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Exhibit 2.02
ESCROW AGREEMENT
AGREEMENT, dated as of ________ __, 1997, among Cardinal
Health, Inc., an Ohio corporation ("Cardinal"), MediQual Systems, Inc., a
Delaware corporation ("MediQual"), ▇▇▇▇ ▇. ▇▇▇▇▇ (the "MediQual Stockholders
Representative"), and Bank One Trust Company, NA, a national banking
association, as escrow agent (the "Escrow Agent").
Preliminary Statements:
A. Cardinal, MediQual and Hub Merger Corp., a Delaware
corporation ("Subcorp"), have entered into an Amended and Restated Agreement and
Plan of Merger dated as of July 7, 1997 (the "Merger Agreement"), pursuant to
which, among other things, Cardinal will acquire the businesses operated by
MediQual through the merger of Subcorp with and into MediQual, with MediQual as
the surviving corporation, in accordance with the terms and conditions of the
Merger Agreement.
B. Capitalized terms used but not otherwise defined herein
shall have the respective meanings given them in the Merger Agreement.
C. The Merger Agreement provides that Cardinal shall be
indemnified, subject to the limitations set forth in the Merger Agreement, by
the MediQual Stockholders for certain possible losses.
D. To facilitate such indemnification, the Merger Agreement
provides for the deposit into escrow of a portion of the Cardinal Common Shares
otherwise to be distributed to the MediQual Stockholders to secure certain
indemnification obligations of the MediQual Stockholders and to provide for the
payment of the expenses of the MediQual Stockholders Representative incurred in
such capacity.
E. Cardinal and the Stockholders Representative desire to
secure the services of the Escrow Agent, and the Escrow Agent is willing to
provide such services, pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION I
APPOINTMENT OF ESCROW AGENT; RESIGNATION AND SUCCESSOR
1.1 APPOINTMENT OF ESCROW AGENT. The Escrow Agent is hereby
appointed, and accepts its appointment and designation as, Escrow Agent pursuant
to the terms and conditions of this Agreement.
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1.2 RESIGNATION OF ESCROW AGENT; APPOINTMENT OF SUCCESSOR. The
Escrow Agent acting at any time hereunder may resign at any time by giving at
least 30 days' prior written notice of resignation to Cardinal and the MediQual
Stockholders Representative, such resignation to be effective on the date
specified in such notice. Upon receipt of such notice, Cardinal shall, unless
otherwise agreed between Cardinal and the MediQual Stockholders Representative,
appoint a bank or trust company with a combined capital and surplus of at least
$100 million as successor Escrow Agent, by a written instrument delivered to
such Escrow Agent and the MediQual Stockholders Representative, whereupon such
successor Escrow Agent shall succeed to all the rights and obligations of the
retiring Escrow Agent as of the effective date of resignation as if originally
named herein. Upon such assignment of this Escrow Agreement, the retiring Escrow
Agent shall duly transfer and deliver the Escrow Deposit at the time held by the
retiring Escrow Agent, provided that, if no successor Escrow Agent shall have
been appointed on the effective date of resignation of the resigning Escrow
Agent hereunder, the resigning Escrow Agent may pay the Escrow Deposit into a
court of competent jurisdiction.
SECTION II
ESCROW ARRANGEMENTS
2.1 LIABILITY SECURED BY THE ESCROW DEPOSIT. This Escrow
Agreement has been executed and delivered, and the Escrow Account (as defined
in Section 2.2(d)) is hereby established, subject to the limitations set forth
in the Merger Agreement, to (i) facilitate any indemnification which may be owed
to Cardinal pursuant to the Merger Agreement, and (ii) to provide for the
payment of the expenses incurred by the MediQual Stockholders Representative in
serving in such capacity. That portion of the Escrow Deposit (as defined below)
attributable to ______ of the Escrowed Shares [6% of the aggregate number of
Cardinal Common Shares which would be issuable to MediQual Stockholders on the
Closing Date (including all of the Retained Shares)] including any Additional
Property (as defined below) deposited into the Escrow Account in respect of such
shares (hereinafter referred to collectively as the "First Escrowed Amount"),
will be available to satisfy claims of Cardinal in accordance with Section 3.1
hereof, and that portion of the Escrow Deposit attributable to ____________ of
the Escrowed Shares [0.5% of the aggregate number of Cardinal Common Shares
which would be issuable to MediQual Stockholders on the Closing Date (including
all of the Retained Shares)] including any Additional Property (as defined
below) deposited into the Escrow Account in respect of such shares (hereinafter
referred to collectively as the "Second Escrowed Amount"), will be available to
satisfy the reimbursement of the expenses incurred by the MediQual Stockholders
Representative
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incurred in such capacity in accordance with Section 3.2 hereof. In addition, in
the event that any of the First Escrowed Amount is still available upon the
satisfaction of all Indemnification Obligations (as defined below), but prior to
the distribution of any such amount to the MediQual Stockholders in accordance
with Section 3.3, such remaining First Escrowed Amount shall also constitute
part of the Second Escrowed Amount in accordance with the terms of such Section
3.3 hereof.
2.2 DELIVERY OF THE ESCROWED SHARES; ETC. (a) On the Closing
Date, Cardinal shall deliver to the Escrow Agent certificates bearing
appropriate legends registered in the name of the "Escrow Agent under Escrow
Agreement, dated _______ ___, 1997, by and among Cardinal Health, Inc., an Ohio
corporation, MediQual Systems, Inc., a Delaware corporation, ▇▇▇▇ ▇. ▇▇▇▇▇ and
Bank One Trust Company, NA", for the applicable number of Cardinal Common Shares
determined in accordance with Section 2.1(h) of the Merger Agreement (such
Shares, together with any additional Cardinal Common Shares distributed in
respect thereof pursuant to any stock split (or deposited with respect to any
such stock split shares), and any cash deposited into the Escrow Account
pursuant to Section 2.2(b), collectively the "Escrowed Shares"). Cardinal shall
also deliver to the Escrow Agent for deposit into the Escrow Account all cash
dividends or Cardinal Common Shares distributed pursuant to any stock dividend,
reclassification of shares or other transaction to which such shares may be
subject, and any other securities, cash or other property distributed in respect
of the Escrowed Shares (whether by way of liquidation, merger, exchange,
spin-off or otherwise), any investments or securities permitted by this
Agreement and any interest received thereon (collectively, the "Additional
Property"). (The Escrowed Shares, together with the Additional Property, shall
constitute the "Escrow Deposit".) Notwithstanding any other provision of this
Agreement to the contrary, whenever Escrowed Shares are to be distributed
pursuant to this Agreement, except for distributions made pursuant to Section
2.2(b), there shall be distributed to the party entitled to such Escrow Shares,
concurrently with the delivery of such Escrowed Shares, the Additional Property
relating thereto. The parties agree that all such distributions of Additional
Property made to the MediQual Stockholders in respect of such Escrowed Shares,
including, without limitation, all such interest and all other income earned on
such shares, shall be interest and income of the MediQual Stockholders and shall
be reported for federal, state and local tax purposes as for the accounts of the
MediQual Stockholders, pro rata in accordance with their respective ownership as
reflected on the then current Ownership Certificate (as hereinafter defined).
(b) In order to facilitate the transfer (subject to applicable
restrictions, if any) by the MediQual Stockholders of their respective Escrowed
Shares (but no Additional Property in
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respect thereof), at any time and from time to time during the term of this
Agreement, the MediQual Stockholders Representative, on behalf of any MediQual
Stockholder, shall have the right to substitute cash for any Escrowed Shares
included in the Escrow Deposit by depositing with the Escrow Agent an amount of
cash equal to the product of (i) the number of Escrowed Shares such MediQual
Stockholder wishes to substitute cash for (the "Substituted Shares"), times (ii)
the value of such Substituted Shares (as determined in accordance with Section
8.7 of the Merger Agreement). Upon any such substitution, the Escrow Agent shall
open a separate subaccount for such MediQual Stockholder. Upon receipt of such
amount of cash in respect of such Substituted Shares, together with a certified
form W-9 and such other information as the Escrow Agent may reasonably require,
the Escrow Agent shall release such Substituted Shares to the MediQual
Stockholders Representative on behalf of such MediQual Stockholder.
(c) On the Closing Date, the MediQual Stockholders
Representative shall deliver to the Escrow Agent a written certificate setting
forth the respective ownership interests of each MediQual Stockholder with
respect to the Escrowed Shares (as the same may be amended from time to time in
accordance with the next sentence, the "Ownership Certificate"). The Ownership
Certificate may be amended from time to time by written certificate executed by
the MediQual Stockholders Representative and delivered to the Escrow Agent.
(d) The Escrow Agent shall hold the Escrow Deposit in an
escrow account (the "Escrow Account") for the benefit of the MediQual
Stockholders and Cardinal. The Escrow Deposit shall not be subject to any lien
or attachment of any creditor or any party thereto, and shall be used solely for
the purposes and subject to the conditions set forth in this Agreement and the
Merger Agreement.
2.3 INVESTMENT OF THE ESCROW DEPOSIT. Except for the release
of the Escrow Shares pursuant to Section 2.2(b) and the release of the Escrow
Deposit pursuant to Section 3 hereof, the Escrow Agent shall not sell or
transfer any of the Escrowed Shares. The Escrow Agent is hereby authorized and
directed to invest any cash contained in the Escrow Deposit in the following
obligations (collectively, the "Permitted Investments"):
(a) obligations of, or fully guaranteed as to timely payment
of principal and interest by, the United States of America;
(b) such money market funds as are agreed to from time to time
by Cardinal and the MediQual Stockholders Representative; and
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(c) certificates of deposit with any bank or trust company
organized under the laws of the United States of America or any agency or
instrumentality thereof or under the laws of any state thereof which has a
combined capital and surplus of at least $100,000,000.
Subject to the foregoing limitations, the Escrow Agent shall
invest any such cash in accordance with written instructions delivered to it by
the MediQual Stockholders Representative from time to time. Except as provided
above, the Escrow Agent shall have no power or duty to invest the Escrow Deposit
or to make substitutions therefor or to sell, transfer or otherwise dispose of
investments acquired hereunder.
2.4 RIGHT TO VOTE THE ESCROWED SHARES. The MediQual
Stockholders Representative, on behalf of the MediQual Stockholders, shall have
the right to direct the Escrow Agent in a writing signed by the MediQual
Stockholders Representative to exercise the voting rights pertaining to all or a
portion of the Escrowed Shares that remain in the Escrow Account. The Escrow
Agent shall comply with any such directions. In the absence of such directions,
the Escrow Agent shall vote all of the Escrowed Shares in accordance with the
recommendations of management of Cardinal.
SECTION III
RELEASE OF THE ESCROW DEPOSIT
3.1 DISTRIBUTIONS FOR INDEMNIFICATION. (a) At any time prior
to the earlier of (i) the date on which Cardinal's audited financial statements
for the first fiscal year ending after the Effective Time are issued and (ii)
the first anniversary of the Effective Time (the "Escrow Date"), Cardinal may
deliver to the Escrow Agent (with a copy to the MediQual Stockholders
Representative) a certificate (a "Notice of Claim") (i) stating that Cardinal is
of the opinion that it may be entitled to indemnification pursuant to Article
VIII of the Merger Agreement (an "Indemnification Obligation"), (ii) stating the
aggregate amount (the "Claim Amount") of such Indemnification Obligation (or, in
the case of an unliquidated Indemnification Obligation, a good faith and
reasonable estimate thereof), and (iii) specifying in reasonable detail the
nature of such Indemnification Obligation. Any Notice of Claim delivered
pursuant to this Section 3.1 with respect to any unliquidated Indemnification
Obligation may be supplemented by a later Notice of Claim specifying in greater
detail the applicable Claim Amount or any other items set forth therein. Upon
delivery of any such Notice of Claim, the Escrow Agent shall, within three
business days of receipt thereof, deliver a written notice together with a copy
of such Notice of Claim to the MediQual Stockholders Representative.
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(b) If the MediQual Stockholders Representative shall object
on behalf of the MediQual Stockholders to the Indemnification Obligation or the
Claim Amount specified in such Notice of Claim, the MediQual Stockholders
Representative shall, within ten business days after delivery of the written
notice containing a copy of any such Notice of Claim, deliver to the Escrow
Agent a certificate (a "Reply Certificate") (x) specifying each such objection,
and (y) specifying in reasonable detail the nature and basis for such objection.
Within three business days after delivery to the Escrow Agent of a Reply
Certificate, the Escrow Agent shall deliver a copy of such Reply Certificate to
Cardinal. Cardinal and the MediQual Stockholders Representative shall negotiate
in good faith for a period of 20 days after delivery of such Reply Certificate
to Cardinal to reach a written resolution of any objections raised in a Reply
Certificate.
(c) If no Reply Certificate is delivered with respect to any
Notice of Claim, then the MediQual Stockholders Representative shall be deemed
to have delivered a Payment Authorization (as defined below) acknowledging
Cardinal's right to receive the Claim Amount specified in such Notice of Claim
with respect to the applicable Indemnification Obligation and the Escrow Agent
shall transfer to Cardinal a portion of the First Escrowed Amount in an amount
equal to such Claim Amount, all in accordance with the procedures set forth in
Section 3.1(e).
(d) If the Escrow Agent receives a Reply Certificate in a
timely manner with respect to any Notice of Claim, the Claim Amount referred to
in such Notice of Claim shall be held by the Escrow Agent and shall not be
released to Cardinal except upon Cardinal's delivery to the Escrow Agent of
either (i) joint written instructions signed by an authorized officer of
Cardinal and by the MediQual Stockholders Representative directing the Escrow
Agent to release the Claim Amount (or any other amount mutually agreed upon by
such parties) or (ii) a final, non-appealable judgment of the arbitrators in the
arbitration proceeding referred to in Section 8.5 of the Merger Agreement
relating to the Indemnification Obligation referred to in such Notice of Claim
demonstrating that Cardinal is entitled to indemnification for such Claim Amount
from the MediQual Stockholders pursuant to the Merger Agreement (either of (i)
or (ii), a "Payment Authorization"), at which date the portion of the amount due
to Cardinal determined pursuant to (i) or (ii) above shall promptly be paid to
Cardinal in accordance with the procedures set forth herein.
(e) As soon as practicable following receipt by the Escrow
Agent of a Payment Authorization, the Escrow Agent shall pay from the First
Escrowed Amount to Cardinal as follows, in the following order of priority, to
the extent required to make such payment:
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FIRST, the Escrow Agent shall transfer, deliver and assign to
Cardinal such number of Escrowed Shares (rounded up or down to the
nearest whole share in the case of the Escrow Shares that are not cash)
included in the First Escrowed Amount held in the Escrow Account as
shall have a value equal to the amount required to make or complete
such payment, it being understood and agreed that such non-cash
Escrowed Shares shall be valued for such purpose as set forth in
Section 8.7 of the Merger Agreement, together with the Additional
Property related thereto;
SECOND, to the extent of any insufficiency, the Escrow Agent
shall utilize any cash not part of the Escrowed Shares included in the
First Escrowed Amount then held in the Escrow Deposit; and
THIRD, to the extent of any insufficiency, the Escrow Agent
shall sell securities or investments included in the First Escrowed
Amount, other than the Escrowed Shares, then held in the Escrow Deposit
for cash and utilize such cash to make up such insufficiency.
To the extent the Escrow Agent is required to transfer, deliver and assign to
Cardinal any Escrowed Shares included in the First Escrowed Amount, Cardinal
shall assist and cooperate in a reasonable manner with the Escrow Agent to
facilitate such transfer, delivery and assignment. In the event the First
Escrowed Amount shall be insufficient to pay the amount expressly set forth in
such Payment Authorization, the Escrow Agent shall deliver to Cardinal the
entire remaining First Escrowed Amount and then deliver to Cardinal and to the
MediQual Stockholders Representative a written notification setting forth the
amount by which such Payment Authorization exceeds the amount of the First
Escrowed Amount so paid.
(f) To the extent that any payment pursuant to Section 3.1(e)
hereof shall be made in cash, the Escrow Agent shall pay all such amount to
Cardinal by wire transfer to the bank account or accounts designated by Cardinal
to the Escrow Agent in writing not less than one business day prior to the date
of such payment.
(g) Notwithstanding anything to the contrary in this
Agreement, in no event shall Cardinal be entitled to receive any amounts from
the Escrow Deposit in excess of the amount of the First Escrowed Amount.
3.2 DISTRIBUTION FOR EXPENSES OF THE MEDIQUAL STOCKHOLDERS
REPRESENTATIVE. (a) At any time during which there are Second Escrow Amounts
retained in the Escrow Deposit, the MediQual Stockholders Representative may
deliver to the Escrow Agent (with a copy to Cardinal) a certificate (a "Notice
of Expenses") stating that (i) the MediQual Stockholders
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Representative has incurred, or expects to incur, expenses, disbursements or
advances (including fees and disbursements of its counsel, experts and other
agents and consultants) in such capacity ("Representative Expenses"), (ii)
stating the aggregate amount of such Representative Expenses, and (iii)
specifying in reasonable detail the nature of such Representative Expenses.
Within five days of receipt of a Notice of Expenses, the Escrow Agent shall
transfer to the MediQual Stockholders Representative a portion of the Second
Escrowed Amount equal to the amount of such Representative Expenses as follows:
FIRST, the Escrow Agent shall transfer, deliver and assign to
the MediQual Stockholders Representative such number of
Escrowed Shares (rounded up or down to the nearest whole share
in the case of the Escrow Shares that are not cash) together
with the Additional Property related thereto included in the
Second Escrowed Amount held in the Escrow Account as shall
have a value equal to the amount required to make or complete
such payment, it being understood and agreed that such
non-cash Escrowed Shares shall be valued for such purpose as
set forth in Section 3.2(d) hereof, together with the
Additional Property related thereto;
SECOND, to the extent of any insufficiency, the Escrow Agent
shall utilize any cash not part of the Escrowed Shares
included in the Second Escrowed Amount held in the Escrow
Deposit; and
THIRD, to the extent of any insufficiency, the Escrow Agent
shall sell securities or investments included in the Second
Escrowed Amount, other than the Escrowed Shares, then held in
the Escrow Deposit for cash and utilize such cash to make up
such insufficiency.
To the extent the Escrow Agent is required to transfer, deliver and assign to
the MediQual Stockholders Representative any Escrowed Shares included in the
Second Escrowed Amount, the MediQual Stockholders Representative shall assist
and cooperate in a reasonable manner with the Escrow Agent to facilitate such
transfer, delivery and assignment. In the event that the Second Escrowed Amount
shall be insufficient to pay the amount of any Representative Expenses
specifically set forth in such Notice of Expenses, the Escrow Agent shall
deliver to the MediQual Stockholders Representative the entire remaining Second
Escrowed Amount and then deliver to the MediQual Stockholders Representative a
written notification setting forth the amount by which the Representative
Expenses set forth in such Notice of Expenses exceeds the amount of the Second
Escrowed Amount so paid. Nothing in this Agreement shall be deemed to restrict
or prohibit the MediQual Stockholders Representative from exercising any rights
or remedies it may have with respect to the MediQual
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Stockholders, whether by way of indemnification or contribution, or otherwise,
for reimbursement of expenses incurred by the MediQual Stockholders
Representative in such capacity.
(b) To the extent that any payment pursuant to Section 3.2(a)
hereof shall be made in cash, the Escrow Agent shall pay all such amount to the
MediQual Stockholders Representative by wire transfer to the bank account or
accounts designated by the MediQual Stockholders Representative in writing not
less than one business day prior to the date of such payment.
(c) Notwithstanding anything to the contrary in this
Agreement, in no event shall the MediQual Stockholders Representative be
entitled to receive any amounts from the Escrow Deposit in excess of the sum of
(i) the amount of the Second Escrowed Amount, plus (ii) any of the First
Escrowed Amount which is not the subject of an Unresolved Claim on the Escrow
Date.
(d) For purposes of this Section 3.2, any non-cash Escrowed
Shares distributed to the MediQual Stockholders Representative shall be valued
for such purpose as the closing price of Cardinal Common Shares as reported on
the New York Stock Exchange Composite Tape on the last trading date immediately
preceding the date on which such shares are distributed to the MediQual
Stockholders Representative.
3.3 RELEASE UPON THE ESCROW DATE. (a) On the Escrow Date, the
Escrow Agent shall distribute the Escrow Deposit to the MediQual Stockholders
and shall terminate the Escrow Account, unless (i) the Escrow Agent shall have
received a Notice of Claim from Cardinal prior to the Escrow Date with respect
to an indemnification claim (an "Unresolved Claim") for which the Escrow Agent
has not received a subsequent Payment Authorization or written notification
signed by Cardinal and the MediQual Stockholder's Representative, informing the
Escrow Agent of the termination or other resolution of such claim or claims
(each, a "Claim Termination Notice"), or (ii) the Escrow Agent shall have
received a Notice of Expenses from the MediQual Stockholders Representative
informing the Escrow Agent that the MediQual Stockholders Representative expects
to incur additional Representative Expenses in connection with Unresolved Claims
or otherwise (an "Expense Claim"). If on the Escrow Date there shall exist any
Unresolved Claim or Expense Claim, then (i) the Escrow Agent shall retain the
Escrow Deposit in the Escrow Account in an amount sufficient for the payment of
all Claim Amounts with respect to all such Unresolved Claims (but not in excess
of the remainder of the First Escrowed Amount), and shall retain in the Escrow
Account in an amount sufficient to cover such Expense Claims (but not in excess
of the remainder of the Escrow Deposit), and (ii) the Escrow Agent shall release
to the MediQual Stockholders the portion of the Escrow Deposit in the Escrow
Account not otherwise retained in accordance with clause
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(i). For all purposes of this Section 3.3(a), the Escrowed Shares (other than
the cash which may be a part thereof) shall be valued as set forth in Section
3.1, in the case of the First Escrowed Amount, or Section 3.2, in the case of
the Second Escrowed Amount.
(b) Upon the resolution of any Unresolved Claim, the Escrow
Agent shall (A) release any portion of the Escrow Deposit retained in respect of
such Unresolved Claim (x) to Cardinal in accordance with any Payment
Authorization received by the Escrow Agent in respect of such Unresolved Claim
or (y) to the MediQual Stockholders in accordance with any Claim Termination
Notice received by the Escrow Agent in respect of such Unresolved Claim and, if
no other Unresolved Claims or Expense Claims remain outstanding, (B) release the
remainder of the Escrow Deposit to the MediQual Stockholders. For purposes of
this Section 3.3(b), the Escrowed Shares shall be valued as set forth in Section
8.7 of the Merger Agreement.
(c) Any distribution to the MediQual Stockholders
Representative pursuant to this Section 3.3 shall be made by the Escrow Agent to
the MediQual Stockholders based on their respective interests in the Escrowed
Shares (as reflected in the then most recent version of the Ownership
Certificate) and the cash and other investments constituting the Escrow Deposit,
subject to any written instructions of the MediQual Stockholders Representative
(including, without limitation, any instructions as to the liquidation of the
Escrow Account and/or the transfer of the Escrowed Shares to the transfer agent
of Cardinal). The Escrow Agent shall sign such stock powers or other documents
of transfer as are necessary to transfer any remaining Escrowed Shares included
within the Escrow Deposit in accordance with such instructions (the "Released
Shares").
SECTION IV
ESCROW AGENT
4.1 FEES. For its services hereunder, the Escrow Agent shall
receive (i) $2,500 upon its receipt of the Escrow Deposit at the Closing (which
shall constitute the fee for initiating the transaction and the fee for the
first year of the Agreement), (ii) commencing on the first anniversary of the
date hereof and then annually thereafter, $1,500 for each calendar year until it
has delivered all of the Escrow Deposit pursuant to Section 3 (prorated for
partial years), and (iii) the transaction fees set forth on Schedule 1 attached
hereto. The Escrow Agent shall be reimbursed for all reasonable out-of-pocket
expenses incurred by the Escrow Agent necessary to perform such services (other
than taxes imposed in respect of the receipt of the fees referred to in the
preceding sentence). The fees, expenses and
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reimbursements referred to in the foregoing two sentences shall be paid by
Cardinal.
4.2 RESPONSIBILITIES OF ESCROW AGENT. The Escrow Agent's
acceptance of its duties under this Agreement is subject to the following terms
and conditions, which the parties hereto agree shall govern and control with
respect to its rights, duties, liabilities and immunities:
(a) Except as to its due execution and delivery of the
Agreement, it makes no representation and has no responsibility as to the
validity of this Agreement or of any other instrument referred to herein, or as
to the correctness of any statement contained herein, and it shall not be
required to inquire as to the performance of any obligation under the Merger
Agreement.
(b) The Escrow Agent shall be protected in acting upon any
written notice, request, waiver, consent, receipt or other paper or document,
not only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth of any information therein contained, which
it in good faith believes to be genuine and what it purports to be.
(c) The Escrow Agent shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it in good faith, or
for any mistake of fact or law, or for anything which it may do or refrain from
doing in connection therewith, except its own gross negligence or misconduct.
(d) The Escrow Agent may consult with competent and
responsible legal counsel selected by it, and it shall not be liable for any
action taken or omitted by it in good faith in accordance with the advice of
such counsel.
(e) Cardinal and the MediQual Stockholders agree to jointly
and severally indemnify and hold the Escrow Agent and its directors, employees,
officers, agents, successors and assigns (collectively, the "Indemnified
Parties") harmless from and against any and all losses, claims, damages,
liabilities and expenses (collectively, "Damages"), including, without
limitation, reasonable costs of investigation and counsel fees and expenses
which may be imposed on the Escrow Agent or incurred by it in connection with
its acceptance of this appointment as the Escrow Agent hereunder or the
performance of its duties hereunder. Such indemnity includes, without
limitation, Damages incurred in connection with any litigation (whether at the
trial or appellate levels) arising from this Escrow Agreement or involving the
subject matter hereof. The indemnification provisions contained in this
paragraph are in addition to any other rights any of the Indemnified Parties may
have by law or otherwise and shall survive the termination of this Agreement or
the resignation or removal of the Escrow Agent. Notwithstanding
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any provision to the contrary in this Escrow Agreement, Cardinal and the
MediQual Stockholders shall have no liability to the Indemnified Parties with
respect to any Damages that result, directly or indirectly, from the gross
negligence or misconduct of the Escrow Agent. Any obligation of the MediQual
Stockholders pursuant to this Section shall be satisfied only by the deduction
from the Escrow Deposit by the MediQual Stockholders Representative of the
amount of such obligations.
(f) The Escrow Agent shall have no duties or responsibilities
except those expressly set forth herein, and it shall not be bound by any
modification of this Agreement unless in writing and signed by all parties
hereto or their respective successors in interest.
(g) The Escrow Agent shall have no responsibility in respect
of the validity or sufficiency of this Escrow Agreement or of the terms hereof.
The recitals of facts in this Escrow Agreement shall be taken as the statements
of Cardinal and the MediQual Stockholders, and the Escrow Agent assumes no
responsibility for the correctness of the same.
(h) The Escrow Agent shall be protected in acting upon any
notice, resolution, request, consent, order, certificate, report, opinion, bond
or other paper or document reasonably believed by it to be genuine and to have
been signed and presented by the proper party or parties. Whenever the Escrow
Agent shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering any action under this Escrow Agreement,
such matter may be deemed inclusively proved and established by a certificate
signed by Cardinal and the MediQual Stockholders Representative (on behalf of
the MediQual Stockholders), and such certificate shall be full warranty for any
action taken or suffered in good faith under the provisions of this Escrow
Agreement.
(i) Except as specifically set forth above, the Escrow Agent
does not have any interest in the Escrow Deposit but is serving as escrow agent
only and having only possession thereof. This Section 4.2(i) shall survive
notwithstanding any termination of this Agreement or the resignation of the
Escrow Agent.
SECTION V
CERTAIN TRANSACTIONS
5.1 MERGER AND OTHER EXCHANGE TRANSACTIONS. In the event of
any consolidation or merger of Cardinal with or into any other corporation or in
the event of any other transaction upon which the holders of Cardinal Common
Shares are entitled to receive cash, shares of stock, securities or other
property in
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exchange for their Cardinal Common Shares, the Escrow Agent, if and to the
extent directed to do so by Cardinal, shall present such Escrow Shares which are
Cardinal Common Shares for such exchange, conversion or otherwise. Any such
cash, shares of stock, securities or other property received from such exchange,
conversion or otherwise shall be deposited in the Escrow Account and shall be
disbursed in accordance with the terms of this Escrow Agreement to Cardinal
and/or the MediQual Stockholders entitled thereto.
5.2 MERGER, ETC. OF CARDINAL. Nothing contained in this Escrow
Agreement shall prevent any merger, liquidation or consolidation of Cardinal
with or into another corporation or corporations, or successive consolidations
or mergers in which Cardinal or its successor or successors shall be a party or
parties, or any sale or other conveyance of all or substantially all of the
property of Cardinal to another corporation.
SECTION VI
MISCELLANEOUS
6.1 MEDIQUAL STOCKHOLDERS REPRESENTATIVE. By virtue of the
approval and adoption of the Merger Agreement at the MediQual Stockholders
Meeting, the MediQual Stockholders have irrevocably appointed the MediQual
Stockholders Representative to act on behalf of the MediQual Stockholders with
respect to all matters relating to this Agreement and Article VIII of the Merger
Agreement, including without limitation in considering and certifying the amount
of any indemnification hereunder, in communicating with the MediQual
Stockholders, in appointing a successor Escrow Agent hereunder, in considering
and acting with respect to any amendment or termination of this Agreement, and
generally in performing all acts expressly required or permitted to be performed
by the MediQual Stockholders Representative pursuant hereto and pursuant to the
Merger Agreement. Cardinal and the Escrow Agent shall have the right to deal
exclusively with the MediQual Stockholders Representative with respect to all
matters under this Agreement and neither Cardinal nor the Escrow Agent shall
have any liability to any MediQual Stockholders for any acts or omissions of the
MediQual Stockholders Representative, or any acts or omissions taken or not
taken by Cardinal or the Escrow Agent at the direction of the MediQual
Stockholders Representative, including, but not limited to (i) any acts or
omissions relating to the voting of any Escrowed Shares or (ii) the transferring
of or the failure to transfer any shares or funds released from escrow. Upon any
distribution of Escrowed Shares or other funds to the MediQual Stockholders
Representative (or to one or more of the MediQual Stockholders upon written
instruction of the MediQual Stockholders Representative) in accordance with this
Agreement, the Escrow
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Agent and Cardinal shall be deemed to have fully satisfied any and all
obligations to the MediQual Stockholders under this Agreement and the Merger
Agreement with respect to the amount of such distribution. The MediQual
Stockholders Representative shall be entitled to reimbursement from the Second
Escrowed Amount, in accordance with the terms of this Agreement, for all
reasonable expenses, disbursements and advances (including fees and
disbursements of its counsel, experts and other agents and consultants) incurred
by the MediQual Stockholders Representative in such capacity.
6.2 AMENDMENT AND TERMINATION This Agreement may be amended or
terminated by the written agreement of the parties hereto, or shall terminate
automatically at such time as all securities and funds from the Escrow Deposit
have been paid or distributed in accordance with the terms of this Agreement and
the Escrow Agent has received all fees as described in Section 6.1 hereto.
Notwithstanding the foregoing, all provisions concerning the indemnification of
the Escrow Agent shall survive any termination of this Agreement.
6.3 NOTICES. All notices, requests, demands, letters, waivers
and other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
sent by next-day or overnight mail or delivery or (d) sent by fax, as follows:
To MediQual:
MediQual Systems, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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To Cardinal:
Cardinal Health, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
3200 National City Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
To the Escrow Agent:
Bank One Trust Company, NA
Corporate Trust Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
To the MediQual Stockholders Representative:
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other Person or address as any party shall specify by notice in
writing to the party entitled to notice. All such notices, requests, demands,
letters, waivers and other communications shall be deemed to have been received
(w) if by personal delivery on the day after such delivery, (x) if by certified
or registered mail, on the fifth Business Day after the mailing thereof, (y) if
by next-day or overnight mail or delivery, on the day delivered or (z) if by
fax, on the next day following the day on which such fax was sent, provided that
a copy is also sent by certified, registered or overnight mail.
6.4 GOVERNING LAW. This Agreement shall be construed,
performed and enforced in accordance with the laws of the State of Delaware.
6.5 MISCELLANEOUS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. The
headings in this Agreement are for convenience of reference only and shall not
define or limit the provisions
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hereof. This Agreement may be executed in several counterparts, each of which is
an original but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
CARDINAL HEALTH, INC.
By:
------------------------------------
Name:
Title:
MEDIQUAL SYSTEMS, INC.
By:
------------------------------------
Name:
Title:
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
BANK ONE TRUST COMPANY, NA
By:
------------------------------------
Name:
Title:
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