
<PAGE>   1
 
                           Offer to Purchase for Cash
                     All Outstanding Shares of Common Stock
                                       of
                         AMERICAN MEDSERVE CORPORATION
                                       at
                              $18.00 NET PER SHARE
                                       by
                           OMNICARE ACQUISITION CORP.
                          a wholly owned subsidiary of
                                 OMNICARE, INC.
 
  THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
      TIME, ON THURSDAY, SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED.
                               ------------------
 
   THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT
 NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE "SHARES"), OF
   AMERICAN MEDSERVE CORPORATION (THE "COMPANY") WHICH REPRESENTS AT LEAST A
MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS AND (2) ANY WAITING
   PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF THE SHARES
    PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. SEE SECTION 14.
 
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER
 AND THE MERGER DESCRIBED HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
 COMPANY'S STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
 CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT
THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
                                   THE OFFER.
 
                                   IMPORTANT
 
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it and any other required documents to the
Depositary (as defined below) and either deliver the certificates for such
Shares to the Depositary along with the Letter of Transmittal (or a manually
signed facsimile) or deliver such Shares pursuant to the procedures for
book-entry transfer set forth in Section 3 hereof or (2) request his or her
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such person if such stockholder desires to tender such Shares.
 
If a stockholder desires to tender Shares and such stockholder's certificates
for such Shares are not immediately available, or the procedures for book-entry
transfer, if applicable, cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such stockholder may tender such Shares by following the procedures for
guaranteed delivery set forth in Section 3.
 
Questions and requests for assistance may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent, the Dealer Manager or from
brokers, dealers, commercial banks or trust companies.
 
                      The Dealer Manager for the Offer is:
 
                       [CREDIT SUISSE FIRST BOSTON LOGO]
 
August 14, 1997
<PAGE>   2
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        -----
<S>                                                                                     <C>
INTRODUCTION..........................................................................      1
 1.  Terms of the Offer...............................................................      2
 2.  Acceptance for Payment and Payment for Shares....................................      3
 3.  Procedure for Tendering Shares...................................................      4
 4.  Withdrawal Rights................................................................      6
 5.  Certain Federal Income Tax Consequences of the Offer and the Merger..............      7
 6.  Price Range of Shares; Dividends on the Shares...................................      8
 7.  Effect of the Offer on the Market for the Shares; Nasdaq Stock Market Listing;         8
     Exchange Act Registration; Margin Regulations....................................
 8.  Certain Information Concerning the Company.......................................      9
 9.  Certain Information Concerning the Purchaser and Parent..........................     14
10.  Source and Amounts of Funds......................................................     16
11.  Background of the Offer..........................................................     16
12.  Purpose of the Offer and the Merger; Plans for the Company; Proposed Merger......     17
13.  Dividends and Distributions......................................................     25
14.  Certain Conditions to the Offer..................................................     26
15.  Certain Legal Matters; Regulatory Approvals......................................     27
16.  Fees and Expenses................................................................     29
17.  Miscellaneous....................................................................     30
Schedule I -- Directors and Executive Officers of Parent and the Purchaser............    I-1
</TABLE>
<PAGE>   3
 
To the Holders of Common Stock
of American Medserve Corporation:
 
                                  INTRODUCTION
 
     Omnicare Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Omnicare, Inc., a Delaware corporation ("Parent"),
hereby offers to purchase all outstanding shares of Common Stock, par value
$0.01 per share (the "Shares"), of American Medserve Corporation, a Delaware
corporation (the "Company"), at a purchase price of $18.00 per Share net to the
seller in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer").
 
     The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 7, 1997 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company. The Merger Agreement provides, among other things,
for the commencement of the Offer by the Purchaser and further provides that
upon the terms and subject to the conditions therein, as soon as practicable
after the consummation of the Offer and any required approval of the Merger
Agreement by the stockholders of the Company (the "Stockholders"), the Purchaser
will be merged with and into the Company (the "Merger"), with the Company being
the corporation surviving the Merger (the "Surviving Corporation"). Each
outstanding Share (other than Dissenting Shares (as hereinafter defined)) not
owned by the Company, Parent, the Purchaser or any other wholly owned subsidiary
of Parent will be converted into and represent the right to receive $18.00 in
cash or any higher price that may be paid per Share pursuant to the Offer,
without interest. See Section 12.
 
     THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF DIRECTORS" OR THE
"BOARD") HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER DESCRIBED
HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS,
HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
 
     Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), financial
advisor to the Company, has delivered to the Board of Directors its written
opinion to the effect that, as of the date of the Merger Agreement, the $18.00
in cash to be received by the Stockholders in the Offer and the Merger, is fair
to such Stockholders from a financial point of view. A copy of such opinion is
included with the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9") with respect to the Offer, and Stockholders are
urged to read the opinion in its entirety for a description of the assumptions
made, factors considered and procedures followed by DLJ. A copy of the Schedule
14D-9 is being furnished herewith.
 
     THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT
NUMBER OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING
ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION") AND (2) ANY WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND
THE REGULATIONS THEREUNDER (THE "HSR ACT") APPLICABLE TO THE PURCHASE OF THE
SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS
ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 14, WHICH SETS FORTH THE
CONDITIONS TO CONSUMMATION OF THE OFFER, AND SECTION 15, WHICH DISCUSSES CERTAIN
LEGAL MATTERS AND REGULATORY CONSENTS AND APPROVALS.
 
     Pursuant to the Merger Agreement, the Company has represented and warranted
that as of August 7, 1997, 12,217,936 Shares were issued and outstanding and
1,310,790 Shares were reserved for issuance pursuant to employee options, of
which 517,117 shares are subject to outstanding, unexercised options.
 
     Tendering Stockholders who have Shares registered in their names will not
be obligated to pay brokerage fees or commissions to the Dealer Manager, the
Depositary or the Information Agent or, except as set forth in Instruction 6 of
the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer. The Purchaser will pay all charges and expenses
of Credit Suisse First Boston Corporation ("Credit
 
                                        1
<PAGE>   4
 
Suisse First Boston"), which is acting as Dealer Manager for the Offer (in such
capacity, the "Dealer Manager"), First Chicago Trust Company of New York, which
is acting as Depositary (the "Depositary"), and D.F. King & Co., Inc., which is
acting as the Information Agent (the "Information Agent"), incurred in
connection with the Offer. See Section 16.
 
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
 
1.  TERMS OF THE OFFER
 
     Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares that
have been validly tendered prior to the Expiration Date and not withdrawn as
permitted by Section 4. The term "Expiration Date" means 12:00 Midnight, New
York City time, on Thursday, September 11, 1997, unless and until the Purchaser,
in its sole discretion, shall have extended the period of time for which the
Offer is open, subject to the terms of the Merger Agreement, in which event the
term "Expiration Date" shall refer to the latest time and date at which the
Offer, as so extended by the Purchaser, shall expire.
 
     Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission (the "Commission"), the
Purchaser reserves the right, in its sole discretion, at any time or from time
to time, and regardless of whether any of the events set forth in Section 14
hereof shall have occurred or shall have been determined by the Purchaser to
have occurred, (a) if, immediately prior to the Expiration Date of the Offer,
the Shares tendered and not withdrawn pursuant to the Offer equal less than 90%
of the outstanding Shares but more than 80% of the outstanding Shares, to extend
the Offer for a period not to exceed seven business days, notwithstanding that
all conditions to the Offer are satisfied as of such date, and thereby delay
acceptance for payment of and the payment for any Shares, by giving oral or
written notice of such extension to the Depositary and (b) prior to the
Expiration Date, to waive any of the conditions set forth in Section 14 (other
than the Minimum Condition) and to make any other changes in the terms and
conditions of the Offer by giving oral or written notice of such waiver or
amendment to the Depositary; provided, however, that unless previously approved
by the Company in writing, no change may be made which decreases the Offer
Price, which reduces the maximum number of Shares to be purchased in the Offer
or which otherwise adversely affects the Stockholders. During any such
extension, all Shares previously tendered and not properly withdrawn will remain
subject to the Offer, subject to the right of a tendering Stockholder to
withdraw such Stockholder's Shares. See Section 4.
 
     If by the Expiration Date any or all of the conditions to the Offer have
not been satisfied or waived, the Purchaser reserves the right (but shall not be
obligated), in its sole discretion, subject to the terms of the Merger Agreement
and the applicable rules and regulations of the Commission, (a) to terminate the
Offer and not accept for payment or pay for any Shares and return all tendered
Shares to tendering Stockholders, (b) prior to the Expiration Date, to waive all
the unsatisfied conditions (other than the Minimum Condition) and accept for
payment and pay for all Shares validly tendered prior to the Expiration Date, or
(c) extend the Offer and, subject to the right of Stockholders to withdraw
Shares during such extension, retain the Shares that have been tendered during
the period or periods for which the Offer is extended.
 
     The rights reserved by the Purchaser in the two preceding paragraphs are in
addition to the Purchaser's rights pursuant to Section 14. There can be no
assurance that the Purchaser will exercise its rights to extend the Offer. Any
extension, amendment or termination will be followed as promptly as practicable
by a public announcement. In the case of an extension, Rule 14e-l(d) under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), requires
that the announcement be issued no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of Rule 14d-4(c) under the
Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that any material change in the
information published, sent or given to Stockholders be promptly disseminated in
a manner reasonably designed to inform the Stockholders of such change) and
without limiting the manner in which the Purchaser may choose to make any public
announcement, the Purchaser currently intends to make announcements by issuing a
release to the Dow
 
                                        2
<PAGE>   5
 
Jones News Service. For purposes of the Offer, "business day" has the meaning
set forth in Rule 14d-1 under the Exchange Act.
 
     If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's right under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering Stockholders are
entitled to withdrawal rights as described in Section 4.
 
     If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer, other than a change in
price or a change in the percentages of securities sought, will depend on the
facts and circumstances, including the materiality, of the changes. With respect
to a change in price or, subject to certain limitations, a change in the
percentage of securities sought, a minimum ten business day period from the day
of such change is generally required to allow for adequate dissemination to
stockholders. Accordingly, if prior to the Expiration Date, the Purchaser
decreases the number of Shares being sought or increases or decreases the Offer
Price and if the Offer is scheduled to expire at any time earlier than the
period ending on the tenth business day from the date on which that notice of
such increase or decrease is first published, sent or given to Stockholders,
then the Offer will be extended at least until the expiration of such ten
business day period.
 
     The Company has provided the Purchaser with the Company's Stockholder lists
and security position listings for the purpose of disseminating the Offer to
Stockholders. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares, and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the
securityholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
 
2.  ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
 
     Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment, and will pay for, all
Shares validly tendered and not withdrawn prior to the Expiration Date promptly
after the Expiration Date. All questions as to the satisfaction of such terms
and conditions will be determined in good faith by the Purchaser. Subject to the
applicable rules of the Commission, the Purchaser expressly reserves the right
to delay acceptance for payment of or payment for Shares in order to comply, in
whole or in part, with any applicable law or government regulation. Any such
delays will be effected in compliance with Rule 14e-l(c) under the Exchange Act
(relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer).
 
     In all cases, Shares accepted for payment pursuant to the Offer will be
paid for only after timely receipt by the Depositary of (i) certificates
evidencing (or a timely Book-Entry Confirmation (as defined in Section 3 below)
with respect to) such Shares, (ii) a Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined below), and (iii) any other documents required by the Letter of
Transmittal. See Section 3 below.
 
     For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment tendered Shares when, as and if the Purchaser gives oral or written
notice to the Depositary of its acceptance of the tenders of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent for
the tendering Stockholders for the purpose of receiving payments from the
Purchaser and transmitting such payments to tendering Stockholders. For a
description of the procedure for tendering Shares pursuant to the Offer, see
Section 3. Accordingly, payment may be made to tendering Stockholders at
different times if delivery of the Shares and other required documents occur at
different times. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE PURCHASER
ON THE CONSIDERATION PAID FOR SHARES PURSUANT TO THE OFFER, WHETHER OR NOT
 
                                        3
<PAGE>   6
 
THE PURCHASER EXERCISES ITS RIGHTS TO EXTEND THE OFFER OR DELAYS IN MAKING SUCH
PAYMENT.
 
     If the Purchaser increases the consideration to be paid for Shares pursuant
to the Offer, the Purchaser will pay such increased consideration for all Shares
purchased pursuant to the Offer, whether or not such Shares were tendered prior
to such increase in consideration.
 
     The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent or any direct or indirect wholly owned
subsidiary or subsidiaries of Parent the right to purchase Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer or prejudice the rights of
tendering Stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
 
     If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted for more Shares than are tendered,
certificates for such unpurchased or untendered Shares will be returned (or, in
the case of Shares tendered by book-entry transfer, such Shares will be credited
to an account maintained at one of the Book-Entry Transfer Facilities (as
defined in Section 3)), without expense to the tendering Stockholder, as
promptly as practicable following the expiration or termination of the Offer.
 
3.  PROCEDURE FOR TENDERING SHARES
 
     Valid Tenders.  For a Stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof) and any other documents required by the Letter of
Transmittal must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase and either (i) Certificates for the
Shares to be tendered must be received by the Depositary at one of such
addresses or (ii) such Shares must be delivered pursuant to the procedures for
book-entry transfer described below (and a confirmation of such delivery
received by the Depositary, including an Agent's Message (as defined below) if
the tendering Stockholder has not delivered a Letter of Transmittal (or a
facsimile thereof)), in each case prior to the Expiration Date, or (b) the
guaranteed delivery procedure described below must be complied with. As used
herein, "Certificates" shall mean certificates representing Shares.
 
     Book-Entry Transfer.  The Depositary will establish accounts with respect
to the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (each, a "Book-Entry Transfer Facility") for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant of the Book-Entry Transfer Facilities' systems
may make book-entry delivery of Shares by causing a Book-Entry Transfer Facility
to transfer such Shares into the Depositary's account in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Shares may be effected through book-entry transfer at a Book-Entry
Transfer Facility, the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message, and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering Stockholder must comply with the guaranteed delivery procedures
described below.
 
     The confirmation of a book-entry transfer into the Depositary's account at
a Book-Entry Facility as described herein is referred to herein as a "Book-Entry
Confirmation". DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
 
     The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgement from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
 
     THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER,
 
                                        4
<PAGE>   7
 
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK ENTRY TRANSFER, A BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
 
     Signature Guarantees.  No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by a registered holder
(which term, for purposes of this Section, includes any participant in any of
the Book-Entry Transfer Facilities' systems whose name appears on a security
position listing as the owner of the applicable security) of Shares tendered
therewith and such registered Stockholder has not completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if the Shares are tendered for
the account of a financial institution (including most commercial banks, savings
and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal.
 
     If the Certificates are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made or Certificates
not tendered or not accepted for payment are to be returned to a person other
than the registered Stockholder, then the tendered Certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the Certificates, with
the signatures guaranteed as described above. See Instructions 1 and 5 of the
Letter of Transmittal.
 
     Guaranteed Delivery.  If a Stockholder desires to tender Shares pursuant to
the Offer and such Stockholder's Certificates are not immediately available or
time will not permit all required documents to reach the Depositary prior to the
Expiration Date, or the procedure for book-entry transfer cannot be completed on
a timely basis, such Shares may nevertheless be tendered if all the following
conditions are satisfied:
 
          (i) the tender is made by or through an Eligible Institution;
 
          (ii) a properly completed and duly executed Notice of Guaranteed
     Delivery, substantially in the form provided by the Purchaser herewith, is
     received by the Depositary prior to the Expiration Date; and
 
          (iii) the appropriate Certificates (or, if applicable, a Book-Entry
     Confirmation) representing all tendered Shares, in proper form for
     transfer, together with the appropriate Letter of Transmittal (or facsimile
     thereof), properly completed and duly executed, with any required signature
     guarantees (or, in the case of a book-entry transfer, an Agent's Message)
     and any other documents required by the Letter of Transmittal, are received
     by the Depositary within three trading days after the execution of such
     Notice of Guaranteed Delivery. A trading day is any day on which the Nasdaq
     National Market is open for business.
 
     The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution and a representation that the stockholder
owns the Shares tendered within the meaning of, and the tender of Shares
effected thereby complies with, Rule 14e-4 under the Exchange Act, each in the
form set forth in the Notice of Guaranteed Delivery.
 
     IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) IS
RECEIVED BY THE DEPOSITARY.
 
     Notwithstanding any other provision of this Offer to Purchase, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of Certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, a Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees and any other documents required by the Letter of
Transmittal (or in the case of a book-entry transfer, an Agent's Message).
 
                                        5
<PAGE>   8
 
     The Purchaser's acceptance for payment of Shares validly tendered pursuant
to the Offer will constitute a binding agreement between the tendering
Stockholder and the Purchaser upon the terms and subject to the conditions of
the Offer.
 
     Appointment as Proxy.  By executing a Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
Stockholder irrevocably appoints designees of the Purchaser as the Stockholder's
attorneys-in-fact and proxies in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of the
Stockholder's rights with respect to the Shares tendered by the Stockholder and
accepted for payment by the Purchaser (and any and all other securities issued
or issuable in respect of such Shares on or after the date of this Offer to
Purchase). All such powers of attorney and proxies shall be considered coupled
with an interest in the tendered Shares. This appointment will be effective
when, and only to the extent that, the Purchaser accepts the tendered Shares for
payment pursuant to the Offer. Upon such acceptance for payment, all prior
powers of attorney, proxies or consents given by the Stockholder with respect to
the tendered Shares will, without further action, be revoked, and no subsequent
powers of attorney, proxies or consents may be given (and, if given, will not be
deemed to be effective) with respect thereto. The designees of the Purchaser
will, with respect to the tendered Shares, be empowered to exercise all voting
and other rights of such Stockholder as they in their sole discretion may deem
proper at any annual, special or adjourned meeting of the Company's
Stockholders, by written consent or otherwise. The Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Shares, the Purchaser must
be able to exercise full voting and other rights of a record and beneficial
Stockholder, including action by written consent, with respect to such Shares.
 
     Determination of Validity.  All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, which determination shall
be final and binding on all parties. The Purchaser reserves the absolute right
to reject any or all tenders of any Shares determined by it not to be in proper
form or if the acceptance for payment of or payment for such Shares may, in the
opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the
absolute right to waive any defect or irregularity in any tender with respect to
Shares of any particular Stockholder, whether or not similar defects or
irregularities are waived in the case of other Stockholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of the Purchaser, Parent, the Depositary, the
Information Agent, the Dealer Manager or any other person will be under any duty
to give notification of any defects or irregularities in tenders or will incur
any liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding on all
parties.
 
4.  WITHDRAWAL RIGHTS
 
     Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable, provided that such Shares tendered
pursuant to the Offer may be withdrawn pursuant to the procedures set forth
below at any time prior to the Expiration Date and, unless theretofore accepted
for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after October 12, 1997.
 
     For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
securities to be withdrawn, the number of Shares to be withdrawn and the name of
the registered Stockholder, if different from that of the person who tendered
such Shares. If Certificates have been delivered or otherwise identified to the
Depositary, then, prior to the release of such Certificates, the serial numbers
of the particular Certificates evidencing the Shares to be withdrawn and a
signed notice of withdrawal with signatures guaranteed by an Eligible
Institution, except in the case of Shares tendered for the account of an
Eligible Institution, must also be furnished to the Depositary as described
above. If Shares have been tendered pursuant to the procedures for book-entry
transfer as set forth in Section 3, any notice of withdrawal must also specify
the reference number assigned to such transfer along with the name and number of
the account at the appropriate Book-Entry Transfer Facility to be credited with
the withdrawn Shares and otherwise comply with such Book-Entry Transfer
Facility's procedures.
 
                                        6
<PAGE>   9
 
     Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will not be deemed to be validly tendered for purposes of the Offer and the
satisfaction of the Minimum Condition. Withdrawn Shares may, however, be
retendered for purposes of the Offer by following one of the procedures
described in Section 3 at any time prior to the Expiration Date.
 
     All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of the Purchaser, Parent, the Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification.
 
5.  CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
 
     The following is a summary of certain federal income tax consequences of
the Offer and the Merger to Stockholders whose Shares are purchased pursuant to
the Offer or whose Shares are converted, in accordance with the Merger
Agreement, into the right to receive the price per Share paid pursuant to the
Offer (the "Merger Consideration") (including any cash amounts received by
dissenting Stockholders pursuant to the exercise of appraisal rights). This
discussion is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), the applicable Treasury Regulations promulgated and
proposed thereunder, judicial authority and administrative rulings and practice.
Legislative, judicial or administrative actions or interpretations are subject
to change, possibly on a retroactive basis, at any time and therefore could
alter or modify the statements and conclusions set forth below. This discussion
assumes that the Stockholders hold the Shares as "capital assets" within the
meaning of Section 1221 of the Code (i.e., property held for investment). This
discussion does not address all aspects of federal income taxation that may be
important to a particular Stockholder in light of such Stockholder's personal
investment circumstances or tax consequences to Stockholders subject to special
treatment under the federal income tax laws (for example, life insurance
companies, tax-exempt organizations, foreign corporations and nonresident alien
individuals) or Stockholders who acquired their Shares through the exercise of
employee stock options or other compensation arrangements. In addition, the
discussion does not address any aspect of foreign, state, local or estate and
gift taxation that may be applicable to a Stockholder.
 
     Consequences of the Offer and the Merger to Stockholders.  The receipt of
the Offer Price or the Merger Consideration (including any cash amounts received
by dissenting Stockholders pursuant to the exercise of appraisal rights) will be
a taxable transaction for federal income tax purposes and also may be a taxable
transaction under applicable state, local and other income tax laws. In general,
for federal income tax purposes, a Stockholder will recognize gain or loss equal
to the difference between the Stockholder's adjusted tax basis in the Shares and
the amount of cash received therefor. Gain or loss must be determined separately
for each block of Shares (i.e., Shares acquired at the same cost in a single
transaction). Such gain or loss will be capital gain or loss and will be
long-term gain or loss if on the date of sale (or, if applicable, the date of
the Merger), the Shares were held for more than one year. If on that date the
Shares were held for more than 18 months, any such gain or loss will be taken
into account in determining a Stockholder's adjusted net capital gain, which is
subject to a reduced maximum rate of federal income tax under a recent amendment
to the Code. A portion of amounts received by dissenting Stockholders pursuant
to the exercise of appraisal rights, may be deemed to be interest income for
federal income tax purposes.
 
     Backup Withholding.  A Stockholder may be subject to "backup withholding"
at a 31% rate with respect to payments made in connection with the Offer or the
Merger. Backup withholding generally applies if the Stockholder (i) fails to
furnish his or her Social Security Number or taxpayer identification number
("TIN"), (ii) furnishes an incorrect TIN, (iii) fails properly to report
interest or dividends or (iv) in certain circumstances, fails to provide a
statement, under penalties of perjury, that the TIN provided is correct and that
he or she is not subject to backup withholding. Backup withholding is not an
additional tax but an advance payment, which may be refunded to the extent it
results in an overpayment of tax. Certain persons generally are exempt from
backup withholding, including corporations and financial institutions. Penalties
apply for failure to furnish correct information and for failure to include the
reportable payments in income. Foreign Stockholders should consult their own tax
advisors regarding withholding taxes in general. See Instruction 10 of the
Letter of Transmittal.
 
                                        7
<PAGE>   10
 
     THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE OFFER
AND THE MERGER TO THEM IN VIEW OF THEIR PARTICULAR CIRCUMSTANCES.
 
6.  PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES
 
     The Shares are quoted on the Nasdaq National Market under the symbol AMCI.
The following table sets forth the reported high and low sales prices per Share
for the Shares on the Nasdaq National Market as published in financial sources
for each of the periods indicated since public trading commenced on November 13,
1996.
 
<TABLE>
<CAPTION>
                                                                          HIGH    LOW
                                                                          ---     ---
        <S>                                                               <C>     <C>
        1996
        Fourth Quarter (from November 13, 1996).........................  $18 1/4 $15 1/4
        1997
        First Quarter...................................................   19      10 7/8
        Second Quarter..................................................   15       9
        Third Quarter (through August 13, 1997).........................   17 3/4  13
</TABLE>
 
     On August 7, 1997, the last full trading day prior to the public
announcement of the execution of the Merger Agreement and the Purchaser's
intention to commence the Offer, the reported closing price per Share on the
Nasdaq National Market was $15 1/2.
 
     On August 13, 1997, the last full trading day prior to the commencement of
the Offer, the reported closing sales price per Share on the Nasdaq National
Market was $17 9/16.
 
     According to the Company, the Company did not declare any cash dividends on
the Shares during the periods set forth above.
 
     STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
 
7.  EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ STOCK MARKET
    LISTING; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS
 
     Market for the Shares.  The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and the number
of holders of Shares which could adversely affect the liquidity and market value
of the remaining Shares held by Stockholders other than the Purchaser. The
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Shares or whether such reduction
would cause future market prices to be greater or less than the Offer price.
 
     Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in the Nasdaq
National Market, which require that an issuer have at least 200,000 publicly
held shares with a market value of $1 million held by at least 400 stockholders
or 300 stockholders holding round lots, and have net tangible assets of at least
either $1 million, $2 million or $4 million depending on profitability levels
during the issuer's four most recent fiscal years. If these standards are not
met, the Shares might nevertheless continue to be included in the NASD's Nasdaq
Stock Market with quotations published in the Nasdaq over-the-counter
"additional list" or in one of the "local lists", but if the number of
Stockholders were to fall below 300, or if the number of publicly held Shares
were to fall below 100,000, or if there are not at least two registered and
active market makers for such Shares, the NASD's rules provide that the Shares
would no longer be "qualified" for Nasdaq Stock Market reporting, and the Nasdaq
Stock Market would cease to provide any quotations. Shares held directly or
indirectly by an officer or director of the Company, or by any beneficial owner
of more than 10% of the Shares, ordinarily will not be considered as being
publicly held for this purpose. According to the Company, as of August 12, 1997,
there were approximately 41 holders of record and 12,217,936 Shares were
outstanding.
 
                                        8
<PAGE>   11
 
If, as a result of the purchase of Shares pursuant to the Offer or otherwise,
the Shares no longer meet the NASD requirements for continued inclusion in the
Nasdaq National Market or in any other tier of the Nasdaq Stock Market, and the
Shares are no longer included in the Nasdaq National Market or any other tier of
the Nasdaq Stock Market, the market for such Shares could be adversely affected.
 
     In the event the Shares no longer meet the requirements of the NASD for
inclusion in any tier of the Nasdaq Stock Market, quotations might still be
available from other sources. The extent of the public market for Shares and
availability of such quotations would, however, depend upon the number of
Stockholders of Shares remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act, as described below, and other factors.
 
     Exchange Act Registration.  The Shares are currently registered under the
Exchange Act. The purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Registration
of the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if such class is not listed on a national securities
exchange and there are fewer than 300 record holders of such Shares. Termination
of registration of the Shares under the Exchange Act would reduce substantially
the information required to be furnished by the Company to its Stockholders and
to the Commission and would make certain provisions of the Exchange Act no
longer applicable to the Company, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement or
information statement pursuant to Section 14(a) or (c) of the Exchange Act in
connection with stockholders' meetings and the related requirement of furnishing
an annual report to Stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions. Furthermore, if the
Purchaser acquires a substantial number of Shares or the registration of the
Shares under the Exchange Act were to be terminated, the ability of "affiliates"
of the Company and persons holding "restricted securities" of the Company to
dispose of such securities pursuant to Rule 144 or 144A under the Securities Act
of 1933, as amended (the "Securities Act"), may be impaired or eliminated. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be "margin securities" or be eligible for listing or Nasdaq
reporting. It is the present intention of the Purchaser to seek to cause the
Company to make an application for termination of registration of the Shares as
soon as possible following the consummation of the Offer if the requirements for
termination of registration are met.
 
     Margin Regulations.  The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations,
following the Offer it is possible that the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers. In addition, if registration of the Shares under the Exchange Act
were terminated, the Shares would no longer constitute "margin securities."
 
8.  CERTAIN INFORMATION CONCERNING THE COMPANY
 
     The Company is a Delaware corporation, with its principal executive offices
located at 184 Shuman Boulevard, Suite 200, Naperville, Illinois 60563, and,
through its subsidiaries, is a leading independent provider of pharmacy services
to long-term care institutions, including skilled nursing facilities, assisted
living facilities and other long-term health care settings. The Company
purchases, repackages and dispenses pharmaceuticals to patients or residents in
its client facilities and provides such facilities with related consultant
pharmacist and information services, including formulary management (i.e.,
management of pharmaceuticals dispensed to minimize cost and maximize
therapeutic benefit), automated medical record-keeping, drug therapy evaluation
and assistance with regulatory compliance. The Company also provides infusion
therapy (i.e., intravenous introduction of fluids containing medications and/or
nutrients), parenteral and enteral nutrition therapy (i.e., introduction, either
intravenously or directly into a patient's digestive system, of nutrient fluids
or other fluids), inhalation and respiratory therapy and wound care management
services, as well as medical supplies and devices.
 
     The Company was formed by Timothy L. Burfield (the Company's President and
Chief Executive Officer) and an investment fund affiliated with Golder, Thoma,
Cressey, Rauner, Inc. to participate in the consolidation of
 
                                        9
<PAGE>   12
 
the long-term care pharmacy industry. To meet this objective, the Company has
pursued an acquisition program designed to expand its presence in selected
geographic markets. Since commencing operations in August 1994, the Company has
completed 30 acquisitions.
 
     Selected Consolidated Financial Data.  Set forth below is certain selected
consolidated financial data with respect to the Company and its consolidated
subsidiaries excerpted or derived from financial information contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
(the "Company 10-K"), and the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997 (the "Company 10-Q"). More comprehensive financial
information is included in the Company 10-K and the Company 10-Q and other
documents filed by the Company with the Commission. The financial information
that follows is qualified in its entirety by reference to the Company 10-K, the
Company 10-Q and such other documents, including the financial statements and
related notes therein. The Company 10-K, the Company 10-Q and such other
documents should be available for inspection and copies thereof should be
obtainable from the offices of the Commission in the manner set forth below.
 
                                       10
<PAGE>   13
 
                         AMERICAN MEDSERVE CORPORATION
                      SELECTED CONSOLIDATED FINANCIAL DATA
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                           PREDECESSOR(1)
                                                               PERIOD      --------------
                                                                FROM           PERIOD
                                      YEAR ENDED             AUGUST 3,          FROM         SIX MONTHS ENDED
                              ---------------------------     1994 TO        JANUARY 1,     -------------------
                              DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   1994 TO AUGUST   JUNE 30,   JUNE 30,
                                  1996           1995           1994          2, 1994         1997       1996
                              ------------   ------------   ------------   --------------   --------   --------
                                                                                                (UNAUDITED)
<S>                           <C>            <C>            <C>            <C>              <C>        <C>
STATEMENT OF OPERATIONS DATA:
  Revenues...................   $ 82,027       $ 44,049       $  8,091        $  6,917      $ 75,563   $ 32,357
  Cost of revenues...........     58,807         31,464          5,991           4,963        54,484     23,259
                                --------        -------        -------          ------      --------    -------
  Gross Profit...............     23,220         12,585          2,100           1,954        21,079      9,098
  Selling, general and
     administrative
     expenses................     19,605         10,029          1,909           1,315        17,413      7,290
  Nonrecurring charges(2)....      3,019             --             --              --            --         --
                                --------        -------        -------          ------      --------    -------
  Operating income...........        596          2,556            191             639         3,666      1,808
  Interest expense...........      2,741          1,762            292              78           389      1,213
  Other (income) expense.....        (84)          (312)           (69)             --           (39)       (75)
  Minority interest..........        (89)            32              6              --          (200)        (4)
                                --------        -------        -------          ------      --------    -------
  Income (loss) before income
     taxes and extraordinary
     item....................     (1,972)         1,074            (38)            561         3,516        674
  Provision (benefit) for
     income taxes............        162            669            (21)             24         1,499        324
                                --------        -------        -------          ------      --------    -------
  Income (loss) before
     extraordinary item......     (2,134)           405            (17)            537         2,017        350
  Write off of deferred
     financing costs, net of
     income tax benefit of
     $404....................        437             --             --              --            --        437
                                --------        -------        -------          ------      --------    -------
  Net income (loss)..........   $ (2,571)      $    405       $    (17)       $    537      $  2,017   $    (87)
                                ========        =======        =======          ======      ========    =======
  Income (loss) per share
     before extraordinary
     item....................   $  (0.29)      $   0.06                                     $   0.17   $   0.05
  Extraordinary item per
     share...................       0.06             --                                           --       0.06
                                --------        -------                                     --------    -------
  Net income (loss) per
     share...................   $  (0.35)      $   0.06                                     $   0.17   $  (0.01)
                                ========        =======                                     ========    =======
  Weighted average shares
     outstanding.............      7,311          6,467                                       12,212      6,466
BALANCE SHEET DATA (AT PERIOD
  END):
  Working capital............   $ 38,494       $  9,540       $  3,517        $    216      $ 29,385   $  9,818
  Total assets...............    113,298         44,997         16,965           5,240       133,508     61,830
  Long-term debt, excluding
     current portion.........      6,087         23,505          8,071             264        13,219     28,167
  Stockholders' equity (net
     capital deficiency).....     92,999         14,573          5,596           1,205        97,303     (1,995)
</TABLE>
 
---------------
(1) Represents results of operations of Gatti LTC Services Inc., which was
    acquired by the Company on August 2, 1994.
 
(2) Represents (a) a noncash, nonrecurring charge of $2.5 million (with no tax
    benefit) related to (i) the sale of 310,208 shares of Common Stock of the
    Company to certain directors and officers at a price less than the
 
                                       11
<PAGE>   14
 
    initial public offering price of the Common Stock on November 13, 1996, and
    (ii) the conversion of options to purchase shares of common stock of certain
    subsidiaries into options to purchase 146,635 shares of Common Stock of the
    Company at a weighted average exercise price less than the initial public
    offering price of the Common Stock on November 13, 1996, (b) a charge of
    $0.3 million ($0.2 million net of tax) related to the termination of a
    professional services agreement with an affiliate of the Company's principal
    stockholder and (c) a charge of $0.2 million ($0.1 million net of tax)
    related to special bonuses paid to management in connection with the
    Company's initial public offering.
 
     Projected Financial Information.  During the course of discussions between
Parent, the Purchaser and the Company that led to the execution of the Merger
Agreement (see Section 11), the Company provided Parent with certain projected
financial data for the year ending December 31, 1997 relating to the Company
(the "Projections").
 
     THE COMPANY DOES NOT, AS A MATTER OF COURSE, PUBLICLY DISCLOSE
FORWARD-LOOKING INFORMATION (SUCH AS THE PROJECTIONS REFERRED TO ABOVE) AS TO
FUTURE REVENUES, EARNINGS OR OTHER FINANCIAL INFORMATION. PROJECTIONS OF THIS
TYPE ARE BASED ON ESTIMATES AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO
SIGNIFICANT ECONOMIC, INDUSTRY AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES,
ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL
OF THE COMPANY. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE PROJECTED
RESULTS WOULD BE REALIZED OR THAT ACTUAL RESULTS WOULD NOT BE SIGNIFICANTLY
HIGHER OR LOWER THAN THOSE PROJECTED. IN ADDITION, THESE PROJECTIONS WERE
PREPARED BY THE COMPANY SOLELY FOR INTERNAL USE AND NOT FOR PUBLICATION OR WITH
A VIEW TO COMPLYING WITH THE PUBLISHED GUIDELINES OF THE COMMISSION REGARDING
PROJECTIONS OR WITH THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS GUIDE
FOR PROSPECTIVE FINANCIAL STATEMENTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE
ONLY BECAUSE THEY WERE FURNISHED TO PARENT. THE PROJECTIONS NECESSARILY MAKE
NUMEROUS ASSUMPTIONS WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS AND
ECONOMIC CONDITIONS, ACCESS TO MARKETS AND DISTRIBUTION CHANNELS, PRICING OF
PHARMACEUTICAL PRODUCTS AND OTHER MATTERS, ALL OF WHICH ARE INHERENTLY SUBJECT
TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES AND MANY OF WHICH ARE BEYOND THE
COMPANY'S CONTROL. ONE CANNOT PREDICT WHETHER THE ASSUMPTIONS MADE IN PREPARING
THE PROJECTIONS WILL BE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY HIGHER OR
LOWER THAN THOSE CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THIS
FORWARD-LOOKING INFORMATION SHOULD NOT BE REGARDED AS FACT OR AN INDICATION THAT
PARENT, THE PURCHASER, THE COMPANY OR ANYONE WHO RECEIVED THIS INFORMATION
CONSIDERED IT A RELIABLE PREDICTOR OF FUTURE RESULTS, AND THIS INFORMATION
SHOULD NOT BE RELIED ON AS SUCH. NONE OF PARENT, THE PURCHASER OR THE COMPANY
ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR
COMPLETENESS OF THE PROJECTIONS AND THE COMPANY HAS MADE NO REPRESENTATION TO
PARENT OR THE PURCHASER REGARDING THE PROJECTIONS.
 
                                       12
<PAGE>   15
 
     The following information has been excerpted from the materials presented
by the Company to Parent and the Purchaser:
 
                         AMERICAN MEDSERVE CORPORATION
            MANAGEMENT PROJECTIONS FOR YEAR ENDING DECEMBER 31, 1997
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                                  YEAR ENDING
                                                                                  ------------
                                                                                  DECEMBER 31,
                                                                                      1997
                                                                                  ------------
<S>                                                                               <C>
Revenues........................................................................    $169,657
Cost of revenues................................................................     120,052
                                                                                    --------
Gross profit....................................................................      49,605
  Gross profit percentage.......................................................        29.2%
Operating expenses..............................................................      33,217
                                                                                    --------
  Operating expenses percentage.................................................        19.6%
EBITDA..........................................................................      16,388
Depreciation....................................................................       1,906
                                                                                    --------
EBITA...........................................................................      14,482
  EBITA percentage..............................................................         8.5%
Amortization....................................................................       2,393
                                                                                    --------
EBIT............................................................................      12,089
  EBIT percentage...............................................................         7.1%
Interest........................................................................       2,078
                                                                                    --------
Earnings before income taxes and minority interest..............................      10,012
Income taxes (benefit)..........................................................       4,381
Other income....................................................................         104
Minority interest...............................................................         161
Net income (loss)...............................................................       5,573
Average number of shares outstanding............................................      12,231
                                                                                    --------
Earnings per share, primary.....................................................    $   0.46
</TABLE>
 
     Other Information.  The Company is subject to the information filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, any material interests of such persons in
transactions with the Company and other matters is required to be described in
proxy statements distributed to the Company's Stockholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available for
inspection and copying at prescribed rates at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of this material may also be obtained by mail, upon
payment of the Commission's customary fees, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains a site on the World Wide Web at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
 
     Except as otherwise noted in this Offer to Purchase, all of the information
concerning the Company contained in this Offer to Purchase, including financial
information, has been taken from or based upon publicly available documents and
records on file with the Commission and other publicly available information.
Although
 
                                       13
<PAGE>   16
 
neither the Purchaser nor Parent has any knowledge that any such information is
untrue, neither the Purchaser nor Parent nor the Dealer Manager takes any
responsibility for the accuracy or completeness of such information or for any
failure by the Company to disclose events that may have occurred or may affect
the significance or accuracy of such information.
 
9.  CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
 
     The Purchaser is a newly incorporated Delaware corporation and a wholly
owned subsidiary of Parent. To date, the Purchaser has not conducted any
business other than in connection with the Offer. Until immediately prior to the
time the Purchaser purchases Shares pursuant to the Offer, it is not anticipated
that the Purchaser will have any significant assets or liabilities or engage in
activities other than those incident to its formation and capitalization and the
transactions contemplated by the Offer. Because the Purchaser is a newly formed
corporation and has minimal assets and capitalization, no meaningful financial
information regarding the Purchaser is available.
 
     Parent was incorporated in Delaware on May 19, 1981 to conduct certain
health care businesses contributed to it by W. R. Grace & Co. and Chemed
Corporation, and in July 1981 public trading of Parent's common stock commenced.
As part of a multi-year restructuring program undertaken in 1985, Parent,
through a series of divestitures and acquisitions, redeployed all of its capital
in the long-term pharmacy business. As a result, Parent is today a leading
independent provider of pharmacy services to long-term care institutions such as
nursing homes, retirement centers and other institutional health care
facilities. Parent operates principally in one business segment, institutional
pharmacy services for the long-term care market. Currently, Parent provides
these services to approximately 361,400 residents in 4,400 nursing facilities
located principally in the states of Alabama, Connecticut, Georgia, Illinois,
Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Missouri, New Jersey,
New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Utah,
Washington, West Virginia and Wisconsin. Parent does not make any export sales.
 
     The name, citizenship, business address, principal occupation or employment
and five year employment history of each of the directors and executive officers
of the Purchaser and Parent are set forth in Schedule I hereto. The principal
executive offices of Parent and the Purchaser are located at 50 East RiverCenter
Boulevard, Covington, Kentucky 41011.
 
     Set forth below is a summary of certain consolidated financial information
with respect to Parent and its consolidated subsidiaries excerpted or derived
from the information contained in or incorporated by reference in Parent's
Annual Report on Form 10-K for the year ended December 31, 1996, as amended on
Form 10-K/A on August 6, 1997 (the "Parent 10-K"), and Parent's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1997 (the "Parent 10-Q"),
in each case, as filed with the Commission by Parent. More comprehensive
financial information is included in or incorporated by reference in the Parent
10-K, the Parent 10-Q and other documents filed by Parent with the Commission,
and the financial information summary set forth below is qualified in its
entirety by reference to the Parent 10-K, the Parent 10-Q and such other
documents and all the financial information and related notes contained therein.
 
                                       14
<PAGE>   17
 
                                 OMNICARE, INC.
 
                      SELECTED CONSOLIDATED FINANCIAL DATA
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                    FISCAL YEAR ENDED                       SIX MONTHS ENDED
                                      ----------------------------------------------     -----------------------
                                      DECEMBER 31,     DECEMBER 31,     DECEMBER 31,     JUNE 30,      JUNE 30,
                                          1996             1995             1994           1997          1996
                                      ------------     ------------     ------------     ---------     ---------
                                                                                               (UNAUDITED)
<S>                                   <C>              <C>              <C>              <C>           <C>
INCOME STATEMENT DATA: (A)
Sales...............................    $536,604         $399,636         $307,655       $384,668      $239,018
Net income..........................    $ 43,450(b)      $ 24,760(c)      $ 13,531(d)    $ 28,581 (e)  $ 18,525
Earnings per share data:
Primary:
Net income..........................    $    .64(b)      $    .47(c)      $    .30(d)    $    .36 (e)  $    .30
Fully diluted:
Net income..........................    $    .61(b)      $    .43(c)      $    .30(d)    $    .36 (e)  $    .28
Dividends per share.................    $    .06         $    .05         $  0.045       $   .035      $    .03
</TABLE>
 
<TABLE>
<CAPTION>
                                         AS OF            AS OF            AS OF           AS OF         AS OF
                                      DECEMBER 31,     DECEMBER 31,     DECEMBER 31,     JUNE 30,      JUNE 30,
                                          1996             1995             1994           1997          1996
                                      ------------     ------------     ------------     ---------     ---------
<S>                                   <C>              <C>              <C>              <C>           <C>
BALANCE SHEET DATA:
Working capital.....................    $329,002         $106,384         $125,550       $271,191      $394,642
Total assets........................     721,697          360,836          317,205        817,166       663,669
Long-term debt (f)..................       1,992           82,692           85,323          1,211        78,071
Stockholders' equity (g) (h)........     634,378          214,761          180,104        715,674       523,753
</TABLE>
 
---------------
(a) The Company has had an active acquisition program in effect since 1989.
 
(b) Includes acquisition expenses related to the 1996 pooling-of-interests
    transaction of $690,000. Such expenses, on an after-tax basis, were
    $534,000, or $.01 per primary and fully diluted share. Net income, excluding
    these expenses, was $43,984,000, or $.65 per primary share ($.61 fully
    diluted).
 
(c) Includes acquisition expenses related to the 1995 Specialized
    pooling-of-interests transaction of $1,292,000. Such expenses, on an
    after-tax basis, were $989,000, or $.02 per primary share ($.01 fully
    diluted). Net income, excluding these expenses, was $25,749,000 or $.49 per
    primary share ($.44 fully diluted).
 
(d) Includes acquisition expenses related to the 1994 Evergreen
    pooling-of-interests transaction of $2,380,000. Such expenses, on an
    after-tax basis, were $1,860,000, or $.04 per primary share ($.03 fully
    diluted). Net income, excluding these expenses, was $15,391,000, or $.34 per
    primary share ($.33 fully diluted).
 
(e) Includes acquisition expenses related to the 1997 pooling-of-interests
    transactions of $1,671,000. Such expenses, on an after tax basis, were
    $1,429,000, or $.02 per primary and fully diluted share. Net income,
    excluding these expenses, was $30,010,000, or $.38 per primary and fully
    diluted share.
 
(f) In 1993, the Company issued $80.5 million of Convertible Subordinated Notes
    due 2003 ("Notes"). In 1996, all of the remaining Notes were converted into
    common stock.
 
(g) In 1994, the Company sold 6,494,964 shares of common stock, in a public
    offering, resulting in net proceeds of $59,211,000.
 
(h) In 1996, the Company sold 5,750,000 (pre-1996 stock split) shares of its
    common stock in a public offering, resulting in net proceeds of
    $279,159,000.
 
     Parent is subject to the informational filing requirements of the Exchange
Act and is required to file reports and other information with the Commission
relating to its business, financial condition and other matters. Information, as
of particular dates, concerning Parent's directors and officers, their
remuneration, the principal holders of Parent's securities and any material
interest of such persons in transactions with Parent is required to be described
in periodic statements filed with the Commission. Such reports and other
information, including the Parent 10-K and the Parent 10-Q, may be inspected and
copies may be obtained from the offices of the Commission in the same manner as
set forth in Section 8.
 
                                       15
<PAGE>   18
 
     Except as set forth in this Offer to Purchase, none of Parent, the
Purchaser or any of their affiliates (collectively, the "Purchaser Entities"),
nor, to the best knowledge of any of the Purchaser Entities, any of the persons
listed on Schedule I, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of the Purchaser Entities,
nor, to the best knowledge of any of the Purchaser Entities, any of the persons
listed on Schedule I, has had any business relationships or transactions with
the Company or any of its executive officers, directors or affiliates that would
require reporting under the rules of the Commission. Except as set forth in this
Offer to Purchase, there have been no contacts, negotiations or transactions
between the Purchaser Entities, or their respective subsidiaries or, to the best
knowledge of any of the Purchaser Entities, any of the persons listed on
Schedule I, and the Company or its affiliates, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
election of directors or a sale or other transfer of a material amount of
assets.
 
     Except as set forth in this Offer to Purchase, during the last five years,
none of the Purchaser Entities, nor, to the best knowledge of any of the
Purchaser Entities, any of the persons listed in Schedule I hereto, (i) has been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
 
     Except as set forth in this Offer to Purchase, none of the Purchaser
Entities, nor, to the best knowledge of the Purchaser Entities, any of the
persons listed on Schedule I hereto, beneficially owns any equity securities of
the Company. Except as set forth in this Offer to Purchase, none of the
Purchaser Entities, nor, to the best knowledge of the Purchaser Entities, any of
the persons listed on Schedule I, beneficially owns any Shares or has effected
any transaction in such equity securities during the past 60 days.
 
10.  SOURCE AND AMOUNTS OF FUNDS
 
     The offer is not conditioned upon any financing arrangements. The total
amount of funds required by the Purchaser to consummate the Offer and the Merger
is expected to be approximately $222.6 million, which amount excludes related
fees and expenses. Purchaser expects to obtain these funds in the form of
capital contributions and/or loans from Parent. Parent expects to fund the
capital contributions and/or loans provided to Purchaser from existing cash
balances and/or from an existing credit facility.
 
11.  BACKGROUND OF THE OFFER
 
     In the past, Parent reviewed certain properties currently owned by the
Company in connection with Parent's consideration of purchasing such properties
prior to the Company's acquisition of such properties. In June, 1997,
representatives of DLJ contacted Joel F. Gemunder, President of Parent, to
inquire as to Parent's interest in pursuing a transaction with the Company.
Parent indicated such an interest and entered into a confidentiality agreement
with the Company on June 4, 1997, which provided, among other things, that
Parent would treat confidentially certain information to be provided to it
concerning the Company. On June 12, 1997, DLJ sent a preliminary bid request
letter to Parent.
 
     Parent engaged Credit Suisse First Boston to serve as its financial advisor
in connection with the potential acquisition of the Company. On June 18, 1997,
Parent submitted a written proposal to acquire the Company at a price range of
$17.00-$19.00 per share, payable in cash. Parent then received an initial draft
of the proposed Merger Agreement together with a letter from DLJ inviting Parent
to submit a final proposal for the acquisition of the Company.
 
     On June 30, 1997, Parent and its advisors met with advisors of the Company
and DLJ and conducted a preliminary review of certain non-public information.
During the period from June 30, 1997 through July 9, 1997, Parent and its
advisors continued a review of the Company's business, financial results and
related data. From
 
                                       16
<PAGE>   19
 
July 2, 1997, through July 9, 1997, Parent, Parent's advisors, the Company's
senior management and the Company's advisors engaged in various discussions
regarding the business of the Company.
 
     On July 10, 1997, Parent submitted, along with a proposed Merger Agreement,
a written offer to acquire the Company at a price of $17.75 per Share, subject
to certain conditions, but not subject to a financing condition. On July 11,
1997, DLJ informed Parent that it was one of the final bidders and invited the
Company to submit a revised offer. On July 15, 1997, Parent submitted a revised
written offer at a price of $18.00 per Share. Shortly thereafter, DLJ informed
Credit Suisse First Boston that Parent had been selected by the Company to
attempt to consummate an acquisition of the Company.
 
     During the period from July 18, 1997 through August 7, 1997, Parent,
Parent's advisors, the Company's senior management and the Company's advisors
negotiated the terms of the Merger Agreement. After approval of such Merger
Agreement by the Board of Directors of Parent, on August 7, 1997, the Board of
Directors of the Company met and approved the proposed transaction and the
Merger Agreement.
 
     The Merger Agreement was executed on August 7, 1997. Prior to the
commencement of trading on August 8, 1997, each of the Company and Parent issued
a press release regarding the execution of the Merger Agreement.
 
12.  PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; PROPOSED MERGER
 
     Purpose of the Offer.  The purpose of the Offer is for Parent, through the
Purchaser, to acquire control of the Board of Directors of, and the entire
equity interest in, the Company. The Purchaser intends to acquire all
outstanding Shares not tendered and purchased pursuant to the Offer. The
acquisition of the entire equity interest in the Company has been structured as
a cash tender offer followed by a cash merger in order to provide a prompt and
orderly transfer of ownership of the Company from the public Stockholders to
Parent and to provide Stockholders with cash for all their Shares.
 
     THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OR
A SOLICITATION OF CALLS FOR A SPECIAL MEETING OF THE COMPANY'S STOCKHOLDERS. ANY
SUCH SOLICITATION WHICH PARENT OR THE PURCHASER MIGHT MAKE WOULD BE MADE ONLY
PURSUANT TO SEPARATE PROXY OR SOLICITATION MATERIALS COMPLYING WITH THE
REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT, AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER.
 
     Plans for the Company.  Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business and
operations of the Company will be continued by the Surviving Corporation
substantially as they are being conducted. Initially upon consummation of the
Merger (the "Effective Time"), the directors of the Purchaser will be the
directors of the Surviving Corporation and the officers of the Company
immediately prior to the Effective Time will be the officers of the Surviving
Corporation.
 
     Parent will continue to evaluate the business and operations of the Company
during the pendency of the Offer and after the consummation of the Offer and the
Merger, and will take such actions as it deems appropriate under the
circumstances then existing. Parent intends to seek additional information about
the Company during this period. Thereafter, Parent intends to review such
information as part of a comprehensive review of the Company's business,
operations, capitalization and management with a view to optimizing the
Company's potential in conjunction with the business of Parent.
 
     Except as described in this Offer to Purchase, neither Parent nor the
Purchaser has any present plans or proposals that would relate to or would
result in (i) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries,
(ii) a sale or transfer of a material amount of assets of the Company or any of
its subsidiaries, (iii) any other material change in the Company's corporate
structure or business, (iv) a class of securities of the Company being delisted
from a national securities exchange or ceasing to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities association
or (v) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act.
 
                                       17
<PAGE>   20
 
  Proposed Merger.
 
     The Merger Agreement.  The following is a summary of certain provisions of
the Merger Agreement, a copy of which has been filed as an exhibit to the
Schedule 14D-1 filed by the Purchaser with the Commission and is available for
copying and inspection at the Commission in the manner set forth in Section 8.
Such summary is qualified in its entirety by reference to the Merger Agreement.
 
     The Offer.  The Merger Agreement provides for the making of the Offer by
the Purchaser. The obligation of Purchaser to accept for payment and pay for
Shares tendered pursuant to the Offer is subject to the satisfaction of the
Minimum Condition and certain other conditions that are described in Section 14.
The Purchaser has agreed that, without the written consent of the Company,
Purchaser shall not amend or waive the Minimum Condition or decrease the Offer
Price or the number of Shares sought in the Offer or amend any other condition
of the Offer in any manner adverse to the Stockholders. If, immediately prior to
the Expiration Date of the Offer, the Shares tendered and not withdrawn pursuant
to the Offer equal less than 90% of the outstanding Shares but more than 80% of
the outstanding Shares, the Purchaser may extend the Offer for a period not to
exceed seven business day, notwithstanding that all conditions to the Offer are
satisfied as of such date.
 
     The Merger.  The Merger Agreement provides that, following the purchase of
Shares pursuant to the Offer, and if required by applicable law in order to
consummate the Merger, the approval of the Merger Agreement by the Stockholders
of the Company and the satisfaction or waiver of the other conditions to the
Merger, the Purchaser will be merged with and into the Company. The Merger shall
become effective at such time as a certificate of merger is filed with the
Secretary of State of the State of Delaware, or at such later time as is
specified in such certificate of merger. As a result of the Merger, all of the
properties, rights, privileges, immunities, powers and franchises of the Company
and the Purchaser shall vest in the Surviving Corporation and all debts,
liabilities and duties of the Company and the Purchaser shall become the debts,
liabilities and duties of the Surviving Corporation.
 
     The Merger Agreement provides that the certificate of incorporation of the
Purchaser at the Effective Time will be the certificate of incorporation of the
Surviving Corporation. The by-laws of the Purchaser at the Effective Time will
be the by-laws of the Surviving Corporation. The Merger Agreement also provides
that the initial directors of the Purchaser at the Effective Time will be the
directors of the Surviving Corporation and the initial officers of the Company
at the Effective Time will be the officers of the Surviving Corporation.
 
     Conversion of Securities.  At the Effective Time, (i) each issued and
outstanding Share held in the treasury of the Company, by Parent, the Purchaser
or any other wholly owned subsidiary of Parent shall be cancelled and retired
and shall cease to exist, and no consideration shall be delivered in exchange
therefor; (ii) each share of common stock of the Purchaser then issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of common stock of the Surviving
Corporation; and (iii) each Share issued and outstanding immediately prior to
the Effective Time shall, except as otherwise provided in (i) above and except
for Shares held by any Stockholder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded appraisal for such Shares in
accordance with Section 262 of the DGCL, be converted into the right to receive
$18.00 in cash or any higher price per Share that may be paid pursuant to the
Offer, without interest.
 
     Dissenting Shares.  Shares that are outstanding immediately prior to the
Effective Time and which are held by Stockholders who shall not have voted in
favor of the Merger or consented thereto in writing and who shall have demanded
properly in writing appraisal for such Shares in accordance with Section 262 of
the DGCL (collectively, the "Dissenting Shares"), shall not be converted into or
represent the right to receive the Merger Consideration. Such Shares instead
will, from and after the Effective Time, represent only the right to receive
payment of the appraised value of such Shares held by them in accordance with
the provisions of such Section 262, except that all Dissenting Shares held by
Stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under such Section
262 shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender, in the manner
provided in the Merger Agreement, of the Certificate or Certificates that,
immediately prior to the Effective Time, evidenced such Shares.
 
                                       18
<PAGE>   21
 
     Options.  The Merger Agreement provides that on the Expiration Date,
immediately prior to the acceptance for payment of Shares pursuant to the Offer,
each outstanding employee stock option to purchase Shares (a "Company Option")
granted under any stock option or compensation plan or arrangement of the
Company or its subsidiaries (collectively, the "Option Plan"), shall be
surrendered to the Company and shall be forthwith canceled and the Company shall
pay to each holder of a Company Option, by check, an amount equal to (i) the
product of the number of the Shares which are issuable upon exercise of such
Company Option, multiplied by the Offer Price, less (ii) the aggregate exercise
price of such Company Option. Except as may be otherwise agreed to by Parent or
the Purchaser and the Company, the Company's Option Plan shall terminate as of
the Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any of its subsidiaries shall be deleted as of
the Effective Time and no holder of Company Options or any participant in the
Option Plan or any other plans, programs or arrangements shall have any rights
thereunder to acquire any equity securities of the Company, the Surviving
Corporation or any subsidiary thereof.
 
     Recommendation.  The Board of Directors has unanimously (i) determined that
the terms of the Offer and the Merger are fair, to and in the best interests of,
the Stockholders, (ii) approved the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, and (iii) resolved to
recommend that the Stockholders accept the Offer, tender their Shares pursuant
to the Offer and approve and adopt the Merger Agreement and the Merger;
provided, that such recommendation may be withdrawn, modified or amended, if, in
the opinion of the Board of Directors, after receipt of advice from outside
legal counsel, failure to withdraw, modify or amend such recommendation would
reasonably be expected to result in the Board of Directors violating its
fiduciary duties to the Company's shareholders under applicable law and the
Company pays the fees and expenses required by the Merger Agreement.
 
     Stockholders' Meeting.  The Merger Agreement provides that the Company
shall, if required in accordance with applicable law, in order to consummate the
Merger, duly call, give notice of, convene and hold a special meeting of its
Stockholders as promptly as practicable following consummation of the Offer for
the purpose of considering and taking action on the Merger Agreement and the
transactions contemplated thereby. If required by applicable law, the Company
will file with the Commission a proxy statement including the recommendation of
the Board of Directors that the Stockholders vote in favor of the approval of
the Merger Agreement and the transactions contemplated thereby. The Company
agrees to respond promptly to all Commission comments with respect to the proxy
statement and to cause the proxy statement to be mailed to the Stockholders at
the earliest practicable time.
 
     Notwithstanding the preceding paragraph, in the event that Parent, the
Purchaser and any other subsidiaries of Parent shall acquire in the aggregate at
least 90% of the outstanding shares of each class of capital stock of the
Company, pursuant to the Offer or otherwise, the Company has agreed, at the
request of Parent, to take all necessary and appropriate action to cause the
Merger to become effective, as soon as practicable after such acquisition,
without a meeting of Stockholders, in accordance with Section 253 of the DGCL.
 
     Representation on the Board of Directors.  Promptly upon the purchase of
and payment for any Shares by Parent or any of its subsidiaries which represents
at least a majority of the outstanding Shares, Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as is equal to the product of the total number
of directors on such Board (giving effect to the directors designated by Parent
pursuant to this sentence) multiplied by the percentage that the number of
Shares so accepted for payment bears to the total number of Shares then
outstanding. In furtherance thereof, the Company shall, upon request of the
Purchaser, promptly increase the size of its Board of Directors or exercise its
best efforts to secure the resignations of such number of directors, or both, as
is necessary to enable Parent's designees to be so elected to the Company's
Board, and shall cause Parent's designees to be so elected. At such time, the
Company shall, if requested by Parent, also cause persons designated by Parent
to constitute at least the same percentage (rounded up to the next whole number)
as is on the Company's Board of Directors of (i) each committee of the Company's
Board of Directors, (ii) each board of directors (or similar body) of each
subsidiary of the Company and (iii) each committee (or similar body) of each
such board. In the event that Parent's designees are elected to the Company's
Board of Directors, until the Effective Time, the Company's Board shall have at
least two directors who are directors on the date of the Merger Agreement (the
"Independent Directors");
 
                                       19
<PAGE>   22
 
provided that, in such event, if the number of Independent Directors shall be
reduced below two for any reason whatsoever, any remaining Independent Directors
(or Independent Director, if there be only one remaining) shall be entitled to
designate persons to fill such vacancies who shall be deemed to be Independent
Directors for purposes of the Merger Agreement or, if no Independent Director
then remains, the other directors shall designate two persons to fill such
vacancies who shall not be stockholders, affiliates or associates of Parent or
the Purchaser and such persons shall be deemed to be Independent Directors for
purposes of the Merger Agreement. In the event that Parent's designees are
elected to the Company's Board, after the acceptance for payment of Shares
pursuant to the Offer and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors shall be required to (a) amend or
terminate the Merger Agreement by the Company or (b) exercise or waive any of
the Company's rights, benefits or remedies thereunder.
 
     Interim Operations of the Company.  Pursuant to the Merger Agreement, the
Company has covenanted and agreed that, except as otherwise expressly provided
in the Merger Agreement or as agreed in writing by the Parent, during the period
from the date of the Merger Agreement until such time as directors of the
Purchaser have been elected to, and shall constitute a majority of, the Board of
Directors of the Company (a) the business of the Company and its subsidiaries
shall be conducted only in the ordinary and usual course of business and
consistent with past practice and, to the extent consistent therewith, each of
the Company and its subsidiaries shall use its reasonable efforts to preserve
its business organizations and business organizations of its subsidiaries intact
and maintain its existing relations with customers, suppliers, employees,
creditors and business partners, (b) the Company will not directly or indirectly
(i) except upon exercise of employee stock options, pursuant to which up to
517,117 Shares may be issued, outstanding on the date of the Merger Agreement,
issue, sell, transfer or pledge or agree to sell, transfer or pledge any
treasury stock of the Company or any capital stock of any of its subsidiaries
beneficially owned by it, (ii) amend its certificate of incorporation or by-laws
or similar organizational documents, or (iii) split, subdivide, combine or
reclassify the outstanding Shares or preferred stock or any outstanding capital
stock of any of the subsidiaries of the Company, (c) neither the Company nor any
of its subsidiaries shall (i) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock other than dividends paid by subsidiaries of the Company to the Company or
any of its wholly owned subsidiaries in the ordinary course of business, (ii)
issue, sell, pledge, grant, dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class of the Company or its subsidiaries, other than Shares reserved for
issuance on the date hereof pursuant to the exercise of employee stock options
outstanding on the date of the Merger Agreement pursuant to which up to 517,117
shares may be issued, (iii) transfer, lease, license, sell, mortgage, pledge,
dispose of, or encumber any assets other than in the ordinary and usual course
of business and consistent with past practice, or (iv) redeem, purchase or
otherwise acquire directly or indirectly any of its capital stock, (d) neither
the Company nor any of its subsidiaries shall (i) grant any increase in the
compensation payable or to become payable by the Company or any of its
subsidiaries to any of its executive officers or employees, enter into any
contract or other binding commitment in respect of any such increase with any of
its directors, officers or other employees or any director, officer or other
employee of its subsidiaries, and not establish, adopt, enter into, make any new
grants or awards under or amend, any collective bargaining agreement; (ii)(A)
adopt any new, or (B) amend or otherwise increase, or accelerate the payment or
vesting of the amounts payable or to become payable under an existing, bonus,
incentive compensation, deferred compensation, severance, profit sharing, stock
option, stock purchase, insurance, pension, retirement or other employee benefit
plan, agreement or arrangement, or (iii) enter into any employment or severance
agreement with or, except in accordance with the existing written policies of
the Company, grant any severance or termination pay to any officer, director or
employee of the Company or any of its subsidiaries; provided however, that (i)
prior to consummation of the Offer, the Company may enter into severance
agreements with certain individuals set forth in the Company Disclosure Schedule
(the "Designated Employees") in the form as approved by the Company's Board of
Directors, (ii) the aggregate cost of payments and benefits provided to the
Designated Employees pursuant to the terms of such severance agreements (unless
otherwise amended with the written consent of, or at the written direction of,
Parent or Purchaser) shall not exceed $2,000,000 in the aggregate, and (iii)
with respect to the severance plan described in the Company Disclosure Schedule
that covers individuals other than the Designated Employees (the "Nondesignated
Employees"): (a) the implementation of such plan and the entering into of
agreements with Nondesignated Employees shall be subject to the prior written
consent
 
                                       20
<PAGE>   23
 
of the Purchaser, which consent shall not be unreasonably withheld (with
reasonableness to be determined based upon Purchaser's reasonable business
objectives and consistent with Purchaser's past practice), and (b) the aggregate
cost of payments and benefits provided to the Nondesignated Employees pursuant
to the terms of such severance agreements (unless otherwise amended with the
written consent of, or at the written direction of, Parent or Purchaser) shall
not exceed $1,000,000 in the aggregate; (e) neither the Company nor any of its
subsidiaries shall permit any insurance policy naming it as a beneficiary or a
loss payable payee to be canceled or terminated except in the ordinary course of
business and consistent with past practice; (f) neither the Company nor any of
its subsidiaries shall enter into any contract or transaction relating to the
purchase of assets that exceed $1,000,000 in the aggregate; (g) neither the
Company nor any of its subsidiaries shall change any of the accounting methods
used by it unless required by GAAP, neither the Company nor any of its
subsidiaries shall make any material tax election except in the ordinary course
of business consistent with past practice, change any material tax election
already made, adopt any material tax accounting method except in the ordinary
course of business consistent with past practice, change any material tax
accounting method unless required by GAAP, enter into any closing agreement,
settle any tax claim or assessment or consent to any tax claim or assessment or
any waiver of the statute of limitations for any such claim or assessment, (h)
neither the Company nor any of its subsidiaries shall (i) incur or assume any
long-term debt, (ii) except in the ordinary course of business and consistent
with past practice and in an aggregate amount not to exceed $3,000,000, incur or
assume any short-term indebtedness, (iii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, (iv) make any loans,
advances or capital contributions to, or investment in, any other person (other
than to wholly owned subsidiaries of the Company), (v) enter into any material
commitment or transaction (including, but not limited to, any borrowing, capital
expenditure or purchase, sale or lease of assets), or (vi) modify, amend or
terminate any of its material contracts or waive, release or assign any material
rights, (i) neither the Company nor any of its subsidiaries shall settle or
compromise any claim, lawsuit, liability or obligation, and neither the Company
nor any of its subsidiaries shall pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction of
any such claims, liabilities or obligation, (x) to the extent reflected or
reserved against in, or contemplated by, the consolidated financial statements
(or the notes thereto) of the Company and its consolidated subsidiaries, (y)
incurred in the ordinary course of business and consistent with past practice or
(z) which are legally required to be paid, discharged or satisfied, (j) neither
the Company nor any of its subsidiaries will take, or agree to commit to take,
any action that would make any representation or warranty of the Company
contained in the Merger Agreement inaccurate in any respect at, or as of any
time prior to, the Effective Time, (k) except as otherwise required by the
fiduciary duties of the board to the Stockholders under applicable law, neither
the Company nor any of its subsidiaries will take any action with the intent of
causing any of the conditions to the Offer not to be satisfied, and (l) except
as otherwise required by the fiduciary duties of the board to the Stockholders
under applicable law, neither the Company nor any of its subsidiaries will enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.
 
     Other Agreements of Parent, the Purchaser and the Company.  The Merger
Agreement provides that neither the Company nor any of its subsidiaries shall
(and the Company shall use its best efforts to cause its officers, directors,
employees, representatives and agents, including, but not limited to, investment
bankers, attorneys and accountants, not to), directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any corporation, partnership, person or other entity or
group (other than Parent and any of its affiliates or representatives)
concerning any proposal or offer to acquire all or a substantial part of the
business and properties of the Company or any of its subsidiaries or any capital
stock of the Company or any of its subsidiaries, whether by merger, tender
offer, exchange offer, sale of assets or similar transactions involving the
Company or any subsidiary, division or operating or principal business unit of
the Company (an "Acquisition Proposal"), except that the Merger Agreement does
not prohibit the Company or the Company's Board from (i) taking and disclosing
to the Company's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act, or (ii) making such disclosure to the Company's stockholders as,
in the good faith judgment of the Board, after receiving advice from outside
counsel, is required under applicable law, provided that the Company may not,
except as described below, withdraw or modify, or propose to withdraw or modify,
its position with respect
 
                                       21
<PAGE>   24
 
to the Offer or the Merger or approve or recommend, or propose to approve or
recommend any Acquisition Proposal, or enter into any agreement with respect to
any Acquisition Proposal. The Merger Agreement provides that the Company will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing. The Merger
Agreement provides that notwithstanding the foregoing, prior to the acceptance
of Shares pursuant to the Offer, the Company may furnish information concerning
the Company and its subsidiaries to any corporation, partnership, person or
other entity or group pursuant to appropriate confidentiality agreements, and
may negotiate and participate in discussions and negotiations with such entity
or group concerning an Acquisition Proposal if (x) such entity or group has
submitted a bona fide written proposal to the Company relating to any such
transaction which the Board determines in good faith, after consulting with a
nationally recognized investment banking firm, represents a superior transaction
to the Offer and the Merger and (y) in the opinion of the Board of Directors of
the Company, only after receipt of advice from outside legal counsel to the
Company, the failure to provide such information or access or to engage in such
discussions or negotiations would reasonably be expected to cause the Board of
Directors to violate its fiduciary duties to the Company's shareholders under
applicable law (an Acquisition Proposal which satisfies clauses (x) and (y)
being referred to herein as a "Superior Proposal"). The Merger Agreement
provides that the Company will immediately notify Parent of the existence of any
proposal or inquiry received by the Company, the identity of the party making
such proposal or inquiry, and the terms (both initial and modified) of any such
proposal or inquiry (and will disclose any written materials delivered in
connection therewith) and the Company will keep Parent reasonably informed of
the status (including amendments or proposed amendments) of any such proposal or
inquiry. The Merger Agreement provides that the Company will promptly provide to
Parent any material non-public information regarding the Company provided to any
other party which was not previously provided to Parent. The Merger Agreement
provides that at any time following notification to Parent of the Company's
intent to do so (which notification shall include the identity of the bidder and
the material terms and conditions of the proposal) and if the Company has
otherwise complied with the terms of the foregoing, the Board of Directors may
withdraw or modify its approval or recommendation of the Offer and may enter
into an agreement with respect to a Superior Proposal, provided it shall (i)
take no such action unless it shall notify Parent promptly of its intention, and
in no event shall such notice be given less than two business days prior to the
earlier of the public announcement of such withdrawal or modification of its
recommendation or the Company's termination of the Merger Agreement, and (ii)
concurrently with entering into such agreement pay or cause to be paid to Parent
the Break-Up Amount (as defined below) plus any amount payable at the time for
reimbursement of expenses pursuant to the Merger Agreement. If the Company shall
have notified Parent of its intent to enter into an agreement with respect to a
Superior Proposal in compliance with the preceding sentence and has otherwise
complied with such sentence, the Company may enter into an agreement with
respect to such Superior Proposal.
 
     From the date of the Merger Agreement, upon reasonable notice, the Company
shall (and shall cause each of its subsidiaries to) afford to the officers,
employees, accountants, counsel, financing sources and other representatives of
Parent, access, during normal business hours during the period prior to the time
that the directors of the Purchaser have been elected to, and shall constitute a
majority of the Board of Directors of the Company, (the "Appointment Date"), to
all its properties, employees, books, contracts, commitments and records and,
during such period, the Company shall (and shall cause each of its subsidiaries
to) furnish promptly to the Parent (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws and (b) all other
information concerning its business, properties and personnel as Parent may
reasonably request. After the Appointment Date, the Company shall provide Parent
and such persons as Parent shall designate with all such information, at such
time as Parent shall request.
 
     Unless otherwise required by law and until the Appointment Date, Parent
will hold any such information which is nonpublic in confidence in accordance
with the provisions of a letter agreement dated June 4, 1997, between the
Company and the Parent.
 
     Pursuant to the Merger Agreement, for five years after the Effective Time,
the Surviving Corporation (or any successor to the Surviving Corporation) shall
indemnify, defend and hold harmless the present and former officers and
directors of the Company and its subsidiaries, determined as of the Effective
Time (each an
 
                                       22
<PAGE>   25
 
"Indemnified Party") against all losses, claims, damages, liabilities, costs,
fees and expenses (including reasonable fees and disbursements of counsel and
judgments, fines, losses, claims, liabilities and amounts paid in settlement
(provided that any such settlement is effected only upon receipt of the written
consent of the Parent or the Surviving Corporation which consent shall not
unreasonably be withheld)) arising out of actions or omissions occurring at or
prior to the Effective Time to the full extent required under applicable
Delaware law, the terms of the Company's certificate of incorporation or bylaws,
as in effect at the date of the Merger Agreement, and the terms of any
indemnification agreement entered into with the Company prior to the date of the
Merger Agreement; provided, that in the event any claim or claims are asserted
or made within such five-year period, all rights to indemnification in respect
of any such claim or claims shall continue until disposition of any and all such
claims. Parent or the Surviving Corporation shall maintain the Company's
existing officers and directors' liability insurance ("D&O Insurance") for a
period of not less than three years after the Effective Time; provided, that the
Parent may substitute therefor policies of substantially equivalent coverage and
amounts containing terms no less favorable to such former directors or officers;
provided, further, if the existing D&O Insurance expires, is terminated or
canceled during such period, Parent or the Surviving Corporation will use all
reasonable efforts to obtain substantially similar D&O Insurance; provided,
further, however, that in no event shall Parent, the Surviving Corporation or
the Company be required to pay aggregate premiums for insurance in excess of
150% of the aggregate premiums paid by the Company in 1996 on an annualized
basis for such purpose (the "1996 Premium"); and provided, further, that if the
Parent or the Surviving Corporation is unable to obtain the amount of insurance
required by this sentence for such aggregate premium, Parent or the Surviving
Corporation shall obtain as much insurance as can be obtained for an annual
premium not in excess of 150% of the 1996 Premium.
 
     The Merger Agreement provides that the Company, the Purchaser and Parent
will each use all reasonable efforts to consummate and make effective the
transactions contemplated by the Merger Agreement as soon as practicable.
 
     Representations and Warranties.  The Merger Agreement contains various
customary representations and warranties made by the Company to Parent and the
Purchaser including, but not limited to, representations and warranties relating
to the Company's organization and qualification, its capitalization, its
authority to enter into the Merger Agreement and to carry out the related
transactions, the absence of conflicts with applicable laws and existing
obligations of the Company and its subsidiaries, financial statements of the
Company, compliance with applicable law, filings made by the Company with the
Commission under the Securities Act or the Exchange Act, undisclosed
liabilities, certain changes or events concerning its businesses, litigation,
employee benefits and labor matters, tax matters, intellectual property,
environmental matters, disclosure documents filed with the Commission in
connection with the Offer and the Merger, brokerage fees and commissions and
other fees, certain business practices, insurance and product warranties.
 
     The Merger Agreement contains various customary representations and
warranties made by Parent and the Purchaser to the Company, including, but not
limited to, representations and warranties relating to Parent's and the
Purchaser's organization and qualification, their authority to enter into the
Merger Agreement and to carry out the related transactions, the absence of
conflicts with applicable laws and existing obligations of Parent and the
Purchaser, certain information provided to the Company by Parent and the
Purchaser for inclusion in disclosure documents filed with the Commission in
connection with the Offer and Merger and the financing of the Offer and Merger.
 
     Conditions to the Merger.  The obligations of each of Parent, the Purchaser
and the Company to effect the Merger are subject to the satisfaction of certain
conditions, including that (a) the Merger Agreement shall have been adopted and
the Merger shall have been approved by the requisite vote of the holders of the
Shares, if required by applicable law, in order to consummate the Merger, (b) no
federal or state governmental or regulatory body or court of competent
jurisdiction shall have enacted, issued, promulgated or enforced any statute,
rule, regulation, executive order, decree, judgment, preliminary or permanent
injunction or other order that is in effect and that prohibits, enjoins or
otherwise restrains the consummation of the Merger; provided, however, that the
parties shall use all commercially reasonable efforts to cause any such decree,
judgment, injunction or order to be vacated or lifted, (c) Parent, the Purchaser
or their affiliates shall have purchased Shares pursuant to the Offer, except
that this condition shall not apply if Parent, the Purchaser or their affiliates
shall have failed to purchase Shares pursuant to the Offer in breach of their
obligations under the Merger Agreement, and (d) the waiting
 
                                       23
<PAGE>   26
 
period (and any extension thereof) applicable to the Merger under the HSR Act
shall have been terminated or shall have expired.
 
     The obligation of the Parent and Purchaser and the Company to effect the
Merger is also subject to the satisfaction or waiver of the condition that all
representations and warranties made by the Company or Parent and Purchaser,
respectively, in the Merger Agreement shall be true and correct on and as of the
Effective Time, unless the inaccuracies (without giving effect to any
materiality or material adverse effect qualifications or materiality exceptions
contained therein) under such representations and warranties, taking all the
inaccuracies under all such representations and warranties together in their
entirety, do not, individually or in the aggregate, result in any event, change
or effect that has, or is reasonably likely to have, a material adverse effect
(A) on the condition (financial or otherwise), business, assets, liabilities,
results of operations or cash flows of the Company and its subsidiaries or
Parent and its subsidiaries, respectively, taken as a whole, or (B) on the
ability of the Company or the ability of Parent or the Purchaser to perform its
obligations under the Merger Agreement or to consummate the transactions
contemplated by the Merger Agreement.
 
     Termination.  The Merger Agreement may be terminated, (a) by the mutual
written consent of Parent and the Company, (b) by either of the Company or
Parent (i) if the Offer shall have expired without any Shares being purchased
therein; provided, however, that the right to terminate the Merger Agreement
under this clause (b)(i) shall not be available to any party whose failure to
fulfill any obligation under the Merger Agreement has been the cause of, or
resulted in, the failure of Parent or the Purchaser, as the case may be, to
purchase the Shares pursuant to the Offer on or prior to such date, (ii) if any
court, arbitrator, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or other
action the parties to the Merger Agreement shall use their reasonable efforts to
lift), which permanently restrains, enjoins or otherwise prohibits the
consummation of the Offer or the Merger and such order, decree, ruling or other
action shall have become final and nonappealable, or (iii) if the Offer has not
been consummated prior to October 5, 1997; provided, that the right to terminate
the Merger Agreement under this clause (b)(iii) shall not be available to any
party whose misrepresentation in the Merger Agreement or whose failure to
perform any of its covenants and agreements or to satisfy any obligation under
the Merger Agreement has been the cause of, or resulted in, the failure of
Parent or the Purchaser, as the case may be, to purchase Shares pursuant to the
Offer on or prior to such date, (c) by the Company (i) if Parent, the Purchaser
or any of their affiliates shall have failed to commence the Offer on or prior
to five business days following the date of the initial public announcement of
the Offer; provided, that the Company may not terminate the Merger Agreement
pursuant to this clause (c)(i) if the Company is at such time in breach of its
obligations under the Merger Agreement such as to cause a material adverse
effect on the condition (financial or otherwise), business, assets, liabilities,
results of operations or cash flows of the Company and its subsidiaries, taken
as a whole, or on the ability of the Company to perform its obligations under
the Merger Agreement or to consummate the transactions contemplated by the
Merger Agreement (a "Company Material Adverse Effect"), (ii) in connection with
entering into an agreement with respect to a Superior Proposal, provided it has
complied with all provisions relating thereto contained in the Merger Agreement,
including the notice provisions, and that it makes simultaneous payment of the
Break-Up Amount (as defined below), or (iii) if Parent or the Purchaser shall
have breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in the Merger Agreement,
which is not cured, in all material respects, within 30 days after the giving of
written notice by the Company to Parent or the Purchaser, as applicable, (d) by
Parent (i) if either Parent or the Purchaser is entitled to terminate the Offer
as a result of (A) the Board of Directors of the Company or any committee
thereof having modified in a manner adverse to Parent or the Purchaser or
withdrawn its approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any Acquisition Proposal, (B) the Company
entering into any agreement with respect to any Superior Proposal in accordance
with the terms of the Merger Agreement, or (C) the Board of Directors of the
Company resolving to do any of the foregoing, (ii) if the Offer is not commenced
as a result of actions or inaction by the Company that result in the failure of
a condition specified in Section 14 hereof or the Offer is terminated or expires
as a result of the failure of a condition specified in Section 14 hereof, unless
such termination or expiration has been caused by or resulted from the failure
of Parent or Purchaser to perform any covenants and agreements of Parent or
Purchaser contained in the Merger Agreement, or (iii) if (A) the Company shall
have breached in any respect any of its representations or warranties contained
in the Merger Agreement,
 
                                       24
<PAGE>   27
 
unless the inaccuracies (without giving effect to any materiality or material
adverse effect qualifications or materiality exceptions contained therein) under
such representations and warranties taking all the inaccuracies under all such
representations and warranties together in their entirety, do not, individually
or in the aggregate, result in a Company Material Adverse Effect or (B) the
Company shall have breached or failed to perform any obligation or to comply
with any agreement or covenant to be performed or complied with by it under the
Merger Agreement, other than, any breach or failure which would not have, either
individually or in the aggregate, a Company Material Adverse Effect (in each of
cases (A) and (B), which breach or failure has not been cured within thirty (30)
days following receipt of written notice thereof by Parent specifying in
reasonable detail the basis of such alleged breach or failure.
 
     Termination Fee.  If (i) the Company terminates the Merger Agreement in
connection with entering into an agreement with respect to a Superior Proposal,
(ii) Parent terminates the Merger Agreement as a result of (A) the Board of
Directors of the Company or any committee thereof having modified in a manner
adverse to Parent or the Purchaser or withdrawn its approval or recommendation
of the Offer, the Merger or the Merger Agreement, or approved or recommended any
Acquisition Proposal, (B) the Company entering into any agreement with respect
to any Superior Proposal in accordance with the terms of the Merger Agreement,
or (C) the Board of Directors of the Company resolving to do any of the
foregoing, or (iii) either the Company or Parent terminates the Merger Agreement
if the Offer shall have expired without any Shares being purchased therein
(provided, however, that such right to terminate is not available to any party
whose failure to fulfill any obligation under the Merger Agreement has been the
cause of, or resulted in, the failure of Parent or the Purchaser, as the case
may be, to purchase the Shares pursuant to the Offer on or prior to such date)
and (1) prior to such termination there shall have been publicly announced
another Acquisition Proposal or (2) the Company shall have entered into a
definitive agreement relating to an Acquisition Proposal or a business
combination or other transaction contemplated by an Acquisition Proposal shall
have been consummated in either case prior to or within six months following
such termination, then the Company agrees that it will immediately thereafter
pay to Parent in same day funds, an amount (the "Break-Up Amount") equal to
$6,700,000.
 
     Pursuant to the Merger Agreement, in the event of the termination of the
Merger Agreement, the Merger Agreement will become null and void and have no
further force or effect, without any liability on the part of any party or its
affiliates, directors, officers, agents or representatives, other than (a)
certain provisions of the Merger Agreement relating to the termination fee,
expenses of the parties and confidentiality of information, publicity and effect
of termination and (b) to the extent that such termination results from the
breach by such party of any of its representations, warranties, covenants or
agreements contained in the Merger Agreement, provided, however, that a party's
damages for any such breach shall be limited to such party's actual damages and
neither party shall be entitled to seek consequential or special damages for any
such breach.
 
     Costs and Expenses.  Except as discussed above, the Merger Agreement
provides that all costs and expenses incurred in connection with the Merger
Agreement and the consummation of the transactions contemplated by the Merger
Agreement shall be paid by the party incurring such costs and expenses.
 
     Amendment and Waivers.  Subject to applicable law, the Merger Agreement may
be amended, modified and supplemented in any and all respects, whether before or
after any vote of the shareholders of the Company contemplated by the Merger
Agreement, by written agreement of the Parent and Purchaser and the Company, by
action taken by their respective Boards of Directors, at any time prior to the
date of the closing of the Merger with respect to any of the terms contained
therein; provided, however, that after the approval of the Merger Agreement by
the stockholders of the Company, no such amendment, modification or supplement
shall reduce the amount or change the form of the Merger Consideration.
 
13.  DIVIDENDS AND DISTRIBUTIONS
 
     The Merger Agreement provides that neither the Company nor its subsidiaries
shall, after the date of the execution and delivery of the Merger Agreement and
until the Appointment Date, declare, set aside, or pay any dividend in cash,
stock or property with respect to its capital stock other than dividends paid by
subsidiaries of the Company to the Company or any of its wholly owned
subsidiaries in the ordinary course of business or issue, sell, pledge, grant,
dispose of or encumber any additional shares of, or securities convertible into
or exchangeable
 
                                       25
<PAGE>   28
 
for, or options, warrants, calls, commitments or rights of any kind to acquire,
any shares of capital stock of any class of the Company or its subsidiaries,
other than Shares reserved for issuance on the date of the Merger Agreement
pursuant to the exercise of company options outstanding on the date of the
Merger Agreement, pursuant to which up to 517,117 Shares may be issued.
 
14.  CERTAIN CONDITIONS TO THE OFFER
 
     Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to
pay for or return tendered Shares promptly after termination or withdrawal of
the Offer), pay for, and may delay the acceptance for payment of or, subject to
the restriction referred to above, the payment for, any tendered Shares, and may
terminate or amend the Offer as to any Shares not then paid for, if (i) the
Minimum Condition has not been satisfied, (ii) any applicable waiting period for
the Offer under the HSR Act has not expired, or (iii) at any time on or after
the date of the Merger Agreement and before the time of acceptance for payment
for any such Shares, any of the following events shall have occurred:
 
          (a) there shall be threatened, instituted, or pending any suit, action
     or proceeding by, or before any court, arbitrator, tribunal, administrative
     agency or commission or other governmental or other regulatory authority or
     agency (collectively, a "Governmental Entity") against the Purchaser,
     Parent, the Company or any subsidiary of the Company (i) seeking to
     prohibit or impose any material limitations on Parent's or the Purchaser's
     ownership or operation (or that of any of their respective subsidiaries or
     affiliates) of all or a material portion of their or the Company's
     businesses or assets, or to compel Parent or the Purchaser or their
     respective subsidiaries and affiliates to dispose of or hold separate any
     material portion of the business or assets of the Company or Parent and
     their respective subsidiaries, in each case taken as a whole, (ii)
     challenging the acquisition by Parent or the Purchaser of any Shares under
     the Offer, seeking to restrain or prohibit the making or consummation of
     the Offer or the Merger or the performance of any of the other transactions
     contemplated by the Merger Agreement, or seeking to obtain from the
     Company, Parent or the Purchaser any material damages, (iii) seeking to
     impose material limitations on the ability of the Purchaser, or render the
     Purchaser unable, to accept for payment, pay for or purchase some or all of
     the Shares pursuant to the Offer and the Merger, (iv) seeking to impose
     material limitations on the ability of Purchaser or Parent effectively to
     exercise full rights of ownership of the Shares, including, without
     limitation, the right to vote the Shares purchased by them on all matters
     properly presented to the Company's stockholders, or (v) which otherwise is
     reasonably likely to have a material adverse effect (A) on the condition
     (financial or otherwise), business, assets, liabilities, results of
     operations or cash flows of the Company or its subsidiaries, taken as a
     whole, or (B) on the ability of the Company to perform its obligations
     under the Merger Agreement or to consummate the transactions contemplated
     by the Merger Agreement (a "Company Material Adverse Effect");
 
          (b) there shall be any action taken by a Governmental Entity or any
     statute, rule, regulation, judgment, administrative interpretation, order
     or injunction enacted, entered, enforced, promulgated, or deemed
     applicable, to the Company, Parent, Purchaser, the Offer or the Merger, or
     any other action shall be taken by any Governmental Entity that is
     reasonably expected to result, directly or indirectly, in any of the
     consequences referred to in clauses (i) through (v) of paragraph (a) above;
 
          (c) there shall have occurred any other event, change or effect after
     the date of the Merger Agreement which, either individually or in the
     aggregate, would have, or be reasonably likely to have, a Company Material
     Adverse Effect;
 
          (d) (i) the Board of Directors of the Company or any committee thereof
     shall have modified in a manner adverse to Parent or the Purchaser or
     withdrawn its approval or recommendation of the Offer, the Merger or the
     Merger Agreement, or approved or recommended any Acquisition Proposal, (ii)
     the Company shall have entered into any agreement with respect to any
     Superior Proposal in accordance with the Merger Agreement or (iii) the
     Board of Directors of the Company resolves to do any of the foregoing;
 
                                       26
<PAGE>   29
 
          (e) the representations and warranties of the Company set forth in the
     Merger Agreement shall not be true and correct, in each case (i) as of the
     date referred to in any representation or warranty which addresses matters
     as of a particular date, or (ii) as to all other representations and
     warranties, as of the date of the Merger Agreement and as of the scheduled
     expiration of the Offer, unless the inaccuracies (without giving effect to
     any materiality or material adverse effect qualifications or materiality
     exceptions contained therein) under such representations and warranties,
     taking all the inaccuracies under all such representations and warranties
     together in their entirety, do not, individually or in the aggregate,
     result in a Company Material Adverse Effect;
 
          (f) the Company shall have breached or failed to perform any
     obligation or to comply with any agreement or covenant to be performed or
     complied with by it under the Merger Agreement other than any breach or
     failure which would not have, either individually or in the aggregate, a
     Company Material Adverse Effect (which breach or failure has not been cured
     within thirty (30) days following receipt of written notice thereof by
     Parent specifying in reasonable detail the basis of such alleged breach or
     failure);
 
          (g) any person entity or "group" (as such term is used in Section
     13(d)(3) of the Exchange Act) other than Parent or any of its affiliates
     acquires beneficial ownership (as defined in Rule 13d-3 promulgated under
     the Exchange Act), of at least 30% of the outstanding Shares of the
     Company;
 
          (h) the Merger Agreement shall have been terminated in accordance with
     its terms, which, in the sole judgment of Parent or the Purchaser, in any
     such case, and regardless of the circumstances (including any action or
     inaction by Parent or the Purchaser) giving rise to such condition makes it
     inadvisable to proceed with the Offer and/or with such acceptance for
     payment of or payment for Shares; or
 
          (i) there shall have occurred (i) any general suspension of, or
     limitation on prices for, trading in securities on any national securities
     exchange or in the over-the-counter market in the United States, (ii) the
     declaration of any banking moratorium or any suspension of payments in
     respect of banks or any limitation (whether or not mandatory) on the
     extension of credit by lending institutions in the United States, (iii) the
     commencement of a war, material armed hostilities or any other material
     international or national calamity involving the United States, (iv) in the
     case of any of the foregoing existing at the time of the commencement of
     the Offer, a material acceleration or worsening thereof, or (v) any
     decline, measured from the date of the Merger Agreement, in the Standard
     and Poor's 500 Index by an amount in excess of 25%.
 
     The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be asserted or waived by Parent or the Purchaser regardless of
the circumstances giving rise to such condition (including any action or
inaction by Parent or the Purchaser not in violation of the Merger Agreement)
and may be asserted or waived by Parent or the Purchaser in whole or in part at
any time and from time to time in the sole discretion of Parent or the
Purchaser, subject in each case to the terms of the Merger Agreement. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
 
15.  CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
 
     Except as described in this Section 15, based on a review of publicly
available filings by the Company with the Commission and other publicly
available information concerning the Company, neither Parent nor the Purchaser
is aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Shares by the Purchaser pursuant to the
Offer, the Merger or otherwise or of any approval or other action by any
governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required prior to the acquisition of Shares by the
Purchaser pursuant to the Offer, the Merger or otherwise. Should any such
approval or other action be required, Parent and the Purchaser currently
contemplate that it will be sought. While the Purchaser does not currently
intend to delay the acceptance for payment of Shares tendered pursuant to the
Offer pending the outcome of any such matter, there can be no assurance that any
such approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that adverse consequences might not result to
the business of the Company or the Purchaser or Parent or that certain parts of
the business of the Company or the Purchaser or Parent might not have to be
disposed of in the event that such approvals were
 
                                       27
<PAGE>   30
 
not obtained or any other actions were not taken. The Purchaser's obligation
under the Offer to accept for payment and pay for Shares is subject to certain
conditions, including conditions relating to the legal matters discussed in this
Section 15. See Section 14.
 
     State Takeover Statutes.  A number of states throughout the United States
have enacted takeover statutes that purport, in varying degrees, to be
applicable to attempts to acquire securities of corporations that are
incorporated or have assets, stockholders, executive offices or places of
business in those states. In 1982, in Edgar v. MITE Corp., the Supreme Court of
the United States held that the Illinois Business Takeover Act, which involved
state securities laws that made the takeover of certain corporations more
difficult, imposed a substantial burden on interstate commerce and was therefore
unconstitutional. However, in 1987, in CTS Corp. v. Dynamics Corp. of America,
the Supreme Court of the United States held that a state may, as a matter of
corporate law and, in particular, those laws concerning corporate governance,
constitutionally disqualify a potential acquirer from voting on the affairs of a
target corporation without prior approval of the remaining stockholders;
provided that the laws were applicable only under certain conditions.
 
     Section 203 of the DGCL prohibits business combination transactions
involving a Delaware corporation and an "interested stockholder" (defined
generally as any person that directly or indirectly beneficially owns 15% or
more of the outstanding voting stock of the subject corporation) for three years
following the date such person became an "interested stockholder," unless
certain exceptions apply, including that before such person became an interested
stockholder the board of directors of the subject corporation approved the
transaction in which such person became an interested stockholder or approved
the business combination. Since the Board, at the special meeting held on August
7, 1997, approved the Merger Agreement and the transactions contemplated
thereby, Section 203 is inapplicable to Parent and the Purchaser in connection
with the Offer and the Merger.
 
     The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
"takeover" statutes. The Purchaser does not know whether any of these statutes
will, by their terms, apply to the Offer, and has not complied with any such
statutes. To the extent that certain provisions of these statutes purport to
apply to the Offer, the Purchaser believes that there are reasonable bases for
contesting such statutes. If any person should seek to apply any state takeover
statute, the Purchaser would take such action as then appears desirable, which
action may include challenging the validity or applicability of any such statute
in appropriate court proceedings. If it is asserted that one or more takeover
statutes apply to the Offer, and it is not determined by an appropriate court
that such statute or statutes do not apply or are invalid as applied to the
Offer, the Purchaser might be required to file certain information with, or
receive approvals from, the relevant state authorities, and the Purchaser might
be unable to purchase or pay for Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer. In such case, the Purchaser may
not be obligated to accept for payment or pay for Shares tendered.
 
     Antitrust.  The Offer and the acquisition of Shares pursuant to the Merger
Agreement are subject to the HSR Act, which provides that certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the Federal Trade Commission ("FTC") and certain waiting period
requirements have been satisfied. Parent intends to file on or before August 18,
1997, a Notification and Report Form with respect to the Offer.
 
     Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares pursuant to the Offer and the Merger may not be consummated until the
expiration of a 15-calendar day waiting period following the filing by Parent.
Accordingly, in the event such filing is made on August 18, 1997, the waiting
period with respect to the Offer will expire at 11:59 p.m., New York City time,
on September 2, 1997, unless the Antitrust Division and the FTC terminate the
waiting period or Parent receives a request for additional information or
documentary material prior thereto. If, within such 15-day waiting period,
either the Antitrust Division or the FTC requests additional information or
material from Parent concerning the Offer, the waiting period will be extended
and would expire at 11:59 p.m., New York City time, on the tenth calendar day
after the date of substantial compliance by Parent with such request. Only one
extension of the waiting period pursuant to a request for additional information
is authorized by the HSR Act. Thereafter, such waiting period may be extended
only by court order or with the consent of Parent. The Purchaser will not accept
for payment Shares tendered pursuant to
 
                                       28
<PAGE>   31
 
the Offer unless and until the waiting period requirements imposed by the HSR
Act with respect to the Offer have been satisfied. See Section 14.
 
     No separate HSR Act waiting period requirements with respect to the Merger
Agreement will apply, so long as the 15-day waiting period expires or is
terminated. Thus, all Shares may be acquired pursuant to the Offer upon the
expiration or termination of the 15-day waiting period or the tenth calendar day
after the date of substantial compliance with a request for additional
information.
 
     The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger Agreement. At any time before or after the
Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares pursuant
to the Offer or otherwise or seeking divestiture of Shares acquired by the
Purchaser or divestiture of substantial assets of Parent or its subsidiaries, or
the Company or its subsidiaries. Private parties and state attorneys general may
also bring legal action under the antitrust laws under certain circumstances.
There can be no assurance that a challenge to the Offer or other acquisition of
Shares by the Purchaser on antitrust grounds will not be made or, if such a
challenge is made, of the result. See Section 14 for certain conditions to the
Offer, including conditions with respect to litigation and certain governmental
actions.
 
     Appraisal Rights.  No appraisal rights are available in connection with the
Offer. If the Merger is consummated, Stockholders of the Company would have the
right to dissent and demand appraisal of their Shares under the DGCL. Under the
DGCL, dissenting Stockholders who comply with the applicable statutory
procedures will be entitled to receive a judicial determination of the fair
value of their Shares (exclusive of any element of value arising from the
accomplishment or expectation of such merger or similar business combination)
and to receive payment of such fair value in cash. In addition, such dissenting
Stockholders would be entitled to receive payment of a fair rate of interest
from the date of consummation of the Merger on the amount determined to be the
fair value of their Shares. Any such judicial determination of the fair value of
the Shares could be based upon considerations other than or in addition to the
price paid in the Offer and the market value of the Shares. In Weinberger v.
UOP, Inc., the Delaware Supreme Court stated, among other things, that "proof of
value by any techniques or methods which are generally considered acceptable in
the financial community and otherwise admissible in court" should be considered
in an appraisal proceeding. Stockholders should recognize that the value so
determined could be higher or lower or the same as the price per Share paid
pursuant to the Offer or the consideration per Share in the Merger.
 
16.  FEES AND EXPENSES
 
     Parent and the Purchaser have engaged Credit Suisse First Boston as the
Dealer Manager in connection with the Offer. Parent has agreed to pay Credit
Suisse First Boston a fee of $1.5 million that will be payable to Credit Suisse
First Boston upon the closing of any acquisition of the Company by Parent.
Parent and the Purchaser also have agreed to indemnify Credit Suisse First
Boston against certain liabilities and expenses, including certain liabilities
under the federal securities laws.
 
     The Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent and First Chicago Trust Company of New York to act as the Depositary in
connection with the Offer. The Information Agent may contact by mail, telephone,
telex, facsimile, telegraph and personal interview and may request brokers,
dealers, commercial banks, trust companies and other nominees to forward the
Offer material to beneficial owners. The Information Agent and Depositary each
will receive reasonable and customary compensation for their services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the federal securities laws. Neither the Information
Agent nor the Depositary has been retained to make solicitations or
recommendations in connection with the Offer.
 
     Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other persons for soliciting tenders of Shares pursuant to
the Offer (other than the fees of the Dealer Manager and the Information Agent).
Brokers, dealers, commercial banks and trust companies will be reimbursed by the
Purchaser for reasonable expenses incurred by them in forwarding material to
their customers.
 
                                       29
<PAGE>   32
 
17.  MISCELLANEOUS
 
     The Offer is not being made to (nor will tenders be accepted from or on
behalf of) Stockholders in any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the securities, blue sky
or other laws of such jurisdiction. Neither the Purchaser nor Parent is aware of
any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerers in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to such Stockholders prior to the expiration
of the Offer. In any jurisdiction where the securities, blue sky or other laws
of which require the Offer to be made by a licensed broker or dealer, the Offer
is being made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
 
     NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
 
     The Purchaser has filed with the Commission the Schedule 14D-1 pursuant to
Rule 14d-3 under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule 14D-1
and any amendments thereto, including exhibits, may be inspected and copies may
be obtained at the same places and in the same manner as set forth in Section 8
(except they will not be available at the regional offices of the Commission).
 
                                          OMNICARE ACQUISITION CORP.
 
August 14, 1997
 
                                       30
<PAGE>   33
 
                                   SCHEDULE I
 
                        DIRECTORS AND EXECUTIVE OFFICERS
                          OF PARENT AND THE PURCHASER
 
     1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT.  Set forth in the table
below are the name and the present principal occupations or employment and the
name, principal business and address of any corporation or other organization in
which such occupation or employment is conducted, and the five-year employment
history of each of the directors and executive officers of Parent. Parent
directly owns 100% of the equity interest in the Purchaser. Unless otherwise
indicated, each person identified below is employed by Parent. The principal
business address of Parent and, unless otherwise indicated, the business address
of each person identified below, is 50 East RiverCenter Boulevard, Covington,
Kentucky 41011. Directors are identified by an asterisk. All persons identified
below are United States citizens.
 
<TABLE>
<CAPTION>
                                    PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR
              NAME                 EMPLOYMENT HISTORY
---------------------------------  ----------------------------------------------------------
<S>                                <C>
EDWARD L. HUTTON*................
Director since 1981
Age: 78                            Mr. Hutton is Chairman of Parent and has held this
                                   position since May 1981. Additionally, he is Chairman and
                                   Chief Executive Officer and a director of Chemed
                                   Corporation, Cincinnati, Ohio (a diversified public
                                   corporation with interests in plumbing and drain cleaning
                                   services, janitorial supplies and health care services)
                                   (hereinafter "Chemed") and has held these positions since
                                   November 1993 and April 1970, respectively. Previously, he
                                   was President and Chief Executive Officer of Chemed,
                                   positions he had held from April 1970 to November 1993. He
                                   is also Chairman and a director of National Sanitary
                                   Supply Company, Cincinnati, Ohio (sanitary and maintenance
                                   supplies distributor) (hereinafter "National Sanitary").
                                   Mr. Hutton is the father of Thomas C. Hutton, who is a
                                   director of the Parent.
JOEL F. GEMUNDER*................
Director since 1981
Age: 58                            Mr. Gemunder is President of Parent and has held this
                                   position since May 1981. From January 1981 until July
                                   1981, he served as Chief Executive Officer of the
                                   partnership organized as a predecessor to Parent for the
                                   purpose of owning and operating certain health care
                                   businesses of Chemed and Daylin, Inc., each then a
                                   subsidiary of W.R. Grace & Co. Mr. Gemunder was an
                                   Executive Vice President of Chemed and Group Executive of
                                   its Health Care Group from May 1981 through July 1981 and
                                   a Vice President of Chemed from 1977 until May 1981. Mr.
                                   Gemunder is a director of Chemed.
 
RONALD K. BAUR*..................
Director since 1994
Age: 56                            Mr. Baur is Regional Vice President-Operations of Parent,
                                   a position he has held since February 1994. Previously, he
                                   was Regional Vice President-Operations of Parent's
                                   Pharmacy Services Group (a group of subsidiaries engaged
                                   in providing pharmacy services to long-term care
                                   facilities) (hereinafter "Pharmacy Services Group") from
                                   March 1993 to February 1994 when the Pharmacy Services
                                   Group was integrated into the corporate management
                                   structure of the Parent. He is also President of Interlock
                                   Pharmacy Systems, Inc., St. Louis, Missouri (pharmacy
                                   services for long-term care facilities) (hereinafter
                                   "Interlock"), a subsidiary of the Parent. He has held this
                                   position since Parent's acquisition of Interlock in July
                                   1992. From 1973 to July 1992, he was the sole stockholder
                                   and the President of Interlock.
 
TIMOTHY E. BIEN..................
Age: 46                            Mr. Bien is Senior Vice President -- Professional Services
                                   and Purchasing of Parent. He has held that position since
                                   1996. Prior to that, Mr. Bien was Vice President of
                                   Professional Services for Parent, a position he had held
                                   since 1992.
</TABLE>
 
                                       I-1
<PAGE>   34
 
<TABLE>
<CAPTION>
                                    PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR
              NAME                 EMPLOYMENT HISTORY
---------------------------------  ----------------------------------------------------------
<S>                                <C>
KENNETH W. CHESTERMAN*...........
Director since 1984
Age: 57                            Mr. Chesterman is a consultant to the Parent. Prior to his
                                   retirement in July 1997, he was an Executive Vice
                                   President of Parent and had held this position since 1984.
                                   He had also served as President of the Pharmacy Services
                                   Group from August 1989 to February 1994. From August 1984
                                   to August 1989, he held the position of President of
                                   Parent's subsidiary, HPI Health Care Services, Inc., Los
                                   Angeles, California (health care services (hereinafter
                                   "HPI"), which was sold in August 1989.
 
CHARLES H. ERHART, JR.*..........
Director since 1981
Age: 72                            Mr. Erhart retired as President of W.R. Grace & Co., Boca
                                   Raton, Florida (international specialty chemicals and
                                   health care) (hereinafter "Grace") in August 1990. He had
                                   held this position since July 1989. From November 1986 to
                                   July 1989, he was Chairman of the Executive Committee of
                                   Grace. From May 1981 to November 1986, he served as Vice
                                   Chairman and Chief Administrative Officer of Grace. Mr.
                                   Erhart is a director of Chemed and National Sanitary.
 
MARY LOU FOX*....................
Director since 1993
Age: 66                            Ms. Fox is Senior Vice President-Marketing of Parent and
                                   has held this position since May 1996. Previously she
                                   served as Vice President-Marketing for Parent since
                                   February 1994. From July 1993 to February 1994, she was
                                   Vice President-Marketing of the Pharmacy Services Group.
                                   She is also President of Westhaven Services Co., Toledo,
                                   Ohio (pharmacy services for long-term care facilities)
                                   (hereinafter "Westhaven"), a subsidiary of Parent. She has
                                   held this position since Parent's acquisition of Westhaven
                                   in October 1992. From 1976 to October 1992, she was the
                                   sole stockholder and the President of Westhaven.
 
DAVID W. FROESEL, JR.............
Age: 45                            Mr. Froesel is Senior Vice President and Chief Financial
                                   Officer of Parent. He has held that position since joining
                                   Parent in March 1996. Mr. Froesel was Vice President of
                                   Finance and Administration at Mallinckrodt Veterinary,
                                   Inc. from May 1993 to February 1996. From July 1989 to
                                   April 1993, he was worldwide corporate controller of
                                   Mallinckrodt Medical Inc.
 
CHERYL D. HODGES*................
Director since 1992
Age: 45                            Ms. Hodges is Senior Vice President and Secretary of
                                   Parent and has held these positions since February 1994.
                                   From August 1986 to February 1994, she was Vice President
                                   and Secretary of Parent. From August 1982 to August 1986,
                                   she served as Vice President-Corporate and Investor
                                   Relations. Ms. Hodges has also served as a director of
                                   Parent for four prior terms: 1984-85; 1986-87; 1988-89 and
                                   1990-91.
 
THOMAS C. HUTTON*................
Director since 1983
Age: 46                            Mr. Hutton is a Vice President of Chemed and has held this
                                   position since February 1988. Mr. Hutton is a director of
                                   Chemed and National Sanitary. He is the son of Edward L.
                                   Hutton, Chairman of Parent.
</TABLE>
 
                                       I-2
<PAGE>   35
 
<TABLE>
<CAPTION>
                                    PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR
              NAME                 EMPLOYMENT HISTORY
---------------------------------  ----------------------------------------------------------
<S>                                <C>
PATRICK E. KEEFE*................
Director since 1993
Age: 52                            Mr. Keefe is Executive Vice President-Operations of Parent
                                   and has held this position since February 1997. Previously
                                   he was Senior Vice President-Operations since February
                                   1994. From April 1993 to February 1994, he was Vice
                                   President-Operations of Parent. From April 1992 to April
                                   1993, he served as Vice President-Pharmacy Management
                                   Programs of Diagnostek, Inc., Albuquerque, New Mexico
                                   (mail-service pharmacy and health care services)
                                   (hereinafter "Diagnostek"). From September 1990 to April
                                   1992, Mr. Keefe served as president of HPI, a subsidiary
                                   of Diagnostek, which was acquired from Parent in August
                                   1989. From August 1984 to September 1990, he served as
                                   Executive Vice President of HPI.
 
SANDRA E. LANEY*.................
Director since 1987
Age: 53                            Ms. Laney is Senior Vice President and Chief
                                   Administrative Officer of Chemed and has held these
                                   positions since November 1993 and May 1991, respectively.
                                   From May 1984 to November 1993, she was a Vice President
                                   of Chemed. Ms. Laney is a director of Chemed and National
                                   Sanitary.
 
ANDREA R. LINDELL, DNSc, RN*.....
Director since 1992
Age: 53                            Dr. Lindell is Dean and Professor in the College of
                                   Nursing and Health at the University of Cincinnati, a
                                   position she has held since December 1990. She also serves
                                   as Director -- Center for Allied Health at the University
                                   of Cincinnati. From August 1981 to August 1990, Dr.
                                   Lindell served as Dean and a Professor in the School of
                                   Nursing at Oakland University, Rochester, Michigan.
 
SHELDON MARGEN, M.D.*............
Director since 1983
Age: 78                            Dr. Margen is a Professor Emeritus in the School of Public
                                   Health, University of California, Berkeley, a position he
                                   has held since May 1989. He had served as a Professor of
                                   Public Health at the University of California, Berkeley,
                                   since 1979.
 
KEVIN J. MCNAMARA*...............
Director since 1986
Age: 44                            Mr. McNamara is President of Chemed and has held this
                                   position since August 1994. From November 1993 to August
                                   1994, Mr. McNamara was Executive Vice President, Secretary
                                   and General Counsel of Chemed. Previously, from May 1992
                                   to November 1993, he held the positions of Vice Chairman,
                                   Secretary and General Counsel of Chemed. From August 1986
                                   to May 1992, he served as Vice President, Secretary and
                                   General Counsel of Chemed. From November 1990 to December
                                   1992, Mr. McNamara served as an Executive Vice President
                                   and Chief Operating Officer of the Company. Mr. McNamara
                                   also served as Vice Chairman of National Sanitary. He is a
                                   director of Chemed and National Sanitary.
 
JOHN M. MOUNT*...................
Director since 1994
Age: 55                            Mr. Mount is a Principal of Lynch-Mount Associates,
                                   Cincinnati, Ohio (management consulting) and has held this
                                   position since November 1993. From April 1991 to November
                                   1993, Mr. Mount was Senior Vice President of Diversey
                                   Corporation, Detroit, Michigan (specialty chemicals)
                                   (hereinafter "Diversey"), and President of Diversey's
                                   DuBois Industrial Division. Previously, from May 1989 to
                                   April 1991, Mr. Mount was an Executive Vice President of
                                   Chemed and President of Chemed's then wholly owned
                                   subsidiary, DuBois Chemicals, Inc. He held the latter
                                   position from September 1986 to April 1991. He is a
                                   director of National Sanitary and Chemed. Mr. Mount has
                                   also served as a director of Parent from 1988 to 1991.
</TABLE>
 
                                       I-3
<PAGE>   36
 
<TABLE>
<CAPTION>
                                    PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR
              NAME                 EMPLOYMENT HISTORY
---------------------------------  ----------------------------------------------------------
<S>                                <C>
D. WALTER ROBBINS, JR.*..........
Director since 1981
Age: 77                            Mr. Robbins retired as Vice Chairman of Grace in January
                                   1987 and thereafter became a consultant to Grace until
                                   July 1995. He is a director of Chemed and National
                                   Sanitary.
</TABLE>
 
     2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER.  Set forth in the
table below are the name and the present principal occupations or employment and
the name, principal business and address of any corporation or other
organization in which such occupation or employment is conducted, and the
five-year employment history of each of the directors and executive officers of
the Purchaser. Each person identified below is employed by Parent. The principal
business address of the Purchaser and each person identified below, is 50 East
RiverCenter Boulevard, Covington, Kentucky 41011. Directors are identified by an
asterisk. All persons identified below are United States citizens.
 
<TABLE>
<CAPTION>
                                           PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
              NAME                              AND FIVE-YEAR EMPLOYMENT HISTORY
---------------------------------  ----------------------------------------------------------
<S>                                <C>
JOEL F. GEMUNDER*................
Age: 58                            Mr. Gemunder is President of the Purchaser. He has served
                                   as President of Parent since 1981 and has been a Director
                                   of Parent since 1981.
BRADLEY S. ABBOTT................
Age: 30                            Mr. Abbott is Treasurer of the Purchaser and is Assistant
                                   Corporate Controller of Parent, a position he has held
                                   since joining Parent in 1996. Prior to that, he worked for
                                   eight years at Price Waterhouse LLP, most recently as a
                                   manager.
LEO P. (TRACY) FINN III..........
Age: 39                            Mr. Finn is Vice President of the Purchaser and is Vice
                                   President-Strategic Planning and Development of Parent, a
                                   position he has held since February 1997. He previously
                                   served as Regional Vice President-Operations for Parent in
                                   Chicago from 1995 through January 1997. Prior to that, Mr.
                                   Finn was Vice President-Development of Parent, a position
                                   he had held since 1989.
DAVID W. FROESEL, JR.*...........
Age: 45                            Mr. Froesel is Senior Vice President and Chief Financial
                                   Officer of Parent. He has held that position since joining
                                   Parent in March 1996. Mr. Froesel was Vice President of
                                   Finance and Administration at Mallinckrodt Veterinary,
                                   Inc. from May 1993 to February 1996. From July 1989 to
                                   April 1993, he was worldwide corporate controller of
                                   Mallinckrodt Medical Inc.
JEFFREY A. GLANCY................
Age: 40                            Mr. Glancy is Assistant Secretary of the Purchaser and is
                                   Vice President-Taxation of Parent, a position he has held
                                   since 1994. Prior to that, he served as Assistant
                                   Treasurer and Director of Taxation of Parent, a position
                                   he had held since 1985.
CHERYL D. HODGES*................
Age: 45                            Ms. Hodges is Senior Vice President and Secretary of
                                   Parent and has held these positions since 1994. From
                                   August 1986 to February 1994, she was Vice President and
                                   Secretary of Parent and has been a Director of Parent
                                   since 1992.
THOMAS R. MARSH..................
Age: 50                            Mr. Marsh is Assistant Treasurer of the Purchaser and is
                                   Vice President-Financial Services and Treasurer of Parent,
                                   a position he has held since 1994. Prior to that, he
                                   served as Controller of Parent, a position he had held
                                   since 1987.
JANICE M. RICE...................
Age: 36                            Ms. Rice is Secretary of the Purchaser and is Vice
                                   President-Risk Management and Employee Benefits of Parent,
                                   a position she has held since 1994. Prior to that, she was
                                   Assistant Treasurer and Corporate Risk Manager of Parent,
                                   a position she had held since 1990.
</TABLE>
 
                                       I-4
<PAGE>   37
 
     Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each Stockholder
or his or her broker, dealer, commercial bank or other nominee to the Depositary
at one of its addresses set forth below.
 
                        The Depositary for the Offer is:
 
                    FIRST CHICAGO TRUST COMPANY OF NEW YORK
 
<TABLE>
<S>                             <C>                             <C>
            By Mail:                        By Hand:                 By Overnight Delivery:
  First Chicago Trust Company     First Chicago Trust Company
          of New York                     of New York             First Chicago Trust Company
      Tenders & Exchanges             Tenders & Exchanges                 of New York
           Suite 4660           c/o The Depository Trust Company       Tenders & Exchanges
         P.O. Box 2569              55 Water Street, DTC TAD             Suite 4680-AMC
    Jersey City, New Jersey     Vietnam Veterans Memorial Plaza    14 Wall Street, 8th Floor
           07303-2569               New York, New York 10041        New York, New York 10005
           By Facsimile Transmission                         To Confirm Receipt of
       (For Eligible Institutions Only):                 Notice of Guaranteed Delivery:
                 (201) 222-4720                                  (201) 222-4707
                       or
                 (201) 222-4721
</TABLE>
 
     Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. You may also contact your broker,
dealer, commercial bank or trust company or nominee for assistance concerning
the Offer.
 
                    The Information Agent for the Offer is:
 
                                D.F. KING & CO.,
                                      INC.
 
                                77 Water Street
                               New York, New York
                                     10005
                                Call Toll Free:
                                 (800) 697-6975
 
                      The Dealer Manager for the Offer is:
 
                       [CREDIT SUISSE FIRST BOSTON LOGO]
 
                             Eleven Madison Avenue
                            New York, New York 10010
                         Call Toll Free: (800) 881-8320
