursuant to which up to 517,117 Shares may be issued, outstanding on the date hereof, issue, sell, transfer or pledge or agree to sell, transfer or pledge any treasury stock of the Company or any capital stock of any of its Subsidiaries beneficially owned by it, (ii) amend its Certificate of Incorporation or By-Laws or similar organizational documents; or (iii) split, subdivide, combine or reclassify the outstanding Shares or Preferred Stock or any outstanding capital stock of any of the Subsidiaries of the Company; (c) neither the Company nor any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock other than dividends paid by Subsidiaries of the Company to the Company or any of its wholly-owned Subsidiaries in the ordinary course of business; (ii) issue, sell, pledge, grant, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiaries, other than Shares reserved for issuance on the date hereof pursuant to the exercise of Company Options outstanding on the date hereof, pursuant to which up to 517,117 Shares may be issued; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any assets other than in the ordinary and usual course of business and consistent with past practice; or (iv) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock; (d) neither the Company nor any of its Subsidiaries shall: (i) grant any increase in the compensation payable or to become payable by the Company or any of its Subsidiaries to any of its executive officers or employees, enter into any contract or other binding commitment in respect of any such increase with any of its directors, officers or other employees or any director, officer or other employee of its Subsidiaries, and not establish, adopt, enter into, make any new grants or awards under or amend, any collective bargaining agreement; (ii)(A) adopt any new, or (B) amend or otherwise increase, or accelerate the payment or vesting of the amounts payable or to become payable under any existing, bonus, incentive compensation, deferred compensation, severance, profit sharing, stock option, stock purchase, insurance, pension, retirement or other employee benefit plan, agreement or arrangement; or (iii) enter into any employment or severance agreement with or, except in accordance with the existing written policies of the Company, grant any severance or termination pay to any officer, director or employee of the Company or any of its Subsidiaries; provided, however, that (i) prior to consummation of the Offer, the Company may enter into severance agreements with the individuals set forth in Section 5.1(d) of the Company Disclosure Schedule (the "Designated Employees") in the form as approved by the Company's Board of Directors, (ii) the aggregate cost of payments and benefits provided to the Designated Employees pursuant to the terms of such severance agreements (unless otherwise amended with the written consent of, or at the written direction of, Parent or Purchaser) shall not exceed $2,000,000 in the aggregate, and (iii) with respect to the severance plan described in Section 3.4 of the Company Disclosure Schedule that covers individuals other than the Designated Employees (the "Nondesignated Employees"): (a) the implementation of such plan and the entering into of agreements with Nondesignated Employees shall be subject to the prior written consent of the Purchaser, which consent shall not be unreasonably withheld (with reasonableness to be determined based upon Purchaser's reasonable business objectives and consistent with Purchaser's past practice), and (b) the aggregate cost of payments and benefits provided to the Nondesignated Employees pursuant to the terms 21 27 of such severance agreements (unless otherwise amended with the written consent of, or at the written direction of, Parent or Purchaser) shall not exceed $1,000,000 in the aggregate; (e) neither the Company nor any of its Subsidiaries shall permit any insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated, except in the ordinary course of business and consistent with past practice; (f) neither the Company nor any of its Subsidiaries shall enter into any contracts or transactions relating to the purchase of assets that exceed $1,000,000 in the aggregate; (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP, neither the Company nor any of its Subsidiaries shall make any material Tax election except in the ordinary course of business consistent with past practice, change any material Tax election already made, adopt any material Tax accounting method except in the ordinary course of business consistent with past practice, change any material Tax accounting method unless required by GAAP, enter into any closing agreement, settle any Tax claim or assessment or consent to any Tax claim or assessment or any waiver of the statute of limitations for any such claim or assessment; (h) neither the Company nor any of its Subsidiaries shall: (i) incur or assume any long-term debt; (ii) except in the ordinary course of business and consistent with past practice and in an aggregate amount not to exceed $3,000,000, incur or assume any short-term indebtedness; (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person; (iv) make any loans, advances or capital contributions to, or investment in, any other person (other than to wholly-owned Subsidiaries of the Company); (v) enter into any material commitment or transaction (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); or (vi) modify, amend or terminate any of its material contracts or waive, release or assign any material rights; (i) neither the Company nor any of its Subsidiaries shall settle or compromise any claim, lawsuit, liability or obligation, and neither the Company nor any of its Subsidiaries shall pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the-payment, discharge or satisfaction of any such claims, liabilities or obligation, (x) to the extent reflected or reserved against in, or contemplated by, the Financial Statements, (y) incurred in the ordinary course of business and consistent with past practice or (z) which are legally required to be paid, discharged or satisfied; (j) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any respect at, or as of any time prior to, the Effective Time; (k) except as otherwise permitted by Section 5.6(b) hereof, neither the Company nor any of its Subsidiaries will take any action with the intent of causing any of the conditions to the Offer set forth in Annex A not to be satisfied; and (l) except as otherwise permitted by Section 5.6(b) hereof, neither the Company nor any of its Subsidiaries will enter into an agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or announce an intention to do any of the foregoing. Section 5.2. Access; Confidentiality. 22 28 (a) Upon reasonable notice, the Company shall (and shall cause each of its Subsidiaries to) afford to the officers, employees, accountants, counsel, financing sources and other representatives of Parent, access, during normal business hours during the period prior to the Appointment Date, to all its properties, employees, books, contracts, commitments and records and, during such period, the Company shall (and shall cause each of its Subsidiaries to) furnish promptly to the Parent (a) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws and (b) all other information concerning its business, properties and personnel as Parent may reasonably request. After the Appointment Date, the Company shall provide Parent and such persons as Parent shall designate with all such information, at such time as Parent shall request. The Company shall promptly, and in any event within seven business days following the date of this Agreement, deliver to Parent true and complete copies of all Plans not previously delivered to Parent and any amendments thereto (or if the Plan is not a written Plan, a description thereof), any related trust or other funding vehicle, any summary plan description required under ERISA or the Code and the most recent determination letter received from the Internal Revenue Service with respect to each Plan intended to qualify under Section 401 of the Code. (b) Unless otherwise required by law and until the Appointment Date, Parent will hold any such information which is nonpublic in confidence in accordance with the provisions of a letter agreement dated June 4, 1997 between the Company and the Parent (the "Confidentiality Agreement"). Section 5.3. Proxy Statement. Unless the Merger is consummated as contemplated in Section 1.9 hereof, the Company shall, as soon as reasonably practicable after the consummation of the Offer, prepare a preliminary form of the Proxy Statement (the "Preliminary Proxy Statement"). The Company shall (a) file the Preliminary Proxy Statement with the SEC promptly after it has been prepared in a form reasonably satisfactory to the Company and Parent and (b) use commercially reasonable efforts to promptly prepare any amendments to the Preliminary Proxy Statement required in response to comments of the SEC or its staff or that the Company with the advice of counsel deems necessary or advisable and to cause the Proxy Statement to be mailed to the Company's stockholders as soon as reasonably practicable after the Preliminary Proxy Statement, as so amended, is cleared by the SEC. Section 5.4. Cooperation. Subject to the terms and conditions of this Agreement and applicable law, each of the parties shall act in good faith and use reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the Transactions as soon as practicable, including such actions or things as any other party may reasonably request in order to cause any of the conditions to such other party's obligation to consummate the Transactions to be fully satisfied. Without limiting the foregoing, the parties shall (and shall cause their respective subsidiaries, and use reasonable efforts to cause their respective affiliates, directors, officers, employees, agents, attorneys, accountants and representatives, to) consult and fully cooperate with and provide assistance to each other in (a) the preparation and filing with the SEC of the Offer Documents, the Schedule 14D-9, and the Preliminary Proxy Statement and the Proxy Statement, and any necessary amendments or supplements thereto; (b) seeking to have the Preliminary Proxy Statement cleared by the SEC as soon as reasonably practicable after filing; (c) obtaining all necessary consents, approvals, waivers, licenses, permits, authorizations, registrations, qualifications, or other permissions or actions by, and giving all necessary notices to and making all necessary filings with and applications and submissions to, any Governmental Entity or other entity as soon as reasonably practicable after filing; (d) seeking early termination of any waiting period under the HSR Act; (e) providing all such information concerning such party, its subsidiaries and its officers, directors, partners and affiliates and making all applications and filings as may be necessary or reasonably requested in connection with any of the foregoing; (f) in general, consummating and making effective the Transactions; and (g) in the event and to the extent required, amending this Agreement so that this 23 29 Agreement and the Offer and the Merger comply with the DGCL. The parties shall (and shall cause their respective affiliates, directors, officers, employees, agents, attorneys, accountants and representatives to) use their reasonable efforts to cause the lifting of any preliminary injunction or restraining order or other similar order issued or entered by any court or other Governmental Entity preventing or restricting consummation of the transactions contemplated hereby in the manner provided for herein. Prior to making any application to or filing with a Governmental Entity or other entity in connection with this Agreement (other than filing under the HSR Act), each party shall provide the other party with drafts thereof and afford the other party a reasonable opportunity to comment on such drafts. Section 5.5. State Takeover Statutes. The Company, Parent and Purchaser will cooperate to take reasonable steps to (a) exempt the Offer and the Merger from the requirements of any applicable state takeover law and (b) assist in any challenge by any of the parties to the validity or applicability to the Offer or the Merger of any state takeover law. Section 5.6. No Solicitation. (a) Neither the Company nor any of its Subsidiaries shall (and the Company shall use its best efforts to cause its officers, directors, employees, representatives and agents, including, but not limited to, investment bankers, attorneys and accountants, not to), directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent, any of its affiliates or representatives) concerning any proposal or offer to acquire all or a substantial part of the business and properties of the Company or any of its Subsidiaries or any capital stock of the Company or any of its Subsidiaries, whether by merger, tender offer, exchange offer, sale of assets or similar transactions involving the Company or any Subsidiary, division or operating or principal business unit of the Company (an "Acquisition Proposal"), except that nothing contained in this Section 5.6 or any other provision hereof shall prohibit the Company or the Company's Board from (i) taking and disclosing to the Company's stockholders a position with respect to a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such disclosure to the Company's stockholders as, in the good faith judgment of the Board, after receiving advice from outside counsel, is required under applicable law, provided that the Company may not, except as permitted by Section 5.6(b), withdraw or modify, or propose to withdraw or modify, its position with respect to the Offer or the Merger or approve or recommend, or propose to approve or recommend any Acquisition Proposal, or enter into any agreement with respect to any Acquisition Proposal. The Company will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. The Company also shall promptly request each person which has heretofore executed a confidentiality agreement in connection with its consideration of acquiring the Company to return all confidential information heretofore furnished to such person by or on behalf of the Company. (b) Notwithstanding the foregoing, prior to the acceptance of Shares pursuant to the Offer, the Company may furnish information concerning the Company and its Subsidiaries to any corporation, partnership, person or other entity or group pursuant to appropriate confidentiality agreements, and may negotiate and participate in discussions and negotiations with such entity or group concerning an Acquisition Proposal if (x) such entity or group has submitted a bona fide written proposal to the Company relating to any such transaction which the Board determines in good faith, after consulting with a nationally recognized investment banking firm, represents a superior transaction to the Offer and the Merger and (y) in the opinion of the Board of Directors of the Company, only after receipt of advice from outside legal counsel to the Company, the failure to provide such information or access or to engage in such discussions or negotiations would reasonably be expected to cause the Board of Directors to violate its fiduciary duties to the Company's shareholders under applicable law (an Acquisition Proposal which satisfies clauses (x) and (y) being referred to herein as a "Superior Proposal"). The Company will immediately notify Parent of the existence of any proposal or inquiry received by the Company, the 24 30 identity of the party making such proposal or inquiry, and the terms (both initial and modified) of any such proposal or inquiry (and will disclose any written materials delivered in connection therewith) and the Company will keep Parent reasonably informed of the status (including amendments or proposed amendments) of any such proposal or inquiry. The Company will promptly provide to Parent any material non-public information regarding the Company provided to any other party which was not previously provided to Parent. At any time following notification to Parent of the Company's intent to do so (which notification shall include the identity of the bidder and the material terms and conditions of the proposal) and if the Company has otherwise complied with the terms of this Section 5.6(b), the Board of Directors may withdraw or modify its approval or recommendation of the Offer and may enter into an agreement with respect to a Superior Proposal, provided it shall (i) take no such action unless it shall notify Parent promptly of its intention, and in no event shall such notice be given less than two business days prior to the earlier of the public announcement of such withdrawal or modification of its recommendation or the Company's termination of this Agreement, and (ii) concurrently with entering into such agreement pay or cause to be paid to Parent the Break-Up Amount (as defined below) plus any amount payable at the time for reimbursement of expenses pursuant to Section 8.1(b). If the Company shall have notified Parent of its intent to enter into an agreement with respect to a Superior Proposal in compliance with the preceding sentence and has otherwise complied with such sentence, the Company may enter into an agreement with respect to such Superior Proposal. Section 5.7. Additional Agreements. Subject to the terms and conditions herein provided, each of the parties hereto shall use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations, or to remove any injunctions or other impediments or delays, legal or otherwise, to achieve the satisfaction of the Minimum Condition and all conditions set forth in Annex A and Article VI, and to consummate and make effective the Merger and the other transactions contemplated by this Agreement as soon as practicable hereafter. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of the Company, Parent and Purchaser shall use all reasonable efforts to take, or cause to be taken, all such necessary actions. Section 5.8. Publicity. The initial press release with respect to the execution of this Agreement shall be a joint press release acceptable to Parent and the Company. Thereafter, so long as this Agreement is in effect, neither the Company, Parent nor any of their respective affiliates shall issue or cause the publication of any press release or other announcement with respect to the Merger, this Agreement or the other Transactions without the prior consultation of the other party, except as such party reasonably believes, after receiving the advice of outside counsel, may be required by law or by any listing agreement with a national securities exchange or trading market. Section 5.9. Notification of Certain Matters. The Company shall give prompt notice to Parent and Parent shall give prompt notice to the Company, of (i) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which would cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect at or prior to the Effective Time and (ii) any material failure of the Company, Parent or the Purchaser, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 5.9 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. Section 5.10. Directors, and Officers' Insurance and Indemnification. (a) For five years after the Effective Time, the Surviving Corporation (or any successor to the Surviving Corporation) shall indemnify, defend and hold harmless the present and former officers and directors of the Company and its Subsidiaries, determined as of the Effective Time (each an "Indemnified Party") against all losses, 25 31 claims, damages, liabilities, costs, fees and expenses (including reasonable fees and disbursements of counsel and judgments, fines, losses, claims, liabilities and amounts paid in settlement (provided that any such settlement is effected only upon receipt of the written consent of the Parent or the Surviving Corporation which consent shall not unreasonably be withheld)) arising out of actions or omissions occurring at or prior to the Effective Time to the full extent required under applicable Delaware law, the terms of the Certificate of Incorporation or the By-Laws, as in effect at the date hereof, and the terms of any indemnification agreement entered into with the Company prior to the date hereof and disclosed in Schedule 5.10 of the Company Disclosure Schedule; provided that, in the event any claim or claims are asserted or made within such five-year period, all rights to indemnification in respect of any such claim or claims shall continue until disposition of any and all such claims. (b) Parent or the Surviving Corporation shall maintain the Company's existing officers, and directors' liability insurance ("D&O Insurance") for a period of not less than three years after the Effective Time; provided, that the Parent may substitute therefor policies of substantially equivalent coverage and amounts containing terms no less favorable to such former directors or officers; provided, further, if the existing D&O Insurance expires, is terminated or canceled during such period, Parent or the Surviving Corporation will use all reasonable efforts to obtain substantially similar D&O Insurance; provided, further, however, that in no event shall Parent, the Surviving Corporation or the Company be required to pay aggregate premiums for insurance under this Section 5.10(b) in excess of 150% of the aggregate premiums paid by the Company in 1996 on an annualized basis for such purpose (the "1996 Premium"); and provided, further, that if the Parent or the Surviving Corporation is unable to obtain the amount of insurance required by this Section 5.10(b) for such aggregate premium, Parent or the Surviving Corporation shall obtain as much insurance as can be obtained for an annual premium not in excess of 150% of the 1996 Premium. (c) Any Indemnified Party wishing to claim indemnification under this Section 5.10, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify the Surviving Corporation thereof, but the failure to so notify shall not relieve the Surviving Corporation of any liability or obligation it may have to such Indemnified Party except, and only to the extent, that such failure prejudices the Surviving Corporation. In the event of any such claim, action, suit, proceeding or investigation (whether arising before, at or after the Effective Time), the Surviving Corporation shall have the right to assume the defense thereof and the Surviving Corporation shall not be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if the Surviving Corporation elects not to assume such defense or counsel reasonably satisfactory to Parent for the Indemnified Parties advises that there are actual conflicts of interest between the Surviving Corporation and the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to them, and the Surviving Corporation shall pay all reasonable fees and expenses of such counsel. ARTICLE VI. CONDITIONS Section 6.1. Conditions to Obligations of Each Party to Effect the Merger. The respective obligation of each party hereto to effect the Merger shall be subject to the satisfaction on or prior to the Effective Time of each of the following conditions, any and all of which may be waived, in whole or in part, by the Company, Parent or the Purchaser, as the case may be, to the extent permitted by applicable law: 26 32 (a) Shareholder Approval. This Agreement shall have been adopted and the Merger shall have been approved by the requisite vote of the holders of the Shares, if required by applicable law, in order to consummate the Merger. (b) Statutes; Court Orders. No federal or state governmental or regulatory body or court of competent jurisdiction shall have enacted, issued, promulgated or enforced any statute, rule, regulation, executive order, decree, judgment, preliminary or permanent injunction or other order that is in effect and that prohibits, enjoins or otherwise restrains the consummation of the Merger; provided however, that the parties shall use all commercially reasonable efforts to cause any such decree, judgment, injunction or order to be vacated or lifted. (c) Purchase of Shares in Offer. Parent, the Purchaser or their affiliates shall have purchased Shares pursuant to the Offer, except that this condition shall not apply if Parent, the Purchaser or their affiliates shall have failed to purchase Shares pursuant to the Offer in breach of their obligations under this Agreement. (d) HSR Approval. The waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired. Section 6.2. Conditions Precedent to the Obligations of the Company. The obligation of the Company to effect the Merger is also subject to the satisfaction at or prior to the Effective Time of the following condition, unless waived by the Company: (a) Accuracy of Representations and Warranties. All representations and warranties made by Parent and Purchaser herein shall be true and correct, unless the inaccuracies (without giving effect to any materiality or material adverse effect qualifications or materiality exceptions contained therein) under such representations and warranties taking all the inaccuracies under all such representations and warranties together in their entirety, do not, individually or in the aggregate, result in a Parent Material Adverse Effect. Section 6.3. Conditions Precedent to the Obligations of Parent and Purchaser. The obligation of the Parent and Purchaser to effect the Merger is also subject to the satisfaction at or prior to the Effective Time of the following additional condition, unless waived by either of Parent or Purchaser. (a) Accuracy of Representations and Warranties.. All representations and warranties made by the Company herein shall be true and correct, unless the inaccuracies (without giving effect to any materiality or material adverse effect qualifications or materiality exceptions contained therein) under such representations and warranties taking all the inaccuracies under all such representations and warranties together in their entirety, do not, individually or in the aggregate, result in a Company Material Adverse Effect. ARTICLE VII. TERMINATION Section 7.1. Termination. This Agreement may be terminated and the Transactions contemplated herein may be abandoned at any time prior to the Effective Time, whether before or after shareholder approval thereof: (a) By the mutual written consent of Parent and the Company. 27 33 (b) By either of the Company or Parent: (i) if the Offer shall have expired without any Shares being purchased therein; provided, however, that the right to terminate this Agreement under this Section 7.1(b)(i) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of Parent or the Purchaser, as the case may be, to purchase the Shares pursuant to the Offer on or prior to such date; (ii) if any Governmental Entity shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties hereto shall use their reasonable efforts to lift), which permanently restrains, enjoins or otherwise prohibits the consummation of the Offer or the Merger and such order, decree, ruling or other action shall have become final and non-appealable; or (iii) if the Offer has not been consummated prior to October 5, 1997; provided, that the right to terminate this Agreement under this Section 7.1(b)(iii) shall not be available to any party whose misrepresentation in this Agreement or whose failure to perform any of its covenants and agreements or to satisfy any obligation under this Agreement has been the cause of, or resulted in, the failure of Parent or the Purchaser, as the case may be, to purchase Shares pursuant to the Offer on or prior to such date. (c) By the Company: (i) if Parent, the Purchaser or any of their affiliates shall have failed to commence the Offer on or prior to five business days following the date of the initial public announcement of the Offer; provided, that the Company may not terminate this Agreement pursuant to this Section 7.1(c)(i) if the Company is at such time in breach of its obligations under this Agreement such as to cause a Company Material Adverse Effect; (ii) in connection with entering into an agreement with respect to a Superior Proposal in accordance with Section 5.6(b), provided it has complied with all provisions thereof, including the notice provisions therein, and that it makes simultaneous payment of the Break-Up Amount as provided in Section 8.1(b); or (iii) if Parent or the Purchaser shall have breached in any material respect any of their respective representations, warranties, covenants or other agreements contained in this Agreement, which is not cured, in all material respects, within 30 days after the giving of written notice by the Company to Parent or the Purchaser, as applicable. (d) By Parent: (i) if either Parent or the Purchaser is entitled to terminate the Offer as a result of the occurrence of any event set forth in paragraph (d) of Annex A hereto; (ii) if the Offer is not commenced as provided in Section 1.1 as a result of actions or inaction by the Company that result in the failure of a condition specified in Annex A hereto, or the Offer is terminated or expires as a result of the failure of a condition specified in Annex A hereto, unless such termination or expiration has been caused by or resulted from the failure of Parent or Purchaser to perform any covenants and agreements of Parent or Purchaser contained in this Agreement; or 28 34 (iii) if (A) the Company shall have breached in any respect any of its representations or warranties contained in this Agreement, unless the inaccuracies (without giving effect to any materiality or material adverse effect qualifications or materiality exceptions contained therein) under such representations and warranties taking all the inaccuracies under all such representations and warranties together in their entirety, do not, individually or in the aggregate, result in a Company Material Adverse Effect or (B) the Company shall have breached or failed to perform any obligation or to comply with any agreement or covenant to be performed or complied with by it under the Agreement, other than, any breach or failure which would not have, either individually or in the aggregate, a Company Material Adverse Effect (in each of cases (A) and (B), which breach or failure has not been cured within thirty (30) days following receipt of written notice thereof by Parent specifying in reasonable detail the basis of such alleged breach or failure). Section 7.2. Effect of Termination. In the event of the termination of this Agreement pursuant to Section 7.1, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith become null and void and of no further force or effect, and no party hereto (or any of its affiliates, directors, officers, agents or representatives) shall have any liability or obligation hereunder, except in any such case (a) as provided in Sections 5.2(b) (Confidentiality), 5.8 (Publicity), 7.2 (Effect of Termination) and 8.1 (Fees and Expenses), which shall survive any such termination and (b) to the extent such termination results from the breach by such party of any of its representations, warranties, covenants or agreements contained in this Agreement, provided, however, that a party's damages for any such breach shall be limited to such party's actual damages and neither party shall be entitled to seek consequential or special damages for any such breach. ARTICLE VIII. MISCELLANEOUS Section 8.1. Fees and Expenses. (a) Except as contemplated by this Agreement, including Section 8.1(b) hereof, all costs and expenses incurred in connection with this Agreement and the consummation of the Transactions shall be paid by the party incurring such expenses. (b) If (x) the Company shall terminate this Agreement pursuant to Section 7.1(c)(ii), (y) Parent shall terminate this Agreement pursuant to Section 7.1(d)(i) hereof, or (z) either the Company or Parent terminates this Agreement pursuant to Section 7.1(b)(i) and (1) prior thereto there shall have been publicly announced another Acquisition Proposal, or (2) (i) the Company shall have entered into a definitive agreement relating to an Acquisition Proposal, or (ii) a business combination or other transaction contemplated by an Acquisition Proposal shall have been consummated, in each of cases (i) and (ii) prior to or within six months following such termination, then the Company agrees that it will immediately thereafter pay to Parent, in same day funds, an amount (the "Break-Up Amount") equal to $6,700,000. Section 8.2. Amendment and Modification. Subject to applicable law, this Agreement may be amended, modified and supplemented in any and all respects, whether before or after any vote of the shareholders of the Company contemplated hereby, by written agreement of the parties hereto, by action taken by their respective Boards of Directors (which in the case of the Company shall include approvals as contemplated in Section 1.3(b)), at any time prior to the Closing Date with respect to any of the terms contained herein; provided, however, that after the approval of this Agreement by the stockholders of the Company, no such amendment, modification or supplement shall reduce the amount or change the form of the Merger Consideration. 29 35 Section 8.3. Nonsurvival of Representations and Warranties. None of the representations and warranties contained in this Agreement or in any schedule, instrument or other document delivered pursuant to this Agreement shall survive the Effective Time. Section 8.4. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given or made as of the date delivered, mailed or transmitted, and shall be effective upon receipt, if delivered personally, telecopied (which is confirmed) or sent by an overnight courier service, such as Federal Express, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Parent or the Purchaser, to: Omnicare, Inc. 2800 Chemed Center 255 East Fifth Street Cincinnati, Ohio 45203 Attention: Mr. Joel F. Gemunder President Telephone Number: (513) 762-6666 Telecopy Number: (513) 762-6678 with a copy to: Dewey Ballantine 1301 Avenue of the Americas New York, New York 10019 Attention: Morton A. Pierce Telephone Number: (212) 259-8000 Telecopy Number: (212) 259-6333 (b) if to the Company, to: American Medserve Corporation 184 Shuman Blvd. Naperville, Illinois 60563 Attention: Mr. Timothy L. Burfield President Telephone Number: (630) 717-2904 Telecopy Number: (630) 717-4196 with a copy to: Gardner, Carton & Douglas Quaker Tower 321 North Clark Street Chicago, Illinois 60610 Attention: Glenn W. Reed, Esq. Telephone Number: (312) 245-8446 Telecopy Number: (312) 644-3381 30 36 Section 8.5. Interpretation. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words "include", "includes" or "including" are used in this Agreement they shall be deemed to be followed by the words "without limitation". As used in this Agreement, the term "affiliates" shall have the meaning set forth in Rule 12b-2 of the Exchange Act.. Section 8.6. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be. considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties. Section 8.7. Entire Agreement; No Third Party Beneficiaries. This Agreement and the Confidentiality Agreement (including the documents and the instruments referred to herein and therein): (a) constitute the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and (b) except as provided in Section 5.10 is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. Section 8.8. Severability. Any term or provision of this Agreement that is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. Section 8.9. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof. Section 8.10. Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written content of the other parties, except that the Purchaser may assign, in its sole discretion, any or all of its rights, interests and obligations hereunder to Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Section 8.11. Waivers. At any time prior to the Effective Time, Parent (for Parent and Purchaser), on the one hand, or the Company, on the other hand, may, to the extent legally allowed, extend the time specified herein for the performance of any of the obligations or other acts of the other, waive any inaccuracies in the representations and warranties of the other contained herein or in any document delivered pursuant hereto, or waive compliance by the other with any of the agreements or covenants of such other party or parties (as the case may be) contained herein. Any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of the other party or parties to be bound thereby. No such extension or waiver shall constitute a waiver of or estoppel with respect to, any subsequent or other breach or failure to strictly comply with the provisions of this Agreement. The failure of any party to insist on strict compliance with this Agreement or to assert any of its rights or remedies hereunder or with respect hereto shall not constitute a waiver of such rights or remedies. 31 37 Section 8.12. Captions. The Table of Contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 32 38 IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above. OMNICARE, INC. By /s/ Joel F. Gemunder ------------------------------- Name: Joel F. Gemunder Title: President OMNICARE ACQUISITION CORP. By /s/ Joel F. Gemunder ------------------------------- Name: Joel F. Gemunder Title: President AMERICAN MEDSERVE CORPORATION By /s/ Timothy L. Burfield ------------------------------- Name: Timothy L. Burfield Title: President 33 39 ANNEX A CERTAIN CONDITIONS OF THE OFFER Notwithstanding any other provisions of the offer, and in addition to (and not in limitation of) the Purchaser's rights to extend and amend the Offer at any time in its sole discretion (subject to the provisions of the Merger Agreement), the Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating to the Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and may delay the acceptance for payment of or, subject to the restriction referred to above, the payment for, any tendered Shares, and may terminate or amend the Offer as to any Shares not then paid for, if (i) the Minimum Condition has not been satisfied, (ii) if any applicable waiting period for the Offer under the HSR Act has not expired, or (iii) at any time on or after the date of the Merger Agreement and before the time of acceptance for payment for any such Shares, any of the following events shall have occurred: (a) there shall be threatened, instituted or pending any suit, action or proceeding by or before any Governmental Entity against the Purchaser, Parent, the Company or any Subsidiary of the Company (i) seeking to prohibit or impose any material limitations on Parent's or the Purchaser's ownership or operation (or that of any of their respective Subsidiaries or affiliates) of all or a material portion of their or the Company's businesses or assets, or to compel Parent or the Purchaser or their respective Subsidiaries and affiliates to dispose of or hold separate any material portion of the business or assets of the Company or Parent and their respective Subsidiaries, in each case taken as a whole, (ii) challenging the acquisition by Parent or the Purchaser of any Shares under the Offer, seeking to restrain or prohibit the making or consummation of the Offer or the Merger or the performance of any of the other transactions contemplated by the Agreement, or seeking to obtain from the Company, Parent or the Purchaser any material damages, (iii) seeking to impose material limitations on the ability of the Purchaser, or render the Purchaser unable, to accept for payment, pay for or purchase some or all of the Shares pursuant to the Offer and the merger, (iv) seeking to impose material limitations on the ability of Purchaser or Parent effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by them on all matters properly presented to the Company's stockholders, or (v) which otherwise is reasonably likely to have a Company Material Adverse Effect; (b) there shall be any action taken by a Governmental Entity or any statute, rule, regulation, judgment, administrative interpretation, order or injunction enacted, entered, enforced, promulgated, or deemed applicable, to the Company, Parent, Purchaser, the Offer or the Merger, or any other action shall be taken by any Governmental Entity that is reasonably expected to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; (c) there shall have occurred any other event, change or effect after the date of the Agreement which, either individually or in the aggregate, would have, or be reasonably likely to have, a Company Material Adverse Effect; (d)(i) the Board of Directors of the Company or any committee thereof shall have modified in a manner adverse to Parent or the Purchaser or withdrawn its approval or recommendation of the Offer, the Merger or the Agreement, or approved or recommended any Acquisition Proposal; (ii) the Company shall have entered into any agreement with respect to any Superior Proposal in accordance with Section 5.6(b) of the Agreement; or (iii) the Board of Directors of the Company resolves to do any of the foregoing; (e) the representations and warranties of the Company set forth in the Agreement shall not be true and correct, in each case (i) as of the date referred to in any representation or warranty which A-1 40 addresses matters as of a particular date, or (ii) as to all other representations and warranties, as of the date of the Agreement and as of the scheduled expiration of the Offer, unless the inaccuracies (without giving effect to any materiality or material adverse effect qualifications or materiality exceptions contained therein) under such representations and warranties, taking all the inaccuracies under all such representations and warranties together in their entirety, do not, individually or in the aggregate, result in a Company Material Adverse Effect; (f) the Company shall have breached or failed to perform any obligation or to comply with any agreement or covenant to be performed or complied with by it under the Agreement other than any breach or failure which would not have, either individually or in the aggregate, a Company Material Adverse Effect (which breach or failure has not been cured within thirty (30) days following receipt of written notice thereof by Parent specifying in reasonable detail the basis of such alleged breach or failure); (g) any person, entity or "group" (as such term is used in Section 13(d)(3) of the Exchange Act) other than Parent or any of its affiliates acquires beneficial ownership (as defined in Rule 13d-3 promulgated under the Exchange Act), of at least 30% of the outstanding Shares of the Company; (h) the Agreement shall have been terminated in accordance with its terms; which, in the sole judgment of Parent or the Purchaser, in any such case, and regardless of the circumstances (including any action or inaction by Parent or the Purchaser) giving rise to such condition makes it inadvisable to proceed with the Offer and/or with such acceptance for payment of or payment for Shares; or (i) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in securities on any national securities exchange or in the over-the-counter market in the United States, (ii) the declaration of any banking moratorium or any suspension of payments in respect of banks or any limitation (whether or not mandatory) on the extension of credit by lending institutions in the United States, (iii) the commencement of a war, material armed hostilities or any other material international or national calamity involving the United States, (iv) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof, or (v) any decline, measured from the date hereof, in the Standard & Poor's 500 Index by an amount in excess of 25%. The foregoing conditions are for the sole benefit of Parent and the Purchaser, may be asserted or waived by Parent or the Purchaser regardless of the circumstances giving rise to such condition (including any action or inaction by Parent or the Purchaser not in violation of the Agreement) and may be asserted or waived by Parent or the Purchaser in whole or in part at any time and from time to time in the sole discretion of Parent or the Purchaser, subject in each case to the terms of the Merger Agreement. The failure by Parent or the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. A-2 -----END PRIVACY-ENHANCED MESSAGE-----