1
THIRD AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TAYLOR MEDICAL, INC.
PSS MERGER CORP.
AND
PHYSICIAN SALES & SERVICE, INC.
DATED AS OF JULY 12, 1995
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THIRD AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS THIRD AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this
"Agreement") is made and entered into as of July 12, 1995, by and among TAYLOR
MEDICAL, INC. ("Taylor"), a Delaware corporation having its principal office
located in Beaumont, Texas; PSS MERGER CORP. ("Merger Corp."), a Delaware
corporation having its principal office located in Jacksonville, Florida; and
PHYSICIAN SALES & SERVICE, INC. ("PSS"), a Florida corporation having its
principal office located in Jacksonville, Florida.
PREAMBLE
The Boards of Directors of PSS, Merger Corp., a wholly owned
subsidiary of PSS, and Taylor are of the opinion that the transactions
described herein are in the best interests of the parties and their respective
shareholders. This Agreement provides for the acquisition of Taylor by PSS
pursuant to the merger of Merger Corp. with and into Taylor. At the Effective
Time of such merger, the outstanding shares of the capital stock of Taylor
shall be converted into the right to receive shares of the common stock of PSS
(except as provided herein). As a result, shareholders of Taylor shall become
shareholders of PSS and Taylor shall continue to conduct its business and
operations as a wholly owned subsidiary of PSS. The transactions described in
this Agreement are subject to the approvals of the shareholders of Taylor and
the shareholders of PSS and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the parties to this
Agreement that the Merger shall qualify (i) as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code for federal income tax
purposes, and (ii) for treatment as a pooling of interests for accounting
purposes .
Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.
All Exhibits (except Exhibit 4.3, a copy of which is attached hereto)
and Schedules deemed to be Exhibits and Schedules to the Second Amended and
Restated Agreement and Plan of Merger, dated June 28, 1995, by and among the
parties hereto, shall be deemed to be the Exhibits and Schedules provided for
in this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time, Merger Corp. shall be merged with and into Taylor in
accordance with the applicable provisions of the DGCL (the "Merger"). Taylor
shall be the Surviving Corporation resulting from the Merger and shall become a
wholly owned Subsidiary of PSS and shall continue to be governed by the Laws of
the State of Delaware. The Merger shall be consummated pursuant to the terms of
this Agreement, which has been approved and adopted by the respective Boards of
Directors of Taylor, Merger Corp. and PSS.
1.2 Time and Place of Closing. The closing (the "Closing") will
take place at 10:00 A.M. on a date to be specified by the parties (the "Closing
Date"), which (subject to the satisfaction or waiver of the conditions set
forth in Sections 9.2 and 9.3) shall be no later than the second business day
after the satisfaction of the conditions set forth in Section 9.1. The place of
Closing shall be at the offices of Alston & Bird, One Atlantic Center, 1201
West Peachtree Street, Atlanta, Georgia 30309-3424, or such other place as may
be mutually agreed upon by the Parties.
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1.3 Effective Time. Subject to the provisions of this Agreement,
the parties shall file a Certificate of Merger executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL as soon as practicable on or after the Closing Date.
The Merger and other transactions contemplated by this Agreement shall become
effective on the date and at the time the Certificate of Merger reflecting the
Merger become effective with the Secretary of State of the State of Delaware
(the "Effective Time").
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Certificate of Incorporation of Taylor in effect
immediately prior to the Effective Time shall be amended and restated,
effective at the Effective Time, in a manner satisfactory to PSS. The
Certificate of Incorporation of Taylor, as so amended and restated, shall be
the Certificate of Incorporation of the Surviving Corporation until otherwise
amended or repealed.
2.2 Bylaws. The Bylaws of Merger Corp. in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
2.3 Directors of PSS. If, immediately after giving effect to the
Merger, former holders of Taylor Capital Stock and Taylor Warrants will hold
not less than twenty percent (20%) of the issued and outstanding shares of PSS
Common Stock, then, effective upon consummation of the Merger, Todd D.
Christopher shall be named as a Class II director of PSS and Walter C. Johnsen
shall be named as a Class II director of PSS. If, immediately after giving
effect to the Merger, former holders of Taylor Capital Stock and Taylor
Warrants will hold less than twenty percent (20%) of the issued and outstanding
shares of PSS Common Stock, then, effective upon consummation of the Merger,
Todd D. Christopher shall be named as a Class II director of PSS.
2.4 Tax-Free Reorganization. The parties intend to adopt this
Agreement as a tax-free plan of reorganization under Section 368(a) of the
Internal Revenue Code.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any
action on the part of the Parties or the shareholders of any of the Parties,
the shares of the constituent corporations of the Merger shall be converted as
follows:
(a) Each share of Merger Corp. Common Stock issued and outstanding at
the Effective Time shall cease to be outstanding and shall be converted into
one share of Taylor Common Stock.
(b) Each share of Taylor Common Stock (excluding treasury shares and
excluding shares held by shareholders who perfect their statutory dissenters'
rights as provided in Section 3.4 of this Agreement) issued and outstanding at
the Effective Time shall cease to be outstanding and shall be converted into
and exchanged for the right to receive (i) eighty nine percent (89%) of that
fraction of a share of PSS Common Stock obtained by dividing the Common Stock
Per Share Purchase Price by the Base Period Trading Price, and (ii) a
contingent right to receive that portion of the Escrow Shares as provided in
the Escrow Agreement that are deposited by PSS pursuant to Section 4.3 of this
Agreement. The sum of clause (i) and (ii) of the preceding sentence is the
"Common Stock Exchange Ratio." The Base Period Trading Price is defined to mean
the average of the daily closing prices for the shares of PSS Common Stock for
the twenty (20) consecutive trading days on which such shares are actually
traded as over-the-counter securities and quoted on the Nasdaq National Market
(as reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source) ending at the close of trading on the second trading day
immediately prior to the Closing Date; provided, that for purposes of this
calculation, the Base Period Trading Price shall be
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deemed to equal (i) $31.851875 in the event the Base Period Trading Price is
greater than $31.851875 or (ii) $26.060625 in the event the Base Period Trading
Price is less than $26.060625 (collectively, $31.851875 and $26.060625 are
referred to as the "Base Period Trading Price Limitations").
(c) Each share of Taylor Series A Preferred Stock (excluding treasury
shares and excluding shares held by shareholders who perfect their statutory
dissenters' rights as provided in Section 3.4 of this Agreement) issued and
outstanding at the Effective Time, together with all accrued but unpaid
dividends, shall cease to be outstanding (or, in the case of dividends, due and
payable) and shall be converted into and exchanged for the right to receive (i)
eighty nine percent (89%) of that fraction of a share of PSS Common Stock
obtained by dividing the Series A Per Share Purchase Price by the Base Period
Trading Price, and (ii) a contingent right to receive that portion of the
Escrow Shares as provided in the Escrow Agreement that are deposited by PSS
pursuant to Section 4.3 of this Agreement. The sum of clause (i) and (ii) above
is the "Series A Exchange Ratio."
(d) Each share of Taylor Series C Preferred Stock (excluding treasury
shares and excluding shares held by shareholders who perfect their statutory
dissenters' rights as provided in Section 3.4 of this Agreement) issued and
outstanding at the Effective Time, together with all accrued but unpaid
dividends, shall cease to be outstanding (or, in the case of dividends, due and
payable) and shall be converted into and exchanged for the right to receive (i)
eighty nine percent (89%) of that fraction of a share of PSS Common Stock
obtained by dividing the Series C Per Share Purchase Price by the Base Period
Trading Price, and (ii) a contingent right to receive that portion of the
Escrow Shares as provided in the Escrow Agreement that are deposited by PSS
pursuant to Section 4.3 of this Agreement. The sum of clause (i) and (ii) above
is the "Series C Exchange Ratio."
3.2 Anti-Dilution Provisions. In the event Taylor or PSS changes
the number of shares of Taylor Common Stock, Taylor Series A Preferred Stock,
Taylor Series C Preferred Stock or PSS Common Stock, respectively, issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend, combination of shares or similar recapitalization with respect to
such stock (an "Anti-Dilution Event") and the record date therefor (in the case
of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Common Stock Exchange Ratio, the
Series A Exchange Ratio, the Series C Exchange Ratio and the Warrant Exchange
Ratio, as the case may be, shall be proportionately adjusted to insure that
holders of Taylor Capital Stock and Taylor Warrants shall receive PSS Common
Stock having the same value as they would have received prior to the
Anti-Dilution Event. In the event PSS has an Anti-Dilution Event and the record
date therefor (in the case of a stock dividend) or the effective date thereof
(in the case of a stock split, share combination or similar recapitalization
for which a record date is not established) shall be prior to the Effective
Time, the Base Period Trading Price Limitations shall be adjusted to
appropriately adjust the ratio under which shares of Taylor Capital Stock and
Taylor Warrants will be converted into shares of PSS Common Stock pursuant to
Section 3.1(b), (c) or (d), or Section 3.6, as the case may be, of this
Agreement to insure that holders of Taylor Capital Stock and Taylor Warrants
shall receive PSS Common Stock having the same value as they would have
received prior to the Anti-Dilution Event.
3.3 Shares Held by Taylor. Each share of Taylor Capital Stock held
in treasury by Taylor, shall be canceled and retired at the Effective Time and
no consideration shall be issued in exchange therefor.
3.4 Dissenting Shareholders. Any holder of shares of Taylor
Capital Stock who perfects its dissenters' rights in accordance with and as
contemplated by Section 262 of the DGCL shall be entitled to receive the value
of such shares in cash from Taylor after the Effective Time as determined
pursuant to such provision of Law; provided, that no such payment shall be made
to any dissenting shareholder unless and until such dissenting shareholder has
complied with the applicable provisions of the DGCL and surrendered to Taylor
the certificate or certificates representing the shares for which payment is
being made. In the event that a dissenting shareholder of Taylor fails to
perfect, or effectively withdraws or loses, its right to
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appraisal and of payment for its shares, PSS shall issue and deliver the
consideration to which such holder of shares of Taylor Capital Stock is
entitled under this Article 3 (without interest) upon surrender by such holder
of the certificate or certificates representing such shares held by such
holder.
3.5 Fractional Shares. No certificates representing fractional
shares of PSS Common Stock will be issued as a result of the Merger. Each
holder of shares of Taylor Capital Stock or Taylor Warrants exchanged pursuant
to the Merger who would otherwise have been entitled to receive a fraction of a
share of PSS Common Stock shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of PSS Common
Stock multiplied by the Base Period Trading Price. No such holder will be
entitled to dividends, voting rights, or any other rights as a shareholder in
respect of any fractional shares.
3.6 Conversion of Taylor Warrants and Taylor Options.. (a) At the
Effective Time, each Taylor Warrant, issued and outstanding at the Effective
Time, whether or not then exercisable, shall cease to be outstanding pursuant
to the terms of the Amendment to Warrant Agreement and shall be converted into
and exchanged for the right to receive (i) eighty nine percent (89%) of the
Warrant Per Share Purchase Price, divided by the Base Period Trading Price, and
(ii) the contingent right to receive that portion of the Escrow Shares as
provided in the Escrow Agreement that are deposited by PSS pursuant to Section
4.3 of this Agreement (clauses (i) and (ii), collectively, the "Warrant
Settlement Payment"). The sum of clause (i) and (ii) of the preceding sentence
is the "Warrant Exchange Ratio." At the Effective Time, each such Taylor
Warrant shall no longer represent the right to purchase shares of Taylor Common
Stock, but in lieu thereof shall represent only the nontransferable right to
receive the Warrant Settlement Payment referred to above. Notwithstanding
anything to the contrary herein, any holder of Taylor Capital Stock who is also
a holder of Taylor Warrants and who perfects dissenters' rights and becomes
entitled to receive the value of such shares of Taylor Capital Stock in cash,
shall receive, in lieu of the Warrant Settlement Payment, a cash payment equal
to the market value of the PSS Common Stock (based on the last sales price of
such common stock on the Nasdaq National Market as reported in The Wall Street
Journal or, if not reported thereby, any other authoritative source) that would
have been otherwise issued as the Warrant Settlement Payment.
(b) At the Effective Time, all rights with respect to Taylor Common
Stock pursuant to Taylor Options disclosed on Schedule 5.3, which are
outstanding at the Effective Time, whether or not then exercisable or vested,
shall be converted into and become rights with respect to PSS Common Stock, and
PSS shall assume each Taylor Option, in accordance with the terms of the Taylor
Stock Plans and stock option agreement by which it is evidenced, except that
from and after the Effective Time, (i) PSS and its Compensation Committee shall
be substituted for Taylor and the Committee of Taylor's Board of Directors
(including, if applicable, the entire Board of Directors of Taylor)
administering such Taylor Stock Plan, (ii) each Taylor Option assumed by PSS
may be exercised solely for shares of PSS Common Stock, (iii) the number of
shares of Taylor Common Stock subject to such Taylor Option immediately prior
to the Effective Time shall be multiplied by the Common Stock Exchange Ratio,
and (iv) the per share exercise price under each such Taylor Option shall be
adjusted by dividing the per share exercise price under each such Taylor Option
by the Common Stock Exchange Ratio and rounding up to the nearest cent.
Notwithstanding the provisions of clause (iii) of the preceding sentence, PSS
shall not be obligated to issue any fraction of a share of PSS Common Stock
upon exercise of Taylor Options and any fraction of a share of PSS Common Stock
that otherwise would be subject to a converted Taylor Option shall represent
the right to receive a cash payment upon exercise of such converted Taylor
Option equal to the product of such fraction and the difference between the
market value of one share of PSS Common Stock at the time of exercise of such
option and the per share exercise price of such option. The market value of one
share of PSS Common Stock at the time of exercise of an option shall be the
last sale price of such common stock on the Nasdaq National Market (as reported
by The Wall Street Journal or, if not reported thereby, any other authoritative
source) on the last trading day preceding the date of exercise. In addition,
notwithstanding the clauses (iii) and (iv) of the first sentence of this
Section 3.5(b), each Taylor Option which is an "incentive stock option" shall
be adjusted as required by Section 424 of the Internal Revenue Code, and the
regulations promulgated thereunder, so as not to constitute a modification,
extension or renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code. Taylor agrees to take all necessary steps to effectuate
the
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foregoing provisions of this Section 3.6(b). At or prior to the Effective Time,
PSS shall take all corporate action necessary to reserve for issuance
sufficient shares of PSS Common Stock for delivery upon exercise of Taylor
Options assumed by it in accordance with this Section 3.6(b).
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly (and in no event more than five
(5) calendar days) after the Effective Time, PSS and Taylor shall cause the
exchange agent selected by PSS (the "Exchange Agent") to mail to the former
holders of Taylor Capital Stock and Taylor Warrants appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates theretofore representing shares of Taylor
Capital Stock or Taylor Warrants shall pass, only upon proper delivery of such
certificates to the Exchange Agent). After the Effective Time, each holder of
shares of Taylor Capital Stock (other than shares to be canceled pursuant to
Section 3.3 of this Agreement or as to which statutory dissenters' rights have
been perfected as provided in Section 3.4 of this Agreement) and Taylor
Warrants issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement. To the extent required
by Section 3.5 of this Agreement, each holder of shares of Taylor Capital Stock
or Taylor Warrants issued and outstanding at the Effective Time also shall
receive, upon surrender of the certificate or certificates representing such
shares, cash in lieu of any fractional share of PSS Common Stock to which such
holder may be otherwise entitled (without interest). PSS shall not be obligated
to deliver the consideration to which any former holder of Taylor Capital Stock
or Taylor Warrants is entitled as a result of the Merger until such holder
surrenders his certificate or certificates representing the shares of Taylor
Common Stock or Taylor Warrants for exchange as provided in this Section 4.1 or
such holder provides an appropriate affidavit regarding loss of such
certificate and an indemnification for loss in favor of PSS. The certificate or
certificates of Taylor Capital Stock or certificates representing the Taylor
Warrants so surrendered shall be duly endorsed as the Exchange Agent may
require. Any other provision of this Agreement notwithstanding, neither PSS,
the Surviving Corporation nor the Exchange Agent shall be liable to a holder of
Taylor Capital Stock or Taylor Warrants for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property Law.
4.2 Rights of Former Taylor Shareholders. At the Effective Time,
the stock transfer books of Taylor shall be closed and no transfer of Taylor
Capital Stock by any such holder and no exercise of any Taylor Warrant shall
thereafter be made or recognized. Until surrendered for exchange in accordance
with the provisions of Section 4.1 of this Agreement, each certificate
theretofore representing shares of Taylor Capital Stock or Taylor Warrants
(other than shares to be canceled pursuant to Sections 3.3 and 3.4 of this
Agreement) shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Sections 3.1, 3.5 and
3.6 of this Agreement in exchange therefor. To the extent permitted by Law,
former shareholders or warrant holders of record of Taylor shall be entitled to
vote after the Effective Time at any meeting of PSS shareholders the number of
whole shares of PSS Common Stock into which their respective shares of Taylor
Capital Stock are converted, regardless of whether such holders have exchanged
their certificates representing Taylor Capital Stock or Taylor Warrants for
certificates representing PSS Common Stock in accordance with the provisions of
this Agreement. Whenever a dividend or other distribution is declared by PSS on
the PSS Common Stock, the record date for which is at or after the Effective
Time, the declaration shall include dividends or other distributions on all
shares issuable pursuant to this Agreement, but no dividend or other
distribution payable to the holders of record of PSS Common Stock as of any
time subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of Taylor Capital Stock or Taylor Warrants
issued and outstanding at the Effective Time until such holder surrenders such
certificate for exchange as provided in Section 4.1 of this Agreement. However,
upon surrender of such certificate, both the PSS Common Stock certificate
(together with all such undelivered dividends or other distributions without
interest) and any undelivered cash payments to be paid for fractional share
interests (without interest) shall be delivered and paid with respect to each
share represented by such certificate.
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4.3 Escrow Shares. At the Effective Time, and pursuant to the terms of
the Escrow Agreement attached hereto as Exhibit 4.3, PSS shall issue an
aggregate number of shares of PSS Common Stock equal to the sum of (A) with
respect to the specific indemnity set forth in Section 2.3 of the Escrow
Agreement, (i) $465,000, the amount of penalties sought by the U.S.
Environmental Protection Agency, divided by the Base Period Trading Price, (ii)
$300,000, the amount of the proposed adjustment sought in connection with
Taylor's sales tax audit pending in the State of Texas at this date, divided by
the Base Period Trading Price, (iii) the aggregate amount of the "Receivables
Claim" as defined in the Escrow Agreement, divided by the Base Period Trading
Price, and (B) with respect to the general indemnity set forth in Section 2.2
of the Escrow Agreement, (i) the General Escrow Percentage of the number of
shares of PSS Common Stock issued pursuant to Section 3.1(b), (ii) the General
Escrow Percentage of the number of shares of PSS Common Stock issued pursuant
to Section 3.1(c), (iii) the General Escrow Percentage of the number of shares
of PSS Common Stock issued pursuant to Section 3.1(d) and (iv) the General
Escrow Percentage of the number of shares of PSS Common Stock issued pursuant
to Section 3.6(a). For purposes of this Section 4.3, the term "General Escrow
Percentage" shall mean that percentage which is the difference between (1)
eleven percent (11%), and (2) the percentage of all shares of PSS Common Stock
to be issued in the Merger (whether held in escrow or not) represented by the
shares to be issued to escrow pursuant to clause (A) above.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TAYLOR
Taylor hereby represents and warrants to PSS and Merger Corp. as
follows:
5.1 Organization, Standing, and Power. Each of Taylor and its
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the Laws of the state of its incorporation, and has the
corporate power and authority to carry on its business as it has been and is
now being conducted and to own, lease and operate its Assets. Each of Taylor
and its Subsidiaries is duly qualified or licensed to transact business as a
foreign corporation and is in good standing in all jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, in the
aggregate, a Material Adverse Effect on Taylor and its Subsidiaries, taken as a
whole. Copies of the articles or certificate of incorporation and all
amendments thereto of Taylor and its Subsidiaries and the bylaws, as amended,
of Taylor and its Subsidiaries and copies of the corporate minutes (or
resolutions adopted by the shareholders or Board of Directors) of Taylor and
its Subsidiaries, which have been made available to PSS for review, are true
and complete, in all Material respects, as in effect on the date of this
Agreement, and accurately reflect all proceedings of the shareholders and Board
of Directors (and all committees thereof) of Taylor and its Subsidiaries. The
stock record books of Taylor and its Subsidiaries, which have been made
available to PSS for review, contain true and complete records of the stock
ownership of Taylor and all prior transfers of the shares of its capital stock.
5.2 Authorization of Agreement; No Breach. The execution, delivery
and performance of this Agreement has been duly authorized by all necessary
corporate action of Taylor, other than the meeting (or written consent) of the
shareholders of Taylor to approve this Agreement to be held pursuant to Section
8.1. This Agreement constitutes, and all agreements and other instruments and
documents to be executed and delivered by Taylor pursuant to this Agreement
will constitute, legal, valid and binding obligations of Taylor enforceable
against Taylor in accordance with their respective terms. The execution,
delivery and performance of this Agreement and the agreements and other
documents and instruments to be executed and delivered by Taylor pursuant to
this Agreement and the consummation of the transactions contemplated hereby and
thereby will not, subject to obtaining the consents identified herein, (i)
violate or result in a breach of or Default under the articles or certificate
of incorporation or bylaws of Taylor or any of its Subsidiaries or any other
Material instrument or agreement to which Taylor or any of its Subsidiaries is
a party or is bound; (ii) to the knowledge of Taylor and its Subsidiaries,
violate any Law, administrative decision or award of any court, arbitrator,
mediator, tribunal, administrative agency or governmental body
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applicable to or binding upon Taylor or its Subsidiaries or upon their
respective securities, property or business; (iii) except as set forth on
Schedule 5.2 or 5.16 conflict with or constitute a Default under any Material
Contract to which Taylor or any of its Subsidiaries is a party or by which
Taylor or any of its Subsidiaries is bound; or (iv) create a Lien upon the
securities, property or business of Taylor or any of its Subsidiaries.
5.3 Capital Stock. The authorized capital stock of Taylor consists
of (i) 23,000,000 shares of Taylor Class A Common Stock, of which 5,322,729
shares are issued and outstanding as of the date of this Agreement and none of
which are issued and held as treasury shares, (ii) 1,094,000 shares of Taylor
Class B Non-Voting Common Stock, none of which are issued and outstanding as of
the date of this Agreement and none of which are issued and held as treasury
shares, (iii) 1,500,000 shares of Taylor Series A Preferred Stock, 770,000 of
which are issued and outstanding as of the date of this Agreement and none of
which are issued and held as treasury shares, and (iv) 1,500,000 shares of
Taylor Series C Preferred Stock, 1,133,329 of which are issued and outstanding
as of the date of this Agreement and none of which are issued and held as
treasury shares. All of such shares are duly and validly issued and
outstanding, are fully paid and non-assessable, and were issued pursuant to a
valid exemption from registration under the 1933 Act and all applicable state
securities laws. Except as set forth on Schedule 5.3, there are no outstanding
warrants, options, rights (including outstanding rights to demand registration
or to sell in connection with a registration by Taylor under the 1933 Act),
calls or other commitments of any nature relating to the Taylor Capital Stock,
and there are no outstanding securities of Taylor convertible into or
exchangeable for shares of Taylor Capital Stock or any other capital stock.
Except as set forth on Schedule 5.3, Taylor is not obligated to issue or
repurchase any shares of its capital stock for any purpose, and to the
knowledge of Taylor no person or entity has entered into any Contract or option
or any right or privilege (whether preemptive or contractual) capable of
becoming a Contract or option for the purchase, subscription or issuance of any
unissued shares, or other securities of Taylor. Taylor's Fully Diluted Common
Equivalents represents 21,915,685 shares of Taylor Common Stock.
5.4 Taylor Subsidiaries. Schedule 5.4 attached hereto contains a
true and correct list of each Subsidiary of Taylor. All of the outstanding
shares of capital stock of each such Subsidiary of Taylor are duly and validly
issued and outstanding, are fully paid and non-assessable, and were issued
pursuant to a valid exemption from registration under the 1933 Act and all
applicable State securities laws and, except as set forth on Schedule 5.4, are
owned of record and beneficially by Taylor, free and clear of any and all
Liens. No shares of capital stock of any Subsidiary are reserved for issuance
and there are no outstanding options, warrants, rights, subscriptions, claims
of any character, Contracts, obligations, convertible or exchangeable
securities or other commitments, contingent or otherwise, relating to the
capital stock of any Subsidiary, or pursuant to which any Subsidiary is or may
become obligated to issue or exchange any share of capital stock. Neither
Taylor nor any Subsidiary owns, directly or indirectly, any capital stock or
other equity or ownership or proprietary interest in any corporation,
partnership, or other entity, except as set forth on Schedule 5.4.
5.5 Financial Statements. (a) Schedule 5.5 contains true and
correct copies of the (i) audited consolidated balance sheets of Taylor as of
September 30, 1994 and 1993, and the audited consolidated statements of income
and audited consolidated statements of cash flows for the years ended September
30, 1994, 1993 and 1992, together with the notes thereto and the reports
thereon of Price Waterhouse LLP, certified public accountants, and (ii)
unaudited consolidated balance sheets of Taylor as of February 28, 1995 and
1994 and the unaudited consolidated statements of income and unaudited
consolidated statements of cash flows for the five-month periods ended February
28, 1995 and 1994 (the "Financial Statements").
(b) The Financial Statements (i) are in accordance with the books and
records of Taylor and its Subsidiaries, which books and records have been
maintained in accordance with reasonable business practices; (ii) present
fairly the consolidated financial condition, assets and liabilities of Taylor
and its Subsidiaries, taken as a whole, as of the respective dates indicated
and the results of operations and cash flows for the respective periods
indicated; (iii) have been prepared in accordance with GAAP consistently
applied throughout the periods involved, except for the omission of notes to
interim unaudited consolidated
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statements, and except that interim unaudited consolidated statements are
subject to normal year end adjustments of the type specifically listed in
Schedule 5.5 which will not, individually or in the aggregate, be Material; and
(iv) reflect adequate reserves for all known Material Liabilities and
reasonably anticipated losses required to be recorded under GAAP. The Financial
Statements contain no untrue statements of any Material fact nor omit to state
any Material fact required to be stated to make the Financial Statements not
misleading, except that there are no notes to the interim unaudited
consolidated statements.
5.6 Absence of Undisclosed Liabilities. Except as disclosed on
Schedule 5.6, as of the date hereof, neither Taylor nor any of its Subsidiaries
has any Undisclosed Liabilities in excess of $100,000 in the aggregate, except
for unpaid liabilities and obligations incurred since February 28, 1995, in the
ordinary course of business and not involving Funded Debt.
5.7 Absence of Changes. Except as disclosed on Schedule 5.7, since
February 28, 1995 there has not been any Material transaction or Material
occurrence (or, in the case of subparagraphs (i), (l) and (m) below, any
transaction or occurrence) in which Taylor or any of its Subsidiaries has:
(a) issued or delivered or agreed to issue or deliver any capital
stock or other securities (whether stock, bonds, debentures or other corporate
securities) or granted or agreed to grant any options or rights to purchase any
securities or borrowed or agreed to borrow any funded debt;
(b) knowingly incurred or become subject to, or agreed to incur or
become subject to, any Material Liability other than in the ordinary course of
business;
(c) discharged or satisfied any Lien or paid any Material Liability
other than (i) current liabilities shown on the balance sheet as of February
28, 1995 included in the Financial Statements, (ii) current liabilities
incurred since that date in the ordinary course of business, or (iii) Funded
Debt shown on such balance sheet or incurred since February 28, 1995;
(d) except as permitted elsewhere in this Agreement or disclosed in
Schedule 5.7, declared, set aside or made, or agreed to declare, set aside or
make any payments or dividends or any distribution to shareholders or
purchased, redeemed or otherwise acquired, directly or indirectly, or agreed to
purchase, redeem or acquire, any shares of capital stock or other securities;
(e) mortgaged, pledged, subjected or agreed to subject, any of its
assets, tangible or intangible, to any Lien, except for any liens regarding
current real and personal property taxes not yet due and payable;
(f) sold, assigned or transferred (or agreed so to do) any of its
tangible assets, or canceled or agreed to cancel any debts or claims, except,
in each case, in the ordinary course of business;
(g) sold, assigned or transferred any patents, trademarks, trade
names, copyrights or other intangible assets;
(h) suffered any Material damage, destruction or loss, whether or not
covered by insurance, which materially and adversely affected the properties or
business thereof, or suffered any extraordinary losses or waived any rights of
substantial value, whether or not in the ordinary course of business;
(i) increased the rate of compensation payable or to become payable by
it to any of its officers, directors, employees or agents over the rate being
paid to them at February 28, 1995, or agreed so to do, except general hourly
rate increases and normal merit increases for employees other than officers;
(j) terminated or amended any Material Contract, License or other
instrument to which it is a party or suffered any loss or termination or
threatened loss or termination, of any existing business arrangement or
Material supplier, the termination or loss of which would materially and
adversely affect any such entity;
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(k) through negotiation or otherwise, made any commitment or incurred
any Liability, whether or not enforceable, to any labor organization;
(l) except for any year-end compensation bonuses to be paid consistent
with past practice, if any, made or agreed to make any accrual or arrangement
for or payment of any bonus or special compensation of any kind to any officer,
director, employee or agent;
(m) directly or indirectly paid or entered into a Contract to pay any
severance or termination pay to any officer, director, employee or agent;
(n) changed any of the accounting principles followed by it or the
methods of applying such principles;
(o) reclassified its shares of capital stock into a different number
of shares;
(p) except in the ordinary course of business or as otherwise
disclosed in writing to PSS, offered or extended more favorable prices,
discounts or other allowances than were offered or extended regularly on and
prior to February 28, 1995;
(q) made or approved the making of any capital expenditure exceeding
the amount of $25,000 in any instance;
(r) except in the ordinary course of business, loaned funds to or
increased the aggregate amount of existing loans to any Person;
(s) suffered or experienced any other event or condition materially
and adversely affecting the business, operations, assets, properties or
condition of Taylor and its Subsidiaries, taken as a whole, financial or
otherwise.
5.8 Indebtedness. Schedule 5.8 lists all Funded Debt of Taylor as
of March 31, 1995, setting forth the principal amounts outstanding, per annum
interest rates and maturity dates for all such indebtedness. All of the
indebtedness (including Funded Debt) of Taylor and its Subsidiaries as of the
respective dates of the Financial Statements and as of the date of this
Agreement is accurately reflected in the Financial Statements, and with respect
to any Funded Debt, neither Taylor nor any of its Subsidiaries is in breach or
Default under any of the terms or conditions set forth in the loan documents or
any other document or instrument related thereto. Except as disclosed on
Schedule 5.8, all of the Funded Debt of Taylor and its Subsidiaries is
prepayable at any time without penalty or premium at the option of the obligor.
Except as disclosed on Schedule 5.8, (i) the transactions contemplated in this
Agreement will not result in any penalty or incurrence of any additional
obligation or change of any terms with respect to any such indebtedness, and
(ii) neither Taylor nor any of its Subsidiaries have any obligations,
Liabilities or indebtedness to any Affiliate.
5.9 Tax Matters. (a) Taylor and each of its Subsidiaries have
filed all federal and state income tax returns for all periods prior to the
date hereof which were required to be filed, and, except as described on
Schedule 5.9, no returns so filed have been examined by the IRS or any state
agency with respect to any such period. Except as listed on Schedule 5.9,
neither Taylor nor any of its Subsidiaries have received notice of any Material
Tax claims being asserted or any proposed assessment by any taxing authority
and no Tax returns thereof have been examined by the IRS or the appropriate
state agencies for any fiscal year or period ended prior to the date hereof,
and neither Taylor nor any of its Subsidiaries are presently under, nor has any
such entity received notice of any contemplated, investigation or audit by the
IRS or any state agency concerning any fiscal year or period ended prior to the
date hereof. Except as listed on Schedule 5.9, neither Taylor nor any of its
Subsidiaries have executed any extension or waivers of any statute of
limitations on the assessment or collection of any tax due that is currently in
effect.
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(b) As of the date hereof, Taylor and each of its Subsidiaries have
filed all Tax returns required to be filed at this date, taking into account
any extensions of the filing deadlines which have been validly granted to any
such entity, and such returns are true and correct in all Material respects and
properly reflect the Tax Liabilities of Taylor and each of its Subsidiaries for
the periods, property or events covered thereby, and each such entity has paid
all Taxes (including penalties and interest in respect thereof, if any) that
have become or are due with respect to any period through the date hereof
whether shown on such returns or not.
(c) Adequate provision has been made in the Financial Statements in
accordance with GAAP as of February 28, 1995, for all Tax Liabilities not
required to be paid prior to such date and for all current and deferred Taxes.
(d) Taylor and each of its Subsidiaries, and each of their respective
predecessors to which any such entity has succeeded, has withheld or collected
from each payment made to each of their employees the amount of all Taxes
required to be withheld or collected therefrom and has paid the same to the
proper tax depositories or collecting authorities.
(e) All ad valorem property taxes for years prior to 1995 imposed on
Taylor, or any of its Subsidiaries or their respective predecessors have been
paid in full or adequately reserved in the Financial Statements, as
appropriate..
(f) Neither Taylor nor any of its Subsidiaries, nor to the knowledge
of Taylor or its Subsidiaries, their respective predecessors to which any such
entity has succeeded, has ever made an election under Section 341(f) of the
Internal Revenue Code and no such entity is a United States real property
holding corporation as defined in Section 897 of the Internal Revenue Code.
5.10 Real Property. (a) Schedule 5.10 identifies all real property
owned by Taylor or any of its Subsidiaries and describes generally all
structures located thereon. Except as shown on Schedule 5.10, the entity owning
each such parcel of real property has good and marketable title to all real
property owned by it, free and clear of all Liens and other imperfections of
title, other than easements which do not materially and adversely affect the
ownership or use of such real property. True and correct copies of all
documents evidencing the Liens upon the real property described on Schedule
5.10 and copies of all title insurance policies relating thereto have been
provided or made available to PSS.
(b) True and correct copies of all real property leases of Taylor and
its Subsidiaries have been provided or made available to PSS. Each of such
leases is in full force and effect on the date hereof, except as the validity
of such leases may be affected by actions, events or conditions involving only
the other party thereto, none of which actions, events or conditions have
occurred or exist to the knowledge of Taylor. No Default under any of the terms
or conditions set forth in any of the foregoing leases or any other documents
or instruments related thereto has occurred or been asserted by any party.
Except as disclosed on Schedule 5.10, the continuation, validity and
effectiveness of the terms and conditions of such leases will not be affected
in any way by the transactions contemplated by this Agreement.
(c) All improvements on the real estate owned by, leased to or used by
Taylor and its Subsidiaries conform in all Material respects to all applicable
state and local laws, zoning and building ordinances and health and safety
ordinances, and the property is zoned for the various purposes for which the
real estate and improvements thereon are presently being used.
(d) Each of the buildings, structures, improvements and leased
premises is in satisfactory condition and repair consistent with the uses to
which they are being put.
(e) No proceedings for the taking of any of such real property by
eminent domain by any governmental authority are pending or, to the knowledge
of Taylor or any of its Subsidiaries, threatened.
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5.11 Personal Property. (a) True and correct copies of all leases for
personal property (except miscellaneous leases of office machinery, medical
equipment, or any leases having future minimum lease payments of less than
$10,000) used or employed by Taylor or any of its Subsidiaries have been
provided or made available to PSS. Each of such leases is in full force and
effect on the date hereof, except as the validity of such leases may be
affected by actions, events or conditions affecting the other party thereto,
none of which actions, events or conditions exists of has occurred to the
knowledge of Taylor.. No Default under any of the terms or conditions set forth
in any of the foregoing leases or any document or instrument related thereto
has occurred or been asserted by any party. Except as disclosed on Schedule
5.11, the continuation, validity and effectiveness of such leases will not be
affected in any way by the transactions contemplated by this Agreement. Except
as disclosed on Schedule 5.11, neither Taylor nor any of its Subsidiaries lease
any personal property as lessor.
(b) All Material items of personal property and leasehold improvements
owned or leased by Taylor or any of its Subsidiaries are shown on or reflected
in the unaudited consolidated balance sheet of Taylor as of February 28, 1995,
included in the Financial Statements, are in satisfactory operating condition
and in a state of reasonable maintenance and repair, consistent with the uses
to which they are being put, and all such personal property, and leasehold
improvements are considered adequate and usable for the continued operation of
the business of Taylor and its Subsidiaries, taken as a whole, as the same is
presently being conducted and are physically located either at one of the
principal places of business of Taylor or its Subsidiaries or at Taylor's
principal business office.
5.12 Intellectual Property. (a) Schedule 5.12 contains a true and
complete list of all Intellectual Property owned by, registered in the name of,
or used by Taylor or any of its Subsidiaries in their respective businesses on
the date hereof, or for which application has been made. All such Intellectual
Property rights are in full force and effect and constitute legal, valid and
binding obligations of the respective parties thereto; and there have not been,
and to the knowledge of Taylor and its Subsidiaries, there currently are not
any Defaults thereunder by any party. Taylor or one of its Subsidiaries owns or
is a valid licensee of all such Intellectual Property rights free and clear of
all Liens or claims of infringement. Neither Taylor nor any of its Subsidiaries
or, to the knowledge of Taylor and any of its Subsidiaries, their respective
predecessors have misused the Intellectual Property rights of others and none
of the Intellectual Property rights as used in the business conducted by any
such entity infringes upon or otherwise violates the rights of others, nor has
any person asserted a claim of such infringement. Neither Taylor nor any of its
Subsidiaries is obligated to pay any royalties to any person or entity with
respect to any such Intellectual Property. Each such entity owns or has the
valid right to use all of the Intellectual Property rights which it is
presently using, or in connection with the performance of any Material
contract, proposal or letter of intent to which it is a party.
(b) To the knowledge of Taylor, except as described on Schedule 5.12,
no officer, director or employee of Taylor or any of its Subsidiaries has
entered into any Contract which requires such officer, director or employee to
assign any interest in any Intellectual Property or keep confidential any trade
secrets, proprietary data, patient lists or other business information or which
restricts or prohibits such officer, director or employee from engaging in
activities competitive with Taylor or its Subsidiaries.
5.13 Accounts Receivable. The accounts receivable and receivables from
Affiliates of Taylor and its Subsidiaries as of February 28, 1995, as reflected
in the Financial Statements (net of reserves reflected in such Financial
Statements), to the extent uncollected on the date hereof, and the accounts
receivable and receivables from Affiliates reflected on the books of Taylor and
its Subsidiaries on the date hereof, are validly existing and represent monies
due for goods sold and delivered or services performed, and the value of such
accounts receivable as shown in the Financial Statements are, in the aggregate,
net of adequate reserves for doubtful and uncollectible accounts as determined
in accordance with GAAP. Except as set forth in Schedule 5.13, there are no
refunds, discounts or other adjustments payable with respect to any such
accounts receivable, and receivables from Affiliates and there are no defenses,
rights of set-off, assignments, restrictions, encumbrances, or conditions
enforceable by third parties on or affecting any of the foregoing.
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5.14 Inventories. All items of inventory of Taylor reflected on the
February 28, 1995 unaudited consolidated balance sheet contained in the
Financial Statements consisted, and all such items on hand on the date of this
Agreement consist of items of a quality and quantity usable and saleable in the
ordinary course of business and conform to generally accepted standards in the
industry in which Taylor is a part. The value of the inventories reflected on
the February 28, 1995 unaudited consolidated balance sheet contained in the
Financial Statements were, in each instance, net of adequate reserves for
damaged, excess, slow moving, obsolete and unsaleable items as determined in
accordance with GAAP. Purchase commitments are not materially in excess of
normal requirements, and none of such purchase commitments are at prices in
excess of the prevailing market prices at the time of the purchase. Since
February 28, 1995, no inventory items have been sold or disposed of, except
through sales in the ordinary course of business, and in no event at prices
less than the aggregate cost to Taylor or any of its Subsidiaries.
5.15 Insurance. All of the properties and business of Taylor and its
Subsidiaries of an insurable nature and of a character usually insured by
companies of similar size and in similar businesses are insured in such amounts
and against such losses, casualties or risks as is usual in such companies and
for such properties and business. A complete and accurate list of all insurance
policies held by Taylor or its Subsidiaries and now in force (including,
without limitation, property damage, public liability, worker's compensation,
fidelity bonds, errors and omissions, theft, forgery and other coverage) is
attached hereto as Schedule 5.15, and, true and correct copies of all such
policies, have been provided or made available to PSS. All such policies are in
full force and effect and the premiums due thereon have been timely paid.
Neither Taylor nor any of its Subsidiaries is now in Default regarding the
provisions of any such policy, nor have they failed to give any notice or
present any Material claim thereunder in due and timely fashion. The
consummation of the transactions contemplated by this Agreement will not
constitute a Default under, or otherwise affect the coverage under any such
insurance policies.
5.16 Compliance with Laws. (a) Taylor and its Subsidiaries has in
effect all Permits necessary for it to own, lease or operate its Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Taylor or its Subsidiaries, taken as a whole.
Neither Taylor nor any of its Subsidiaries is in violation of any Laws, Orders
or Permits applicable to its business or employees conducting its business,
except for violations which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect. No notice or warning from any
Regulatory Authority with respect to any failure or alleged failure of Taylor
or any of its Subsidiaries to comply with any Law has been issued or given, nor
is any such notice or warning proposed or threatened.
(b) Except as set forth on Schedule 5.16, no consent or approval of,
prior filing with or notice to, or other action by, any Regulatory Authority or
any other third party is required in connection with the execution and delivery
of this Agreement or any assignment, agreement or other instrument to be
executed and delivered pursuant to this Agreement by Taylor or the consummation
of the transactions provided for herein or therein except for such consents and
approvals that have been obtained and filings, notices and other actions that
have been taken or made.
(c) To the knowledge of Taylor and its Subsidiaries, there are no
Material capital expenditures that Taylor anticipates will be required to be
made in connection with the business of Taylor or any of its Subsidiaries as
now conducted in order to comply with any existing Laws or other governmental
requirements applicable to the business of Taylor as now conducted including,
without limitation, requirements relating to occupational health and safety and
protection of the environment. "Capital Expenditures" shall have the same
meaning as it has in the Financial Statements if and to the extent that the
treatment thereof is in accordance with GAAP.
(d) Neither Taylor or any of its Subsidiaries, nor, to the knowledge
of Taylor, any officer, director, employee, agent or other representative
thereof acting or purporting to act on behalf of any such entity or any
business enterprise with which Taylor has been associated or affiliated, has,
directly or indirectly, made or authorized any payment, contribution or gift of
money, property, or services, in violation of applicable
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law (i) as a kickback or bribe to any person, or (ii) to any political
organization or the holder of, or any aspirant to, any elective or appointive
office of any nation, state, political subdivision thereof, or other
governmental body or instrumentality.
5.17 Environmental Matters. (a) Except as set forth on Schedule 5.17,
there are no claims, actions, suits, proceedings or investigations related to
Environmental Matters with respect to the ownership, use, condition or
operation of any of the assets held for use or sale by Taylor or any of its
Subsidiaries or any of their respective predecessors in any court or before or
by any federal, state or other governmental agency or private arbitration
tribunal (hereinafter collectively referred to as "Environmental Litigation").
Except as set forth on Schedule 5.17, there are no existing Material violations
of federal, state or local Laws related to Environmental Matters by Taylor or
any of its Subsidiaries with respect to the ownership, use, condition, lease or
operation of any assets thereof or any property formerly held for use or sale
by any of their respective predecessors. Neither Taylor, its Subsidiaries, nor,
to the knowledge of Taylor and its Subsidiaries, any of its predecessors has
used any assets or premises thereof for the handling, treatment, storage, or
disposal of any Hazardous Substances except in compliance with all applicable
environmental Laws. Except as set forth on Schedule 5.17, no written or oral
notice, or other communication from any court or governmental agency, official
or instrumentality, of any alleged violation of any Law related to
Environmental Matters has been filed or communicated to management of any such
entity with respect to the use, ownership, condition, operation, or disposal of
any of the assets of Taylor or any of its Subsidiaries or any property formerly
held for use or sale by any such entity or, to the knowledge of Taylor or any
of its Subsidiaries, any of their respective predecessors. To the knowledge of
Taylor, no basis exists for the allegation of any such violations.
(b) Except as set forth on Schedule 5.17, no release, discharge,
spillage or disposal of any Hazardous Substances in violation of any Law has
occurred or is occurring at any assets or premises of Taylor or any of its
Subsidiaries or, to the knowledge of Taylor and its Subsidiaries, any of their
respective predecessors while or before such premises were owned leased,
operated, or managed, directly or indirectly, by any such entity.
(c) Except as set forth on Schedule 5.17, no soil or water in, under
or adjacent to any of the premises of Taylor or any of its Subsidiaries or
property formerly held for use or sale by any such entity or, to the knowledge
of Taylor and its Subsidiaries, their respective predecessors has been
contaminated by any Hazardous Substance while or before such assets or premises
were owned, leased, operated or managed, directly or indirectly, by Taylor or
its Subsidiaries, or any of their respective predecessors.
(d) Except as set forth on Schedule 5.17, all waste containing any
Hazardous Substances generated, used, handled, stored, treated or disposed of
(directly or indirectly) by Taylor or any of its Subsidiaries or, to the
knowledge of Taylor and its Subsidiaries, any of their respective predecessors
has been released or disposed of in compliance with all applicable reporting
requirements under CERCLA and RCRA and other applicable legal requirements.
(e) Taylor and each of its Subsidiaries and, to the knowledge of
Taylor and its Subsidiaries, their respective predecessors have complied with
all applicable reporting requirements under CERCLA and RCRA concerning the
disposal or release of Hazardous Substances, and except as set forth on
Schedule 5.17, no such entity has made a report concerning any of their
premises, operations or activities.
(f) Except as set forth on Schedule 5.17, to the knowledge of Taylor
and its Subsidiaries, no building or other improvement or any premises owned,
leased, operated or managed by Taylor or any of its Subsidiaries contains any
asbestos-containing materials.
(g) Copies of any environmental audits or environmental surveys of any
real estate owned or leased by Taylor are attached to Schedule 5.17.
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5.18 Litigation and Claims. There are no outstanding Court Orders or
administrative decisions to which Taylor or any of its Subsidiaries is subject,
and, except as disclosed on Schedule 5.18, there is no Litigation pending or
threatened against or relating to Taylor or any of its Subsidiaries or their
respective Assets or businesses, and to the knowledge of Taylor and its
Subsidiaries, there is no specific event which has occurred for which any such
action or any state of facts or occurrence of any event which might give rise
to the foregoing. Except as disclosed on Schedule 5.18, neither Taylor nor any
of its Subsidiaries have been advised by any attorney representing any such
entity that there are any "loss contingencies" (as defined in Statement of
Financing Accounting Standards No. 5 issued by the Financial Accounting
Standards Board in March 1975 ("FASB 5")), which would be required by FASB 5 to
be disclosed or accrued in the consolidated financial statements of Taylor.
5.19 Contracts and Commitments. (a) Except as set forth on Schedule
5.19, copies of the following Contracts to which Taylor or any of its
Subsidiaries is a party or by which any such entity benefits, and which involve
payment by or the receipt of payment by Taylor or its Subsidiaries of any
amounts in excess of $50,000, have been made available to PSS for review:
(i) any Contract for the employment of any officer, director,
employee or consultant;
(ii) any Contract for the purchase, sale, production or
supply, whether on a continuing basis or otherwise, of goods or
services of any type except those made in the ordinary course of
business;
(iii) any distributor, sales agency or vendor Contract or
sub-contract or any License agreement, except those made in the
ordinary course of business;
(iv) any Contract not made in the ordinary course of business,
including but not limited to any covenants not to compete;
(v) any continuing Contract for the purchase of materials,
supplies, equipment or services in excess of normal operating
requirements;
(vi) any Contracts that are, in the reasonable opinion of
Taylor, materially adverse, onerous or otherwise harmful to any of the
Company's businesses, properties, operations or assets;
(vii) any Contract pursuant to which such entity receives a
management fee or a billings and collections fee; or
(viii) any Contracts, leases, quotas, restrictions or trade
conditions upon which the business, rights or assets, or condition,
financial or otherwise, of Taylor depends or is or would be Materially
affected.
(b) Except as set forth on Schedule 5.19 or as to Contracts that are
cancelable at will or upon 30 days' notice or less, (i) each of the Contracts
described in this Section 5.19 is in full force and effect on the date hereof,
except as the validity of such Contracts may be affected by actions, events or
conditions involving only the other party thereto, none of which actions,
events or conditions have occurred or exist to the knowledge of Taylor, (ii) no
Default under any of the terms or conditions set forth in any of the Contracts
to which Taylor or any of its Subsidiaries is a party or any document or
instrument related thereto has occurred or been asserted by any party, and
(iii) the continuation, validity and effectiveness of such Contracts, and all
other Material terms thereof, will not be affected by the transactions
contemplated by this Agreement.
5.20 Powers of Attorney. Except as disclosed on Schedule 5.20, neither
Taylor nor any of its Subsidiaries have given or granted any power of attorney,
whether limited or general, to any Person that is continuing in effect.
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5.21 Benefit Plans. (a) Schedule 5.21.1 lists (i) every pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus or other incentive plan, any other
written or unwritten employee program, arrangement, agreement or understanding,
whether arrived at through collective bargaining or otherwise; (ii) any
medical, vision, dental or other health plan, any life insurance plan; or (iii)
any other employee benefit plan or fringe benefit plan, including, without
limitation, any "employee benefit plan," as that term is defined in Section
3(3) of ERISA, currently or expected to be adopted, maintained by, sponsored in
whole or in part by, or contributed to by Taylor or any of its Subsidiaries or
any entity aggregated therewith under Internal Revenue Code Sections 414(b) or
414(c) for the benefit of employees, former employees, retirees, directors,
independent contractors, spouses or dependents of any of the foregoing or any
other beneficiaries and under which such employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries are
eligible to participate (collectively, the "Benefit Plans"). Any Benefit Plan
that is an "employee pension benefit plan," as that term is defined in Section
3(2) of ERISA, or an "employee welfare benefit plan" as that term is defined in
Section 3(1) of ERISA, is referred to herein as an "ERISA Plan." On or after
September 26, 1980, neither Taylor nor any of its Subsidiaries or any entity
aggregated therewith under Internal Revenue Code Section 414(b) or 414(c) have
had an "obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A))
("Multiemployer Plan"). Neither Taylor nor any of its Subsidiaries have
incurred, nor is reasonably expected to incur prior to the Closing Date, any
liability under Title I or Title IV of ERISA or under Internal Revenue Code
Section 412 other than routine funding obligations and routine claims for
benefits. All Liabilities arising out of or related to Benefit Plans and ERISA
Plans of Taylor and of its ERISA Affiliates are reflected in the Financial
Statements in accordance with GAAP.
(b) True, correct and complete copies of all written Benefit Plans, as
currently in effect (or as otherwise requested by PSS), listed on Schedule
5.21.1 and all trust agreements or other funding arrangements, including
insurance contracts, all amendments thereto and, where applicable, with respect
to any such plans or plan amendments, the most recent determination letters
issued by the IRS, all advisory opinions issued by the United States Department
of Labor after December 31, 1974, the annual reports or returns, audited or
unaudited financial statements, actuarial valuations, and summary annual
reports for the most recent three plan years, the most recent summary plan
descriptions and any Material modifications thereto have been provided or made
available to PSS.
(c) Except as listed on Schedule 5.21.2, all the Benefit Plans and the
related trusts subject to ERISA comply with and have been administered in all
Material respects in compliance with, the provisions of ERISA, all provisions
of the Internal Revenue Code relating to qualification and tax exemption under
Internal Revenue Code Section 401(a) and 501(a) or otherwise applicable to
secure intended tax consequences, and all other applicable laws, rules and
regulations and collective bargaining agreements in all Material respects.
Except as listed on Schedule 5.21.2, all governmental approvals for the Benefit
Plans have been obtained, including, but not limited to, timely determination
letters on the qualification of the ERISA Plans and tax exemption of related
trusts, as applicable under the Internal Revenue Code, and all such
governmental approvals continue in full force and effect. Neither Taylor, nor
any of its Subsidiaries, nor any administrator or fiduciary of any such Benefit
Plan (or agent of any of the foregoing) has engaged in any transaction or acted
or failed to act in any manner which could subject any such entity to any
direct or indirect liability (by indemnity or otherwise) for a breach of any
fiduciary, co-fiduciary or other duty under ERISA. No oral or written
representation or communication with respect to any aspect of the Benefit Plans
has been made to employees of Taylor or any of its Subsidiaries or any of their
respective predecessors prior to or on the Closing Date that is not in
accordance with the written or otherwise preexisting terms and provisions of
such Benefit Plans in effect immediately prior to the Closing Date. There are
no unresolved claims or disputes under the terms of, or in connection with, the
Benefit Plans and no action, legal or otherwise, has been commenced with
respect to any claim other than processing of claims in the ordinary course of
business.
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(d) All annual reports or returns, audited or unaudited financial
statements, actuarial valuations, summary annual reports and summary plan
descriptions issued with respect to the Benefit Plans are correct and accurate
in all Material respects.
(e) Since December 31, 1974, no "party in interest" (as defined in
Section 3(14) of ERISA) or "disqualified person" (as defined in Section
4975(e)(2) of the Internal Revenue Code) of any ERISA Plan has engaged in any
"prohibited transaction" (within the meaning of Section 4975(c) of the Internal
Revenue Code or Section 406 of ERISA).
(f) No Liability exists and no event that could result in a Liability
has occurred with respect to any Benefit Plan that individually or in the
aggregate could have a Material Adverse Effect on Taylor or any of its
Subsidiaries.
(g) Neither Taylor nor any of its Subsidiaries have maintained, or
currently maintain, a Benefit Plan providing welfare benefits (as defined in
ERISA Section 3(1)) to employees after retirement or other separation of
service except to the extent required under Part 6 of Title I of ERISA and
Internal Revenue Code Section 4980B(f).
(h) Except as set forth on Schedule 5.21.3, the consummation of the
transactions contemplated by this Agreement will not entitle any current or
former employee of Taylor, any of its Subsidiaries or any of their respective
predecessors whose employment is not terminated as a result of such
transactions, to severance pay, unemployment compensation or any similar
payment, and will not accelerate the time of payment or vesting, or increase
the amount, of compensation due any such employee or former employee.
(i) All Benefit Plans subject to Section 4980B of the Internal Revenue
Code or Part 6 of Title I of ERISA, or both, have been maintained in compliance
in all Material respects with the requirements of such laws and any regulations
(proposed or otherwise) issued thereunder.
5.22 Remuneration. Schedule 5.22 contains a complete and accurate
schedule of the direct compensation (including wages, salaries and actual or
anticipated bonuses), plus a description of other annual benefits not made
available to the other employees generally, to be paid in the current fiscal
year to (i) all of the officers and directors of Taylor; and (ii) all of the
employees of Taylor or any of its Subsidiaries who received or will be
receiving in excess of $50,000 (excluding commission and bonus compensation)
during such year. No unpaid salary, other than for the immediately preceding
pay period and other than pursuant to the existing deferred compensation plans
of Taylor or any of its Subsidiaries is now payable to any of such officers,
directors or employees.
5.23 Union and Employment Agreements. Except as set forth on Schedule
5.23, neither Taylor nor any of its Subsidiaries is a party to any union
agreement, nor does any such entity have any written or oral agreement that is
not terminable by it at will with any of its officers, directors, employees,
consultants, agents, or any other person performing services therefor, relating
to their employment by or performance of services for any such entity or their
compensation therefor. No union attempts to organize the employees of Taylor or
any of its Subsidiaries have been made, nor are any such attempts now
threatened so far as is known to any such entity. Except as set forth on
Schedule 5.23, neither Taylor nor any of its Subsidiaries has received notice,
or has any reason to believe, that any of the officers or directors of any such
entity will terminate or contemplates terminating his or her employment
currently or at any time within sixty (60) days of the Closing Date.
5.24 Interested Transactions. (a) Except as set forth on Schedule
5.24, neither Taylor nor any of its Subsidiaries are currently a party to any
Contract, loan or other transaction with any of the following persons, or in
which any of the following persons have any direct or indirect interest (other
than as a shareholder or employee of Taylor):
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(i) Any director, officer, employee of Taylor or its
Subsidiaries or any of the shareholders of Taylor;
(ii) Any of the spouses, parents, siblings, children, aunts,
uncles, nieces, nephews, in-laws and grandparents of any of the
persons described in clause (i); or
(iii) Any corporation, trust, partnership or other entity in
which any of the persons described in clauses (i) or (ii) has a
beneficial interest (other than in a corporation whose shares are
publicly traded and in which such persons own beneficially in the
aggregate no more than 5% of the equity interest).
(b) Except as set forth on Schedule 5.24, none of the shareholders of
Taylor is an employee, consultant, partner, principal, director or shareholder
of any business entity which is engaged in a business which competes with or is
similar to the business of Taylor or any of its Subsidiaries.
5.25 Brokers and Finders. No broker, agent, finder or consultant or
other person has been retained by or on behalf of Taylor (other than Tucker
Anthony Incorporated ("Tucker Anthony") and legal or accounting advisors), or
is entitled to be paid based upon any agreements or understandings made by
Taylor in connection with the transactions contemplated hereby. Except for fees
due to Tucker Anthony, neither PSS nor Taylor shall have any Liability for any
broker's fee, finder's fee, consultant's fee or similar third party
remuneration by reason of any action of Taylor.
5.26 Statements True and Correct. No statement, certificate,
instrument, or other writing furnished or to be furnished by Taylor to PSS
pursuant to this Agreement or any other document, agreement, or instrument
referred to herein contains or will contain any untrue statement of Material
fact or will omit to state a Material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the information supplied or to be supplied by Taylor for
inclusion in the Registration Statement to be filed by PSS with the SEC will,
when the Registration Statement becomes effective, be false or misleading with
respect to any Material fact, or omit to state any Material fact necessary to
make the statements therein not misleading. None of the information supplied or
to be supplied by Taylor or any Subsidiary thereof, for inclusion in the Joint
Proxy Statement to be mailed to Taylor's and PSS's shareholders in connection
with the Shareholders' Meetings, and any other documents to be filed by Taylor
with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Joint Proxy Statement, when first mailed to
the shareholders of Taylor and PSS, be false or misleading with respect to any
Material fact, or omit to state any Material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Joint Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Shareholders' Meetings, be
false or misleading with respect to any Material fact, or omit to state any
Material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Shareholders' Meetings.
All documents that Taylor is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply
as to form in all Material respects with the provisions of applicable Law.
5.27 Accounting, Tax and Regulatory Matters. Neither Taylor nor any
Affiliate thereof has taken any action or has any knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to
in Section 9.1(b) of this Agreement or result in the imposition of a condition
or restriction of the type referred to in the last sentence of such Section.
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5.28 State Takeover Laws. Taylor has taken all necessary action to
exempt the transactions contemplated by this Agreement from any applicable
state takeover Law, including Section 203 of the DGCL.
5.29 Schedules. All Schedules attached hereto are true, correct and
complete as of the date of this Agreement. Matters disclosed on each Schedule
shall be deemed disclosed only for purposes of the matters to be disclosed on
such Schedule and shall not be deemed to be disclosed for any other purpose
unless expressly provided therein.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PSS
PSS hereby represents and warrants to Taylor as follows:
6.1 Organization, Standing, and Power. Each of PSS and its
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the Laws of the state of its incorporation, and has the power
and authority to carry on its business as it has been and is now being
conducted and to own, lease and operate its Assets. Each of PSS and its
Subsidiaries is duly qualified or licensed to transact business as a foreign
corporation and is in good standing in all jurisdictions where the character of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on PSS or such Subsidiary.
6.2 Authorization of Agreement; No Breach. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action of PSS, other than the meeting of the shareholders of PSS to
approve this Agreement to be held pursuant to Section 8.1. This Agreement
constitutes, and all agreements and other instruments and documents to be
executed and delivered by PSS pursuant to this Agreement will constitute,
legal, valid and binding obligations of PSS enforceable against PSS in
accordance with their respective terms. The execution, delivery and performance
of this Agreement and the agreements and other documents and instruments to be
executed and delivered by PSS pursuant to this Agreement and the consummation
of the transactions contemplated hereby and thereby will not, subject to
obtaining the consents identified herein, (i) violate or result in a breach of
or Default under the articles or certificate of incorporation or bylaws of PSS
or any of its Subsidiaries or any other Material instrument or agreement to
which PSS or any of its Subsidiaries is a party or is bound; (ii) to the
knowledge of PSS and its Subsidiaries, violate any Law, administrative decision
or award of any court, arbitrator, mediator, tribunal, administrative agency or
governmental body applicable to or binding upon PSS or its Subsidiaries or upon
their respective securities, property or business; (iii) conflict with or
constitute a Default under any Material Contract to which PSS or any of its
Subsidiaries is a party or by which PSS or any of its Subsidiaries is bound; or
(iv) create a Lien upon the securities, property or business of PSS or any of
its Subsidiaries.
6.3 Capital Stock. The authorized capital stock of PSS consists of (i)
20,000,000 shares of Common Stock, 6,779,799 of which shares are issued and
outstanding as of March 30, 1995, and none of which are issued and held as
treasury shares, and (ii) 1,000,000 shares of Preferred Stock, none of which
shares are issued and outstanding as of the date of this Agreement and none of
which are issued and held as treasury shares. All of such shares are duly and
validly issued and outstanding, and are fully paid and non-assessable and were
issued pursuant to an effective registration statement under the 1933 Act or
applicable state securities laws or pursuant to an exemption from registration
under the 1933 Act or applicable state securities laws. Except as set forth on
Schedule 6.3 and as contemplated by this Agreement, there are no outstanding
warrants, options, rights (including outstanding rights to demand registration
or to sell in connection with a registration by PSS under the Securities Act of
1933, as amended), calls or other commitments of any nature relating to the PSS
Common Stock or any other capital stock of PSS, and there are no outstanding
securities of PSS convertible into or exchangeable for shares of PSS Common
Stock or any other capital stock of PSS. PSS and its Subsidiaries have no
knowledge of any voting agreements or voting trusts between or among any Person
or Persons relating to PSS, the PSS Common Stock or any of its
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Subsidiaries (if not wholly owned by PSS). Except as set forth on Schedule 6.3,
PSS is not obligated to issue or repurchase any shares of its capital stock for
any purpose, and no person or entity has entered into any Contract or option or
any right or privilege (whether preemptive or contractual) capable of becoming
a Contract or option for the purchase, subscription or issuance of any unissued
shares, or other securities of PSS.
6.4 PSS Subsidiaries. Schedule 6.4 attached hereto is a true and
correct list of each Subsidiary of PSS. All of the outstanding shares of
capital stock of each such Subsidiary are duly and validly issued and
outstanding, are fully paid and non-assessable, and were issued pursuant to a
valid exemption from registration under the Securities Act of 1933, as amended,
and all applicable state securities laws, and, except as set forth on Schedule
6.4, are owned of record and beneficially by PSS, free and clear of any and all
Liens. No shares of capital stock of any Subsidiary are reserved for issuance
and there are no outstanding options, warrants, rights, subscriptions, claims
of any character, Contracts, obligations, convertible or exchangeable
securities or other commitments, contingent or otherwise, relating to the
capital stock of any Subsidiary, pursuant to which any Subsidiary is or may
become obligated to issue or exchange any share of capital stock. Neither PSS
nor any Subsidiary owns, directly or indirectly, any capital stock or other
equity or ownership or proprietary interest in any corporation, partnership, or
other entity, except as set forth on Schedule 6.4.
6.5 PSS Documents. PSS has heretofore furnished the following
documents to Taylor:
(a) its final Prospectus, dated May 5, 1994, contained in its
Registration Statement on Form S-1 (Registration No. 33-76580);
(b) its Proxy Statement, dated June 30, 1994; and
(c) its Quarterly Reports on Form 10-Q for the fiscal quarters ended
June 30, 1994, September 30, 1994 and December 31, 1994.
Documents (a) - (c) above are collectively referred to herein as the
"PSS Documents." As of their respective dates, the PSS Documents complied in
all Material respects with all applicable Laws. Since May 5, 1994, PSS has
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy
statements. The PSS Documents did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated in such PSS Document, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements (including, in each case, any related notes)
contained in the PSS Documents, complied as to form in all material respects
with the applicable published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes to such financial statements or, in
the case of unaudited statements, as permitted by the published rules and
regulations of the SEC with respect thereto) and fairly presented the
consolidated financial position of PSS and its Subsidiaries, taken as a whole,
at the respective dates and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements do not include notes and are subject to normal year end adjustments
which will not, in the aggregate, be Material. There have been no changes in
PSS' accounting policies and practices between the dates of the PSS Documents
and the date hereof that have had or are likely to have a Material Adverse
Effect on the present or future financial performance of PSS, and no such
change is contemplated as of the date hereof.
6.6 Absence of Undisclosed Liabilities. Except as disclosed on
Schedule 6.6, as of the date hereof neither PSS nor any of its Subsidiaries has
any Undisclosed Liabilities in excess of $300,000 in the aggregate, except for
unpaid liabilities and obligations incurred since March 31, 1995, in the
ordinary course of business and not involving Funded Debt.
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6.7 Absence of Certain Changes or Events. Since March 31, 1995, except
as disclosed on Schedule 6.7, (i) there have been no events, changes or
occurrences which have had, or are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on PSS, and (ii) neither PSS or any
of its Subsidiaries has taken any action, or failed to take any action, prior
to the date of this Agreement, which action or failure, if taken after the date
of this Agreement, would represent or result in a Material breach or violation
of any of the covenants and agreements of PSS provided in Article 7 of this
Agreement.
6.8 Legal Proceedings. There are no outstanding Court Orders or
administrative decisions to which PSS or any of its Subsidiaries is subject,
and there is no Litigation pending or threatened against or relating to PSS or
any of its Subsidiaries or their respective assets or businesses, which if
resolved adversely to PSS would have a Material Adverse Effect on PSS and its
Subsidiaries, taken as a whole. Neither PSS nor any of its Subsidiaries have
been advised by any attorney representing any such entity that there are any
"loss contingencies" as defined in FASB 5, which would be required by FASB 5 to
be disclosed or accrued in the consolidated financial statements of PSS and
which are not so disclosed or accrued.
6.9 Brokers and Finders. Other than Alex. Brown & Sons Incorporated
("Alex. Brown"), no broker, agent, finder or consultant or other person has
been retained by or on behalf of PSS (other than legal or accounting advisors),
or is entitled to be paid based upon any agreements or understandings made by
PSS in connection with the transactions contemplated hereby. Except for fees
due to Alex. Brown, neither Taylor nor PSS shall have any Liability for any
broker's fee, finder's fee, consultant's fee or similar third party
remuneration by reason of any action of PSS.
6.10 Statements True and Correct. No statement, certificate,
instrument or other writing furnished or to be furnished by PSS or any
Affiliate thereof to Taylor pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of Material fact or will omit to state a Material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. None of the information supplied or to be supplied
by PSS or any Affiliate thereof for inclusion in the Registration Statement to
be filed by PSS with the SEC, will, when the Registration Statement becomes
effective, be false or misleading with respect to any Material fact, or omit to
state any Material fact necessary to make the statements therein not
misleading. None of the information supplied or to be supplied by PSS or any
Affiliate thereof for inclusion in the Joint Proxy Statement to be mailed to
Taylor's and PSS's shareholders in connection with the Shareholders' Meetings,
and any other documents to be filed by PSS or any Affiliate thereof with the
SEC or any other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed, and
with respect to the Joint Proxy Statement, when first mailed to the
shareholders of Taylor and PSS, be false or misleading with respect to any
Material fact, or omit to state any Material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Joint Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Shareholders' Meetings, be
false or misleading with respect to any Material fact, or omit to state any
Material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Shareholders' Meetings.
All documents that PSS or any Affiliate thereof is responsible for filing with
any Regulatory Authority in connection with the transactions contemplated
hereby will comply as to form in all Material respects with the provisions of
applicable Law.
6.11 Authority of Merger Corp.. Merger Corp. is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware as a wholly owned Subsidiary of PSS. The authorized capital stock of
Merger Corp. consists of 1,000 shares of Merger Corp. Common Stock, all of
which is validly issued and outstanding, fully paid and nonassessable and is
owned by PSS free and clear of any Lien. Merger Corp. has the corporate power
and authority necessary to execute, deliver and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect
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thereof on the part of Merger Corp. This Agreement represents a legal, valid,
and binding obligation of Merger Corp., enforceable against Merger Corp. in
accordance with its terms.
6.12 Accounting, Tax and Regulatory Matters. Neither PSS nor any
Affiliate has taken any action or has any knowledge of any fact or circumstance
that is reasonably likely to (i) prevent the transactions contemplated hereby,
including the Merger, from qualifying for pooling-of-interests accounting
treatment or as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
6.13 Insurance. All of the properties and business of PSS and its
Subsidiaries of an insurable nature and of a character usually insured by
companies of similar size and in similar businesses are insured in such amounts
and against such losses, casualties or risks as is usual in such companies and
for such properties and business. All such insurance policies are in full force
and effect and the premiums due thereon have been timely paid. Neither PSS nor
any of its Subsidiaries is now in Default regarding the provisions of any such
policy, nor have they failed to give any notice or present any Material claim
thereunder in due and timely fashion. The consummation of the transactions
contemplated by this Agreement will not constitute a Default under, or
otherwise affect the coverage under any such insurance policies.
6.14 Compliance with Laws. (a) Each of PSS and its Subsidiaries has in
effect all Permits necessary for it to own, lease or operate its Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on PSS or its Subsidiaries, taken as a whole. Neither
PSS nor any of its Subsidiaries is in violation of any Laws, Orders or Permits
applicable to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect. No notice or warning from any Regulatory
Authority with respect to any failure or alleged failure of PSS or any of its
Subsidiaries to comply with any Law has been issued or given, nor is any such
notice or warning proposed or threatened.
(b) No consent or approval of, prior filing with or notice to, or
other action by, any Regulatory Authority or any other third party is required
in connection with the execution and delivery of this Agreement or any
assignment, agreement or other instrument to be executed and delivered pursuant
to this Agreement by PSS or the consummation of the transactions provided for
herein or therein except for such consents and approvals that have been
obtained and filings, notices and other actions that have been taken or made.
(c) Neither PSS or any of its Subsidiaries, nor, to the knowledge of
Taylor, any officer, director, employee, agent or other representative thereof
acting or purporting to act on behalf of any such entity or any business
enterprise with which PSS has been associated or affiliated, has, directly or
indirectly, made or authorized any payment, contribution or gift of money,
property, or services, in violation of applicable law (i) as a kickback or
bribe to any person, or (ii) to any political organization or the holder of, or
any aspirant to, any elective or appointive office of any nation, state,
political subdivision thereof, or other governmental body or instrumentality.
6.15 Tax Matters. (a) As of the date hereof, PSS and each of its
Subsidiaries have filed all Tax returns required to be filed at this date,
taking into account any extensions of the filing deadlines which have been
validly granted to any such entity, and such returns are true and correct in
all Material respects and properly reflect the Tax Liabilities of PSS and each
of its Subsidiaries for the periods, property or events covered thereby, and
each such entity has paid all Taxes (including penalties and interest in
respect thereof, if any) that have become or are due with respect to any period
through the date hereof whether shown on such returns or not.
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(b) Adequate provision has been made in the Financial Statements in
accordance with GAAP as of December 31, 1994, for all Tax Liabilities not
required to be paid prior to such date and for all current and deferred Taxes.
(c) PSS and each of its Subsidiaries, and each of their respective
predecessors to which any such entity has succeeded, has withheld or collected
from each payment made to each of their employees the amount of all Taxes
required to be withheld or collected therefrom and has paid the same to the
proper tax depositories or collecting authorities.
(d) All ad valorem property taxes for years prior to 1995 imposed on
PSS, or any of its Subsidiaries or their respective predecessors have been paid
in full or adequately reserved in the consolidated financial statements
contained in the PSS Documents, as appropriate..
(e) Neither PSS nor any of its Subsidiaries, nor to the knowledge of
PSS or its Subsidiaries, their respective predecessors to which any such entity
has succeeded, has ever made an election under Section 341(f) of the Internal
Revenue Code and no such entity is a United States real property holding
corporation as defined in Section 897 of the Internal Revenue Code.
6.16 Benefit Plans. (a) On or after September 26, 1980, neither PSS
nor any of its Subsidiaries or any entity aggregated therewith under Internal
Revenue Code Section 414(b) or 414(c) have had an "obligation to contribute"
(as defined in ERISA Section 4212) to a "multiemployer plan" (as defined in
ERISA Sections 4001(a)(3) and 3(37)(A)) ("Multiemployer Plan"). Neither PSS nor
any of its Subsidiaries have incurred, nor is reasonably expected to incur
prior to the Closing Date, any liability under Title I or Title IV of ERISA or
under Internal Revenue Code Section 412 other than routine funding obligations
and routine claims for benefits. All Liabilities arising out of or related to
Benefit Plans and ERISA Plans of PSS andof its ERISA Affiliates are reflected
in the consolidated financial statements of PSS contained in the PSS Documents
in accordance with GAAP.
(b) All the Benefit Plans of PSS and the related trusts subject to
ERISA comply with and have been administered in all Material respects in
compliance with, the provisions of ERISA, all provisions of the Internal
Revenue Code relating to qualification and tax exemption under Internal Revenue
Code Section 401(a) and 501(a) or otherwise applicable to secure intended tax
consequences, and all other applicable laws, rules and regulations and
collective bargaining agreements. All governmental approvals for the Benefit
Plans of PSS have been obtained or are pending, including, but not limited to,
timely determination letters on the qualification of the ERISA Plans of PSS and
tax exemption of related trusts, as applicable under the Internal Revenue Code,
and all such governmental approvals continue in full force and effect. Neither
PSS, nor any of its Subsidiaries, nor any administrator or fiduciary of any
such Benefit Plan (or agent of any of the foregoing) has engaged in any
transaction or acted or failed to act in any manner which could subject any
such entity to any direct or indirect liability (by indemnity or otherwise) for
a breach of any fiduciary, co-fiduciary or other duty under ERISA. No oral or
written representation or communication with respect to any aspect of the
Benefit Plans of PSS has been made to employees of PSS or any of its
Subsidiaries or any of their respective predecessors prior to or on the Closing
Date that is not in accordance with the written or otherwise preexisting terms
and provisions of such Benefit Plans of PSS in effect immediately prior to the
Closing Date. There are no unresolved claims or disputes under the terms of, or
in connection with, the Benefit Plans of PSS and no action, legal or otherwise,
has been commenced with respect to any claim.
(c) All annual reports or returns, audited or unaudited financial
statements, actuarial valuations, summary annual reports and summary plan
descriptions issued with respect to the Benefit Plans of PSS are correct and
accurate in all Material respects.
(d) Since December 31, 1974, no "party in interest" (as defined in
Section 3(14) of ERISA) or "disqualified person" (as defined in Section
4975(e)(2) of the Internal Revenue Code) of any ERISA Plan of
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PSS has engaged in any "prohibited transaction" (within the meaning of Section
4975(c) of the Internal Revenue Code or Section 406 of ERISA).
(e) No Liability exists and no event that could result in a Liability
has occurred with respect to any Benefit Plan of PSS that individually or in
the aggregate could have a Material Adverse Effect on PSS and its Subsidiaries,
taken as a whole.
(f) Neither PSS nor any of its Subsidiaries have maintained, or
currently maintain, a Benefit Plan providing welfare benefits (as defined in
ERISA Section 3(1)) to employees after retirement or other separation of
service except to the extent required under Part 6 of Title I of ERISA and
Internal Revenue Code Section 4980B(f).
(g) All Benefit Plans of PSS subject to Section 4980B of the Internal
Revenue Code or Part 6 of Title I of ERISA, or both, have been maintained in
compliance with the requirements of such laws and any regulations (proposed or
otherwise) issued thereunder.
6.17 Schedules. All Schedules attached hereto are true, correct and
complete as of the date of this Agreement. Matters disclosed on each Schedule
shall be deemed disclosed only for purposes of the matters to be disclosed on
such Schedule and shall not be deemed to be disclosed for any other purpose.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Conduct of Taylor Business. Except as set forth on Schedule 7.1,
prior to the Closing Date, except with the prior written consent of PSS, and
except as necessary to effect the transactions contemplated in this Agreement,
Taylor shall:
(a) conduct its business in substantially the same manner as presently
being conducted and refrain from entering into any transaction or Contract
other than in the ordinary course of business (or, even if in the ordinary
course of business, not in excess of $50,000), and not make any Material change
in its methods of management, marketing, accounting, or operations;
(b) consult with PSS prior to undertaking any Material new business
opportunity outside the ordinary course of business and not undertake such new
business opportunity without the prior written consent of PSS, which consent
will not be unreasonably withheld;
(c) confer on a regular basis with one or more designated
representatives of PSS to report Material operational matters and to report the
general status of ongoing business operations;
(d) notify PSS of any unexpected Material change in the normal course
of business or in the operation of its properties, and of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), adjudicatory proceedings or submissions involving
any Material property, and Taylor agrees to keep PSS fully informed of such
events and permit PSS's representatives prompt access to all materials prepared
in connection therewith;
(e) Except as set forth on Schedule 7.1, not enter into any new
employment Contract or, except in the ordinary course of business, any
commitment to employees (including any commitment to pay retirement or other
benefits);
(f) not increase the compensation (including fringe benefits) payable
or to become payable to any officer, director, employee, agent or independent
contractor of either such company, except general hourly rate increases and
normal merit increases for employees other than officers made in the ordinary
course of business and consistent with past practice;
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(g) except in the ordinary course of business, not (i) create or incur
any indebtedness, (ii) enter into or terminate any lease of real estate, or
(iii) release or create any Liens of any nature whatsoever;
(h) except in the ordinary course of business and, even if in the
ordinary course of business, then not in an amount to exceed $25,000 in the
aggregate, make or commit to make any capital expenditure, or enter into any
lease of capital equipment as lessee or lessor;
(i) not sell any Material asset or make any Material commitment
relating to its assets other than in the ordinary course of business;
(j) not amend the Certificate of Incorporation, Bylaws or other
governing instruments of Taylor or any of its Subsidiaries, or
(k) not make any changes in its accounting methods or practices,
except for changes in its tax accounting methods or practices that may be
necessitated by changes in applicable tax laws;
(l) except for this Agreement, or pursuant to the exercise of stock
options or the Taylor Warrants outstanding as of the date hereof in accordance
with their current terms, and except for shares of Taylor Common Stock which
may be issued upon the conversion of Taylor Series A Preferred Stock or Taylor
Series C Preferred Stock, issue, sell, pledge, encumber, authorize the issuance
of, enter into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional shares
of Taylor Capital Stock or any other capital stock of its Subsidiaries, or any
stock appreciation rights, or any option, warrant, conversion, or other right
to acquire any such stock, or any security convertible into any such stock, or
pay or declare or agree to pay or declare any dividend with respect to any
Taylor Capital Stock;
(m) other than in the ordinary course of business, not take any
action, or omit to take any action, which would cause the representations and
warranties contained in Article Five to be untrue or incorrect;
(n) not make any loan to any Person or increase the aggregate amount
of any loan currently outstanding to any Person, except for usual and customary
advances to employees made in the ordinary course of business; and
(o) not make any agreement or commitment which will result in or cause
to occur a violation of any of the items contained in paragraphs (a) through
(n).
Notwithstanding the foregoing, Taylor shall be entitled, without the consent of
PSS, to take such action as Taylor deems prudent with respect to the operations
of Taylor Plus.
7.2 Conduct of PSS Business. PSS agrees that from the date hereof to
the Effective Time, except to the extent that Taylor shall otherwise consent by
an instrument in writing signed on behalf of Taylor by its President:
(a) It will (i) operate its business substantially as presently
operated and only in the ordinary course, except that any business acquisition
by PSS or the incurrence of additional debt or the issuance or sale of equity
securities shall be deemed to be in the ordinary course.
(b) No Amendments; Corporate Existence. Except as previously disclosed
in writing by PSS to Taylor, it will not, and it will not permit Merger Corp.
to, amend its Certificate of Incorporation or By-Laws; and it will, cause each
of its Subsidiaries to, maintain its corporate existence and corporate powers.
7.3 Adverse Changes in Condition. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
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aggregate, a Material Adverse Effect on it, or (ii) would cause or constitute a
Material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.4 Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements
will fairly present the consolidated financial position of the entity filing
such statements as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows for the periods
then ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not Material). As
of their respective dates, such reports filed with the SEC will comply in all
Material respects with the securities Laws and will 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. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder Approval. As
soon as practicable after execution of this Agreement, PSS shall file the
Registration Statement with the SEC, and shall use its commercially reasonable
best efforts to cause the Registration Statement to become effective under the
1933 Act and take any action required to be taken under the applicable state
Blue Sky or Securities Laws in connection with the issuance of the shares of
PSS Common Stock upon consummation of the Merger. The information supplied by
PSS and Taylor for inclusion in the Registration Statement shall not at the
time the Registration Statement is declared effective by the SEC contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in the Registration Statement or necessary in order to make the
statements in the Registration Statement, in the light of the circumstances
under which they were made, not misleading. Taylor shall cooperate with PSS and
furnish PSS with all information concerning it and the holders of its capital
stock as PSS may reasonably request in connection with such action. Taylor
shall call a Shareholders' Meeting (or vote by written consent), to be held as
soon as practicable after the Registration Statement is declared effective by
the SEC, for the purpose of voting upon approval of this Agreement, the
appointment of the "Representatives," as such term is defined in the Escrow
Agreement, and such other related matters as it deems appropriate. PSS shall
call a Shareholders' Meeting, to be held as soon as practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon the Merger and such other related matters as it deems appropriate.
In connection with the Shareholders' Meetings, (i) Taylor and PSS shall prepare
and file with the SEC a Joint Proxy Statement and mail such Joint Proxy
Statement to their respective shareholders, (ii) the Parties shall furnish to
each other all information concerning them that they may reasonably request in
connection with such Joint Proxy Statement, (iii) unless this Agreement is
terminated in accordance with its terms, the Boards of Directors of Taylor and
PSS shall recommend to their respective shareholders the approval of this
Agreement, and (iv) unless this Agreement is terminated in accordance with its
terms, the Board of Directors and officers of Taylor and PSS shall use their
reasonable efforts to obtain such shareholders' approval.
8.2 Nasdaq Application for Inclusion. PSS shall use its commercially
reasonable best efforts to, prior to the Effective Time, cause the shares of
PSS Common Stock to be issued to the holders of Taylor Common Stock pursuant to
the Merger to be included for quotation on the Nasdaq National Market.
8.3 Applications; Antitrust Notification. PSS shall promptly prepare
and file, and Taylor shall cooperate in the preparation and, where appropriate,
filing of, applications with all Regulatory Authorities having jurisdiction
over the transactions contemplated by this Agreement seeking the requisite
Consents necessary to consummate the transactions contemplated by this
Agreement. Each of the Parties will
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promptly file with the United States Federal Trade Commission and the United
States Department of Justice the notification and report form required for the
transactions contemplated hereby and any supplemental or additional information
which may reasonably be requested in connection therewith pursuant to the HSR
Act and will comply in all Material respects with the requirements of the HSR
Act.
8.4 Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, Taylor and Merger Corp. shall execute and file
the Certificate of Merger with the Secretary of State of the State of Delaware
in connection with the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable best efforts to lift or rescind
any Order adversely affecting its legal ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, that nothing herein shall preclude
either Party from exercising its rights under this Agreement. Each Party shall
use, and shall cause each of its Subsidiaries to use, its reasonable efforts to
obtain all Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
8.6 Investigation and Confidentiality. (a) Prior to the Effective
Time, each Party shall keep the other Party advised of all Material
developments relevant to its business and to consummation of the Merger and
shall permit the other Party to make or cause to be made such investigation of
the business and properties of it and its Subsidiaries and of their respective
financial and legal conditions as the other Party reasonably requests, provided
that such investigation shall be reasonably related to the transactions
contemplated hereby and shall not interfere unnecessarily with normal
operations. No investigation by a Party shall affect the representations and
warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to it by
the other Party concerning its and its Subsidiaries' businesses, operations,
and financial positions and shall not use such information for any purpose
except in furtherance of the transactions contemplated by this Agreement. If
this Agreement is terminated prior to the Effective Time, each Party shall
promptly return or certify the destruction of all documents and copies thereof,
and all work papers containing confidential information received from the other
Party.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a Material
breach of any representation, warranty, covenant or agreement of the other
Party or which has had or is reasonably likely to have a Material Adverse
Effect on the other Party.
8.7 Press Releases. Prior to the Effective Time, Taylor and PSS shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.8 No Shopping. Except with respect to this Agreement and the
transactions contemplated hereby, neither Taylor nor any of its Subsidiaries or
Affiliates, nor any Representatives thereof shall directly or indirectly
solicit or respond (except as permitted by the next sentence) to any
Acquisition Proposal by any Person. Except to the extent necessary to comply
with the fiduciary duties of Taylor's Board of Directors as advised by counsel,
none of Taylor or any Affiliate or Representative thereof shall furnish any
non-public information, negotiate with respect to, or enter into any Contract
with respect to, any Acquisition Proposal, but Taylor may communicate
information about such an Acquisition Proposal to its shareholders if and to
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the extent that it is required to do so in order to comply with its fiduciary
obligations as advised by counsel. Taylor shall promptly notify PSS orally and
in writing in the event that it receives any inquiry or proposal relating to
any such transaction. Taylor shall (i) immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
Persons conducted heretofore with respect to any of the foregoing, and (ii)
direct and use its reasonable best efforts to cause all of its Representatives
not to engage in any of the foregoing.
8.9 Accounting and Tax Treatment. Each of the Parties undertakes and
agrees to use its reasonable efforts to cause the Merger, and to take no action
which would cause the Merger not, to qualify for pooling-of-interests
accounting treatment and treatment as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 Agreement of Affiliates. Taylor has disclosed on Schedule 8.10
all Persons whom it reasonably believes is an "affiliate" of Taylor for
purposes of Rule 145 under the 1933 Act. Taylor shall use its reasonable best
efforts to cause each such Person to deliver to PSS not later than 10 days
prior to the Effective Time, a written agreement, substantially in the form of
Exhibit 8.10, providing that such Person will not sell, pledge, transfer, or
otherwise dispose of the shares of Taylor Common Stock, Taylor Series A
Preferred Stock and Taylor Series C Preferred Stock held by such Person except
as contemplated by such agreement or by this Agreement and will not sell,
pledge, transfer, or otherwise dispose of the shares of PSS Common Stock to be
received by such Person upon consummation of the Merger except in compliance
with applicable provisions of the 1933 Act and the rules and regulations
thereunder and until such time as financial results covering at least 30 days
of combined operations of PSS and Taylor have been published within the meaning
of Section 201.01 of the SEC's Codification of Financial Reporting Policies. If
the Merger will qualify for pooling-of-interests accounting treatment, shares
of PSS Common Stock issued to such affiliates of Taylor in exchange for shares
of Taylor Common Stock, Taylor Series A Preferred Stock and Taylor Series C
Preferred Stock shall not be transferable until such time as financial results
covering at least 30 days of combined operations of PSS and Taylor have been
published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies, regardless of whether each such affiliate has
provided the written agreement referred to in this Section 8.10 (and PSS shall
be entitled to place restrictive legends upon certificates for shares of PSS
Common Stock issued to affiliates of Taylor pursuant to this Agreement to
enforce the provisions of this Section 8.10). PSS shall not be required to
maintain the effectiveness of the Registration Statement under the 1933 Act for
the purposes of resale of PSS Common Stock by such affiliates.
8.11 Employee Benefits. Following the Effective Time, PSS shall
provide generally to officers and employees of Taylor and its Subsidiaries
employee benefits under employee benefit plans (other than stock option or
other plans involving the potential issuance of PSS Common Stock), on terms and
conditions which when taken as a whole are substantially similar to those
currently provided by PSS and its Subsidiaries to their similarly situated
officers and employees.
8.12 Stockholders Agreement. Simultaneously with the execution and
delivery of this Agreement, each of the Persons listed on Schedule 8.12 has
executed and delivered a Stockholders Agreement in the form of Exhibit 8.12
hereto pursuant to which such Person has agreed, among other things, to vote
all shares of Taylor Common Stock, Taylor Series A Preferred Stock and Taylor
Series C Preferred Stock held of record by such Person in favor of the Merger
and in favor of the appointment of the "Representatives" (as such term is
defined in the Escrow Agreement) at the Taylor Shareholder Meeting.
8.13 Pooling Letter. Simultaneously with the execution and delivery of
this Agreement, Price Waterhouse LLP has delivered to PSS and Taylor a letter
to the effect that Taylor and its Subsidiaries qualify for pooling-of-interests
accounting treatment.
8.14 Payment of Subordinated Debt. On the Closing Date, and following
the Effective Time, PSS shall pay in full the outstanding principal and
interest (and premium, if any, to the extent that it is clearly disclosed in
this Agreement or a Schedule hereto) of all subordinated debt of Taylor.
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8.15 [Deleted]
8.16 Determination of Taylor Plus Adjustment. For the period beginning
on April 14, 1995 and ending at the end of the calendar month immediately
preceding the Effective Time (unless the end of the calendar month immediately
preceding the Effective Time is less than 15 days prior to the Effective Time,
then ending at the end of the second calendar month immediately preceding the
Effective Time) (the "Ending Month"), Taylor shall prepare and deliver to PSS,
not later than 15 days after the end of each such calendar month, an unaudited
statement of income for the Taylor Plus Division of Taylor prepared in
accordance with GAAP (subject to normal adjustments for interim unaudited
financial statements) and on a basis consistent with past practices. Each such
unaudited statement of operations shall be accompanied by a certificate of the
chief financial officer of Taylor certifying that such statement of operations
is (i) in accordance with the books and records of the Taylor Plus Division,
which books and records have been maintained in accordance with good business
practices, (ii) presents fairly the results of operations of the Taylor Plus
Division for the immediately preceding month, and (iii) has been prepared in
accordance with GAAP consistent with past practices (subject to normal
adjustments for interim unaudited financial statements). As used in this
Section 8.15, the term "Annualized Losses" shall mean the product of (i) all
such losses from operations of the Taylor Plus Division from April 14, 1995
through the Ending Month (determined by subtracting any interest and taxes from
the operating income (loss) for such period), and (ii) the quotient obtained by
dividing 12 by the number of calendar months form April 1, 1995 through the
Ending Month. The product of the Annualized Losses, if any, and 7.5 shall be
the Taylor Plus Adjustment.
8.17 [Deleted]
8.18 Conditional Releases. Simultaneously with the execution and
delivery of this Agreement, each officer and director of Taylor has executed
and delivered a Conditional Release, in the form of Exhibit 8.18 to this
Agreement, to be effective only if the Effective Time occurs.
8.19 Amendment to Warrant Agreement. Simultaneously with the execution
and delivery of this Agreement, the Amendment to Warrant Agreement, in the form
of Exhibit 8.19 to this Agreement, has been executed and delivered by Taylor
and the "Majority Warrant Holders," as such term is defined in the Taylor
Warrant Agreement, providing that, conditioned upon consummation of the Merger,
at the Effective Time the Taylor Warrants shall represent only the right to
receive the consideration provided in Section 3.6 of this Agreement.
8.20 Guaranty by PSS. PSS unconditionally guarantees any and all
obligations of PSS Merger Corp. to Taylor hereunder and under any agreement or
instrument entered into in connection herewith.
8.21 Piggyback Registration. (a) If PSS proposes to register any of
its securities under the Securities Act for sale for cash (otherwise than in
connection with registration of securities issuable pursuant to an employee
stock option, stock purchase or similar plan or pursuant to a merger, exchange
offer or a transaction of the type specified in Rule 145(a) under the
Securities Act), PSS shall give Affiliates of Taylor identified on Schedule
8.21 ("Registration Affiliates") notice of such proposed registration at least
20 days prior to the filing of a registration statement. At the written request
of the holder(s) of any of the PSS Common Stock held by such Registration
Affiliate(s) delivered to PSS within 15 days after the receipt of the notice
from PSS, which request shall state the number of shares of PSS Common Stock
that the Registration Affiliates wish to sell or distribute publicly under the
registration statement proposed to be filed by PSS, PSS shall use its best
efforts to register under the Securities Act such shares, and to cause such
registration (the "Piggyback Registration") to become and remain effective for
a reasonable period of time not to exceed 60 days or such longer period of time
acceptable to PSS; provided that PSS may, without the consent of the
Registration Affiliates, withdraw such registration statement prior to its
becoming effective if PSS has abandoned its proposal to register its
securities.
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(b) If the managing underwriters thereof advise PSS in writing that in
their opinion the number of securities requested to be included in the
registration exceeds the number which can be sold in the offering, PSS shall
include in the registration the shares the Registration Affiliates propose to
sell and the securities PSS proposes to sell in proportion to the number of
shares each proposes to sell.
(c) Notwithstanding anything to the contrary contained herein, the
Registration Affiliates shall have no rights to a Piggyback Registration after
the first to occur of (i) two (2) years after the Effective Time, or (ii) the
effective date of any registration statement filed by PSS following the
Effective Time which would permit the registration of shares of PSS Common
Stock held by the Registration Affiliates; provided that if any shares to be
sold by the Registration Affiliates are cutback by the managing underwriters as
provided in Section 8.21(b) above, then the rights granted hereunder shall not
terminate until the earlier of (A) two (2) years after the Effective Time, or
(B) the effective date of any subsequent registration statement filed by PSS
which would permit the registration of shares of PSS Common Stock held by the
Registration Affiliates.
(d) In the event of any registration of any shares of PSS Common Stock
held by Registration Affiliates under the Securities Act, PSS shall, and hereby
does, indemnify and hold harmless in the case of any Piggyback Registration,
the Registration Affiliates, their directors and officers and each other
Person, if any, who controls such seller within the meaning of Section 15 of
the Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which the Registration Affiliates or any such director or
officer or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such shares
were registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and PSS shall reimburse the Registration Affiliates, and each such director,
officer and controlling person for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; provided that PSS shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to PSS
through an instrument duly executed by or on behalf of such Registration
Affiliate or such underwriter, as the case may be, specifically stating that it
is for use in the preparation thereof. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of PSS,
or any such director, officer or controlling person and shall survive the
transfer of such shares by the Registration Affiliate.
(e) PSS may require, as a condition to including any shares of PSS
Common Stock to be offered by a Registration Affiliate in any registration
statement filed pursuant to Section 8.21(a), that PSS shall have received an
undertaking reasonably satisfactory to it from such Registration Affiliate, to
indemnify and hold harmless in the case of any Piggyback Registration, PSS, its
directors and officers and each other Person, if any, who controls PSS within
the meaning of Section 15 of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which PSS or any such director or
officer or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contain therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information about such Registration Affiliate as a shareholder of PSS
furnished to PSS through an instrument duly executed by such Registration
Affiliate specifically stating that it is for use in the preparation of such
registration
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statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of PSS or any such
director, officer or controlling person and shall survive the transfer by any
Registration Affiliate of such shares.
(f) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
Section 8.21 (d) or (e), such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Section 8.21 (d) or (e), except to
the extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist or the
indemnified party may have defenses not available to the indemnifying party in
respect of such claim, the indemnifying party shall be entitled to participate
in and to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. Neither an
indemnified nor an indemnifying party shall be liable for any settlement of any
action or proceeding effected without its consent. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation.
(g) The indemnification required by Section 8.21 (d) and (e) shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
(h) In the event that any shares of PSS Common Stock held by a
Registration Affiliate are to be registered pursuant to Section 8.21(a), PSS
covenants and agrees that it shall use its best efforts to effect the
registration and cooperate in the sale of such shares to be registered and
shall, subject to PSS's rights to delay or withdraw certain registrations, as
expeditiously as reasonably possible:
(i) prepare and file with the SEC a registration statement
with respect to the shares (as well as any necessary amendments or
supplements thereto) and use its best efforts to cause the
registration statement to become effective;
(ii) notify the Registration Affiliates, promptly after PSS
shall receive notice thereof, of the time when the registration
statement becomes effective;
(iii) advise the Registration Affiliates after PSS shall
receive notice or otherwise obtain knowledge of the issuance of any
order by the SEC suspending the effectiveness of the registration
statement or amendment thereto or of the initiation or threatening of
any proceeding for that purpose and promptly use its best efforts to
prevent the issuance of any stop order or to obtain its withdrawal
promptly if a stop order should be issued;
(iv) furnish to the Registration Affiliates such number of
copies of the registration statement, each amendment and supplement
thereto, the prospectus included in the registration statement
(including each preliminary prospectus) and such other documents as
the Registration Affiliates may reasonably request in order to
facilitate the disposition of the shares of PSS Common Stock owned by
the Registration Affiliates; and
(v) enter into such customary agreements (including an
underwriting agreement in customary form, including appropriate mutual
indemnification provisions) and take all such other
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action, if any, as the Registration Affiliates or the underwriters
shall reasonably request in order to expedite or facilitate the
disposition of such shares.
(i) PSS shall pay, on behalf of the Registration Affiliates, all
expenses in connection with any Piggyback Registration, including, without
limitation, all registration, filing and NASD fees, all fees and expenses of
complying with securities or blue sky laws, and the fees and disbursements of
counsel for PSS and of its independent accountants; provided that, in any
registration, each party shall pay for its own underwriting discounts and
commissions and transfer taxes.
(j) The Registration Affiliates may not assign their rights under this
Section 8.21 to anyone without the prior written consent of PSS, and any
attempted transfer in violation of this Section 8.21(j) shall be null and void.
8.22 Indemnification of Taylor Officers and Directors. PSS agrees (a)
if Taylor presently has an insurance policy for directors' and officers'
liabilities, it will maintain such coverage for acts and omissions occurring
prior to or at the Effective Time for a period of six (6) years after the
Closing and (b) that, in addition to any rights that any Taylor Executive would
have under the Certificate of Incorporation and Bylaws of PSS, as the same may
be in effect from time to time after the date hereof as to indemnification and
advancement of expenses, the Taylor Executives following the Closing shall be
entitled as a matter of contract (only to the extent permitted by applicable
law in effect as of the date of a request for indemnification pursuant to this
Section 8.22) to all of the rights to indemnification and advancement of
expenses provided to directors, officers, employees, or agents of Taylor or any
constituent corporation of Taylor as set forth in the Certificate of
Incorporation and Bylaws of Taylor as of the date hereof, regardless of any
subsequent amendments thereto which thereafter occur, which rights shall
continue indefinitely in each Taylor Executive's favor as to any acts or
omissions of such Taylor Executive prior to or at the Closing.
8.23 Regarding the Escrow Agreement. Since April 9, 1995 Taylor has
maintained and between this date and the Closing, Taylor shall maintain
accurate records and books of account reflecting all payments and credits
received with respect to any matter covered by the specific indemnity contained
in Section 2.3 of the Escrow Agreement, including but not limited to tracking
individual payments or credits received to specific individual items included
within the "Receivable Claim," as such term is defined in the Escrow Agreement,
and Taylor shall promptly provide such records and books of account to PSS upon
its reasonably request from time to time prior to Closing.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6 of this Agreement:
(a) Shareholder Approval. The shareholders of Taylor and PSS shall
have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by
Law, by the provisions of any governing instruments, or by the rules of the
NASD, and the shareholders of Taylor shall have approved the appointment of the
"Representatives", as such term is defined in the Escrow Agreement.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent so obtained which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
which in the reasonable judgment of the Board of Directors of PSS would so
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materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
(c) Consents and Approvals. Except as set forth on Schedule 9.1, each
Party shall have obtained any and all Consents required for consummation of the
Merger (other than those referred to in Section 9.1(b) of this Agreement) or
for the preventing of any Default under any Contract or Permit of such Party
which, if not obtained or made, is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on such Party. Except as set forth
on Schedule 9.1, no Consent so obtained which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
which in the reasonable judgment of the Board of Directors of PSS would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes
illegal consummation of the transactions contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness of
the Registration Statement shall have been issued, no action, suit, proceeding
or investigation by the SEC to suspend the effectiveness thereof shall have
been initiated and be continuing, and all necessary approvals under state
securities Laws or the 1933 Act or 1934 Act relating to the issuance or trading
of the shares of PSS Common Stock issuable pursuant to the Merger shall have
been received.
(f) Nasdaq Quotation. The shares of PSS Common Stock issuable pursuant
to the Merger shall have been approved for quotation on the Nasdaq National
Market.
(g) Pooling Letters. Each of the Parties shall have received a letter,
dated as of the Effective Time, in form and substance reasonably acceptable to
such Party, from Arthur Andersen to the effect that the Merger will qualify for
pooling-of-interests accounting treatment. Each of the Parties and Arthur
Andersen also shall have received an updated letter, dated as of the Effective
Time, in form and substance reasonably acceptable to such Party, from Price
Waterhouse to the effect that Taylor and its Subsidiaries qualify for
pooling-of-interests accounting treatment.
9.2 Conditions to Obligations of PSS. The obligations of PSS to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following
conditions, unless waived by PSS pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. The representations and warranties
of Taylor set forth or referred to in this Agreement shall be true and correct
in all Material respects (except that those representations and warranties
which are qualified as to materiality shall be true and correct in all
respects) as of the date of this Agreement and as of the Effective Time with
the same effect as though all such representations and warranties had been made
on and as of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such date).
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Taylor to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with.
(c) Certificates. Taylor shall have delivered to PSS (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Section 9.2(a) and 9.2(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by Taylor's Board of Directors and shareholders evidencing
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the taking of all corporate action necessary to authorize the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as PSS and its
counsel shall request.
(d) Opinion of Counsel. PSS shall have received an opinion of
Hutcheson & Grundy, counsel to Taylor, dated as of the Closing, in form
reasonably satisfactory to PSS, as to the matters set forth in Exhibit 9.2(d).
(e) Cold Comfort Letters. PSS shall have received from Price
Waterhouse letters dated not more than five days prior to (i) the date of the
Joint Proxy Statement and (ii) the Effective Time, with respect to certain
financial information regarding Taylor, in form and substance reasonably
satisfactory to PSS, which letters shall be based upon customary specified
procedures undertaken by such firm in accordance with Statement of Auditing
Standard No. 72.
(f) Employment Agreements. PSS shall have entered into employment
agreements with Gene Chrisman and Dan Peoples within ten (10) days of the date
of this Agreement in substantially the form of Exhibit 9.2(f).
(g) Affiliates Agreements. PSS shall have received from each affiliate
of Taylor the affiliates letter referred to in Section 8.10 of this Agreement,
to the extent necessary to assure in the reasonable judgment of PSS that the
transactions contemplated hereby will qualify for pooling-of-interests
accounting treatment.
(h) Delivery of Documents. Taylor shall have delivered all of its
books and records to PSS including, but not limited to, (i) all corporate and
other records of Taylor and each Subsidiary and their respective predecessors,
including the minute books, stock books, stock transfer registers, books of
account, leases and Contracts, deeds and title documents, and Financial
Statements; and (ii) such other documents or certificates as shall be
reasonably requested by PSS.
(i) Resignation of Taylor Directors. On or prior to the Closing Date,
Taylor shall have delivered to PSS evidence satisfactory to PSS of the
resignation of the directors of Taylor effective as of the Closing Date.
(j) Statements for Services Rendered. Taylor shall have received final
statements for all legal, accounting and advisory fees for which it is
responsible for payment in connection with the transactions contemplated by
this Agreement, together with an acknowledgment by each such legal counsel,
accountant or advisor that such statement represents its final bill for all
services rendered to Taylor in connection with the transactions contemplated by
this Agreement.
(k) Retention of Sales Force. Between the date of this Agreement and
the Effective Time, the Taylor sales force shall not have decreased in number
to less than 165 full-time sales persons.
(l) Fairness Opinion. PSS shall have received an oral report on or
before the date of this Agreement and confirmed in a subsequent written opinion
as the dates of (i) the mailing of the Joint Proxy Statement and (ii) the
Closing Date, an opinion from Alex. Brown to the effect that the terms of the
Merger are fair to the stockholders of PSS from a financial point of view,
which opinion shall be in form and substance reasonably satisfactory to PSS.
(m) No Material Adverse Change. There shall not have been any Material
adverse change in the business, assets, Liabilities financial condition, or
results of operations of Taylor and its Subsidiaries, taken as a whole, between
February 28, 1995 and the Closing Date, and Taylor shall have delivered to PSS
a certificate, dated as of the Closing Date, signed by its chief executive
officer and chief financial officer certifying to such effect.
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(n) Consent of Lender. PSS shall have received from NationsBank, as
agent bank, under PSS' senior credit facility its written consent to the
consummation of the Merger and the other transactions contemplated by this
Agreement within twenty (20) days of the date of this Agreement.
(o) Escrow Agreement. The Escrow Agreement shall have been executed
and delivered by a national bank as the Escrow Agent in substantially the form
of Exhibit 4.3 hereto, with any changes thereto from the form of Exhibit 4.3
being only such changes which relate specifically to the Escrow Agent and which
changes are reasonably acceptable to PSS.
9.3 Conditions to Obligations of Taylor. The obligations of Taylor to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following
conditions, unless waived by Taylor pursuant to Section 11.6(b) of this
Agreement:
(a) Representations and Warranties. The representations and warranties
of PSS set forth or referred to in this Agreement shall be true and correct in
all Material respects (except that those representations and warranties which
are qualified as to materiality shall be true and correct in all respects) as
of the date of this Agreement and as of the Effective Time with the same effect
as though all such representations and warranties had been made on and as of
the Effective Time (provided that representations and warranties which are
confined to a specified date shall speak only as of such date).
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of PSS to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with.
(c) Certificates. PSS shall have delivered to Taylor (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Section 9.3(a) and 9.3(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by PSS's Board of Directors and sole shareholder and Merger Corp.'s
Board of Directors and shareholders evidencing the taking of all corporate
action necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all in
such reasonable detail as Taylor and its counsel shall request.
(d) Opinion of Counsel. Taylor shall have received an opinion of
Alston & Bird, counsel to PSS, dated as of the Effective Time, in form
reasonably acceptable to Taylor, as to the matters set forth in Exhibit 9.3(d).
(e) Tax Opinion. Taylor shall have received the opinion of Price
Waterhouse to the effect that the Merger will constitute a tax-free
reorganization within the meaning of 368(a) of the Internal Revenue Code, which
opinion shall be in form and substance reasonably satisfactory to Taylor.
(f) Fairness Opinion. Taylor shall have received an oral report on or
before the date of this Agreement and confirmed in a subsequent written opinion
as of the dates of (i) the mailing of the Joint Proxy Statement, and (ii) the
Closing Date, from Tucker Anthony that the terms of the Merger are fair from a
financial point of view to the shareholders of Taylor, which opinion shall be
in form and substance reasonably satisfactory or Taylor.
(g) No Material Adverse Change. There shall not have been any Material
adverse change in the business, assets, Liabilities, financial condition, or
results of operations of PSS and its Subsidiaries, taken as a whole, between
December 31, 1994 and the Closing Date, and PSS shall have delivered to Taylor
a certificate, dated as of the Closing Date, signed by its chief executive
officer and chief financial officer certifying to such effect.
(h) Escrow Agreement. The Escrow Agreement shall have been executed
and delivered by a national bank as the Escrow Agent in substantially the form
of Exhibit 4.3 hereto, with any changes thereto
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from the form of Exhibit 4.3 being only such changes which relate specifically
to the Escrow Agent and which changes are reasonably acceptable to Taylor.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Taylor and PSS, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of PSS
and the Board of Directors of Taylor; or
(b) By the Board of Directors of either Party
(provided that the terminating Party is not then in Material breach of any
representation, warranty, covenant, or other agreement contained in this
Agreement) in the event of a breach by the other Party of any representation or
warranty contained in this Agreement which cannot be or has not been cured
within 30 days after the giving of written notice to the breaching Party of
such breach and which breach is reasonably likely, in the reasonable opinion of
the non-breaching Party, to have, individually or in the aggregate, a Material
Adverse Effect on the breaching Party; or
(c) By the Board of Directors of either Party
(provided that the terminating Party is not then in Material breach of any
representation, warranty, covenant, or other agreement contained in this
Agreement) in the event of a Material breach by the other Party of any covenant
or agreement contained in this Agreement which cannot be or has not been cured
within 30 days after the giving of written notice to the breaching Party of
such breach; or
(d) By the Board of Directors of either Party
(provided that the terminating Party is not then in Material breach of any
representation, warranty, covenant, or other agreement contained in this
Agreement) in the event (i) any Consent of any Regulatory Authority required
for consummation of the Merger and the other transactions contemplated hereby
shall have been denied by final nonappealable action of such authority or if
any action taken by such authority is not appealed within the time limit for
appeal, or (ii) the shareholders of Taylor or PSS fail to vote their approval
of this Agreement and the transactions contemplated at the Shareholders'
Meetings where the transactions were presented to such shareholders for
approval and voted upon; or
(e) By the Board of Directors of either Party in the
event that the Merger shall not have been consummated by September 15, 1995, if
the failure to consummate the transactions contemplated hereby on or before
such date is not caused by any breach of this Agreement by the Party electing
to terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party
(provided that the terminating Party is not then in Material breach of any
representation, warranty, covenant, or other agreement contained in this
Agreement) in the event that any of the conditions precedent to the obligations
of such Party to consummate the Merger cannot be satisfied or fulfilled by the
date specified in Section 10.1(e) of this Agreement; or
(g) By the Board of Directors of either Party if the
Base Period Trading Price is less than $26.00 or greater than $44.00 (in each
case, calculated without regard to the Base Period Trading Price
Limitations);or
(h) By the Board of Directors of either Party if the
Board of Directors of Taylor shall fail to call a shareholders' meeting or
solicit consents for the purpose of approving the Merger or shall have
affirmed, recommended or authorized entering into any other Acquisition
Proposal or other
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transaction involving a merger, share exchange, consolidation or transfer of
substantially all of the Assets of Taylor; or
(i) By the Board of Directors of PSS if the sum of
all adjustments to the Aggregate Purchase Price contained in clauses (i), (iv)
and (v) of the definition of Aggregate Purchase Price set forth in Section 11.1
hereof would result in a reduction of the Aggregate Purchase Price by more than
$2,000,000 but for the proviso contained in such definition of "Aggregate
Purchase Price."
10.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment, and (ii) a termination pursuant
to Sections 10.1(b), 10.1(c) or 10.1(f) of this Agreement shall not relieve a
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination.
10.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except Articles 2, 3, 4 and 11 and
Sections 6.5, 8.1, 8.10, 8.11, 8.21, 8.22, 10.2 and 10.3 of this Agreement, and
except with respect to the indemnification obligations in the Escrow Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"Acquisition Proposal" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition of all
of the stock or assets of, or other business combination involving such Party
or any of its Subsidiaries or the acquisition of a substantial equity interest
in, or a substantial portion of the assets of, such Party or any of its
Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect beneficial owner of any 10%
or greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"Aggregate Purchase Price" shall mean $45,000,000, (i) minus
the Taylor Plus Adjustment, if any, (ii) plus the aggregate of all exercise or
purchase prices under all Taylor Options and Taylor Warrants, (iii) minus all
accrued but unpaid dividends on the Taylor Series A Preferred Stock and the
Taylor Series C Preferred Stock as of the Closing Date, (iv) minus any amounts
owed to Taylor ten (10) days prior to the Closing Date under the promissory
note from Rick Stanley in the principal amount of $176,020, and (v) minus any
expenses incurred by Taylor or on Taylor's behalf in connection with the
transactions contemplated hereunder in excess of $1,500,000, determined in
accordance with Section 11.2 hereof; provided, however, that the aggregate of
the adjustments in clauses (i), (iv) and (v) of this definition shall not
exceed $2,000,000.
"Agreement" shall mean this Third Amended and Restated
Agreement and Plan of Merger, including the Exhibits delivered pursuant hereto
and incorporated herein by reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or
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intangible, accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or not
carried on the books and records of such Person, and whether or not owned in
the name of such Person or any Affiliate of such Person and wherever located.
"Certificate of Merger" shall mean the Certificate of Merger
to be executed by Merger Corp. and Taylor and filed with the Secretary of State
of the State of Delaware relating to the Merger as contemplated by Section 1.1
of this Agreement.
"Closing Date" shall mean the date on which the Closing
occurs.
"Common Stock Per Share Purchase Price" shall mean the
quotient obtained by dividing (i) the Aggregate Purchase Price by (ii) the
Fully Diluted Common Equivalents.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant to
any Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding or undertaking of any
kind or character, or other document to which any Person is a party or that is
binding on any Person or its capital stock, Assets or business.
"Default" shall mean (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a breach
or violation of or default under any Contract, Order or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order or Permit.
"DGCL" shall mean the Delaware General Corporate Law.
"Environmental Laws" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient air,
surface water, ground water, land surface or subsurface strata) and which are
administered, interpreted or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the environment,
including the Comprehensive Environmental Response Compensation and Liability
Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases or threatened releases of any
Hazardous Substance, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall have the meaning provided in Section
5.14 of this Agreement.
"Escrow Agreement" shall mean the Escrow Agreement attached to
this Agreement as Exhibit 4.3.
"Escrow Shares" shall mean the shares of PSS Common Stock
issued pursuant to Section 4.3 hereof.
"Exhibits" shall mean the Exhibits so marked, copies of which
are attached to this Agreement. Such Exhibits are hereby incorporated by
reference herein and made a part hereof, and may be referred to in this
Agreement and any other related instrument or document without being attached
hereto.
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"FBCA" shall mean the Florida Business Corporation Act.
"Fully Diluted Common Equivalents" shall mean the sum of (i)
all issued and outstanding shares of Taylor Common Stock, and (ii) all shares
of Taylor Common Stock issuable upon the exercise of all outstanding Taylor
Options and Taylor Warrants, the conversion of any Taylor Series A Preferred
Stock and Taylor Series C Preferred Stock, and the conversion of all other
convertible securities of Taylor and the issuance of all Taylor Common Stock
issuable pursuant to any other rights or commitments of any nature (except for
shares of Taylor Common Stock issuable upon conversion of the subordinated debt
to be paid by PSS pursuant to Section 8.14 hereof unless such subordinated debt
is converted into Taylor Common Stock prior to the Effective Time).
"Funded Debt" shall mean any outstanding indebtedness
(including leases required to be capitalized under GAAP) of such party or its
Subsidiaries, except Funded Debt between such parties, representing borrowing,
but excluding trade payables.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous Material, hazardous waste, regulated substance or toxic substance (as
those terms are defined by any applicable Environmental Laws) and (ii) any
chemicals, pollutants, contaminants, petroleum, petroleum products, or oil (and
specifically shall include asbestos requiring abatement, removal or
encapsulation pursuant to the requirements of Regulatory Authorities and any
polychlorinated biphenyls).
"HSR Act" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" shall mean the copyrights, patents,
trademarks, service marks, service names, tradenames, applications therefor,
technology rights and licenses, computer software (including, without
limitation, any source or object codes therefor or documentation relating
thereto), trade secrets, franchises, know-how, inventions and intellectual
property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder.
"Joint Proxy Statement" shall mean the proxy statement used by
Taylor and PSS to solicit the approval of their respective shareholders of the
transactions contemplated by this Agreement, which shall include the prospectus
of PSS relating to the issuance of the PSS Common Stock as provided in this
Agreement.
"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a Person or
its Assets, Liabilities or business, including those promulgated, interpreted
or enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction,
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security interest, title retention or other security arrangement, or any
adverse right or interest, charge, or claim of any nature whatsoever of, on, or
with respect to any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable and (ii) Liens which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on a Party.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information relating to or affecting a Party, its
business, its Assets (including Contracts related to it), or the transactions
contemplated by this Agreement.
"Material" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question; provided
that any specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"Material Adverse Effect" on a Party shall mean an event,
change or occurrence which, individually or together with any other event,
change or occurrence, has a Material adverse impact on (i) the financial
position, business, or results of operations of such Party and its
Subsidiaries, taken as a whole, or (ii) the ability of such Party to perform
its obligations under this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement, provided that Material Adverse
Effect shall not be deemed to include the impact of (x) changes in Laws of
general applicability or interpretations thereof by courts or governmental
authorities, (y) changes in generally accepted accounting principles, and (z)
the Merger and compliance with the provisions of this Agreement on the
operating performance of the Parties.
"Merger Corp. Common Stock" shall mean the $0.01 par value
common stock of Merger Corp.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Nasdaq National Market" shall mean the National Market System
of the National Association of Securities Dealers Automated Quotations System.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi- judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency or Regulatory Authority.
"Party" shall mean either Taylor, Merger Corp. or PSS, and
"Parties" shall mean all of Taylor, Merger Corp. and PSS.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person or its securities,
Assets or business.
"Person" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
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"Preferred A Dividend Adjustment Per Share" shall mean the
quotient obtained by dividing (i) all accrued but unpaid dividends on the
Taylor Series A Preferred Stock as of the Closing Date, by (ii) the number of
shares of Taylor Common Stock into which the Taylor Series A Preferred Stock is
convertible at the Effective Time.
"Preferred C Dividend Adjustment Per Share" shall mean the
quotient obtained by dividing (i) all accrued but unpaid dividends on the
Taylor Series C Preferred Stock as of the Closing Date, by (ii) the number of
shares of Taylor Common Stock into which the Taylor Series C Preferred Stock is
convertible at the Effective Time.
"PSS Capital Stock" shall mean, collectively, the PSS Common
Stock, the PSS Preferred Stock and any other class or series of capital stock
of PSS.
"PSS Common Stock" shall mean the $0.01 par value common stock
of PSS.
"PSS Preferred Stock" shall mean the $0.01 par value preferred
stock of PSS.
"PSS Stock Plans" shall mean the existing stock option and
other stock-based compensation plans of PSS designated as follows: 1994 Long
Term Incentive Plan, 1994 Long Term Stock Plan, 1994 Incentive Stock Option
Plan, Directors' Stock Plan, Employee Stock Purchase Plan and 1986 Incentive
Stock Option Plan.
"Registration Statement" shall mean the Registration Statement
on Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by PSS
under the 1933 Act with respect to the shares of PSS Common Stock to be issued
to the shareholders of Taylor in connection with the transactions contemplated
by this Agreement.
"Regulatory Authorities" shall mean, collectively, all federal
and state regulatory agencies having jurisdiction over the Parties and their
respective Subsidiaries, including the NASD, and the SEC.
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a Person.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules
and regulations of any Regulatory Authority promulgated thereunder.
"Series A Per Share Purchase Price" shall mean the product of
(i) the Common Stock Per Share Purchase Price plus the Preferred A Dividend
Adjustment Per Share, times (ii) the number of shares of Taylor Common Stock
into which the Taylor Series A Preferred Stock is convertible at the Effective
Time.
"Series C Per Share Purchase Price" shall mean the product of
(i) the Common Stock Per Share Purchase Price plus the Preferred C Dividend
Adjustment Per Share, times (ii) the number of shares of Taylor Common Stock
into which the Taylor Series C Preferred Stock is convertible at the Effective
Time.
"Shareholders' Meetings" shall mean the respective meetings of
the shareholders of Taylor and PSS to be held pursuant to Section 8.1 of this
Agreement, including any adjournment or adjournments thereof.
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"Subsidiaries" shall mean all those corporations,
partnerships, associations, or other entities of which the entity in question
owns or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which 50% or
more of the outstanding equity securities is owned directly or indirectly by
its parent; provided, there shall not be included any such entity acquired
through foreclosure or any such entity the equity securities of which are owned
or controlled in a fiduciary capacity.
"Surviving Corporation" shall mean Taylor as the surviving
corporation resulting from the Merger.
"Tax" or "Taxes" shall mean any federal, state, county, local,
or foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other taxes,
assessments, charges, fares, or impositions, including interest, penalties, and
additions imposed thereon or with respect thereto.
"Taylor Capital Stock" shall mean the Taylor Common Stock,
Taylor Series A Preferred Stock and Taylor Series C Preferred Stock.
"Taylor Class A Common Stock" shall mean the $.01 par value
per share Class A Voting Common Stock of Taylor.
"Taylor Class B Non-Voting Common Stock" shall mean the $.01
par value per share Class B Non-Voting Common Stock of Taylor.
"Taylor Common Stock" shall mean the Taylor Class A Common
Stock and the Taylor Class B Common Stock.
"Taylor Executives" shall mean all present and former officers
and directors of Taylor or any constituent corporation absorbed into Taylor
pursuant to merger or consolidation.
"Taylor Option" shall mean a stock option granted pursuant to
the Taylor Stock Plan.
"Taylor Plus Adjustment" shall mean the amount, if any,
determined in accordance with Section 8.15 of this Agreement.
"Taylor Series A Preferred Stock" shall mean the $.01 par
value per share Series A Preferred Stock of Taylor.
"Taylor Series C Preferred Stock" shall mean the $.01 par
value per share Series C Preferred Stock of Taylor.
"Taylor Stock Plan" shall mean the existing stock option plans
of Taylor designated as follows: (i) the 1986 Stock Option Plan, and (ii) the
1993 Stock Option Plan..
"Taylor Warrant Agreement" shall mean the Warrant Agreement,
dated January 31, 1993, by and among Taylor and warrant holders named therein.
"Taylor Warrants" shall mean the warrants to purchase Taylor
Class A Common Stock pursuant to the Warrant Agreement..
"Undisclosed Liabilities" shall mean any liability or
obligation of a Party to this Agreement, whether accrued, liquidated,
unliquidated, absolute, contingent, matured, unmatured or otherwise, as of the
Closing Date, that is not fully reflected or reserved against in their
respective financial statements or fully disclosed in a Schedule.
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"Warrant Per Share Purchase Price" shall mean the
consideration to be received pursuant to Section 3.6 hereof in respect of each
share of Taylor Common Stock subject to a Taylor Warrant and shall equal the
Common Stock Per Share Purchase Price minus the exercise or purchase price for
such share of Taylor Common Stock under such Taylor Warrant.
(b) In addition to the terms defined in Section 11.1 (a) above, the
terms set forth below shall have the meanings ascribed thereto in the
referenced sections:
Alex. Brown - Section 6.9 Exchange Agent - Section 4.1
Annualized Losses - Section 8.16 FASB 5 - Section 5.18
Audited Balance Sheet - Section 8.17 Financial Statements - Section 5.5
Base Period Trading Price - Section 3.1(b) Merger - Section 1.1
Base Period Trading Price Limitations - Section 3.1(b) Multiemployer Plan - Section 5.21(a)
Benefit Plans - Section 5.21 Per Share Purchase Price - Section 3.1(b)
Capital Expenditures - Section 5.16(c) PSS Documents - Section 6.5
Closing - Section 1.2 Series A Exchange Ratio - Section 3.1(c)
Closing Date - Section 1.2 Series C Exchange Ratio - Section 3.1(d)
Common Stock Exchange Ratio - Section 3.1(b) Settlement Payment - Section 3.5(a)
Effective Time - Section 1.3 Taylor Options - Section 3.5
Ending Month - Section 8.16 Tucker Anthony - Section 5.25
Environmental Litigation - Section 5.7 Warrant Exchange Ratio - Section 3.6(a)
ERISA Plan - Section 5.21 Warrant Settlement Payment - Section 3.6(a)
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 Expenses. (a) PSS shall bear and pay all direct costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including filing, registration and application fees,
printing fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel. PSS shall bear and pay reasonable
costs and expenses for (i) fees and expenses of Taylor's counsel, (ii) fees and
expenses of Taylor's accountants, (iii) fees and expenses of Tucker Anthony,
Inc., and (iv) any bonuses described in paragraph B.1 of Schedule 5.21.3,
incurred by Taylor or on Taylor's behalf in connection with the transactions
contemplated hereunder in an amount not to exceed $1,500,000 in the aggregate.
For purposes of the allocation of joint expenses, each of the Parties shall
bear and pay one-half of the filing fees payable in connection with the
Registration Statement and the Joint Proxy Statement and printing costs
incurred in connection with the printing of the Registration Statement and the
Joint Proxy Statement if the Merger is not consummated, but PSS shall pay all
of such costs and expenses if the Merger is consummated.
(b) If this Agreement is terminated pursuant to Section 10.1(h), and
within one (1) year after the effective date of such termination Taylor is the
subject of a Third Party Acquisition Event with any Person (other than a Party
hereto), then at the time of consummation of such Third Party Acquisition
Event, Taylor shall pay to PSS a break-up fee of $2,500,000 in immediately
available funds, which fee represents the Parties' best estimates of the
out-of-pocket costs incurred by PSS and the value of management time, overhead,
opportunity costs and other unallocated costs of PSS incurred by or on behalf
of PSS in connection with this Agreement. Taylor shall not enter into any
agreement with respect to any Third Party Acquisition Event which does not, as
a condition precedent to the consummation of such Third Party Acquisition
Event, require such break-up fee to be paid to PSS upon such consummation. As
used herein, the term "Third Party Acquisition Event" shall mean either of the
following: (i) Taylor shall consummate any agreement with respect to an
Acquisition Proposal, or (ii) any Person (other than a Party hereto or its
affiliates) shall have acquired beneficial ownership (as such term is defined
in Rule 13d-3 under the 1934
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Act) or the right to acquire beneficial ownership of, or a new group has been
formed which beneficially owns or has the right to acquire beneficial ownership
of, Taylor Capital Stock representing 50% or more of the total combined voting
power of Taylor.
11.3 Brokers and Finders. Except for Alex. Brown, as to PSS, and
Tucker Anthony, as to Taylor, each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions
contemplated hereby. In the event of a claim by any broker or finder based
upon his or its representing or being retained by or allegedly representing or
being retained by Taylor or PSS, each of Taylor and PSS, as the case may be,
agrees to indemnify and hold the other Party harmless of and from any Liability
in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided herein,
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than as provided in
Section 8.11 of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
shareholder approval of this Agreement has been obtained; provided, that after
any such approval by the holders of Taylor Common Stock, there shall be made no
amendment that pursuant to the DGCL requires further approval by such
shareholders without the further approval of such shareholders; and further
provided, that after any such approval by the holders of PSS Common Stock, the
provisions of this Agreement relating to the manner or basis in which shares of
Taylor Common Stock will be exchanged for shares of PSS Common Stock shall not
be amended after the Shareholders' Meetings in a manner adverse to the holders
of PSS Common Stock without any requisite approval of the holders of the issued
and outstanding shares of PSS Common Stock entitled to vote thereon.
11.6 Waivers. (a) Prior to or at the Effective Time, PSS, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Taylor, to waive or extend the time for the
compliance or fulfillment by Taylor of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of PSS under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of PSS.
(b) Prior to or at the Effective Time, Taylor, acting through its
Board of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by PSS, to waive or extend the time for the compliance or fulfillment
by PSS of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of Taylor under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Taylor.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
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11.7 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. 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.
11.8 Notices. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered by hand,
by facsimile transmission, by registered or certified mail, postage pre-paid,
or by courier or overnight carrier, to the persons at the addresses set forth
below (or at such other address as may be provided hereunder), and shall be
deemed to have been delivered as of the date so delivered:
Taylor: Taylor, Inc.
2155 IH-10 East
Beaumont, Texas 77701
Telecopy Number: (409) 832-1879
Attention: Todd D. Christopher
Copy to Counsel: Hutcheson & Grundy, L.L.P.
1200 Smith Street, Suite 3300
Houston, Texas 77002-4579
Telecopy Number: (713) 951-2925
Attention: Benjamin G. Clark, Esq.
PSS: Physician Sales & Service, Inc.
7800 Belfort Parkway, Suite 250
Jacksonville, Florida 32256
Telecopy Number: (904) 281-9555
Attention: Mr. Patrick C. Kelly
Copy to Counsel: Alston & Bird
One Atlantic Center
1201 W. Peachtree Street
Atlanta, Georgia 30309
Telecopy Number: (404) 881-7777
Attention: J. Vaughan Curtis, Esq.
11.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws.
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11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether
under any rule of construction or otherwise. No party to this Agreement shall
be considered the draftsman. The parties acknowledge and agree that this
Agreement has been reviewed, negotiated and accepted by all parties and their
attorneys and shall be construed and interpreted according to the ordinary
meaning of the words used so as fairly to accomplish the purposes and
intentions of all parties hereto.
11.13 Enforcement of Agreement. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.14 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
TAYLOR MEDICAL, INC.
By: /s/ Eugene Humphrey
--------------------------------------------
Vice President and Chief Financial Officer
PHYSICIAN SALES & SERVICE, INC.
By: /s/ David A. Smith
--------------------------------------------
Vice President and Chief Financial Officer
PSS MERGER CORP.
By: /s/ David A. Smith
--------------------------------------------
Vice President and Chief Financial Officer
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Exhibit 4.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into this
21st day of August, 1995, by and between Physician Sales & Service, Inc., a
Florida corporation ("PSS"), NationsBank of Georgia, National Association, as
the escrow agent (the "Escrow Agent") and Todd D. Christopher, David C.
Wetherill and Philip A. Tuttle as representatives (the "Representatives")
appointed by the former holders (the "Shareholders") of the issued and
outstanding shares of capital stock of Taylor Medical, Inc., a Delaware
corporation ("Taylor").
W I T N E S S E T H :
PSS Merger Corp. ("Merger Corp.") is a wholly owned subsidiary of PSS and
each is a party to a Third Amended and Restated Agreement and Plan of Merger
with Taylor, dated July 12, 1995 (the "Merger Agreement"), pursuant to which
Merger Corp. has on this date merged (the "Merger") with and into Taylor with
Taylor surviving the merger and becoming a wholly owned subsidiary of PSS.
Under the Merger Agreement, the Shareholders and the holders of warrants to
purchase shares of Taylor capital stock (the "Warrant Holders") received
contingent rights to receive, in the aggregate, shares of common stock of PSS
("PSS Common Stock") as provided in Sections 3.1(b), (c) and (d) and 3.6 of the
Merger Agreement.
In accordance with the Merger Agreement, the PSS Common Stock issuable
pursuant to the contingent rights of Shareholders and Warrant Holders has been
issued and will be held by the Escrow Agent pursuant to the terms of this
Agreement until termination of this Agreement as provided herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE 1
ESTABLISHMENT OF ESCROW
On this date, PSS has executed a stock certificate in negotiable form
representing the Escrow Shares and naming the Escrow Agent as the registered
holder for the benefit of the Shareholders and Warrant Holders. Schedule 1 to
this Agreement shows for each Shareholder and Warrant Holder (i) the respective
percentage interest (the "Percentage Interest") of each such Shareholder and
Warrant Holder in the General Escrow Shares and the Specific Escrow Shares, and
(ii) the corresponding aggregate maximum number of shares of PSS Common Stock
issuable to each Shareholder or Warrant Holder, subject to the adjustments
provided herein. The Escrow Agent shall hold the Escrow Shares on behalf of,
and as a convenience to PSS and the Shareholders and Warrant Holders with the
same force and effect as if such shares had been delivered by PSS to each
Shareholder and Warrant Holder and subsequently delivered by such Shareholder
or Warrant Holder to the Escrow Agent. The Escrow Agent shall hold the Escrow
Shares, together with any and all future cash dividends or cash income with
respect to the Escrow Shares (as provided in Section 5.1 hereof) ("Cash") for
the benefit of PSS, Merger Corp., the Shareholders and the Warrant Holders, as
the case may be, pursuant to the terms of this Agreement. Cash shall be held
by the Escrow Agent in The Nations Fund - Treasury Portfolio, a prospectus of
which is hereby acknowledged as received by PSS and the Representatives. PSS
and the Representatives acknowledge that Escrow Agent may receive a fee from
the manager of its money market fund for acting as sub-administrator. Any
income or interest realized from the investments made by the Escrow Agent
pursuant hereto shall be included in Cash and paid in accordance with this
Agreement.
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ARTICLE 2
INDEMNIFICATION
2.1 Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Audited Balance Sheet" shall mean the audited consolidated balance
sheet of Taylor as of March 31, 1995 prepared by Arthur Andersen LLP and
attached as Exhibit 1 to this Agreement.
(b) "Closing Date" shall mean the date of the closing of the transactions
contemplated by the Merger, which shall be the date on which the Effective Time
occurs.
(c) "Disputed Loss Notice" shall mean a Loss Notice that is disputed by
the Representatives by delivery of a Protest Notice.
(d) "Effective Time" shall mean the time that the Certificate of Merger
reflecting the Merger becomes effective with the Secretary of State of
Delaware.
(e) "Environmental Claim" shall mean any Loss incurred up to but not
exceeding $465,000 in excess of specific identifiable reserves for the
Environmental Claim reflected on the Audited Balance Sheet resulting from the
civil administrative action brought by the Environmental Protection Agency
against Taylor on February 14, 1995.
(f) "Escrow Agent Expenses" shall mean the one-half of the expenses of
the Escrow Agent which the Representatives are obligated to bear under Section
6.4 hereof, in an amount up to $50,000, incurred in connection with the
obligations of the Escrow Agent under this Agreement.
(g) "Escrow Shares" shall mean the General Escrow Shares and the Specific
Escrow Shares.
(h) "General Escrow Shares" shall mean those shares of PSS Common Stock
issued and placed in Escrow equal to (i) the difference between eleven percent
(11%) and the percentage of Specific Escrow Shares out of the total number of
shares of PSS Common Stock issued in the Merger, multiplied by (ii) the total
number of shares of PSS Common Stock issued in the Merger.
(i) "Indemnifiable Loss" shall mean any Loss for which an Indemnitee may
be indemnified pursuant to Section 2.2 or 2.3 hereof.
(j) "Indemnitee" shall mean a party entitled to indemnification under
Section 2.2 hereof.
(k) "Litigation Claim" shall mean any Loss in excess of specific
identifiable reserves for such Litigation Claims reflected on the Audited
Balance Sheet resulting from any pending litigation of Taylor at the Closing
Date, but excluding the Environmental Claim.
(l) "Loss" shall mean any direct or indirect demand, claim, payment or
failure to receive payment, obligation, action or cause of action, assessment,
loss, liability, cost or expense, including without limitation, penalties,
interest on any amount payable to a third party as a result of the foregoing,
and any legal or other expense reasonably incurred in connection with
investigating or defending any claim or action, whether or not resulting in any
liability, and any amount paid in settlement of any claim or action.
(m) "Loss Notice" shall mean a written notice, as prescribed in Section
2.4 hereof, provided by an Indemnitee to the Escrow Agent and the
Representatives setting forth in reasonable detail the nature and amount of an
Indemnifiable Loss or potential Indemnifiable Loss and the number of Escrow
Shares sought to be cancelled in respect of such Indemnifiable Loss.
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(n) "Receivable Claim" shall mean (i) any Loss incurred by reason of the
failure of Taylor to receive all principal and interest due at the Closing Date
under the two notes receivable of Taylor from LC Acquisition Corporation
aggregating $848,586.80 in excess of specific identifiable reserves for such
notes receivable reflected in the detailed accounts of Taylor supporting the
Audited Balance Sheet; (ii) any of the following Losses, all of which shall be
determined as of December 31, 1995: (A) any Loss incurred by reason of the
failure of Taylor to receive the difference between (x) $1,051,000 and (y) any
and all monies received by Taylor after February 28, 1995 relating to those
certain accounts receivable of Taylor Home Health, Inc. ("THH") and Taylor Home
Health Supply of Louisiana, Inc. ("THHSL") sold to Zeta Home Health Care, Inc.
("Zeta") pursuant to that certain Agreement for Sale and Purchase of Assets and
Covenant Not to Compete dated July 1, 1994, by and among THH, THHSL and Zeta;
(B) any Loss up to but not exceeding $300,000 incurred by reason of the failure
of PSS to recover in the form of cash or credits usable by December 31, 1995 by
PSS, the specific inventory items in the Inventory Morgue reflected in the
detailed accounts of Taylor supporting the Audited Balance Sheet; (C) any Loss
up to but not exceeding $80,000 incurred by reason of the failure of PSS to
recover, in the form of cash or payroll deductions, amounts owed to Taylor by
the Taylor sales representatives for the sample accounts of such
representatives; and (D) any amounts less than $676,935 recovered by PSS or
Taylor, in the form of cash or credits usable by December 31, 1995 by PSS, for
amounts owed to Taylor under the Vendor Rebate Receivable as reflected in the
detailed accounts of Taylor supporting the Audited Balance Sheet; and (iii) any
amounts, determined as of March 28, 1996, less than $570,435 recovered by
Taylor or PSS, in the form of cash or credits usable by March 28, 1996 by PSS,
for amounts owed to Taylor due to Vendor Inventory Returns as reflected in the
detailed accounts of Taylor supporting the Audited Balance Sheet.
(o) "Representative Expenses" shall mean expenses of the Representatives,
in an amount up to $225,000, incurred in connection with their obligations
under this Agreement.
(p) "Protest Notice" shall mean a written notice, as prescribed in Section
2.4 hereof, provided by the Representatives to an Indemnitee if he disputes any
Loss Notice received from an Indemnitee.
(q) "Sales Tax Claim" shall mean any Loss incurred up to but not
exceeding $300,000 in excess of any specific reserves for such Sales Tax Claim
reflected on the Audited Balance Sheet in connection with the sales tax audit
of Taylor by the State of Texas and which is pending at this date.
(r) "Specific Escrow Shares" shall mean those shares of PSS Common Stock
issued and placed in Escrow equal to the sum of (i) the Environmental Claim
divided by the Value Per Share, (ii) the Sales Tax Claim divided by the Value
Per Share, (iii) the aggregate amount of the Receivables Claim divided by the
Value Per Share, (iv) the Representative Expenses divided by the Value Per
Share, and (v) the Escrow Agent Expenses divided by the Value Per Share.
(s) "Value Per Share" shall mean $10.61729167.
2.2 General Indemnity by Representatives. Subject to the express
limitations of Section 2.7 hereof, the Representatives, as the representative
of the Shareholders and the Warrant Holders, shall, to the fullest extent
permitted by law, indemnify, defend, and hold harmless PSS, Merger Corp. and
Taylor (each an "Indemnitee") from and against (i) any Litigation Claim and
(ii) any Loss suffered or incurred by such Indemnitee, as and when due, which
arises out of or results from a breach of any of the representations,
warranties or covenants (except to the extent such covenants are waived by PSS
prior to the Effective Time) and agreements of Taylor set forth in the Merger
Agreement or in any document or agreement made or executed by Taylor pursuant
to the Merger Agreement.
2.3 Specific Indemnity by Representatives. In addition to the
indemnification obligations in Section 2.2 above, and subject to the express
limitations of Section 2.7 hereof, the Representatives, as the representative
of the Shareholders and the Warrant Holders, shall, to the fullest extent
permitted by law, indemnify, defend, and hold harmless the Indemnitees from and
against any Loss suffered or incurred by such Indemnitee, as and when due,
which arises out of or results from an Environmental Claim, a
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Receivable Claim, a Sales Tax Claim, any Representative Expenses and the Escrow
Agent Expenses paid by an Indemnitee.
2.4 Notice of Claim. If an Indemnitee incurs an Indemnifiable Loss, or
should an Indemnitee negotiate a proposed settlement in satisfaction of a
potential Indemnifiable Loss, it shall promptly provide a Loss Notice to the
Representatives and the Escrow Agent. If the Representatives dispute the
amount sought under any such Loss Notice or otherwise dispute the right of the
Indemnitee to be indemnified hereunder, they shall provide the Indemnitee and
the Escrow Agent a Protest Notice within thirty (30) days of the date any such
Loss Notice is given. Notwithstanding anything in this Escrow Agreement to the
contrary, the Representatives may not dispute any indemnifiable loss and may
not submit a Protest Notice with respect to a Receivable Claim for which they
assert that a payment or credit was received prior to the Closing Date unless
such payment or credit is specifically identifiable in the records and books of
account of Taylor as provided in Section 8.22 of the Merger Agreement. If no
Protest Notice is received by the Indemnitee and the Escrow Agent within thirty
(30) days from the date on which any Loss Notice is given, or if a Protest
Notice is received and the dispute is resolved in favor of the Indemnitee after
following the procedures set forth below, then the Escrow Agent shall cause to
be delivered to PSS and PSS shall promptly cancel and retire (i) with respect
to an Indemnifiable Loss under Section 2.2, that number of General Escrow
Shares as shall equal the number of General Escrow Shares (rounded to the next
highest whole number) that, when multiplied by the Value Per Share, equals the
amount sought by or awarded to the Indemnitee, and (ii) with respect to an
Indemnifiable Loss under Section 2.3, that number of Specific Escrow Shares as
shall equal the number of Specific Escrow Shares (rounded to the next highest
whole number) that, when multiplied by the Value Per Share, equals the amount
sought by or awarded to the Indemnitee. To the extent that Cash is held in
escrow, and at the option of the Indemnitee, the Escrow Agent shall pay any
Indemnifiable Loss, in whole or in part, with such Cash. In its Loss Notice,
PSS shall set forth for the Escrow Agent (i) the number of General Escrow
Shares, (ii) the number of Specific Escrow Shares, and/or (iii) the amount of
Cash, if any, to be delivered to PSS in accordance with this paragraph. If the
Indemnitee and the Escrow Agent receive a Protest Notice within such 30-day
period, the Escrow Agent shall not deliver any Cash or Escrow Shares until
receipt by it of written instructions (i) signed by a majority of the
Representatives and a duly authorized officer of the Indemnitee; or (ii) signed
by an arbitration panel that has considered and resolved such dispute as
provided in Section 2.5 below, which sets forth (i) the number of General
Escrow Shares, (ii) the number of Specific Escrow Shares, and/or (iii) the
amount of Cash, if any, to be delivered to PSS in accordance with this
paragraph. After delivery of any Escrow Shares to PSS in accordance with this
paragraph, the Escrow Agent shall be reissued a certificate in respect of any
remaining Escrow Shares.
2.5 Procedure With Respect to Disputed Indemnifiable Loss. A Disputed
Loss Notice may be resolved by the agreement of a majority of the
Representatives and the Indemnitee, in which case written notice of such
agreement shall be promptly provided to the Escrow Agent, together with a
statement of the agreed upon amount to be reimbursed to the Indemnitee. If a
majority of the Representatives and the Indemnitee are unable to resolve a
Disputed Loss Notice, then such Disputed Loss Notice shall be submitted to
arbitration on an informal basis. If a Disputed Loss Notice is to be
arbitrated, a majority of the Representatives shall select one arbitrator, the
Indemnitee shall select one arbitrator, and the two arbitrators so chosen shall
select a third. Any decision of the informal arbitration panel shall require
the vote of at least two (2) of such arbitrators and shall be deemed conclusive
and each party shall be deemed to have waived any rights to appeal therefrom.
Any resolution of a Disputed Loss Notice, whether by agreement of the parties
or by arbitration, must be made within sixty (60) days of the date of the
Protest Notice in regard to which the dispute relates. If any arbitration
decision is rendered in favor of the Indemnitee, then the Indemnitee's and the
Representatives' reasonable legal and other expenses incurred in the
arbitration proceeding shall be added to the amount of the Indemnifiable Loss.
If any arbitration decision is rendered in favor of the Representatives, then
the Indemnitee shall reimburse the Representatives for the benefit of the
Shareholders and Warrant Holders for reasonable legal and other expenses
incurred in the arbitration proceeding. In determining whether an arbitration
decision is "in favor" of one party or the other, if an Indemnitee receives
greater than one-half of its claim in arbitration it shall be deemed to have
been a decision "in favor" of the Indemnitee. If resolution of a Disputed Loss
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Notice is not made within sixty (60) days of the date of the Protest Notice as
provided in this Section 2.5, then the Escrow Agent may, in its sole
discretion, either (i) continue to hold the Escrow Shares undisbursed until
such time as the disputing parties agree in writing as to a proper disposition
of such Escrow Shares, or (ii) if such agreement is not forthcoming, the Escrow
Agent shall be entitled to tender into the registry or custody of any court of
competent jurisdiction all money or property in its hand under the terms of
this Agreement, and, upon the advice of counsel, may take such other legal
action as may be appropriate or necessary, whereupon the parties hereto agree
Escrow Agent shall be discharged from all further duties under this Agreement.
Any such legal action may be brought in any court of competent jurisdiction.
The filing of any such legal proceedings shall not deprive Escrow Agent of its
compensation earned prior to such filing.
2.6 Employment of Counsel. An Indemnitee may employ legal counsel of its
choice and at its expense to conduct and direct the entire defense of any
litigation or claim described in a Loss Notice. Upon the receipt by an
Indemnitee of notice of any such claim contained in a Loss Notice and the
employment by the Indemnitee of counsel to defend any such claim, the
Indemnitee shall notify the Representatives in writing. The Indemnitee shall
be responsible for any attorneys' fees incurred in connection with the defense
of such litigation or claim, subject to its right to reimbursement of such
expenses as provided herein. The Representatives may, at their expense,
participate in the defense of any litigation or claim; provided that control of
any such defense shall be with counsel selected by the Indemnitee.
2.7 Exclusive Remedy. If an Indemnitee incurs an Indemnifiable Loss, the
sole and exclusive means of recovery shall be as set forth in this Agreement
and the escrow established hereunder. Neither the Representatives nor the
Shareholders or Warrant Holders have any obligation or liability to an
Indemnitee beyond the several interest of such Shareholders or Warrant Holders
in the Escrow Shares. Each Indemnitee agrees that if it incurs any
Indemnifiable Loss it will not sue or seek recourse against the Representatives
or the Shareholders or the Warrant Holders, or any of them, other than as
provided in this Agreement.
ARTICLE 3
TERM; EXPIRATION; LIMITS
3.1 Term - General Indemnity. With respect to the indemnification
obligations set forth in Section 2.2 hereof, the term of escrow for the
General Escrow Shares shall commence on the Closing Date of the Merger and
shall terminate upon the earlier to occur of (i) one (1) year after the Closing
Date, or (ii) upon the first publication by PSS of audited consolidated
financial statements covering an accounting period after the Closing Date. PSS
and the Representatives shall provide written notice to the Escrow Agent upon
expiration of the escrow for the General Escrow Shares.
3.2 Term - Specific Indemnity. With respect to the indemnification
obligations set forth in Section 2.3 hereof, the term of escrow for the
Specific Escrow Shares shall commence on the Closing Date of the Merger and
shall terminate with respect to each type of claim indemnified under Section
2.3 hereof upon a final determination that Taylor can incur no Indemnifiable
Loss for an Environmental Claim, a Receivable Claim, a Sales Tax Claim,
Representative Expenses or the Escrow Agent Expenses, as the case may be. PSS
and the Representatives shall provide written notice to the Escrow Agent upon
expiration of the escrow for the Specific Escrow Shares. If, following one (1)
year after the Closing Date, a majority of the Representatives desire to settle
the Environmental Claim, the Receivable Claim or the Sales Tax Claim, then the
Indemnitee shall use its good faith efforts to settle such claim unless in its
reasonable judgment any proposed settlement would be adverse to the
Indemnitee's ongoing business. Any settlement of such claim must be with the
consent of a majority of the Representatives.
3.3 Expiration of Term - No Claim Pending. If at the expiration of an
escrow term provided in Section 3.1 or 3.2 above, either (i) no Loss Notice has
been received with respect to an Indemnifiable Loss covered by the escrow which
term is expiring; or (ii) any Loss Notice that has been received has been
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resolved in accordance with this Agreement; or (iii) no litigation or claim is
pending for which an Indemnitee may be entitled to indemnification
hereunder, the Escrow Agent shall (i) deliver to the transfer agent for PSS
Common Stock for issuance to each Shareholder and Warrant Holder, a certificate
representing the number of shares of PSS Common Stock equal to the aggregate
number of the Escrow Shares subject to the escrow which term is expiring and
then remaining in escrow times the Percentage Interest for such Shareholder or
Warrant Holder, and (ii) deliver to each Shareholder and Warrant Holder, any
Cash times the Percentage Interest for such Shareholder or Warrant Holder. The
Representatives and PSS shall provide written notice to the Escrow Agent which
sets forth the number of Escrow Shares to be delivered as provided in the
foregoing sentence. Any such delivery of PSS Common Stock shall be of full
shares and any fractional portions shall be rounded to a whole number by the
Escrow Agent, with each Shareholder and Warrant Holder receiving one (1) full
share of PSS Common Stock if such fraction is .5 or more, and nothing in
respect thereof if such fraction is less than .5, so that the number of shares
remaining in escrow to be delivered will be fully allocated among such
Shareholders and Warrant Holders.
3.4 Expiration of Term - Claim Pending. If at the expiration of an escrow
term provided in Section 3.1 or 3.2 above, any claim is pending under Section
2.2 or Section 2.3 for which an Indemnitee would be entitled to indemnification
if such claim were resolved adversely to them, then the Escrow Agent shall
retain in such escrow that number of shares of PSS Common Stock as shall equal
the number of Escrow Shares (rounded to the next highest whole number) that,
when multiplied by the Value Per Share, equals the amount set forth by such
Indemnitee in the Loss Notice with respect to such claims (the "Retained
Shares"). The Representatives and PSS shall provide written notice to the
Escrow Agent which sets forth the Retained Shares as determined in the
foregoing sentence. The number of Escrow Shares, less the number of Retained
Shares, shall then be distributed to the Shareholders as set forth in Section
3.3 above. Upon the resolution of any claim for which shares were retained in
escrow at the expiration of the term of this Agreement and receipt of written
notice from PSS and the Representatives to such effect, the Escrow Agent shall
cancel the appropriate number of Retained Shares (if any) and shall distribute
any remaining Retained Shares to the Shareholders as set forth in Section 3.3
above.
3.5 Effect of Final Delivery. Notwithstanding the expiration of the term
of the escrow, this Agreement shall continue in full force and effect until the
Escrow Agent has delivered all of the Escrow Shares pursuant to the terms
hereof. After all of such shares have been so delivered, all rights, duties
and obligations of the respective parties hereunder shall terminate. If any
cash is held in escrow at the expiration of the term of the escrow, such cash
shall be distributed pro rata with the Escrow Shares as provided in Sections
3.3 and 3.4 above.
3.6 Limitations. Notwithstanding anything to the contrary contained in
this Agreement, no Indemnitee may submit a Loss Notice pursuant to Section 2.2
hereof (and no obligation to indemnify shall exist) until the aggregate
Indemnifiable Losses of all Indemnitees hereunder shall equal $50,000 (the
"Deductible Amount"). The Escrow Agent shall have no responsibility to
determine whether Indemnifiable Losses equal or exceed the Deductible Amount.
If and when the sum of all Indemnifiable Losses of all Indemnitees hereunder
equals or exceeds the Deductible Amount, then each Indemnitee may submit a Loss
Notice for all Indemnifiable Losses incurred in excess of the Deductible
Amount.
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ARTICLE 4
ESCROW STOCK CERTIFICATES
The Escrow Agent may at any time request the transfer agent for PSS Common
Stock to issue new certificates representing the Escrow Shares in such
denominations as may be necessary or appropriate in carrying out the Escrow
Agent's obligations under this Agreement.
ARTICLE 5
DIVIDENDS; VOTING RIGHTS
5.1 Cash Dividends; Voting Rights. Any and all cash dividends or other
cash income with respect to the Escrow Shares shall be held in escrow with the
Escrow Shares pursuant to the terms of this Agreement. By written notice
signed by all of the Representatives, the Representatives shall have the right
to direct the Escrow Agent in writing as to the exercise of voting rights with
respect to such Escrow Shares held by the Escrow Agent on behalf of the
Shareholders and Warrant Holders, and the Escrow Agent shall comply with such
directions if received from the Representatives at least five (5) days prior to
the date of the meeting at which such vote is to be taken; provided that all of
the Representatives must notify the Escrow Agent to vote all of the Escrow
Shares in the same manner. In the absence of the unanimous direction of the
Representatives, the Escrow Agent shall not vote any such Escrow Shares.
5.2 Stock Splits; Stock Dividends. In the event of any stock split or
stock dividend with respect to PSS Common Stock that becomes effective during
the term of this Agreement, the additional shares so issued with respect to the
Escrow Shares shall be added to the Escrow Shares and any other references
herein to a specific number of shares of PSS Common Stock and the Value Per
Share shall be adjusted accordingly.
ARTICLE 6
THE ESCROW AGENT
6.1 Liability. In performing any of its duties under this Agreement, or
upon the claimed failure to perform its duties hereunder, Escrow Agent shall
not be liable to anyone for any damages, losses or expenses which they may
incur as a result of the Escrow Agent so acting, or failing to act; provided,
however, that Escrow Agent shall be liable for damages arising out of its
willful default or gross negligence under this Agreement. Accordingly, Escrow
Agent shall not incur any such liability with respect to (i) any action taken
or omitted to be taken in good faith upon advice of its counsel or counsel for
PSS or the Representatives given with respect to any questions relating to the
duties and responsibilities of the Escrow Agent hereunder; or (ii) any action
taken or omitted to be taken in reliance upon any document, including any
written notice or instructions provided for this Agreement, not only as to its
due execution and to the validity and effectiveness of its provisions, but also
as to the truth and accuracy of any information contained therein, which the
Escrow Agent shall in good faith believe to be genuine, to have been signed or
presented by the purported proper person or persons and to conform with the
provisions of this Agreement. Written instructions provided to Escrow Agent
hereunder by PSS and/or the Representatives shall be signed by the Authorized
Representatives as identified on Schedule 2 attached hereto. The limitation of
liability provisions of this Section 6.1 shall survive the termination of this
Agreement and the resignation or removal of the Escrow Agent.
6.2 Indemnification of Escrow Agent. PSS and the Representatives hereby,
jointly and severally, agree to indemnify and hold harmless the Escrow Agent
against any and all losses, claims, damages, liabilities and expenses,
including, without limitation, reasonable costs of investigation and counsel
fees and disbursements (both at the trial and appellate levels) which may be
imposed on Escrow Agent or incurred by it in connection with its acceptance of
this appointment as Escrow Agent hereunder or the performance of its duties
hereunder (except in connection with the willful default or gross negligence of
the Escrow Agent hereunder), including, without limitation, any litigation
arising from this Escrow
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Agreement, or involving the subject matter thereof. The indemnity
provisions of this Section 6.2 shall survive the termination of this Agreement
and the resignation or removal of the Escrow Agent.
6.3 Resignation. The Escrow Agent may resign at any time from its
obligations under this Agreement by providing written notice to the parties
hereto. Such resignation shall be effective not later than sixty (60) days
after such written notice has been given. The Escrow Agent shall have no
responsibility for the appointment of a successor escrow agent. If a successor
escrow agent is not selected within sixty (60) days of the resignation of
Escrow Agent, the Escrow Agent shall have the right to institute a Bill of
Interpleader or any other appropriate judicial proceeding in any court of
competent jurisdiction and shall be entitled to tender into the registry or
custody of any court of competent jurisdiction all money or property in its
hand under the terms of this Agreement, whereupon the parties hereto agree
Escrow Agent shall be discharged from all further duties under this Agreement.
The filing of any such legal proceedings shall not deprive Escrow Agent of its
compensation earned prior to such filing. The Escrow Agent may be removed for
cause by PSS or the Representatives. The removal of the Escrow Agent shall not
deprive the Escrow Agent of its compensation earned prior to such removal.
6.4 Expenses of Escrow Agent. The Representatives (on behalf of the
Shareholders and out of the Escrow Shares, but not personally) and PSS shall
share equally the expenses of the Escrow Agent on the terms set forth herein.
Escrow Agent's fees and expenses are set forth on Schedule 3 attached hereto
and made a part hereof and Escrow Agent shall bill PSS for the amount of such
fees and expenses. PSS shall pay the amount of such fees and expenses to
Escrow Agent, and the one-half of such amount owed by the Representatives,
which constitute the Escrow Agent Expenses, shall constitute an Indemnifiable
Loss pursuant to Section 2.3 hereof. As security for the Escrow Agent Expenses
and any and all losses, claims, damages, liabilities and expenses incurred by
Escrow Agent in connection with its acceptance of appointment hereunder, and
with performance of the agreement herein contained, Escrow Agent is hereby
given a lien upon all assets held by Escrow Agent hereunder, which lien shall
be prior to all other liens or claims against such assets.
ARTICLE 7
REPRESENTATIVES
7.1 Power and Authority. The Representatives shall have full power and
authority to represent the Shareholders and their successors with respect to
all matters arising under this Agreement, and all action taken by the
Representatives hereunder shall be binding upon such Shareholders and their
successors as if expressly ratified and confirmed in writing by each of them.
Without limiting the generality of the foregoing, the Representatives shall
have full power and authority, on behalf of all the Shareholders and their
successors, to interpret all the terms and provisions of this Agreement, to
dispute or fail to dispute any claim of Indemnifiable Loss against the Escrow
Shares made by an Indemnitee, to negotiate and compromise any dispute which may
arise under this Agreement, to sign any releases or other documents with
respect to any such dispute, and to authorize payments to be made with respect
thereto. All determinations of the Representatives shall be decided by a
majority thereof.
7.2 Resignation; Successors. A Representative, or any successor hereafter
appointed, may resign and shall be discharged of his duties hereunder upon the
appointment of a successor Representative as hereinafter provided. In case of
such resignation, or in the event of the death or inability to act of a
Representative, a successor shall be named from among the Shareholders by a
majority of the members of the Board of Directors of Taylor who served on such
board prior to the Merger. Each such successor Representative shall have all
the power, authority, rights and privileges hereby conferred upon the original
Representatives, and the term "Representatives" as used herein shall be deemed
to include such successor Representative or Representatives.
7.3 Liability. In performing any of their duties under this Agreement, or
upon the claimed failure to perform their duties hereunder, the Representatives
shall not be liable to anyone for any damages, losses or expenses which they
may incur as a result of any act, or failure to act under this Agreement;
provided,
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however, that the Representatives shall be liable for damages arising out of
their willful default or gross negligence under this Agreement. Accordingly,
the Representatives shall not incur any such liability with respect to (i) any
action taken or omitted to be taken in good faith upon advice of their counsel
given with respect to any questions relating to the duties and responsibilities
of the Representatives hereunder; or (ii) any action taken or omitted to be
taken in reliance upon any document, including any written notice or
instructions provided for in this Agreement, not only as to its due execution
and to the validity and effectiveness of its provisions, but also as to the
truth and accuracy of any information contained therein, which the
Representatives shall in good faith believe to be genuine, to have been signed
or presented by the purported proper person or persons and to conform with the
provisions of this Agreement. The limitation of liability provisions of this
Section 7.3 shall survive the termination of this Agreement and the resignation
of any or all of the Representatives.
7.4 Indemnification of Representatives. PSS shall indemnify and hold
harmless the Representatives from and against any Loss (as such term is defined
in Section 2.1(k) hereof) incurred in connection with the performance of his
duties hereunder, including the advancement of expenses incurred in connection
with investigating or defending any claim or action. The indemnity provisions
of this Section 7.4 shall survive the termination of this Agreement and the
resignation of any or all of the Representatives.
7.5 Representative Expenses. PSS shall pay any Representative Expenses in
amount up to $225,000, which amounts shall constitute an Indemnifiable Loss
pursuant to Section 2.3 hereof.
ARTICLE 8
MISCELLANEOUS
8.1 Transferability. The contingent right to receive Escrow Shares shall
not be transferable by the Shareholders otherwise than by will or by the laws
of descent and distribution.
8.2 Notices. Each party shall keep each of the other parties hereto
advised in writing of all transactions pursuant to this Agreement. Any notices
or other communications required or permitted under this Agreement shall be in
writing and shall be sufficiently given if sent by registered or certified
mail, postage prepaid, addressed as follows, or if sent by facsimile to the
facsimile numbers identified below:
If to PSS or Merger Corp.:
Physician Sales & Service, Inc.
7800 Belfort Parkway, Suite 250
Jacksonville, Florida 32256
Attn: Mr. Patrick C. Kelly
Tel: (904) 281-0011
Facsimile: (904) 281-9555
with a copy to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attn: J. Vaughan Curtis, Esq.
Tel: (404) 881-7397
Facsimile: (404) 881-7777
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If to Representatives:
Mr. Todd D. Christopher
Mr. David C. Wetherill
Mr. Philip A. Tuttle
c/o Mr. Todd D. Christopher
Taylor Medical, Inc.
2155 IH-10 East
Beaumont, Texas 77701
Telecopy number: (409) 832-1879
If to Escrow Agent:
NationsBank of Georgia, National Association
Corporate Trust Administration
600 Peachtree Street - Suite 900
Atlanta, Georgia 30308
or such other person or address as shall be furnished in writing by any of the
parties and any such notice or communication shall be deemed to have been given
as of the date so mailed.
8.3 Construction. The validity, enforcement and construction of this
Agreement shall be governed by the laws of the State of Georgia, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
8.4 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legatees, assigns and
transferees, as the case may be. Escrow Agent shall be bound only by the terms
of this Agreement and shall not be bound by or incur liability with respect to
the Merger Agreement or any other agreement or understanding between PSS and
the Shareholders. The Escrow Agent shall not be charged with notice or
knowledge of any such ancillary document, fact or information not specifically
set forth herein. The Escrow Agent shall undertake to perform only such duties
as are expressly set forth herein and no additional or implied duties or
obligations shall be read into this Agreement against the Escrow Agent.
8.5 Separability. If any provision or section of this Agreement is
determined to be void or otherwise unenforceable, it shall not affect the
validity or enforceability of any other provisions of this Agreement which
shall remain enforceable in accordance with their terms.
8.6 Headings. The headings and subheadings contained in this Agreement
are for reference only and for the benefit of the parties and shall not be
considered in the interpretation or construction of this Agreement.
8.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument
8.8 Amendments. This Agreement may be amended from time to time but only
by written agreement signed by all of the parties hereto.
8.9 Third Party Beneficiaries. Taylor and Merger Corp. are expressly
intended to be third party beneficiaries of the indemnities and obligations of
the Representatives as if they were parties to this Agreement.
[Signatures Contained on Next Page]
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IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of
the day and year first above written.
PHYSICIAN SALES & SERVICE, INC.
By:_______________________________
Patrick C. Kelly,
Chairman of the Board, President
and Chief Executive Officer
"ESCROW AGENT"
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION
By: ________________________________
Title: _____________________________
"REPRESENTATIVES"
____________________________________
Todd D. Christopher
____________________________________
David C. Wetherill
____________________________________
Philip A. Tuttle
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Exhibit 8.10
AFFILIATE AGREEMENT
Physician Sales & Service, Inc.
7800 Belfort Parkway, Suite 250
Jacksonville, Florida 32256
Attention: Mr. Patrick C. Kelly
Mr. David A. Smith
Gentlemen:
The undersigned is a shareholder of Taylor Medical, Inc. ("Taylor"), a
corporation organized and existing under the laws of the State of Delaware, and
will become a shareholder of Physician Sales & Service, Inc. ("PSS") pursuant
to the transactions described in that certain Third Amended and Restated
Agreement and Plan of Merger, dated as of July 12, 1995 (the "Agreement"), by
and among PSS, PSS Merger Corp. ("Merger Corp.") and Taylor. Capitalized terms
used herein that are not defined herein shall have the same meaning as ascribed
in the Agreement. Under the terms of the Agreement, Merger Corp. will be
merged with and into Taylor (the "Merger"), and the shares of Taylor Capital
Stock, Taylor Options and Taylor Warrants will be converted into and exchanged
for shares of PSS Common Stock or rights with respect thereto. This Affiliate
Agreement represents an agreement between the undersigned and PSS regarding
certain rights and obligations of the undersigned in connection with the shares
of PSS to be received by the undersigned in connection with the Merger.
In consideration of the Merger and the mutual covenants contained
herein, the undersigned and PSS hereby agree as follows:
1. Affiliate Status. The undersigned understands that as to Taylor he
is an "affiliate" under Rule 145(c) as defined in Rule 405 of the Rules and
Regulations of the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended ("1933 Act"), and the undersigned
anticipates that he will be such an "affiliate" at the time of the Merger.
2. Initial Restriction on Disposition. The undersigned agrees that he
will not sell, transfer, or otherwise dispose of his interests in, or reduce
his risk relative to, any of the shares of PSS Common Stock into which his
shares of Taylor Capital Stock or Taylor Warrants are converted upon
consummation of the Merger until such time as PSS notifies the undersigned that
the requirements of SEC Accounting Series Release Nos. 130 and 135 ("ASR 130
and 135") have been met. The undersigned understands that ASR 130 and 135
relate to publication of financial results of post-Merger combined operations
of PSS and Taylor. PSS agrees to comply with ASR 130 and 135 and so advise the
undersigned as soon as reasonably practicable.
3. Covenants and Warranties of Undersigned. The undersigned
represents, warrants and agrees that:
(a) During the 30 days immediately preceding the Effective Time of the
Merger, the undersigned has not sold, transferred, or otherwise disposed of
his interests in, or reduced his risk relative to, any of the shares of
Taylor Capital Stock beneficially owned by the undersigned as of the date
of the Shareholders' Meeting of Taylor held to approve the Merger, except
for any pledges of such Taylor Capital Stock existing prior to such 30-day
period as disclosed on Schedule 1 hereto. In the event of any such pledge,
the undersigned will use his commercially reasonable efforts to obtain an
agreement from any such pledgee to abide by the terms of this Agreement.
59
(b) The PSS Common Stock received by the undersigned as a result of
the Merger will be taken for his or its own account pursuant to the
provisions of the undersigned's partnership, if the undersigned is a
partnership, and not for others, directly or indirectly, in whole or in
part, except for the pledge of any such shares as replacement for shares of
Taylor Capital Stock as disclosed on Schedule 1.
(c) PSS has informed the undersigned that shares of PSS Common Stock
received pursuant to the Merger can only be sold by the undersigned (1)
following registration under the 1933 Act, or (2) in conformity with the
volume and other requirements of Rule 145(d) promulgated by the SEC as the
same now exist or may hereafter be amended, if applicable, or (3) to the
extent some other exemption from registration under the 1933 Act might be
available.
(d) The undersigned is aware that PSS has agreed and shall treat the
Merger as a tax-free reorganization under Section 368 of the Internal
Revenue Code ("Code") for federal income tax purposes. The undersigned
acknowledges that Section 1.368-1(b) of the Income Tax Regulations requires
"continuity of interest" in order for the Merger to be treated as tax-free
under Section 368 of the Code. This requirement is satisfied if, taking
into account those Taylor shareholders who receive cash in exchange for
their stock, who receive cash in lieu of fractional shares, or who dissent
from the Merger, there is no plan or intention on the part of the Taylor
shareholders to sell or otherwise dispose of the PSS Common Stock to be
received in the Merger that will reduce such shareholders' ownership to a
number of shares having, in the aggregate, a value at the time of the
merger of less than 50% of the total fair market value of the Taylor
Capital Stock outstanding immediately prior to the Merger. The undersigned
has no prearrangement, plan or intention to sell or otherwise dispose of an
amount of his PSS Common Stock to be received in the Merger which would
cause the foregoing requirement not to be satisfied; provided that, and
subject to compliance with the terms of Section 4 below, if the undersigned
is a partnership, the undersigned may distribute such PSS Common Stock to
its partners pursuant to its partnership agreement. If the undersigned is
a partnership it is not aware that any of its partners has any
pre-arrangement, plan or intention to sell or otherwise dispose of such
distributed stock which would cause the foregoing requirement not to be
satisfied. The undersigned further understands that the requirements
referred to in this paragraph (d) shall not apply to any PSS Common Stock
received in the Merger in respect of Taylor Options or Taylor Warrants and
that the statements in this paragraph (d) accordingly do not apply to PSS
Common Stock received in the Merger in respect of Taylor Options or Taylor
Warrants.
4. Restrictions on Transfer. The undersigned understands and agrees
that stop transfer instructions with respect to the shares of PSS Common Stock
received by the undersigned pursuant to the Merger will be given to PSS's
Transfer Agent and that there will be placed on the certificates for such
shares, or shares issued in substitution thereof, a legend stating in
substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is accounted for as a "pooling of
interests" and may not be sold, nor may the owner thereof reduce his
risks relative thereto in any way, until such time as Physician Sales
& Service, Inc. ("PSS") has published the financial results covering
at least 30 days of combined operations after the effective date of
the merger through which the business combination was effected. In
addition, the shares represented by this certificate may not be sold,
transferred or otherwise disposed of except or unless (1) covered by
an effective registration statement under the Securities Act of 1933,
as amended, (2) in accordance with (i) Rule 145(d) (in the case of
shares issued to an individual who is not an affiliate of PSS) or (ii)
Rule 144 (in the case of shares issued to an individual who is an
affiliate of PSS) of the Rules and Regulations of such Act, or (3) in
accordance with a legal opinion satisfactory to counsel for PSS that
such sale or transfer is otherwise exempt from the registration
requirements of such Act."
Such legend will also be placed on any certificate representing PSS securities
issued subsequent to the original issuance of the PSS Common Stock pursuant to
the Merger as a result of any stock dividend, stock
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60
split, or other recapitalization as long as the PSS Common Stock issued to the
undersigned pursuant to the Merger has not been transferred in such manner to
justify the removal of the legend therefrom. Upon the request of the
undersigned, PSS shall cause the certificates representing the shares of PSS
Common Stock issued to the undersigned in connection with the Merger to be
reissued free of any legend relating to restrictions on transfer by virtue of
ASR 130 and 135 as soon as practicable after the requirements of ASR 130 and
135 have been met, and at such time, if the undersigned is a partnership, the
undersigned may transfer and distribute such shares to its partners in
accordance with its partnership agreement, and upon such transfer PSS will
issue certificates representing such shares registered in the respective names
of such partners, subject to other applicable provisions of this Agreement but
free of restrictive legends referring to Rule 145(d) if, in the opinion of
PSS's counsel, such shares are no longer subject to Rule 145(d). In addition,
if the provisions of Rules 144 and 145 are amended to eliminate restrictions
applicable to the PSS Common Stock received by the undersigned pursuant to the
Merger, or at the expiration of the restrictive period set forth in Rule
145(d), or upon registration of any such shares, PSS, upon the request of the
undersigned, will cause the certificates representing the shares of PSS Common
Stock issued to the undersigned in connection with the Merger to be reissued
free of any legend relating to the restrictions set forth in Rules 144 and
145(d) upon receipt by PSS of an opinion of its counsel to the effect that such
legend may be removed.
5. Understanding of Restrictions on Dispositions. The undersigned has
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon his ability to sell, transfer, or otherwise
dispose of the shares of PSS Common Stock received by the undersigned, to the
extent he believes necessary, with his counsel or counsel for Taylor.
6. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of PSS Common Stock received by him in connection
with the Merger at any time during the restrictive period set forth in Rule
145(d), the undersigned will provide the necessary representation letter in
customary form to the transfer agent for PSS Common Stock together with such
additional information as the transfer agent may reasonably request. If PSS's
counsel concludes that such proposed sale or transfer complies with the
requirements of Rule 145(d), PSS shall cause such counsel to provide, at PSS'
expense, such opinions as may be necessary to PSS's Transfer Agent so that the
undersigned may complete the proposed sale or transfer.
7. Acknowledgments. The undersigned recognizes and agrees that the
foregoing provisions also apply to (i) the undersigned's spouse, (ii) any
relative of the undersigned or of the undersigned's spouse who has the same
home as the undersigned, (iii) any trust or estate in which the undersigned,
the undersigned's spouse, and any such relative collectively own at least a 10%
beneficial interest or of which any of the foregoing serves as trustee,
executor, or in any similar capacity, and (iv) any corporation or other
organization in which the undersigned, the undersigned's spouse and any such
relative collectively own at least 10% of any class of equity securities or of
the equity interest.
8. Miscellaneous. This Affiliate Agreement is the complete agreement
between PSS and the undersigned concerning the subject matter hereof. Any
notice required to be sent to any party hereunder shall be sent by registered
or certified mail, return receipt requested, using the addresses set forth
herein or such other address as shall be furnished in writing by the parties.
This Affiliate Agreement shall be governed by the laws of the State of
Delaware.
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61
This Affiliate Agreement is executed as of the ___ day of _____, 1995.
Very truly yours,
___________________________
___________________________
___________________________
___________________________
Address
AGREED TO AND ACCEPTED as of
___________, 1995
PHYSICIAN SALES & SERVICE, INC.
By:_________________________
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AFFILIATE AGREEMENT
Physician Sales & Service, Inc.
7800 Belfort Parkway, Suite 250
Jacksonville, Florida 32256
Attention: Mr. Patrick C. Kelly
Mr. David A. Smith
Gentlemen:
The undersigned is a shareholder of Taylor Medical, Inc. ("Taylor"), a
corporation organized and existing under the laws of the State of Delaware, and
will become a shareholder of Physician Sales & Service, Inc. ("PSS") pursuant
to the transactions described in that certain Third Amended and Restated
Agreement and Plan of Merger, dated as of July 12, 1995 (the "Agreement"), by
and among PSS, PSS Merger Corp. ("Merger Corp.") and Taylor. Capitalized terms
used herein that are not defined herein shall have the same meaning as ascribed
in the Agreement. Under the terms of the Agreement, Merger Corp. will be
merged with and into Taylor (the "Merger"), and the shares of Taylor Capital
Stock, Taylor Options and Taylor Warrants will be converted into and exchanged
for shares of PSS Common Stock or rights with respect thereto. This Affiliate
Agreement represents an agreement between the undersigned and PSS regarding
certain rights and obligations of the undersigned in connection with the shares
of PSS to be received by the undersigned in connection with the Merger.
In consideration of the Merger and the mutual covenants contained
herein, the undersigned and PSS hereby agree as follows:
1. Affiliate Status. The undersigned understands that as to Taylor he
is an "affiliate" under Rule 145(c) as defined in Rule 405 of the Rules and
Regulations of the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended ("1933 Act"), and the undersigned
anticipates that he will be such an "affiliate" at the time of the Merger.
2. Initial Restriction on Disposition. The undersigned agrees that he
will not sell, transfer, or otherwise dispose of his interests in, or reduce
his risk relative to, any of the shares of PSS Common Stock into which his
shares of Taylor Capital Stock or Taylor Warrants are converted upon
consummation of the Merger until such time as PSS notifies the undersigned that
the requirements of SEC Accounting Series Release Nos. 130 and 135 ("ASR 130
and 135") have been met. The undersigned understands that ASR 130 and 135
relate to publication of financial results of post-Merger combined operations
of PSS and Taylor. PSS agrees to comply with ASR 130 and 135 and so advise the
undersigned as soon as reasonably practicable.
3. Covenants and Warranties of Undersigned. The undersigned
represents, warrants and agrees that:
(a) During the 30 days immediately preceding the Effective Time of the
Merger, the undersigned has not sold, transferred, or otherwise disposed of
his interests in, or reduced his risk relative to, any of the shares of
Taylor Capital Stock beneficially owned by the undersigned as of the date
of the Shareholders' Meeting of Taylor held to approve the Merger, except
for any pledges of such Taylor Capital Stock existing prior to such 30-day
period as disclosed on Schedule 1 hereto. In the event of any such pledge,
the undersigned will use his commercially reasonable efforts to obtain an
agreement from any such pledgee to abide by the terms of this Agreement.
63
(b) The PSS Common Stock received by the undersigned as a result of
the Merger will be taken for his or its own account pursuant to the
provisions of the undersigned's partnership, if the undersigned is a
partnership, and not for others, directly or indirectly, in whole or in
part, except for the pledge of any such shares as replacement for shares of
Taylor Capital Stock as disclosed on Schedule 1.
(c) PSS has informed the undersigned that shares of PSS Common Stock
received pursuant to the Merger can only be sold by the undersigned (1)
following registration under the 1933 Act, or (2) in conformity with the
volume and other requirements of Rule 145(d) promulgated by the SEC as the
same now exist or may hereafter be amended, if applicable, or (3) to the
extent some other exemption from registration under the 1933 Act might be
available.
(d) The undersigned is aware that PSS has agreed and shall treat the
Merger as a tax-free reorganization under Section 368 of the Internal
Revenue Code ("Code") for federal income tax purposes. The undersigned
acknowledges that Section 1.368-1(b) of the Income Tax Regulations requires
"continuity of interest" in order for the Merger to be treated as tax-free
under Section 368 of the Code. This requirement is satisfied if, taking
into account those Taylor shareholders who receive cash in exchange for
their stock, who receive cash in lieu of fractional shares, or who dissent
from the Merger, there is no plan or intention on the part of the Taylor
shareholders to sell or otherwise dispose of the PSS Common Stock to be
received in the Merger that will reduce such shareholders' ownership to a
number of shares having, in the aggregate, a value at the time of the
merger of less than 50% of the total fair market value of the Taylor
Capital Stock outstanding immediately prior to the Merger. The undersigned
has no prearrangement, plan or intention to sell or otherwise dispose of an
amount of his PSS Common Stock to be received in the Merger which would
cause the foregoing requirement not to be satisfied; provided that, and
subject to compliance with the terms of Section 4 below, if the undersigned
is a partnership, the undersigned may distribute such PSS Common Stock to
its partners pursuant to its partnership agreement. If the undersigned is
a partnership it is not aware that any of its partners has any
pre-arrangement, plan or intention to sell or otherwise dispose of such
distributed stock which would cause the foregoing requirement not to be
satisfied. The undersigned further understands that the requirements
referred to in this paragraph (d) shall not apply to any PSS Common Stock
received in the Merger in respect of Taylor Options or Taylor Warrants and
that the statements in this paragraph (d) accordingly do not apply to PSS
Common Stock received in the Merger in respect of Taylor Options or Taylor
Warrants.
4. Restrictions on Transfer. The undersigned understands and agrees
that stop transfer instructions with respect to the shares of PSS Common Stock
received by the undersigned pursuant to the Merger will be given to PSS's
Transfer Agent and that there will be placed on the certificates for such
shares, or shares issued in substitution thereof, a legend stating in
substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is accounted for as a "pooling of
interests" and may not be sold, nor may the owner thereof reduce his
risks relative thereto in any way, until such time as Physician Sales
& Service, Inc. ("PSS") has published the financial results covering
at least 30 days of combined operations after the effective date of
the merger through which the business combination was effected. In
addition, the shares represented by this certificate may not be sold,
transferred or otherwise disposed of except or unless (1) covered by
an effective registration statement under the Securities Act of 1933,
as amended, (2) in accordance with (i) Rule 145(d) (in the case of
shares issued to an individual who is not an affiliate of PSS) or (ii)
Rule 144 (in the case of shares issued to an individual who is an
affiliate of PSS) of the Rules and Regulations of such Act, or (3) in
accordance with a legal opinion satisfactory to counsel for PSS that
such sale or transfer is otherwise exempt from the registration
requirements of such Act."
Such legend will also be placed on any certificate representing PSS securities
issued subsequent to the original issuance of the PSS Common Stock pursuant to
the Merger as a result of any stock dividend, stock
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split, or other recapitalization as long as the PSS Common Stock issued to the
undersigned pursuant to the Merger has not been transferred in such manner to
justify the removal of the legend therefrom. Upon the request of the
undersigned, PSS shall cause the certificates representing the shares of PSS
Common Stock issued to the undersigned in connection with the Merger to be
reissued free of any legend relating to restrictions on transfer by virtue of
ASR 130 and 135 as soon as practicable after the requirements of ASR 130 and
135 have been met, and at such time, if the undersigned is a partnership, the
undersigned may transfer and distribute such shares to its partners in
accordance with its partnership agreement, and upon such transfer PSS will
issue certificates representing such shares registered in the respective names
of such partners, subject to other applicable provisions of this Agreement but
free of restrictive legends referring to Rule 145(d) if, in the opinion of
PSS's counsel, such shares are no longer subject to Rule 145(d). In addition,
if the provisions of Rules 144 and 145 are amended to eliminate restrictions
applicable to the PSS Common Stock received by the undersigned pursuant to the
Merger, or at the expiration of the restrictive period set forth in Rule
145(d), or upon registration of any such shares, PSS, upon the request of the
undersigned, will cause the certificates representing the shares of PSS Common
Stock issued to the undersigned in connection with the Merger to be reissued
free of any legend relating to the restrictions set forth in Rules 144 and
145(d) upon receipt by PSS of an opinion of its counsel to the effect that such
legend may be removed.
5. Understanding of Restrictions on Dispositions. The undersigned has
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon his ability to sell, transfer, or otherwise
dispose of the shares of PSS Common Stock received by the undersigned, to the
extent he believes necessary, with his counsel or counsel for Taylor.
6. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of PSS Common Stock received by him in connection
with the Merger at any time during the restrictive period set forth in Rule
145(d), the undersigned will provide the necessary representation letter in
customary form to the transfer agent for PSS Common Stock together with such
additional information as the transfer agent may reasonably request. If PSS's
counsel concludes that such proposed sale or transfer complies with the
requirements of Rule 145(d), PSS shall cause such counsel to provide, at PSS'
expense, such opinions as may be necessary to PSS's Transfer Agent so that the
undersigned may complete the proposed sale or transfer.
7. Acknowledgments. The undersigned recognizes and agrees that the
foregoing provisions also apply to (i) the undersigned's spouse, (ii) any
relative of the undersigned or of the undersigned's spouse who has the same
home as the undersigned, (iii) any trust or estate in which the undersigned,
the undersigned's spouse, and any such relative collectively own at least a 10%
beneficial interest or of which any of the foregoing serves as trustee,
executor, or in any similar capacity, and (iv) any corporation or other
organization in which the undersigned, the undersigned's spouse and any such
relative collectively own at least 10% of any class of equity securities or of
the equity interest.
8. Miscellaneous. This Affiliate Agreement is the complete agreement
between PSS and the undersigned concerning the subject matter hereof. Any
notice required to be sent to any party hereunder shall be sent by registered
or certified mail, return receipt requested, using the addresses set forth
herein or such other address as shall be furnished in writing by the parties.
This Affiliate Agreement shall be governed by the laws of the State of
Delaware.
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This Affiliate Agreement is executed as of the ___ day of _____, 1995.
Very truly yours,
___________________________________
By:________________________________
Name:___________________________
Title:__________________________
AGREED TO AND ACCEPTED as of
___________, 1995
PHYSICIAN SALES & SERVICE, INC.
By:____________________________
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Exhibit 8.12
STOCKHOLDERS AGREEMENT
(Individual)
THIS STOCKHOLDERS AGREEMENT, dated as of April 9, 1995 (this
"Agreement"), is made and entered into by and among Physician Sales &
Service, Inc., a Florida corporation ("PSS"), Taylor Medical, Inc., a
Delaware corporation ("Taylor") and the other parties signatory hereto
(each a "Stockholder").
Preamble
The Stockholder desires that PSS, PSS Merger Corp., a wholly owned
subsidiary of PSS ("Merger Corp."), and Taylor enter into an Agreement
and Plan of Merger dated the date hereof (as the same may be amended or
supplemented, the "Merger Agreement") with respect to the merger of
Merger Corp. with and into Taylor (the "Merger"), with the result that
Taylor becomes a wholly owned subsidiary of PSS. The Stockholder is
executing this Agreement as an inducement to PSS to enter into and
execute, and to cause Merger Corp. to enter into and execute, the Merger
Agreement.
All capitalized terms used herein which are not defined herein
shall have the same meanings as ascribed to them in the Merger
Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by
PSS and Merger Corp. of the Merger Agreement and the mutual covenants,
conditions and agreements contained herein and therein, the parties
agree as follows:
1. Representations and Warranties. The Stockholder severally and
not jointly represents and warrants to PSS as follows:
(a) Except as set forth on Schedule 1 hereto, the Stockholder
is the record and beneficial owner of the Taylor Capital Stock
(which includes all shares which may be acquired upon the exercise
of any Taylor Option or Taylor Warrant whether presently
exercisable or not) set forth on Schedule 1 to this Agreement
(such Stockholder's "Shares"). Except for the Stockholder's
Shares and any other shares of Taylor Capital Stock into which
they may be converted or for which they may be exercised or
issuable upon the exercise of options or warrants owned by the
Stockholder, the Stockholder is not the record or beneficial owner
of any shares of Taylor Capital Stock. This Agreement has been
duly authorized, executed and delivered by, and constitutes a
valid and binding agreement of, the Stockholder, enforceable in
accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency or similar laws affecting
creditors rights generally or the availability of equitable
remedies.
(b) Subject to the foregoing sentence, neither the execution
and delivery of this Agreement nor the consummation by the
Stockholder of the transactions contemplated hereby will result in
a violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement, understanding, arrangement
or restriction of any kind to which the Stockholder is a party or
bound or to which the Stockholder's Shares are subject. Except as
set forth on Schedule 1 hereto, consummation by the Stockholder of
the transactions contemplated hereby will not violate, or require
any consent, approval, or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation
applicable to the Stockholder or the Stockholder's Shares.
(c) Except as set forth on Schedule 1 hereto, such
Stockholder's Shares and the certificates representing such Shares
are now and at all times during the term hereof will be held by
such Stockholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or
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agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder.
(d) No broker, investment banker, financial adviser or other
person is entitled to any broker's, finder's, financial adviser's
or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by
or on behalf of the Stockholder in his capacity as such.
(e) The Stockholder understands and acknowledges that PSS is
entering into, and causing Merger Corp. to enter into, the Merger
Agreement in reliance upon the Stockholder's execution and deliver
of this Agreement. The Stockholder acknowledges that the
irrevocable proxy set forth in Section 4 is granted in
consideration for the execution and deliver of the Merger
Agreement by PSS and Merger Corp.
2. Voting Agreements. The Stockholder severally agrees with, and
covenants to, PSS as follows:
(a) At any meeting of stockholders of Taylor called to vote
upon the Merger, the Merger Agreement, and any other matters
related thereto, or at any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the
Stockholder shall vote (or cause to be voted) the Stockholder's
Shares in favor of the Merger, the execution and deliver by Taylor
of the Merger Agreement and the approval of the terms thereof and
each of the other transactions contemplated by the Merger
Agreement, including approval of the Escrow Agreement and
appointment of the Representative, provided that the terms of the
Merger Agreement shall not have been amended to reduce the
consideration payable in the Merger to a lesser amount of PSS
Common Stock or otherwise to materially and adversely impair the
Stockholder's rights or increase the Stockholder's obligations
thereunder.
(b) At any meeting of stockholders of Taylor or at any
adjournment thereof or in any other circumstances upon which their
vote, consent or other approval is sought, the Stockholder shall
vote (or cause to be voted) such Stockholder's Shares against (i)
any merger agreement or merger (other than the Merger Agreement
and the Merger), consolidation, combination, sale of substantially
all of the assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by Taylor or (ii) any amendment of
Taylor's Certificate of Incorporation or By-laws or other proposal
or transaction involving Taylor or any of its subsidiaries which
amendment or other proposal or transaction would in any manner
impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the
Merger Agreement (each of the foregoing in clause (i) or (ii)
above, a "Competing Transaction").
3. Covenants. The Stockholder severally agrees with, and covenants
to, PSS as follows:
(a) The Stockholder shall not (i) transfer (which term shall
include, without limitation, for the purposes of this Agreement, any sale,
gift, pledge, or consent to any transfer of), any or all of the
Stockholder's Shares or any interest therein, except pursuant to the
Merger; (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares or
any interest therein, (iii) grant any proxy, power of attorney or other
authorization in or with respect to such Shares, except for this Agreement
or (iv) deposit such Shares into a voting trust or enter into a voting
agreement or arrangement with respect to such Shares; provided, that the
Stockholder may transfer (as defined above) any of the Stockholder's
Shares to any other person who is on the date hereof, or to any family
member of a person or charitable institution which prior to the
Stockholders Meeting and prior to such transfer becomes, a party to this
Agreement bound by all the obligations of the "Stockholder"
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hereunder; provided, however, that the Stockholder shall not transfer
any of the Stockholder's Shares pursuant to the preceding proviso and
shall not transfer any other shares of Taylor Capital Stock if any such
transfer, either alone or in the aggregate with other transfers by other
persons who may be affiliates of Taylor, would preclude PSS's ability to
account for the business combination to be effected by the Merger as a
pooling of interests.
(b) If a majority of the holders of Taylor Capital Stock
approve the Merger and the Merger Agreement, the Stockholder's
Shares shall, pursuant to the terms of the Merger Agreement, be
exchanged for the consideration provided in the Merger Agreement.
The Stockholder hereby waives any rights of appraisal, or rights
to dissent from the Merger, that such Stockholder may have.
(c) The Stockholder shall not, nor shall it cause any
investment banker. attorney or other adviser or representative of
the Stockholder ( and it shall so instruct any such person) to,
directly or indirectly, (i) solicit, initiate or encourage the
submission of, any takeover proposal or (ii) participate in any
discussions or negotiations regarding, or furnish to any person
any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any
takeover proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the
preceding sentence by an investment banker, attorney or other
adviser or representative of the Stockholder, whether or not such
person is purporting to act on behalf of the Stockholder or
otherwise, shall be deemed to be in violation of this Section 3(c)
by the Stockholder. For all purposes hereof, "takeover proposal"
means any proposal for a merger or other business combination
involving Taylor or any of its subsidiaries or any proposal or
offer to acquire in any manner, directly or indirectly an equity
interest in any voting securities of, or a substantial portion of
the assets of Taylor or any of its subsidiaries, other than the
Merger and the other transactions contemplated by the Merger
Agreement and other than any transfer expressly permitted by the
proviso to Section 3(a).
4. Grant of irrevocable Proxy; Appointment of Proxy.
(a) The Stockholder hereby irrevocably grants to, and
appoints, PSS and Patrick C. Kelly, President and Chairman of the
Board of PSS, and David A. Smith, Vice President and Chief
Financial Officer of PSS, in their respective capacities as
officers of PSS, and any individual who shall hereafter succeed to
any such office of PSS, and each of them individually, the
Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of the
Stockholder, to vote the Stockholder's Shares, or grant a consent
or approval in respect of such Shares (i) in favor of the Merger;
the execution and delivery of the Merger Agreement and approval of
the terms thereof, the appointment of the Shareholder
Representative as provided in the Merger Agreement, and each of
the other transactions contemplated by the Merger Agreement,
provided that the terms of the Merger Agreement shall not have
been amended to reduce the consideration payable in the Merger to
a lesser amount of PSS Common Stock or otherwise to adversely
impair the Stockholder's rights or increase the Stockholder's
obligations thereunder, whether in his capacity as a stockholder
or in any other capacity, and (ii) against any Competing
Transaction.
(b) Except as set forth on Schedule 1 hereto, the Stockholder
represents that any proxies heretofore given in respect of the
Stockholder's shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) The Stockholder hereby affirms that the irrevocable proxy
set forth in this Section 4 is given in connection with the
execution of the Merger Agreement, and that such irrevocable proxy
is given to secure the performance of the duties of the
Stockholder under this Agreement. The Stockholder hereby further
affirms that the irrevocable proxy is coupled with an
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interest and may under no circumstances be revoked. The Stockholder
hereby ratifies and confirms all that such irrevocable proxy may lawfully
do or cause to be done by virtue hereof
5. Certain Events. The Stockholder agrees that this Agreement and
the obligations hereunder shall attach to the Stockholder's Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or
otherwise, including without limitation the Stockholder's successors or
assigns. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital
structure of Taylor affecting the Taylor Capital Stock, or the
acquisition of additional shares of Taylor Capital Stock or other voting
securities of Taylor by any Stockholder, the number of Shares subject to
the terms of this Agreement shall be adjusted appropriately and this
Agreement and the obligations hereunder shall attach to any additional
shares of Taylor Capital Stock or other voting securities of Taylor
issued to or acquired by the Stockholder.
6. Stop Transfer. Taylor agrees with, and covenants to, PSS that
Taylor shall not register the transfer of any certificate representing
any of the Stockholder's Shares, unless such transfer is made to PSS or
otherwise in compliance with this Agreement.
7. Further Assurances. The Stockholder shall, upon request of PSS,
execute and deliver any additional documents and take such further
actions as may reasonably be deemed by PSS to be necessary or desirable
to carry out the provisions hereof and to vest the power to vote such
Stockholder's Shares as contemplated by Section 4 in PSS and the other
irrevocable proxies described therein at the expense of PSS.
8. Termination. This Agreement, and all rights and obligations of
the parties hereunder; including without limitation, the proxy set forth
in Section 4, shall terminate upon the first to occur of (i) the
Effective Time of the Merger or (ii) the date upon which the Merger
Agreement is terminated in accordance with its terms, provided that if
an "Extension Event" shall have occurred as of or prior to termination
of the Merger Agreement, then, for a period of one year following such
termination, (i) the rights and obligations of the parties hereto under
Sections 2(b), 3(c), 4(a)(ii) and 5 hereof shall continue in full force
and effect and (ii) the Stockholder shall not transfer any or all of the
Stockholder's Shares in connection with any Competing Transaction or
takeover proposal. For purposes of the foregoing, an "Extension Event"
shall mean any of the following events: (A) the stockholders meeting to
approve the Merger Agreement shall not have been held or the approval of
the Merger at such meeting by the holders of a majority of the
outstanding shares of Taylor Capital Stock shall not have been obtained,
or (B) any person (other than PSS or any subsidiary of PSS) shall have
made, or disclosed an intention to make, a takeover proposal or proposal
for a Competing Transaction.
9. Miscellaneous.
(a) All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice): (i) if to PSS,
to the address set forth in Section 11.8 of the Merger Agreement; and
(ii) if to the Stockholder, to the address shown on the signature page
hereof
(b) The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(c) This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same
agreement.
(d) This Agreement (including the documents and instruments
referred to herein)
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constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect
to the subject matter hereof
(e) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles
of conflicts of laws thereof
(f) Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or
in part, by operation of law or otherwise, by any of the parties
without the prior written consent of the other parties, except as
expressly contemplated by Section 3 (a). Any assignment in
violation of the foregoing shall be void.
(g) The Stockholder agrees that irreparable damage would
occur and that PSS would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that PSS shall be
entitled to an injunction or injunctions to prevent breaches by
the Stockholder of this Agreement and to enforce specifically the
terms and provisions of this Agreement in any court of the United
States located in the State of Delaware or in Delaware state
court, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit such party to the personal
jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated hereby,
(ii) agrees that such party will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave
from any such court and (iii) agrees that such party will not
bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than a Federal
court sitting in the State of Delaware or a Delaware state court.
(h) If any term, provision, covenant or restriction herein,
or the application thereof to any circumstance, shall, to any
extent, be held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions herein and the application
thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated,
and shall be enforced to the fullest extent permitted by law.
(i) No amendment, modification or waiver in respect of this
Agreement shall be effective against any party unless it shall be
in writing and signed by such party.
[Signatures Contained on Next Page]
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IN WITNESS WHEREOF, the undersigned parties have executed and
delivered this Stockholders Agreement as of the day and year first above
written.
PHYSICIAN SALES & SERVICE, INC.
By: /s/ Patrick C. Kelly
------------------------------------
Patrick C. Kelly,
Chairman of the Board and President
TAYLOR MEDICAL, INC.
By: /s/ Todd D. Christopher
------------------------------------
Todd D. Christopher, President
"STOCKHOLDER"
/s/ Todd D. Christopher (SEAL)
----------------------------------------
Todd D. Christopher
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SCHEDULE 1
Stockholder Name Class of Taylor Capital Stock Held Number of Shares Held
- ------------------- ---------------------------------------- ---------------------
Todd D. Christopher Class A Common Stock 15,600*
Options to purchase Class A Common Stock 650,000
*Mr. Christopher owns only 15,600 shares of Taylor Medical, Inc. Common
Stock directly. The remaining 234,159 shares of Taylor Common Stock in
which he holds a beneficial interest are held in the name of Taylor
Investment Partnership (the "Partnership"), which owns, in the
aggregate, 867.256 shares of Taylor Common Stock. While he expects that
such shares will be distributed out of the Partnership prior to the
stockholders' meeting to approve the Merger, Mr. Christopher does not
presently control the voting or disposition of the shares held in the
Partnership.
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IN WITNESS WHEREOF, the undersigned parties have executed and
delivered this Stockholders Agreement as of the day and year first above
written.
PHYSICIAN SALES & SERVICE, INC.
By: /s/ Patrick C. Kelly
--------------------------------------
Patrick C. Kelly,
Chairman of the Board and President
TAYLOR MEDICAL, INC.
By: /s/ Todd D. Christopher
--------------------------------------
Todd D. Christopher, President
"STOCKHOLDER"
/s/ David Stanley (SEAL)
-----------------------------------------
David Stanley
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SCHEDULE 1
Stockholder Name Class of Taylor Capital Stock Held Number of Shares Held
- ---------------- ---------------------------------------- ---------------------
David Stanley Class A Common Stock 1,227,591*
Options to purchase Class A Common Stock 100,000
*250,000 of these shares are subject to a divorce escrow and are not
presently subject to his control.
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75
Exhibit 8.12
STOCKHOLDERS AGREEMENT
(Corporate/Partnership)
THIS STOCKHOLDERS AGREEMENT, dated as of April 9, 1995 (this "Agreement"),
is made and entered into by and among Physician Sales & Service, Inc. a Florida
corporation ("PSS"), Taylor Medical, Inc., a Delaware corporation ("Taylor")
and the other parties signatory hereto (each a "Stockholder")
Preamble
The Stockholder desires that PSS, PSS Merger Corp., a wholly owned
subsidiary of PSS ("Merger Corp."), and Taylor enter into an Agreement and Plan
of Merger dated the date hereof (as the same may be amended or supplemented,
the "Merger Agreement") with respect to the merger of Merger Corp. with and
into Taylor (the "Merger"), with the result that Taylor becomes a wholly owned
subsidiary of PSS. The Stockholder is executing this Agreement as an
inducement to PSS to enter into and execute, and to cause Merger Corp. to enter
into and execute, the Merger Agreement.
All capitalized terms used herein which are not defined herein shall have
the same meanings as ascribed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by PSS and
Merger Corp. of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
1. Representations and Warranties. The Stockholder severally and not
jointly represents and warrants to PSS as follows:
(a) Except as set forth on Schedule 1 hereto, the Stockholder is the
record and beneficial owner of the Taylor Capital Stock (which includes
all shares which may be acquired upon the exercise of any Taylor Option
or Taylor Warrant whether presently exercisable or not) set forth on
Schedule 1 to this Agreement (such Stockholder's "Shares"). Except for
the Stockholder's Shares and any other shares of Taylor Capital Stock
into which they may be converted or for which they may be exercised, the
Stockholder is not the record or beneficial owner of any shares of Taylor
Capital Stock. This Agreement has been duly authorized, executed and
delivered by, and constitutes a valid and binding agreement of, the
Stockholder, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors rights generally or the availability of
equitable remedies.
(b) Subject to the foregoing sentence, neither the execution and
delivery of this Agreement nor the consummation by the Stockholder of the
transactions contemplated hereby will result in a violation of, or a
default under, or conflict with, any contract, trust, commitment,
agreement, understanding, arrangement or restriction of any kind to which
the Stockholder is a party or bound or to which the Stockholder's Shares
are subject. Except as set forth on Schedule 1 hereto, consummation by
the Stockholder of the transactions contemplated hereby will not violate,
or require any consent, approval, or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable to
the Stockholder or the Stockholder's Shares.
(c) Except as set forth on Schedule 1 hereto, such Stockholder's
Shares and the certificates representing such Shares are now and at all
times during the term hereof will be held by such Stockholder, free and
clear of all liens, claims, security interests, proxies, voting trusts or
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76
agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising
hereunder.
(d) No broker, investment banker, financial adviser or other person
is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Stockholder in his capacity as such.
(e) The Stockholder understands and acknowledges that PSS is
entering into, and causing Merger Corp. to enter into, the Merger
Agreement in reliance upon the Stockholder's execution and delivery of
this Agreement. The Stockholder acknowledges that the irrevocable proxy
set forth in Section 4 is granted in consideration for the execution and
delivery of the Merger Agreement by PSS and Merger Corp.
2. Voting Agreements. The Stockholder severally agrees with, and
covenants to, PSS as follows:
(a) At any meeting of stockholders of Taylor called to vote upon the
Merger, the Merger Agreement, and any other matters related thereto, or
at any adjournment thereof or in any other circumstances upon which a
vote, consent or other approval with respect to the Merger and the Merger
Agreement is sought, the Stockholder shall vote (or cause to be voted)
the Stockholder's Shares in favor of the Merger, the execution and
delivery by Taylor of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, including approval of the Escrow Agreement and appointment of
the Representative, provided that the terms of the Merger Agreement shall
not have been amended to reduce the consideration payable in the Merger
to a lesser amount of PSS Common Stock or otherwise to materially and
adversely impair the Stockholder's rights or increase the Stockholder's
obligations thereunder.
(b) At any meeting of stockholders of Taylor or at any adjournment
thereof or in any other circumstances upon which their vote, consent or
other approval is sought, the Stockholder shall vote (or cause to be
voted) such Stockholder's Shares against (i) any merger agreement or
merger (other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantially all of the assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by Taylor
or (ii) any amendment of Taylor's Certificate of Incorporation or By-laws
or other proposal or transaction involving Taylor or any of its
subsidiaries which amendment or other proposal or transaction would in
any manner impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement (each of the foregoing in clause (i) or (ii) above, a
"Competing Transaction").
3. Covenants. The Stockholder severally agrees with, and covenants to,
PSS as follows:
(a) The Stockholder shall not (i) transfer (which term shall
include, without limitation, for the purposes of this Agreement, any
sale, gift, pledge, or consent to any transfer of), any or all of the
Stockholder's Shares or any interest therein, except pursuant to the
Merger; (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares
or any interest therein, (iii) grant any proxy, power of attorney or
other authorization in or with respect to such Shares, except for this
Agreement or (iv) deposit such Shares into a voting trust or enter into a
voting agreement or arrangement with respect to such Shares; provided,
that the Stockholder may transfer (as defined above) any of the
Stockholder's Shares to (x) if the Stockholder is a partnership, to its
partners pursuant to its partnership agreement, or (y) any other person
who is on the date hereof, or to any family member of a person or
charitable institution which prior to the Stockholders Meeting and prior
to
- 2 -
77
such transfer becomes, a party to this Agreement bound by all the
obligations of the "Stockholder" hereunder provided, however, that the
Stockholder shall not transfer any of the Stockholder's Shares pursuant
to the preceding proviso and shall not transfer any other shares of
Taylor Capital Stock if any such transfer, either alone or in the
aggregate with other transfers by other persons who may be affiliates of
Taylor, would preclude PSS's ability to account for the business
combination to be effected by the Merger as a pooling of interests.
(b) If a majority of the holders of Taylor Capital Stock approve the
Merger and the Merger Agreement, the Stockholder's Shares shall, pursuant
to the terms of the Merger Agreement, be exchanged for the consideration
provided in the Merger Agreement. The Stockholder hereby waives any
rights of appraisal, or rights to dissent from the Merger, that such
Stockholder may have.
(c) The Stockholder shall not, nor shall it cause any investment
banker, attorney or other adviser or representative of the Stockholder
(and it shall so instruct any such person) to, directly or indirectly,
(i) solicit, initiate or encourage the submission of, any takeover
proposal or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or
take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
takeover proposal. For all purposes hereof, "takeover proposal" means
any proposal for a merger or other business combination involving Taylor
or any of its subsidiaries or any proposal or offer to acquire in any
manner, directly or indirectly an equity interest in any voting
securities of, or a substantial portion of the assets of Taylor or any of
its subsidiaries, other than the Merger and the other transactions
contemplated by the Merger Agreement and other than any transfer
expressly permitted by the proviso to Section 3(a).
4. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) The Stockholder hereby irrevocably grants to, and appoints, PSS
and Patrick C. Kelly, President and Chairman of the Board of PSS, and
David A. Smith, Vice President and Chief Financial Officer of PSS, in
their respective capacities as officers of PSS, and any individual who
shall hereafter succeed to any such office of PSS, and each of them
individually, the Stockholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of the
Stockholder, to vote the Stockholder's Shares, or grant a consent or
approval in respect of such Shares (i) in favor of the Merger; the
execution and delivery of the Merger Agreement and approval of the terms
thereof, the appointment of the Shareholder Representative as provided in
the Merger Agreement, and each of the other transactions contemplated by
the Merger Agreement, provided that the terms of the Merger Agreement
shall not have been amended to reduce the consideration payable in the
Merger to a lesser amount of PSS Common Stock or otherwise to adversely
impair the Stockholder's rights or increase the Stockholder's obligations
thereunder, whether in his capacity as a stockholder or in any other
capacity, and (ii) against any Competing Transaction.
(b) Except as set forth on Schedule 1 hereto, the Stockholder
represents that any proxies heretofore given in respect of the
Stockholder's shares are not irrevocable, and that any such proxies are
hereby revoked.
(c) The Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 4 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of the Stockholder under this Agreement. The
Stockholder hereby further affirms that the irrevocable proxy is coupled
with an interest and may under no circumstances be revoked. The
Stockholder hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof.
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78
5. Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of
such Shares shall pass. whether by operation of law or otherwise, including
without limitation the Stockholder's successors or assigns. In the event of
any stock split, stock dividend, merger, reorganization, recapitalization or
other change in the capital structure of Taylor affecting the Taylor Capital
Stock, or the acquisition of additional shares of Taylor Capital Stock or other
voting securities of Taylor by any Stockholder, the number of Shares subject to
the terms of this Agreement shall be adjusted appropriately and this Agreement
and the obligations hereunder shall attach to any additional shares of Taylor
Capital Stock or other voting securities of Taylor issued to or acquired by the
Stockholder.
6. Stop Transfer. Taylor agrees with, and covenants to, PSS that Taylor
shall not register the transfer of any certificate representing any of the
Stockholder's Shares, unless such transfer is made to PSS or otherwise in
compliance with this Agreement.
7. Further Assurances. The Stockholder shall, upon the reasonable request
of PSS, execute and deliver any additional documents and take such further
actions as may reasonably be deemed by PSS to be necessary or desirable to
carry out the provisions hereof and to vest the power to vote such
Stockholder's Shares as contemplated by Section 4 in PSS and the other
irrevocable proxies described therein at the expense of PSS.
8. Termination. This Agreement, and all rights and obligations of the
parties hereunder; including without limitations the proxy set forth in Section
4, shall terminate upon the first to occur of (i) the Effective Time of the
Merger or (ii) the date upon which the Merger Agreement is terminated in
accordance with its terms; provided that if an "Extension Event" shall have
occurred as of or prior to termination of the Merger Agreement, then, for a
period of one year following such termination, (i) the rights and obligations
of the parties hereto under Sections 2(b), 3(c), 4(a)(ii) and 5 hereof shall
continue in full force and effect and (ii) the Stockholder shall not transfer
any or all of the Stockholder's Shares in connection with any Competing
Transaction or takeover proposal. For purposes of the foregoing, an "Extension
Event" shall mean any of the following events: (A) the stockholders meeting to
approve the Merger Agreement shall not have been held or the approval of the
Merger at such meeting by the holders of a majority of the outstanding shares
of Taylor Capital Stock shall not have been obtained, or (B) any person (other
than PSS or any subsidiary of PSS) shall have made, or disclosed an intention
to make, a takeover proposal or proposal for a Competing Transaction.
9. Miscellaneous.
(a) All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice): (i) if to PSS,
to the address set forth in Section 11.8 of the Merger Agreement; and
(ii) if to the Stockholder, to the address shown on the signature page
hereof
(b) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(c) This Agreement may be executed in two or more counterparts, all
of which shall be considered one and the same agreement.
(d) This Agreement (including the documents and instruments referred
to herein) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
- 4 -
79
(e) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof
(f) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part,
by operation of law or otherwise, by any of the parties without the prior
written consent of the other parties. except as expressly contemplated by
Section 3(a). Any assignment in violation of the foregoing shall be
void.
(g) The Stockholder agrees that irreparable damage would occur and
that PSS would not have any adequate remedy at law in the event that any
of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly
agreed that PSS shall be entitled to an injunction or injunctions to
prevent breaches by the Stockholder of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of
the United States located in the State of Delaware or in Delaware state
court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto
(i) consents to submit such party to the personal jurisdiction of any
Federal court located in the State of Delaware or any Delaware state
court in the event any dispute arises out of this Agreement or any of the
transactions contemplated hereby, (ii) agrees that such party will not
attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (iii) agrees that such party
will not bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than a Federal court
sitting in the State of Delaware or a Delaware state court.
(h) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by
a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions herein
and the application thereof to any other circumstances, shall remain in
full force and effect, shall not in any way be affected, impaired or
invalidated, and shall be enforced to the fullest extent permitted by
law.
(i) No amendment, modification or waiver in respect of this
Agreement shall be effective against any party unless it shall be in
writing and signed by such party.
- 5 -
80
IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Stockholders Agreement as of the day and year first above written.
PHYSICIAN SALES & SERVICE, INC.
By: /s/ Patrick C. Kelly
-----------------------------------
Patrick C. Kelly,
Chairman of the Board and President
TAYLOR MEDICAL, INC.
By: /s/ Todd D. Christopher
-----------------------------------
Todd D. Christopher, President
"STOCKHOLDER"
ALLSOP VENTURE PARTNERS
By: /s/ Larry C. Maddox
------------------------------------
Title: General Partner
- 6 -
81
Schedule 1
Stockholder Name Class of Taylor Capital Stock Held Number of Shares Held
- ---------------- ---------------------------------- ---------------------
Allsop Venture Partners: Class A Common Stock 234,686
Series A Preferred Stock 250,000
Series C Preferred Stock 217,777
Warrants to purchase Shares of
Class A Common Stock 410,250
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IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Stockholders Agreement as of the day and year first above written.
PHYSICIAN SALES & SERVICE, INC.
By.: /s/ Patrick C. Kelly
-----------------------------------
Patrick C. Kelly,
Chairman of the Board and President
TAYLOR MEDICAL, INC.
By: /s/ Todd D. Christopher
------------------------------
Todd D. Christopher, President
"STOCKHOLDER"
DAVIS VENTURE PARTNERS
By: /s/ Phillip A. Tuttle
------------------------------
Title: General Partner
- 8 -
83
Schedule 1
Stockholder Name Class of Taylor Capital Stock Held Number of Shares Held
- ---------------- ---------------------------------- ---------------------
Davis Venture Partners: Class A Common Stock 187,749
Series A Preferred Stock 200,000
Series C Preferred Stock 217,777
Warrants to purchase Shares of
Class A Common Stock 273,500
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IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Stockholders Agreement as of the day and year first above written.
PHYSICIAN SALES & SERVICE, INC.
By: /s/ Patrick C. Kelly
-----------------------------------
Patrick C. Kelly,
Chairman of the Board and President
TAYLOR MEDICAL, INC.
By: /s/ Todd D. Christopher
------------------------------
Todd D. Christopher, President
"STOCKHOLDER"
NORO VENTURE PARTNERS, L.P.
By: /s/ Harvey Mallement
------------------------------
Title: General Partner
- 10 -
85
Schedule 1
Stockholder Name Class of Taylor Capital Stock Held Number of Shares Held
- ---------------- ---------------------------------- ---------------------
Noro Venture Partners, L.P.: Class A Common Stock 93,875
Series A Preferred Stock 100,000
Series C Preferred Stock 90,803
Warrants to purchase Shares of
Class A Common Stock 16,410
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IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Stockholders Agreement as of the day and year first above written.
PHYSICIAN SALES & SERVICE, INC.
By: /s/ Patrick C. Kelly
-----------------------------------
Patrick C. Kelly,
Chairman of the Board and President
TAYLOR MEDICAL, INC.
By: /s/ Todd D. Christopher
------------------------------
Todd D. Christopher, President
"STOCKHOLDER"
HARVEST TECHNOLOGY PARTNERS, L.P.
By: /s/ Harvey Mallement
------------------------------
Title: General Partner
- 12 -
87
Schedule 1
Stockholder Name Class of Taylor Capital Stock Held Number of Shares Held
- ------------------ ---------------------------------- ---------------------
Harvest Technology Class A Common Stock 46,937
Partners, L.P.:
Series A Preferred Stock 50,000
Series C Preferred Stock 45,403
Warrants to purchase Shares of
Class A Common Stock 8,205
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IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Stockholders Agreement as of the day and year first above written.
PHYSICIAN SALES & SERVICE, INC.
By: /s/ Patrick C. Kelly
-----------------------------------
Patrick C. Kelly,
Chairman of the Board and President
TAYLOR MEDICAL, INC.
By: /s/ Todd D. Christopher
------------------------------
Todd D. Christopher, President
"STOCKHOLDER"
WFG HARVEST PARTNERS, L.P.
By: /s/ Harvey Mallement
------------------------------
Title: General Partner
- 14 -
89
Schedule 1
Stockholder Name Class of Taylor Capital Stock Held Number of Shares Held
- ----------------- ---------------------------------- ---------------------
WFG Harvest Class A Common Stock 31,293
Partners, L.P.:
Series A Preferred Stock 33,335
Series C Preferred Stock 21,037
Warrants to purchase Shares of
Class A Common Stock 101,195
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90
IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Stockholders Agreement as of the day and year first above written.
PHYSICIAN SALES & SERVICE, INC.
By: /s/ Patrick C. Kelly
-----------------------------------
Patrick C. Kelly,
Chairman of the Board and President
TAYLOR MEDICAL, INC.
By: /s/ Todd D. Christopher
------------------------------
Todd D. Christopher, President
"STOCKHOLDER"
EUROPEAN DEVELOPMENT CAPITAL CORP. N.V.
By: /s/ Leonard Gubar
------------------------------
Title: Attorney-in-Fact
- 16 -
91
Schedule 1
Stockholder Name Class of Taylor Capital Stock Held Number of Shares Held
- ---------------- ---------------------------------- ---------------------
European Development Class A Common Stock 62,581
Capital Corp.:
Series A Preferred Stock 66,665
Series C Preferred Stock 60,533
Warrants to purchase Shares of
Class A Common Stock 10,940
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92
IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Stockholders Agreement as of the day and year first above written.
PHYSICIAN SALES & SERVICE, INC.
By: /s/ Patrick C. Kelly
-----------------------------------
Patrick C. Kelly,
Chairman of the Board and President
TAYLOR MEDICAL, INC.
By: /s/ Todd D. Christopher
------------------------------
Todd D. Christopher, President
"STOCKHOLDER"
DEMUTH, FOLGER & WETHERILL
By: /s/ David C. Wetherill
------------------------------
Title: General Partner
- 18 -
93
Schedule 1
Stockholder Name Class of Taylor Capital Stock Held Number of Shares Held
- ---------------- ---------------------------------- ---------------------
DeMuth, Folger & Wetherill:: Series C Preferred Stock 300,000
Warrants to purchase Shares of
Class A Common Stock 410,250
- 19 -
94
Exhibit 8.18
CONDITIONAL RELEASE
This Conditional Release is made and entered into this 9th day of April,
1995, for the benefit of Taylor Medical, Inc. (the "Company"), a Delaware
corporation, and its Affiliates, successors and assigns by Larry C. Maddox, an
officer, director and/or stockholder of the Company and an individual resident
of the State of Texas. This Release is delivered pursuant to Section 9.2(i) of
that certain Agreement and Plan of Merger, dated April 9, 1995, by and among
the Company, PSS Merger Corp. and Physician Sales & Service, Inc. (the
"Agreement"). Unless otherwise defined herein, capitalized terms used herein
shall have the same meanings ascribed to them in the Agreement.
For good and valuable consideration including the consideration to be
received by the undersigned under the Agreement, the sufficiency of which is
hereby acknowledged, the undersigned does hereby release and forever discharge
the Company and its successors and assigns, to be effective only if the
Effective Time occurs, from any and all liabilities, obligations, claims,
demands, rights or causes of action existing or relating to transactions or
events occurring on or prior to the Effective Time, whether known or unknown,
direct or indirect, liquidated, matured, contingent or otherwise, except (i)
any Liabilities of the Company to the undersigned with respect to unpaid
salary, wages or other compensation or reimbursement of expenses arising out of
employment by the Company and reflected on the March 31, 1995 unaudited balance
sheet of the Company contained in the Financial Statements, or accrued
thereafter in accordance with the Agreement or otherwise contemplated by the
Agreement or set forth in the schedules thereto, or (ii) any Liabilities of the
Company, Physician Sales & Service, Inc. or PSS Merger Corp. to indemnify the
undersigned in his capacity as an officer or director under the Company's
Certificate of Incorporation or Bylaws as in effect at the Effective Time or
pursuant to the terms of the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Release as of
the day and year first above written.
/s/ Larry C. Maddox (Seal)
--------------------
Larry C. Maddox
95
Exhibit 8.18
CONDITIONAL RELEASE
This Conditional Release is made and entered into this 9th day of April,
1995, for the benefit of Taylor Medical, Inc. (the "Company"), a Delaware
corporation, and its Affiliates, successors and assigns by Phillip A. Tuttle, an
officer, director and/or stockholder of the Company and an individual resident
of the State of Texas. This Release is delivered pursuant to Section 9.2(i) of
that certain Agreement and Plan of Merger, dated April 9, 1995, by and among
the Company, PSS Merger Corp. and Physician Sales & Service, Inc. (the
"Agreement"). Unless otherwise defined herein, capitalized terms used herein
shall have the same meanings ascribed to them in the Agreement.
For good and valuable consideration including the consideration to be
received by the undersigned under the Agreement, the sufficiency of which is
hereby acknowledged, the undersigned does hereby release and forever discharge
the Company and its successors and assigns, to be effective only if the
Effective Time occurs, from any and all liabilities, obligations, claims,
demands, rights or causes of action existing or relating to transactions or
events occurring on or prior to the Effective Time, whether known or unknown,
direct or indirect, liquidated, matured, contingent or otherwise, except (i)
any Liabilities of the Company to the undersigned with respect to unpaid
salary, wages or other compensation or reimbursement of expenses arising out of
employment by the Company and reflected on the March 31, 1995 unaudited balance
sheet of the Company contained in the Financial Statements, or accrued
thereafter in accordance with the Agreement or otherwise contemplated by the
Agreement or set forth in the schedules thereto, or (ii) any Liabilities of the
Company, Physician Sales & Service, Inc. or PSS Merger Corp. to indemnify the
undersigned in his capacity as an officer or director under the Company's
Certificate of Incorporation or Bylaws as in effect at the Effective Time or
pursuant to the terms of the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Release as of
the day and year first above written.
/s/ Phillip A. Tuttle (Seal)
----------------------
Phillip A. Tuttle
96
Exhibit 8.18
CONDITIONAL RELEASE
This Conditional Release is made and entered into this 9th day of April,
1995, for the benefit of Taylor Medical, Inc. (the "Company"), a Delaware
corporation, and its Affiliates, successors and assigns by William J. Kane an
officer, director and/or stockholder of the Company and an individual resident
of the State of Texas. This Release is delivered pursuant to Section 9.2(i) of
that certain Agreement and Plan of Merger, dated April 9, 1995, by and among
the Company, PSS Merger Corp. and Physician Sales & Service, Inc. (the
"Agreement"). Unless otherwise defined herein, capitalized terms used herein
shall have the same meanings ascribed to them in the Agreement.
For good and valuable consideration including the consideration to be
received by the undersigned under the Agreement, the sufficiency of which is
hereby acknowledged, the undersigned does hereby release and forever discharge
the Company and its successors and assigns, to be effective only if the
Effective Time occurs, from any and all liabilities, obligations, claims,
demands, rights or causes of action existing or relating to transactions or
events occurring on or prior to the Effective Time, whether known or unknown,
direct or indirect, liquidated, matured, contingent or otherwise, except (i)
any Liabilities of the Company to the undersigned with respect to unpaid
salary, wages or other compensation or reimbursement of expenses arising out of
employment by the Company and reflected on the March 31, 1995 unaudited balance
sheet of the Company contained in the Financial Statements, or accrued
thereafter in accordance with the Agreement or otherwise contemplated by the
Agreement or set forth in the schedules thereto, or (ii) any Liabilities of the
Company, Physician Sales & Service, Inc. or PSS Merger Corp. to indemnify the
undersigned in his capacity as an officer or director under the Company's
Certificate of Incorporation or Bylaws as in effect at the Effective Time or
pursuant to the terms of the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Release as of
the day and year first above written.
/s/ William J. Kane (Seal)
-------------------- ------
William J. Kane
97
Exhibit 8.18
CONDITIONAL RELEASE
This Conditional Release is made and entered into this 9th day of April,
1995, for the benefit of Taylor Medical, Inc. (the "Company"), a Delaware
corporation, and its Affiliates, successors and assigns by David C. Wetherill,
an officer, director and/or stockholder of the Company and an individual
resident of the State of Texas. This Release is delivered pursuant to Section
9.2(i) of that certain Agreement and Plan of Merger, dated April 9, 1995, by
and among the Company, PSS Merger Corp. and Physician Sales & Service, Inc. (the
"Agreement"). Unless otherwise defined herein, capitalized terms used herein
shall have the same meanings ascribed to them in the Agreement.
For good and valuable consideration including the consideration to be
received by the undersigned under the Agreement, the sufficiency of which is
hereby acknowledged, the undersigned does hereby release and forever discharge
the Company and its successors and assigns, to be effective only if the
Effective Time occurs, from any and all liabilities, obligations, claims,
demands, rights or causes of action existing or relating to transactions or
events occurring on or prior to the Effective Time, whether known or unknown,
direct or indirect, liquidated, matured, contingent or otherwise, except (i)
any Liabilities of the Company to the undersigned with respect to unpaid
salary, wages or other compensation or reimbursement of expenses arising out of
employment by the Company and reflected on the March 31, 1995 unaudited balance
sheet of the Company contained in the Financial Statements, or accrued
thereafter in accordance with the Agreement or otherwise contemplated by the
Agreement or set forth in the schedules thereto, or (ii) any Liabilities of the
Company, Physician Sales & Service, Inc. or PSS Merger Corp. to indemnify the
undersigned in his capacity as an officer or director under the Company's
Certificate of Incorporation or Bylaws as in effect at the Effective Time or
pursuant to the terms of the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Release as of
the day and year first above written.
/s/ David C. Wetherill (Seal)
-----------------------
David C. Wetherill
98
Exhibit 8.18
CONDITIONAL RELEASE
This Conditional Release is made and entered into this 9th day of April,
1995, for the benefit of Taylor Medical, Inc. (the "Company"), a Delaware
corporation, and its Affiliates, successors and assigns by David J. Stanley, an
officer, director and/or stockholder of the Company and an individual resident
of the State of Texas. This Release is delivered pursuant to Section 9.2(i) of
that certain Agreement and Plan of Merger, dated April 9, 1995, by and among
the Company, PSS Merger Corp. and Physician Sales & Service, Inc. (the
"Agreement"). Unless otherwise defined herein, capitalized terms used herein
shall have the same meanings ascribed to them in the Agreement.
For good and valuable consideration including the consideration to be
received by the undersigned under the Agreement, the sufficiency of which is
hereby acknowledged, the undersigned does hereby release and forever discharge
the Company and its successors and assigns, to be effective only if the
Effective Time occurs, from any and all liabilities, obligations, claims,
demands, rights or causes of action existing or relating to transactions or
events occurring on or prior to the Effective Time, whether known or unknown,
direct or indirect, liquidated, matured, contingent or otherwise, except (i)
any Liabilities of the Company to the undersigned with respect to unpaid
salary, wages or other compensation or reimbursement of expenses arising out of
employment by the Company and reflected on the March 31, 1995 unaudited balance
sheet of the Company contained in the Financial Statements, or accrued
thereafter in accordance with the Agreement or otherwise contemplated by the
Agreement or set forth in the schedules thereto, (ii) any Liabilities of the
Company, Physician Sales & Service, Inc. or PSS Merger Corp. to indemnify the
undersigned in his capacity as an officer or director under the Company's
Certificate of Incorporation or Bylaws as in effect at the Effective Time or
pursuant to the terms of the Agreement, (iii) Liabilities of the Company,
whether accrued or hereafter from time to time accruing under that certain
Employment Agreement described in Schedule 5.23 of the Agreement to the extent
disclosed thereon, or (iv) an employee bonus in the sum of $100,000 payable to
the undersigned.
IN WITNESS WHEREOF, the undersigned has duly executed this Release as of
the day and year first above written.
/s/ David J. Stanley (Seal)
---------------------
David J. Stanley
99
Exhibit 8.18
CONDITIONAL RELEASE
This Conditional Release is made and entered into this 9th day of April,
1995, for the benefit of Taylor Medical, Inc. (the "Company"), a Delaware
corporation, and its Affiliates, successors and assigns by Todd D. Christopher,
an officer, director and/or stockholder of the Company and an individual
resident of the State of Texas. This Release is delivered pursuant to Section
9.2(i) of that certain Agreement and Plan of Merger, dated April 9, 1995, by
and among the Company, PSS Merger Corp. and Physician Sales & Service, Inc. (the
"Agreement"). Unless otherwise defined herein, capitalized terms used herein
shall have the same meanings ascribed to them in the Agreement.
For good and valuable consideration including the consideration to be
received by the undersigned under the Agreement, the sufficiency of which is
hereby acknowledged, the undersigned does hereby release and forever discharge
the Company and its successors and assigns, to be effective only if the
Effective Time occurs, from any and all liabilities, obligations, claims,
demands, rights or causes of action existing or relating to transactions or
events occurring on or prior to the Effective Time, whether known or unknown,
direct or indirect, liquidated, matured, contingent or otherwise, except (i)
any Liabilities of the Company to the undersigned with respect to unpaid
salary, wages or other compensation or reimbursement of expenses arising out of
employment by the Company and reflected on the March 31, 1995 unaudited balance
sheet of the Company contained in the Financial Statements, or accrued
thereafter in accordance with the Agreement or otherwise contemplated by the
Agreement or set forth in the schedules thereto, or (ii) any Liabilities of the
Company, Physician Sales & Service, Inc. or PSS Merger Corp. to indemnify the
undersigned in his capacity as an officer or director under the Company's
Certificate of Incorporation or Bylaws as in effect at the Effective Time or
pursuant to the terms of the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Release as of
the day and year first above written.
/s/ Todd D. Christopher (Seal)
------------------------
Todd D. Christopher
100
Exhibit 8.18
CONDITIONAL RELEASE
This Conditional Release is made and entered into this 9th day of April,
1995, for the benefit of Taylor Medical, Inc. (the "Company"), a Delaware
corporation, and its Affiliates, successors and assigns by Dan Peoples, an
officer, director and/or stockholder of the Company and an individual resident
of the State of Texas. This Release is delivered pursuant to Section 9.2(i) of
that certain Agreement and Plan of Merger, dated April 9, 1995, by and among
the Company, PSS Merger Corp. and Physician Sales & Service, Inc. (the
"Agreement"). Unless otherwise defined herein, capitalized terms used herein
shall have the same meanings ascribed to them in the Agreement.
For good and valuable consideration including the consideration to be
received by the undersigned under the Agreement, the sufficiency of which is
hereby acknowledged, the undersigned does hereby release and forever discharge
the Company and its successors and assigns, to be effective only if the
Effective Time occurs, from any and all liabilities, obligations, claims,
demands, rights or causes of action existing or relating to transactions or
events occurring on or prior to the Effective Time, whether known or unknown,
direct or indirect, liquidated, matured, contingent or otherwise, except (i)
any Liabilities of the Company to the undersigned with respect to unpaid
salary, wages or other compensation or reimbursement of expenses arising out of
employment by the Company and reflected on the March 31, 1995 unaudited balance
sheet of the Company contained in the Financial Statements, or accrued
thereafter in accordance with the Agreement or otherwise contemplated by the
Agreement or set forth in the schedules thereto, or (ii) any Liabilities of the
Company, Physician Sales & Service, Inc. or PSS Merger Corp. to indemnify the
undersigned in his capacity as an officer or director under the Company's
Certificate of Incorporation or Bylaws as in effect at the Effective Time or
pursuant to the terms of the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Release as of
the day and year first above written.
/s/ Dan Peoples (Seal)
----------------
Dan Peoples
101
Exhibit 8.18
CONDITIONAL RELEASE
This Conditional Release is made and entered into this 9th day of April,
1995, for the benefit of Taylor Medical, Inc. (the "Company"), a Delaware
corporation, and its Affiliates, successors and assigns by Gene Crisman, an
officer, director and/or stockholder of the Company and an individual resident
of the State of Texas. This Release is delivered pursuant to Section 9.2(i) of
that certain Agreement and Plan of Merger, dated April 9, 1995, by and among
the Company, PSS Merger Corp. and Physician Sales & Service, Inc. (the
"Agreement"). Unless otherwise defined herein, capitalized terms used herein
shall have the same meanings ascribed to them in the Agreement.
For good and valuable consideration including the consideration to be
received by the undersigned under the Agreement, the sufficiency of which is
hereby acknowledged, the undersigned does hereby release and forever discharge
the Company and its successors and assigns, to be effective only if the
Effective Time occurs, from any and all liabilities, obligations, claims,
demands, rights or causes of action existing or relating to transactions or
events occurring on or prior to the Effective Time, whether known or unknown,
direct or indirect, liquidated, matured, contingent or otherwise, except (i)
any Liabilities of the Company to the undersigned with respect to unpaid
salary, wages or other compensation or reimbursement of expenses arising out of
employment by the Company and reflected on the March 31, 1995 unaudited balance
sheet of the Company contained in the Financial Statements, or accrued
thereafter in accordance with the Agreement or otherwise contemplated by the
Agreement or set forth in the schedules thereto, or (ii) any Liabilities of the
Company, Physician Sales & Service, Inc. or PSS Merger Corp. to indemnify the
undersigned in his capacity as an officer or director under the Company's
Certificate of Incorporation or Bylaws as in effect at the Effective Time or
pursuant to the terms of the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Release as of
the day and year first above written.
/s/ Gene Crisman (Seal)
-----------------
Gene Crisman
102
Exhibit 8.18
CONDITIONAL RELEASE
This Conditional Release is made and entered into this 9th day of April,
1995, for the benefit of Taylor Medical, Inc. (the "Company"), a Delaware
corporation, and its Affiliates, successors and assigns by Eugene Humphrey, an
officer, director and/or stockholder of the Company and an individual resident
of the State of Texas. This Release is delivered pursuant to Section 9.2(i) of
that certain Agreement and Plan of Merger, dated April 9, 1995, by and among
the Company, PSS Merger Corp. and Physician Sales & Service, Inc. (the
"Agreement"). Unless otherwise defined herein, capitalized terms used herein
shall have the same meanings ascribed to them in the Agreement.
For good and valuable consideration including the consideration to be
received by the undersigned under the Agreement, the sufficiency of which is
hereby acknowledged, the undersigned does hereby release and forever discharge
the Company and its successors and assigns, to be effective only if the
Effective Time occurs, from any and all liabilities, obligations, claims,
demands, rights or causes of action existing or relating to transactions or
events occurring on or prior to the Effective Time, whether known or unknown,
direct or indirect, liquidated, matured, contingent or otherwise, except (i)
any Liabilities of the Company to the undersigned with respect to unpaid
salary, wages or other compensation or reimbursement of expenses arising out of
employment by the Company and reflected on the March 31, 1995 unaudited balance
sheet of the Company contained in the Financial Statements, or accrued
thereafter in accordance with the Agreement or otherwise contemplated by the
Agreement or set forth in the schedules thereto, or (ii) any Liabilities of the
Company, Physician Sales & Service, Inc. or PSS Merger Corp. to indemnify the
undersigned in his capacity as an officer or director under the Company's
Certificate of Incorporation or Bylaws as in effect at the Effective Time or
pursuant to the terms of the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Release as of
the day and year first above written.
/s/ Eugene Humphrey (Seal)
--------------------
Eugene Humphrey
103
Exhibit 8.18
CONDITIONAL RELEASE
This Conditional Release is made and entered into this 9th day of April,
1995, for the benefit of Taylor Medical, Inc. (the "Company"), a Delaware
corporation, and its Affiliates, successors and assigns by Michael Lege, an
officer, director and/or stockholder of the Company and an individual resident
of the State of Texas. This Release is delivered pursuant to Section 9.2(i) of
that certain Agreement and Plan of Merger, dated April 9, 1995, by and among
the Company, PSS Merger Corp. and Physician Sales & Service, Inc. (the
"Agreement"). Unless otherwise defined herein, capitalized terms used herein
shall have the same meanings ascribed to them in the Agreement.
For good and valuable consideration including the consideration to be
received by the undersigned under the Agreement, the sufficiency of which is
hereby acknowledged, the undersigned does hereby release and forever discharge
the Company and its successors and assigns, to be effective only if the
Effective Time occurs, from any and all liabilities, obligations, claims,
demands, rights or causes of action existing or relating to transactions or
events occurring on or prior to the Effective Time, whether known or unknown,
direct or indirect, liquidated, matured, contingent or otherwise, except (i)
any Liabilities of the Company to the undersigned with respect to unpaid
salary, wages or other compensation or reimbursement of expenses arising out of
employment by the Company and reflected on the March 31, 1995 unaudited balance
sheet of the Company contained in the Financial Statements, or accrued
thereafter in accordance with the Agreement or otherwise contemplated by the
Agreement or set forth in the schedules thereto, or (ii) any Liabilities of the
Company, Physician Sales & Service, Inc. or PSS Merger Corp. to indemnify the
undersigned in his capacity as an officer or director under the Company's
Certificate of Incorporation or Bylaws as in effect at the Effective Time or
pursuant to the terms of the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Release as of
the day and year first above written.
/s/ Michael Lege (Seal)
-----------------
Michael Lege
104
Exhibit 8.19
AMENDMENT TO
WARRANT AGREEMENT
THIS AMENDMENT (this "Amendment") to the Warrant Agreement dated October
26, 1992 and the Warrant Agreement dated January 31, 1993 (the "Warrant
Agreements") is entered into this 9th day of April, 1995, by and between Taylor
Medical, Inc. (the "Company") and each person named on the execution page
hereof (the "Holders"). Capitalized terms used herein but not otherwise
defined shall have the meanings ascribed to them in the Warrant Agreements.
WHEREAS, the Company plans to enter into an Agreement and Plan of Merger
("Plan of Merger"), of even date herewith with Physician Sales & Service, Inc.
and PSS Merger Corp.; and
WHEREAS, Section 8.19 of the Plan of Merger requires that simultaneously
with the execution and delivery of the Plan of Merger that the parties amend
the Warrant Agreements as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Section 5.7. Section 5.7 of each Warrant Agreement is hereby amended
by adding the following sentence to the end of Section 5.7:
"Notwithstanding anything to the contrary contained in this
Section 5.7 or this Agreement, upon consummation of the
transactions contemplated by the Agreement and Plan of Merger
dated April 9, 1995 by and among the Company, Physician Sales &
Service, Inc. and PSS Merger Corp. (the "Plan of Merger"), all
Warrants shall be cancelled in exchange for the consideration set
forth in the Plan of Merger."
2. Majority Warrant Holders. The undersigned represent and warrant that
the signatories hereto constitute the Majority Warrant Holders under the
Warrant Agreements and that in accordance with Section 17.6 of the Warrant
Agreements, the undersigned have the legal capacity and authority to enter into
this Agreement and to amend the Warrant Agreements.
IN WITNESS WHEREOF, the undersigned parties have executed this Amendment
as of the day and year first above written.
TAYLOR MEDICAL, INC.
By: /s/ Todd D. Christopher
-------------------------------
Todd D. Christopher, President
[Signatures Continued on Next Page]
105
WARRANT HOLDERS:
TAYLOR MEDICAL, INC.
By: /s/ Todd D. Christopher
----------------------------------
Todd D. Christopher, President
HARVEST PARTNERS INTERNATIONAL, L.P.
By: Harvest Associates International, General
Partner
By: /s/ Harvey Mallement
---------------------------------
Harvey Mallement, General Partner
DEUTSCHE BETEILIGUNGSGESELLSCHAFT,
mbH
By:______________________________________
Title:___________________________________
By:______________________________________
Title:___________________________________
HARVEST TECHNOLOGY PARTNERS, L.P.
By: Harvest Associates, L.P., General Partner
By: /s/ Harvey Mallement
-------------------------------------
Harvey Mallement, General Partner
WFG HARVEST PARTNERS, L.P.
By: /s/ Harvey Mallement
------------------------------------
Harvey Mallement, General Partner
[Signatures Continued on Next Page]
106
NORO VENTURE PARTNERS IV, L.P.
By: /s/ Harvey Mallement
-----------------------------------
Harvey Mallement, General Partner
EUROPEAN DEVELOPMENT CAPITAL
CORP., N.V.
By: /s/ Leonard Gubar
-----------------------------------
Leonard Gubar, Attorney-in-Fact
DAVIS VENTURE PARTNERS, L.P.
By: /s/ Philip A. Tuttle
------------------------------------
Philip A. Tuttle, General Partner
ALLSOP VENTURE PARTNERS III, L.P.
By: Mark Venture Partners L.P.,
General Partner
By: /s/ Larry C. Maddox
------------------------------------
Larry C. Maddox, General Partner
DEMUTH, FOLGER & WETHERILL
By: /s/ David C. Wetherill
------------------------------------
David C. Wetherill, General Partner
MORAMERICA CAPITAL CORP.
By:____________________________________
Kevin F. Mullane, Vice President
[Signatures Continued on Next Page]
107
PREMIER VENTURE CAPITAL CORPORATION
By: ______________________________________
Thomas J. Adamek, President
LOUISIANA FUND CORPORATION
By: ______________________________________
Thomas J. Adamek,
President, Premier Venture Capital
Corporation as Agent for Louisiana Fund
Corporation
By: ______________________________________
WALTER C. JOHNSEN
108
Exhibit 9.2(d)
Form of Opinion of Hutcheson & Grundy
We have acted as counsel to Taylor Medical, Inc., a Delaware corporation
("Taylor"), in connection with the execution and delivery of that certain
Agreement and Plan of Merger, dated April 9, 1995 (the "Agreement"), by and
among Taylor, PSS Merger Corp. and Physician Sales & Service, Inc. ("PSS"), and
the consummation of the transactions contemplated therein (the "Merger"). This
opinion is delivered to you pursuant to Section 9.2(d) of the Agreement.
Unless otherwise specified herein, capitalized terms used herein shall have the
meanings ascribed to them in the Agreement.
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such corporate records of Taylor
and its Subsidiaries and such agreements, opinions and other instruments,
certificates of officers of Taylor and other persons, and such other documents
as we have deemed necessary as a basis for rendering the opinions hereinafter
expressed. In such examination, we have assumed the genuineness of all
signatures not witnessed by us, the authenticity and completeness of all
documents submitted to us as originals, and the conformity to original
documents of all documents submitted to us as certified, conformed, or
photostatic copies. As to certificates of public officials, we have assumed
the same to have been properly given and to be accurate. We have also relied,
as to various matters of fact material to this opinion, on certificates of
public officials and officers of Taylor. We are not aware of any facts that
would make such reliance unwarranted or unjustified.
During the course of our examination, we have assumed that the execution,
delivery, and performance of all relevant documents by the parties thereto,
other than Taylor, have been duly authorized and are valid and binding upon
such parties, and that such parties have the full power, authority, and legal
right to perform their obligations under such documents.
In rendering this opinion we have assumed that each natural person signing
any document reviewed by us had the legal capacity to do so and that each
person signing any document reviewed by us in a representative capacity had
authority to sign in such capacity (except where this opinion expressly
addresses due authorization, execution and delivery), that the Agreement and
all documents related thereto to which Taylor is a party accurately describes
and contains the mutual understanding of the parties, that there are no oral or
written statements that modify, amend or vary, or purport to modify, amend or
vary any of the terms of the Agreement or any documents related thereto, and
that as to factual matters all representations and warranties made in the
Agreement and all documents related thereto are correct and accurate.
Whenever a statement or opinion herein is qualified by "known to this
firm," "to the knowledge of this firm," "aware of" or similar phrase, such
phrase means that, in the course of rendering the legal services described in
the introductory paragraph of this letter, no facts or circumstances have come
to the attention of those attorneys in this firm who rendered such legal
services that gave any of such attorneys reason to believe that any such
information is incorrect in any respect that would affect our opinions
expressed herein.
Based upon the foregoing, and subject to the limitations expressed herein,
we are of the opinion that:
(1) Each of Taylor and its Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation and has the corporate power and authority to own, lease,
and operate its assets and properties and to carry on the business in which it
is engaged as described in the Joint Proxy Statement/Prospectus. Each of
Taylor and its Subsidiaries is duly qualified or licensed to transact business
and is in good standing in all jurisdictions where the failure to be so
qualified or licensed to transact business would have a material adverse effect
on the business, financial conditions or results of operations of Taylor and
its Subsidiaries considered as a single enterprise.
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109
(2) Taylor possesses the full corporate right, power and authority to
enter into and perform its obligations under the Agreement and all documents
related thereto to which Taylor is a party, and the Agreement and all such
documents have been duly and validly authorized, executed and delivered by
Taylor, and no other corporate proceedings are necessary to authorize the
Agreement and such other documents or to consummate the Merger.
(3) The Agreement and all documents related thereto to which Taylor is a
party constitute the valid and binding obligations of Taylor enforceable
against it in accordance with their respective terms, except as enforcement may
be (i) limited by applicable bankruptcy, insolvency, liquidation, receivership,
reorganization and other similar laws affecting the enforceability of
creditors' rights generally, and (ii) subject to general principles of equity.
(4) The authorized capital stock of Taylor consists of (i) 23,000,000
shares of Taylor Class A Common Stock, 5,322,729 of which shares were issued
and outstanding as of April 9, 1995 and none of which were issued and held as
treasury shares; (ii) 1,094,000 shares of Taylor Class B Common Stock, none of
which shares were issued and outstanding as of April 9, 1995 and none of which
were issued and held as treasury shares; (iii) 1,500,000 shares of Taylor
Series A Preferred Stock, 770,000 of which shares were issued and outstanding
as of April 9, 1995 and none of which were issued and held as treasury shares;
and (iv) 1,500,000 shares of Taylor Series C Preferred Stock, 1,133,329 of
which shares were issued and outstanding as of April 9, 1995 and none of which
shares were issued and held as treasury shares. In addition, at April 9, 1995,
Taylor had issued and outstanding (a) 3,377,725 Taylor Warrants, representing
the right to purchase 2,283,725 shares of Taylor Class A Common Stock at an
exercise price of $1.00 per share and the right to purchase 1,094,000 shares of
Taylor Class B Common Stock at an exercise price of $1.00 per share, and (b)
Taylor Options, representing the right to purchase 3,130,115 shares of Taylor
Common Stock.
(5) Neither (i) the execution, delivery and performance of the Agreement
and the documents related thereto to which Taylor is a party, (ii) compliance
by Taylor with all of the provisions of the Agreement and the documents related
thereto to which it is a party, nor (iii) consummation of the respective
transactions contemplated thereby, does or will result in a breach of, or
constitute a default, breach or violation, or result in creation of any
material lien or encumbrance on the properties of Taylor or its Subsidiaries
under any material agreement known to us to which Taylor or its Subsidiaries is
a party, or under any judgment, decree, order, statute, rule, license or
governmental regulation known to us and applicable to Taylor or its
Subsidiaries, unless such default, breach or violation has been duly and
validly waived or excused.
(6) We know of no legal or governmental proceedings, pending or
threatened, to which Taylor or any of its Subsidiaries are subject that is
required to be described in the Registration Statement or Joint Proxy
Statement/Prospectus and is not so described, other than litigation incident to
the kind of business conducted by Taylor and its Subsidiaries that individually
or in the aggregate is not material to Taylor and its Subsidiaries considered
as a single enterprise. Neither do we know of any litigation, contract or
other document that is required to be described in the Registration Statement
or Joint Proxy Statement/Prospectus or is required to be filed as an exhibit to
the Registration Statement that is not described or so filed as required.
Except as to portions relating to PSS and its Subsidiaries, and except for
financial statements and other financial or statistical information, as to
which we express no opinion, the Registration Statement and Joint Proxy
Statement/Prospectus and any supplement or amendment thereto complies as to
form in all material respects with the 1933 Act and the 1934 Act.
(7) Upon the filing of the duly executed Certificate of Merger as
provided in the DGCL, the Merger will have been duly and validly effected under
the laws of the State of Delaware.
We have participated with you, your counsel, and independent accountants
in the preparation of the Registration Statement and the Joint Proxy
Statement/Prospectus, including conferences with officers
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110
and other representatives of and independent accountants to Taylor. During the
curse of such representation and after such inquiry as we believe to be
reasonable under the circumstances, but without any independent verification,
nothing has come to our attention to indicate that either the Registration
Statement or the Joint Proxy Statement/Prospectus or any amendment or
supplement thereto, as of their respective dates and as of the date hereof,
except as it relates to PSS and its Subsidiaries or as to financial information
provided by accountants or other parties, contains any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements not misleading or that the
descriptions of the contracts and other documents referred to in the
Registration Statement and Joint Proxy Statement/Prospectus or any amendment or
supplement thereto are not accurate and do not fairly present the information
required to be shown therein.
We are licensed to practice law in the Sate of Texas and before the
federal courts having jurisdiction in Texas, and we express no opinion with
respect to the laws of any jurisdiction other than the State of Texas, the
federal laws of the United States of America and the general corporate laws of
the State of Delaware.
This opinion is rendered solely for the benefit of PSS, Inc. and may not
be used, circulated, quoted or referred to, or otherwise relied upon by any
person, without our prior written permission.
[Final form of Legal Opinion will be subject to
Opinion Committee review and approval]
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111
EXHIBIT 9.2(f)
EMPLOYMENT AGREEMENT
This is an employment agreement between PHYSICIAN SALES & SERVICE,
INC., a Florida corporation with its principal place of business located in
Jacksonville, Florida, including its successors and assigns (hereinafter
collectively referred to as "PSS") and ______________________________, an
individual (hereinafter referred to as "Employee").
RECITALS:
1. PSS is a company engaged in the sale, marketing and distribution
of medical and pharmaceutical supplies and equipment to office-based physicians
(hereinafter "PSS' Business").
2. PSS desires to employ Employee, and Employee desires to work for
PSS under the terms of this Agreement.
3. PSS has developed, at significant cost, a training program,
and agrees to put Employee through its comprehensive training program in order
to instruct Employee as to his/her job and PSS' Business.
4. At great expense to PSS, it has secured customers and solicited
potential customers through its employees, advertising and marketing efforts
throughout the country, and in particular within a fifty (50) mile radius of the
branch at which Employee is employed and/or in the sales territory(ies)
(hereinafter the "Market Area") in which area Employee will have employment
responsibilities involving marketing, training, customer contact and/or exposure
to marketing and/or customer information.
5. With the exception of its employees, PSS considers its most valuable
assets to be its confidential information and trade secrets, including but not
limited to, its customer lists, vendor lists, its pricing information, samples,
lists of contacts, and its technical, training, financial and marketing books,
reports, manuals and information. The parties to this Agreement recognize that
PSS has invested, and continues to invest, considerable amounts of time and
money in obtaining and developing all the information described above
(hereinafter collectively referred to as "PSS' Confidential Information"), as
well as the goodwill of its customers, and any misappropriation or unauthorized
disclosure of PSS' Confidential Information and trade secrets in any form would
irreparably harm PSS.
6. The parties recognize that Employee may take part in attaining and
developing, and/or otherwise will have access to, PSS' Confidential Information
in the course of his/her employment for which PSS will compensate Employee.
In consideration of mutual promises set forth in this Agreement, the
parties to this Agreement hereby agree to the following:
NATURE OF EMPLOYMENT
7. PSS shall employ Employee in such capacities as PSS deems
appropriate, the parties acknowledging that the title and duties assigned to
Employee may change as PSS determines is in its best interest.
COMPENSATION
8. PSS shall pay to Employee compensation as may be determined by PSS,
which PSS may adjust at its discretion based on periodic review.
OTHER SIMULTANEOUS EMPLOYMENT
9. Employee will at all times perform the duties required of him/her
under this Agreement and devote his/her exclusive productive time, energy and
skill to performing his/her duties for PSS.
10. While in PSS' employ, Employee will refrain from engaging in any
other business activity, including, without limitation, providing consulting
services, without PSS' prior written consent, and Employee will promptly notify
PSS' Branch Manager or any officer of PSS of any information Employee learns
about any current or former employee engaging in any business activity similar
or related to PSS' Business.
PSS' INFORMATION TO BE KEPT CONFIDENTIAL
11. Employee shall refrain from directly or indirectly disclosing to
any third party, or using for any purpose other than for the direct benefit of
PSS, any of PSS' Confidential Information during his/her employ and thereafter,
whatever the reason for his/her leaving PSS' employ.
CONFIDENTIALITY OF PSS' PROPERTY
12. Employee recognizes that all of the documents and other tangible
items which contain any of PSS' Confidential Information are PSS' property
exclusively, including those documents and items which Employee may have
developed or contributed to developing while in PSS' employ, whether or not
developed during regular working hours or on PSS' premises.
13. Employee recognizes that all materials, identification information,
keys, computer software and hardware, manuals, data bases, samples, tapes,
technical notes and equipment PSS provides for Employee are also the property
of PSS exclusively. All items described in this and the preceding paragraph are
hereafter collectively referred to as "PSS' Property".
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14. Should Employee's employment be terminated for any reason,
Employee shall:
(a) Refrain from taking any of PSS' Property or allowing any of
PSS' Property to be taken from PSS' premises;
(b) Refrain from reproducing in any manner or allowing to be
reproduced any of PSS' Property;
(c) Refrain from removing any such reproduction from PSS'
premises; and
(d) Immediately return to PSS any original or reproduction of PSS'
Property in his/her possession.
NON-COMPETE COVENANT
15. Unless Employee receives PSS' prior written waiver during his/her
employment with PSS and for a period of two (2) years thereafter, Employee shall
not, either directly or indirectly, either on his/her own behalf or on behalf of
another business, engage in the following activities, or assist others in such
activities, anywhere in the Market Area:
(a) Hiring, recruiting, or attempting to recruit for any person
or business entity which competes with PSS any person
employed by PSS or employed by PSS at any time during the
previous twelve (12) months;
(b) Soliciting any business from any of PSS' current, former or
prospective customers, a prospective customer being defined
as any person or entity PSS has actively solicited, planned to
solicit, or provided services to during the twelve (12) months
prior to Employee's termination of employment with PSS; or
(c) Entering into, engaging in, being employed by, being connected
to, or consulting for any person or business entity which
competes with, or is similar to, PSS' Business or business
planned to be conducted by PSS at the time of Employee's
termination of employment with PSS.
16. Employee further acknowledges that if his/her employment with PSS
terminates for any reason, he/she will be able to earn a livelihood without
violating the foregoing restrictions and that his/her ability to earn a
livelihood without violating such restrictions is a material condition to
his/her employment or continued employment with PSS. Employee agrees that this
covenant is reasonable and shall apply both during the term of Employee's
employment under this Agreement and thereafter, regardless of how said
employment is terminated.
REMEDIES FOR BREACH OF AGREEMENT
17. The parties to this Agreement recognize that irreparable harm
would result from any breach by Employee of the covenants of this Agreement and
that monetary damages alone would not provide adequate relief for any such
breach. Accordingly, if Employee breaches a restrictive covenant of this
Agreement, the parties acknowledge that injunctive relief in favor of PSS is
proper. Moreover, the parties acknowledge and agree that any award of
injunctive relief shall not preclude PSS from seeking or recovering any lawful
compensatory damages which may have resulted from a breach of the covenants
herein or any liquidated damages as provided in paragraph 18.
18. If Employee does not violate the general obligations of the
non-competition provisions of this Agreement, but is hired by a competitor of
PSS, a pharmaceutical company, or by any company engaged in the sale or
distribution of medical or pharmaceutical supplies or equipment within two (2)
years of the end of any PSS training program in which Employee has
participated, Employee agrees to pay PSS $10,000.00 as reimbursement for the
reasonable value of such training.
19. If PSS brings an action to enforce any provision(s) in this
Agreement in a court of competent jurisdiction and secures any relief, Employee
shall pay to PSS all costs and expenses PSS incurs in enforcing this Agreement,
including PSS' court costs and attorney's fees.
20. If Employee breaches a covenant herein containing a specified term
(e.g., Non-Compete Covenant), the term shall be extended by the period of time
between Employee's termination of employment with PSS and the date a court of
competent jurisdiction enters an injunction restraining further breach of the
covenant.
21. If a court of competent jurisdiction determines that any of the
restrictions in this Agreement are overbroad, Employee shall agree to
modification of the affected restriction(s) to permit enforcement to the
maximum extent allowed by law.
22. A waiver of any of Employee's obligations under this Agreement or
any other modification of this Agreement shall be ineffective unless it is set
forth in writing and signed by PSS' President.
23. The parties acknowledge that the restrictive covenants in this
Agreement are essential independent elements of this Agreement and that but for
Employee agreeing to comply with them, PSS would not have employed or have
continued to employ Employee. Accordingly, the existence of any claim by
Employee against PSS, whether based on this Agreement or otherwise, shall not
operate as a defense to PSS' enforcement of any restrictive covenant herein
against Employee.
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COMPETITOR'S INFORMATION
24. If Employee has been employed by a competitor of PSS prior to
signing this Agreement, Employee agrees to immediately return to such employer
all confidential information and property in Employee's possession relating to
the employer. Such information includes, but is not limited to, computer data,
price lists, customer lists, computer access, catalogs and any other
information in any form whatsoever. Employee further agrees not to make any use
of any previous employer's confidential information while an employee of PSS,
to take no actions to further the business of PSS while an employee of another
company, and not to make any attempt to obtain any further information from
his/her present or former employer. Employee, by signing this Agreement,
expressly represents to PSS that Employee, by signing this Agreement, expressly
represents to PSS that Employee has returned to Employee's former employer all
confidential information and property associated with the former employer's
business.
TERM OF AGREEMENT
25. This Agreement shall be effective on this date and shall terminate
as set forth below.
26. With or without notice and for any or no reason, either party may
terminate Employee's employment under this Agreement during the first year of
employment. After one (1) year of employment hereunder, ten (10) days' notice
shall be provided by either party for termination of Employee's employment for
any or no reason. PSS shall have the option of providing pay in lieu of such
notice.
27. Regardless of the length of Employee's employment, PSS may
terminate Employee's employment under this Agreement immediately without notice
for what it determines to be good cause, including without limitation,
misconduct, unsatisfactory job performance or a breach of this Agreement.
28. If Employee's employment with PSS is terminated, Employee shall be
paid all compensation earned through the effective date of termination, but no
other compensation or bonus monies shall be due Employee which are not due and
payable as of the effective date of Employees' termination.
ASSIGNMENT
29. PSS' rights and obligations under this Agreement shall inure to
the benefit of and be binding upon PSS' assigns and successors. Since this
Agreement is personal to Employee, Employee's obligations under this Agreement
may not be assigned or transferred to any other person or entity.
SAVINGS CLAUSE
30. If any provision(s) of this Agreement is declared invalid or
unenforceable, the other provisions of this Agreement shall remain in full
force and effect and shall be construed in a fashion which gives meaning to all
of the other terms of this Agreement.
31. This Agreement shall be governed by the laws of the State of
Florida.
ENTIRE AGREEMENT
32. This Agreement expressly supersedes all practices, understanding,
and agreement, whether written or oral, not specifically set forth in this
Agreement. This Agreement constitutes the entire agreement between PSS and
Employee, and there are no other agreements or understandings concerning this
Agreement which are not fully set forth in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement at
________________________, _________________________ on the _______ day of
__________, 19____.
PHYSICIAN SALES & SERVICE, INC.
By:
- ---------------------------------- -----------------------------------
Witness Its:
----------------------------------
- ---------------------------------- --------------------------------------
Witness Employee
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Exhibit 9.3(d)
Form of Opinion of Alston & Bird
We have acted as counsel to Physician Sales & Service, Inc., a Florida
corporation ("PSS"), and PSS Merger Corp., a Delaware corporation and wholly
owned subsidiary of PSS ("Merger Corp."), in connection with the execution and
delivery of that certain Agreement and Plan of Merger, dated as of April 9,
1995 (the "Agreement") by and among PSS, Merger Corp. and Taylor Medical, Inc.
("Taylor"), and the consummation of the transactions contemplated therein.
This opinion is delivered to you pursuant to Section 9.3(d) of the Agreement.
Unless otherwise specified herein, capitalized terms used herein shall have the
meanings ascribed to them in the Agreement.
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such corporate records of each of
PSS and Merger Corp., and such agreements, opinions and other instruments,
certificates of officers of each such company and other persons and such other
documents as we have deemed necessary as a basis for rendering the opinions
hereinafter expressed. In such examination, we have assumed the genuineness of
all signatures, the authenticity and completeness of all documents submitted to
us as originals and the conformity to original documents of all documents
submitted to us as certified, conformed or photostatic copies, and, as to
certificates of public officials, we have assumed the same to have been
properly given and to be accurate. We have also relied, as to various matters
of fact material to this opinion, on certificates of public officials and
officers of PSS and Merger Corp. We have no reason to believe that we are not
justified in relying on any of the aforementioned items.
During the course of our examination, we have assumed the due
authorization, valid execution and delivery of all relevant documents by the
parties thereto other than PSS and Merger Corp., and that the execution,
delivery and performance of all relevant documents by the parties thereto,
other than PSS and Merger Corp., have been duly authorized and are valid and
binding upon such parties, and that such parties have the full power, authority
and legal right to perform their obligations under such documents.
Whenever an opinion with respect to the existence or absence of facts is
qualified by the phrase "to our knowledge," it is intended to indicate that,
during the course of our representation as described herein, no information has
come to the attention of those attorneys in this firm who rendered such legal
services that would give us actual knowledge of the existence or absence of
such facts. However, except to the extent expressly set forth herein, we have
not undertaken any independent investigation to determine the existence of
absence of such facts.
Based upon the foregoing, and subject to the limitations expressed below,
we are of the opinion that:
1. Each of PSS and Merger Corp. is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation
and has the corporate power and authority to own, lease and operate its assets
and properties and to carry on the business in which it is engaged as described
in the Proxy Statement/Prospectus.
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2. Each of PSS and Merger Corp. possesses the full corporate right, power
and authority to enter into the Agreement and all documents related thereto to
which each of them is a party, and the Agreement and all such other documents
have been duly and validly authorized, executed and delivered by each such
company, and no other corporate proceedings are necessary to authorize the
Agreement and such other documents or to consummate the Merger.
3. The Agreement and all documents related thereto to which PSS or Merger
Corp., as the case may be, is a party constitute the valid and binding
obligations of PSS or Merger Corp., as the case may be, enforceable against
each in accordance with their respective terms, except as enforcement may be
(i) limited by applicable bankruptcy, insolvency, liquidation, reorganization
and other similar laws affecting the enforceability of creditor's rights
generally; and (ii) subject to general principles of equity.
4. The authorized capital stock of PSS consists of (i) 20,000,000 shares
of common stock, 6,779,799 of which shares were issued and outstanding as of
March 30, 1995 and none of which were issued and held as treasury shares, and
(ii) 1,000,000 shares of Preferred Stock, none of which were issued and
outstanding as of April 9, 1995 and none of which were issued and held as
treasury shares. To our knowledge, all such shares were validly issued and are
fully paid and nonassessable under applicable provisions of the Florida
Business Corporation Act.
5. Neither (i) the execution, delivery and performance of the Agreement
and the documents related thereto to which PSS or Merger Corp. is a party; (ii)
compliance by PSS and Merger Corp. with all of the provisions of the Agreement
and the documents related thereto to which they are a party; nor (iii)
consummation of the respective transactions contemplated thereby, does or will
result in a breach of, or constitute a default, breach or violation, or result
in the creation of any material lien or encumbrance on the properties of PSS or
its Subsidiaries under any material agreement known to us to which PSS or
Merger Corp. is a party, or under any judgment, decree, order, statute, rule,
license or governmental regulation known to us and applicable to PSS or Merger
Corp., unless such default, breach or violation has been duly and validly
waived or excused.
6. The Registration Statement filed by PSS under the Securities Act of
1933, as amended (the "1933 Act"), has been declared effective under the 1933
Act, and to our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been initiated or are pending or contemplated. We do not know of any legal or
governmental proceedings pending or threatened to which PSS or any of its
Subsidiaries is a party or to which any of the properties of PSS or any of its
Subsidiaries are subject, which is required to be described in the Registration
Statement or Proxy Statement/Prospectus and is not so described, other than
litigation incident to the kind of business conducted by PSS and its
Subsidiaries which individually and in the aggregate is not material to PSS and
its Subsidiaries considered as one enterprise, and we do not know of any
litigation, contract or other document which is required to be described in the
Registration Statement or Proxy Statement/Prospectus or is required to be filed
as an exhibit to the Registration Statement which is not described or so filed
as required. Except as to portions relating to Taylor and its Subsidiaries,
and except for financial statements and other financial or statistical
information, as to which we express no opinion, the Registration Statement and
Proxy Statement/Prospectus and any supplement or amendment thereto complies as
to form in all material respects with the 1933 Act.
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7. The shares of PSS Common Stock to be issued to the shareholders of
Taylor in the Merger, when properly issued and delivered following consummation
of the Merger, will be fully paid and nonassessable under the Florida Business
Corporation Act.
We have participated with you, your counsel, and independent accountants
in the preparation of the Registration Statement and the Proxy
Statement/Prospectus, including conferences with officers and other
representatives of and independent accountants to Taylor. During the course of
such representation and after such inquiry as we believe to be reasonable under
the circumstances, but without any independent verification, nothing has come
to our attention to indicate that either the Registration Statement or the
Proxy Statement/Prospectus or any amendment or supplement thereto, as of their
respective effective dates and as of the date hereof, except as it relates to
Taylor and its Subsidiaries or as to financial information provided by
accountants or other parties, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements not misleading or that the descriptions of the
contracts and other documents referred to in the Registration Statement and
Proxy Statement/Prospectus or any amendment or supplement thereto are not
accurate and do not fairly present the information required to be shown.
We are licensed to practice law in the State of Georgia and before the
federal courts having jurisdiction in Georgia, and we express no opinion with
respect to the laws of any jurisdiction other than the State of Georgia, the
State of Florida, the federal laws of the United States of America and the
general corporate laws of the State of Delaware. We are relying as to matters
of Florida law on the opinion of Fred Elefant.
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