EXHIBIT 2.1
================================================================================
---------------------------------
AMENDED AND RESTATED
PURCHASE AGREEMENT
among
▇▇▇▇▇▇▇▇▇▇▇ DRUG CO., INC.,
COUNSEL CORPORATION,
STADT HOLDINGS, INC.
and
BERGEN ▇▇▇▇▇▇▇▇ CORPORATION
---------------------------------
January 21, 1999
---------------------------------
02/09/99s3no1s.doc
TABLE OF CONTENTS
Article I - Certain Definitions
Section 1.1 Certain Definitions......................................2
Section 1.2 Terms Defined in Other Sections..........................9
Section 1.3 Interpretation..........................................12
Article IA - Changes in Structure
Section 1A.1 Transfer of Shares......................................12
Section 1A.2 Liquidation of Distribution.............................12
Section 1A.3 Liquidation of Stadtco..................................12
Section 1A.4 Merger of the ▇▇▇▇▇▇▇▇▇▇▇ Company.......................13
Section 1A.5 Acknowledgment and Consent..............................13
Section 1A.6 Transfer of ▇▇▇▇▇▇▇▇▇▇▇ U.S.A. Stock....................14
Section 1A.7 Merger of ▇▇▇▇▇▇▇▇▇▇▇ U.S.A.............................14
Section 1A.8 Formation of Acquisition Subsidiaries...................14
Section 1A.9 Further Assurances......................................14
Article II - Purchase and Sale; Grant of the Back-up Option Agreement
and Other Rights; Additional Covenants..................15
Section 2.1 Purchase and Sale of the ▇▇▇▇▇▇▇▇▇▇▇ Common Stock;
Grant of the Back-up Option Agreement and Other Rights..15
Section 2.2 Estimated Net Purchase Price; Adjustments to the
Estimated Net Purchase Price; Payment of Consideration..16
Section 2.3 Securities Law Matters..................................19
Section 2.4 Restrictions on Sales and Other Transfers...............21
Section 2.5 Determination of Net Worth as of the Closing Date.......22
Section 2.6 Determination of September 30 Net Worth.................24
Section 2.7 Closing.................................................24
Article III - Representations and Warranties Regarding the Companies....24
Section 3.1 Organization and Standing; Business.....................25
Section 3.2 Subsidiaries............................................25
Section 3.3 Corporate Power and Authority...........................26
Section 3.4 Capitalization of the Company...........................27
Section 3.5 Conflicts, Consents and Approvals.......................27
Section 3.6 No Material Adverse Change..............................28
Section 3.7 Intentionally omitted...................................29
Section 3.8 Taxes...................................................29
Section 3.9 Compliance with Law.....................................30
ii
----
Section 3.10 Intellectual Property...................................30
Section 3.11 Title to and Condition of Properties....................31
Section 3.12 Medicare and Medicaid; Reimbursement by Payors; Related
Legislation and Regulations.............................31
Section 3.13 Litigation..............................................33
Section 3.14 Brokerage and Finder's Fees; Expenses...................33
Section 3.15 Financial Statements....................................33
Section 3.16 Employee Benefit Plans..................................35
Section 3.17 Contracts...............................................37
Section 3.18 Labor Matters...........................................38
Section 3.19 Undisclosed Liabilities.................................38
Section 3.20 Operation of the Businesses; Relationships..............39
Section 3.21 Permits; Compliance.....................................39
Section 3.22 Environmental Matters...................................40
Section 3.23 Intentionally omitted...................................40
Section 3.24 Year 2000...............................................41
Section 3.25 Antitakeover Laws; Support Agreements...................41
Section 3.26 Accounts Receivable and Inventories.....................41
Section 3.27 Insurance...............................................41
Section 3.28 Employee Agreements.....................................41
Section 3.29 Director Compensation...................................42
Article IV - Representations and Warranties Regarding the
Counsel Entities........................................42
Section 4.1 Organization and Qualification of the Seller............42
Section 4.2 Corporate Power and Authority...........................43
Section 4.3 Conflicts; Consents and Approvals.......................44
Section 4.4 Indemnification.........................................45
Section 4.5 Ownership of the Shares.................................45
Section 4.6 Brokers.................................................46
Section 4.7 Securities and Related Matters..........................46
Section 4.8 Intentionally omitted...................................48
Section 4.9 Board Recommendation....................................48
Article V - Representations and Warranties Regarding the Purchaser
Section 5.1 Organization and Standing...............................48
Section 5.2 Corporate Power and Authority...........................48
Section 5.3 Capitalization of the Purchaser.........................49
Section 5.4 Conflicts; Consents and Approvals.......................49
Section 5.5 Brokers.................................................50
Section 5.6 BBC SEC Documents and Other Public Disclosures..........50
Article VI - Covenants and Agreements...................................51
iii
----
Section 6.1 Access and Information..................................51
Section 6.2 Affirmative Covenants...................................52
Section 6.3 Negative Covenants......................................53
Section 6.4 Closing Documents.......................................54
Section 6.5 Transfer and Other Taxes................................55
Section 6.6 Non-Competition and Confidentiality Agreement...........55
Section 6.7 Reasonable Efforts; Further Assurances..................57
Section 6.8 Third Party Proposals...................................57
Section 6.9 Tax Election............................................59
Section 6.10 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filings...............................60
Section 6.11 Notification by the Purchaser...........................60
Section 6.12 Agreements..............................................60
Section 6.13 Company Options.........................................60
Section 6.14 Retained Employees......................................62
Section 6.15 PharMerica Shares.......................................62
Section 6.16 Environmental Matters...................................64
Section 6.17 Canadian Corporation's Shareholders' Meeting............64
Section 6.18 Payment of Certain Debt.................................65
Section 6.19 Pharmaceutical Supply Agreement and Shared
Services Agreement......................................66
Section 6.20 Access to Prepare the Proposed Statement and to review
Other Documents.........................................66
Section 6.21 Assignment of Rights....................................66
Section 6.22 Audited Financial Statements............................67
Section 6.23 Waiver..................................................68
Section 6.24 Name Change.............................................68
Section 6.25 Stadt Solutions.........................................68
Article VII - Conditions to Closing.....................................69
Section 7.1 Mutual Conditions.......................................69
Section 7.2 Conditions to the Purchaser's Obligations...............69
Section 7.3 Conditions to the Counsel Entities' Obligations.........73
Article VIII - Termination..............................................74
Section 8.1 Termination.............................................74
Section 8.2 Effect of Termination...................................76
Article IX - Survival of Representations and Warranties; Indemnification.78
Section 9.1 Survival of Representations and Warranties..............78
Section 9.2 Indemnification.........................................78
iv
----
Section 9.3 Procedures for Third Party Claims.......................81
Section 9.4 Procedures for Inter-Party Claims.......................82
Section 9.5 Right of Set-Off........................................82
Section 9.6 Limitations Arising from Knowledge of Claims............82
Article X - Miscellaneous...............................................82
Section 10.1 Notices.................................................82
Section 10.2 Expenses................................................84
Section 10.3 Governing Law; Consent to Jurisdiction..................84
Section 10.4 Assignment; Successors and Assigns; No Third Party
Rights..................................................84
Section 10.5 Counterparts............................................85
Section 10.6 Titles and Headings.....................................85
Section 10.7 Entire Agreement........................................85
Section 10.8 Amendment and Modification..............................85
Section 10.9 Publicity...............................................85
Section 10.10 Waiver..................................................85
Section 10.11 Severability............................................85
Section 10.12 No Strict Construction..................................86
Section 10.13 Knowledge...............................................86
Section 10.14 Subsidiaries' Ownership of PharMerica Shares............86
Companies' Disclosure Schedule
Schedule 3.1 Organization and Standing; Business
Schedule 3.2 Subsidiaries
Schedule 3.4 Capitalization of the Company
Schedule 3.5 Conflicts; Consents and Approvals
Schedule 3.8. Taxes
Schedule 3.9 Compliance with Law
Schedule 3.10 Intellectual Property
Schedule 3.12 Medicare and Medicaid; Reimbursement by Payors; Related
Legislation and Regulations
Schedule 3.13 Litigation
Schedule 3.15 Financial Statements
Schedule 3.16 Employee Benefit Plans
Schedule 3.17 Contracts
Schedule 3.18 Labor Matters
Schedule 3.19 Undisclosed Liabilities
Schedule 3.20 Operation of the Businesses; Relationships
Schedule 3.21 Permits; Compliance
Schedule 3.22 Environmental Matters
Schedule 3.25 Anti-takeover Laws; Support Agreements
v
----
Schedule 3.27 Insurance
Schedule 3.28 Employee Agreements; Option Cancellation Agreements
Schedule 3.29 Director Compensation
Schedule 4.3 Conflicts; Consents and Approvals
Schedule 4.4 Indemnification
Schedule 9.2 Indemnification
Purchaser's Disclosure Schedule
Schedule 5.4 Conflicts; Consents and Approvals
Appendices
Appendix 1.1 Back-up Option Agreement
Appendix 1A.2A Distribution/Stadtco Certificate of Ownership and Merger
Appendix 1A.3A Stadtco/Company Certificate of Ownership and Merger
Appendix 1A.3B Stadtco/Company Plan of Merger and Articles of Merger
Appendix 1A.4A Company/Opco Agreement of Merger
Appendix 1A.4B Company/Opco Plan of Merger and Articles of Merger
Appendix 1A.4C Company/Opco Certificate of Merger
Appendix 1A.5 Acknowledgment and Consent
Appendix 1A.7A U.S.A./Licensco Agreement of Merger
Appendix 1A.7B U.S.A./Licensco Certificate of Merger
Appendix 1.3 Irrevocable Proxy
Appendix 1.4 Voting Trust Agreement
Appendix 2.1 Amended Limited Liability Agreement
Appendix 2.1A LLC Assignments
Appendix 2.3.7 Registration Rights
Appendix 6.14 Transitional Consulting Agreements
Appendix 6.21 Assignment of Rights
Appendix 7.2.7A Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ & Manner, P.C.
Appendix 7.2.7B Form of Opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇
Appendix 7.2.7C Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Appendix 7.2.9A Designated Optionee Option Cancellation Agreements
Appendix 7.2.9B Non-Designated Optionee Option Cancellation Agreements
Appendix 7.3.4 Form of Opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
vi
----
AMENDED AND RESTATED PURCHASE AGREEMENT
---------------------------------------
This AMENDED AND RESTATED PURCHASE AGREEMENT, dated as of January 21,
1999, is by and among ▇▇▇▇▇▇▇▇▇▇▇ DRUG CO., INC., a Pennsylvania corporation
having its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ 15235(the "▇▇▇▇▇▇▇▇▇▇▇ Company"), COUNSEL CORPORATION, an Ontario
corporation having its principal place of business at Exchange Tower, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the "Canadian Corporation"),
STADT HOLDINGS INC., a Delaware corporation (the "US Seller"), and BERGEN
▇▇▇▇▇▇▇▇ CORPORATION, a New Jersey corporation having its principal place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("BBC" or the
"Purchaser").
RECITALS
1. Previously, the Canadian Corporation was the legal and beneficial
owner of fourteen percent (14%) of the issued and outstanding capital stock of
the ▇▇▇▇▇▇▇▇▇▇▇ Company and the US Seller was the legal and beneficial owner of
eighty six percent (86%) of the issued and outstanding capital stock of the
▇▇▇▇▇▇▇▇▇▇▇ Company. The US Seller is an indirect wholly-owned subsidiary of the
Canadian Corporation.
2. The Canadian Corporation and the US Seller (collectively, the
"Counsel Entities") entered into a stock purchase agreement, dated as of
November 8, 1998 (the "Prior Contract"), with the Purchaser and the ▇▇▇▇▇▇▇▇▇▇▇
Company pursuant to which the Counsel Entities agreed to sell and transfer to
the Purchaser, and the Purchaser agreed to purchase from the Counsel Entities,
all of the outstanding shares of capital stock of the ▇▇▇▇▇▇▇▇▇▇▇ Company, all
as more specifically provided in the Prior Contract.
3. The parties have agreed to implement a change in structure such that
(a) immediately prior to the closing described herein, all of the assets,
liabilities, business and properties of the ▇▇▇▇▇▇▇▇▇▇▇ Company became owned by
two single member limited liability companies, of which the sole member is the
US Seller, and (b) rather than acquire all of the outstanding capital stock of
the ▇▇▇▇▇▇▇▇▇▇▇ Company, the Purchaser will acquire from the US Seller all of
the US Seller's membership interests in both such limited liability companies.
4. The parties have decided to incorporate such change in structure
into the Prior Contract by amending and restating the Prior Contract. This
Agreement constitutes the amendment and restatement of the Prior Contract and
supersedes the Prior Contract in all respects. The parties' intent is to assure
that, upon consummation of the closing described herein, the Purchaser will (a)
have substantially the same ownership interests in the assets, liabilities,
business and properties that presently comprise the assets, liabilities,
business and properties of the ▇▇▇▇▇▇▇▇▇▇▇ Company that it would have had in the
event that the Prior Contract had not been amended and restated and (b) enjoy
Exhibit 2.1 - Page 1
substantially the same benefits as the Purchaser would have enjoyed in the event
that the Prior Contract had not been amended and restated, and had the
transaction contemplated by the Prior Contract been consummated.
5. The Canadian Corporation and its subsidiaries are also the legal and
beneficial owners of 7,819,315 shares of the common stock, par value $.01 per
share, of PharMerica (the "PharMerica Shares").
6. The Purchaser desires to obtain certain rights with respect to the
PharMerica Shares, and the Canadian Corporation is willing to confer such rights
upon the Purchaser, all as more specifically provided herein.
7. The ▇▇▇▇▇▇▇▇▇▇▇ Company would benefit substantially from being
directly affiliated with the Purchaser. The ▇▇▇▇▇▇▇▇▇▇▇ Company purchases a
substantial amount of its pharmaceutical supplies from the Purchaser.
Furthermore, given the Purchaser's access to capital and borrowing capacity,
direct affiliation with the Purchaser is expected to improve the ▇▇▇▇▇▇▇▇▇▇▇
Company's access to capital necessary for the ▇▇▇▇▇▇▇▇▇▇▇ Company's continued
growth.
8. The Boards of Directors (or Executive Committees of such Boards of
Directors) of each of the Canadian Corporation, the US Seller, the ▇▇▇▇▇▇▇▇▇▇▇
Company and the Purchaser have determined that it is in the best interests of
such entity to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
Certain Definitions
Section 1.1 Certain Definitions. As used in this Agreement, the
following terms have the respective meanings set forth below.
"Accountants" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., L.L.P., the ▇▇▇▇▇▇▇▇▇▇▇
Company's independent accountants.
"Action" means any administrative, judicial or other legal proceeding
before any Governmental Authority.
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
Exhibit 2.1 - Page 2
"controlled" and "controlling" have meanings correlative thereto.
"Agreement" means this Amended and Restated Purchase Agreement.
"Associate" has the meaning ascribed to such term in Rule 405
promulgated by the SEC pursuant to the Act.
"Back-up Option Agreement" means an option agreement relating to
PharMerica, to be given by the Canadian Corporation to the Purchaser, dated the
Closing Date, in the form and substance of the option agreement annexed hereto
as Appendix 1.1.
"BBC Common Stock" means the Class A Common Stock, par value $1.50 per
share, of the Purchaser.
"Business Day" means a day on which national banks are open for
business in New York City.
"Certificate of Net Debt" means a certificate, executed by the chief
financial officer of the Canadian Corporation, setting forth (a) a statement by
such officer as to such officer's good faith estimate of the Net Debt as of
January 20, 1999 and (b) back-up documentation, in reasonable detail, evidencing
such officer's calculation of such Net Debt. "Certified Net Debt" means the
aggregate amount of Net Debt set forth in the Certificate of Net Debt.
"CEO Contract" means the employment agreement, made effective as of
July 6, 1998, by and between the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Claims" means any and all claims, demands, actions, causes of action
and legal proceedings.
"Company" means ▇▇▇▇▇▇▇▇▇▇▇ Company, except that (a) with respect to
the period of time from the effective time of the Company/Opco Merger to the
time immediately prior to the transfer of the capital stock of ▇▇▇▇▇▇▇▇▇▇▇
U.S.A. to the US Seller pursuant to Section 1A.6, "Company" means Opco, (b) with
respect to the period of time from the time of such transfer of capital stock of
▇▇▇▇▇▇▇▇▇▇▇ U.S.A. to the time immediately prior to the effective time of the
U.S.A./Licensco Merger, "Company" means Opco and ▇▇▇▇▇▇▇▇▇▇▇ U.S.A. and (c) with
respect to any period of time after the effective time of the ▇▇▇▇▇▇▇▇▇▇▇
U.S.A./Licensco Merger, "Company" means Opco and Licensco.
"Companies" means the Company and each of the Subsidiaries.
"Competitive Business" means (a) a specialty mail order pharmaceutical
care delivery system business comparable to the specialty mail order
Exhibit 2.1 - Page 3
pharmaceutical care delivery system business as conducted by the Companies as of
November 8, 1998 that is focused on one or more of the following specific
disease states: HIV/AIDS, organ transplantation, serious mental illnesses, and
infertility and (b) the business of delivering pharmaceutical products to
individuals incarcerated in corrections facilities pursuant to contracts with
commercial corrections management companies and governmental entities. Excluded
from the definition of "Competitive Business" are (w) any de minimis business of
the Companies not included within clauses (a) or (b) above, (x) the development
of pharmaceuticals for use primarily in the treatment of infertility, as
performed by Sage BioPharma, Inc., and the marketing of such pharmaceuticals so
developed, (y) the marketing and distribution of pharmaceuticals, as performed
by FARO Pharmaceuticals, Inc., and (z) all other activities not specifically
listed in clauses (a) or (b) above, including, but not limited to, specialty
mail order pharmaceutical care delivery systems and general mail order pharmacy
services that do not involve specialization in any of the above-mentioned
disease states; institutional pharmacy services; pharmacy management services;
home health care; the development of drug formularies; the development of "below
threshold" drugs; disease state management; treatment of hormone-dependent
ailments; and pharmaceutical sales and marketing.
"Code" means the Internal Revenue Code of 1986, as amended.
"CPA" means Deloitte & Touche LLP.
"Distribution" means ▇▇▇▇▇▇▇▇▇▇▇ Drug Distribution Co. Inc., a Delaware
corporation.
"Encumbrances" means security interests, liens, encumbrances, claims
and restrictions of any kind.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Final Net Debt" means the Net Debt as of the Closing Date, as set
forth in the Final Accounting Report.
"First Quarterly Period" means the period commencing on the Closing
Date and ending on the ninetieth (90th) calendar day after the Closing Date,
"Second Quarterly Period" means the period commencing on the ninety first (91st)
calendar day after the Closing Date and ending on the one hundred and eightieth
(180th) calendar day after the Closing Date, "Third Quarterly Period" means the
period commencing on the one hundred and eighty first (181st) calendar day after
the Closing Date and ending on the two hundred and seventieth (270th) calendar
day after the Closing Date, "Fourth Quarterly Period" means the period
commencing on the two hundred and seventy first (271st) calendar day after the
Exhibit 2.1 - Page 4
Closing Date and ending on the three hundred and sixtieth (360th) calendar day
after the Closing Date, "Fifth Quarterly Period" means the period commencing on
the three hundred and sixty first (361st) calendar day after the Closing Date
and ending on the four hundred and fiftieth (450th) calendar day after the
Closing Date and "Sixth Quarterly Period" means the period commencing on the
four hundred and fifty first (451st) calendar day after the Closing Date and
ending on the five hundred and fortieth (540th) calendar day after the Closing
Date.
"▇▇▇▇▇▇▇ Agreement" means the employment agreement, made as of
September 18, 1998, between the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"GAAP" means generally accepted accounting principles as in effect in
the United States on November 8, 1998.
"Governmental Authority" means any national, federal, state,
provincial, county, municipal or local government, foreign or domestic, or the
government of any political subdivision of any of the foregoing, or any entity,
authority, agency, ministry or other similar body exercising executive,
legislative, judicial, regulatory or administrative authority or functions of or
pertaining to government, including any authority or other quasi-governmental
entity established to perform any of such functions.
"▇▇▇▇ Goods" means materials which have been purchased by the Companies
from a source other than the manufacturer or a distributor licensed to resell
the materials of such manufacturer.
"Limited Audit" means an audit performed in accordance with standard
auditing procedures as recognized by the American Institute of Certified Public
Accountants, subject to such modifications as shall have been agreed upon in
writing by the Purchaser and the Canadian Corporation prior to the Closing.
"Limited Size Acquisition" means an acquisition for cash of a
substantial portion of the assets or the capital stock of a Person valued,
giving effect to assumed indebtedness, at not more than $1,000,000 per
transaction and not more than $3,000,000 in the aggregate.
"Market Value" means the lesser of (a) $24.8125 and (b) the average of
the last sale prices, quoted regular way, of the BBC Common Stock on the New
York Stock Exchange on each of the last ten (10) consecutive trading days ending
on the third trading day prior to the Closing Date (such average, the "Market
Value Average").
"Material Adverse Change" means, with respect to a Person, a material
adverse change in the business, condition (financial or otherwise), properties,
assets, liabilities or results of operations of such Person and its
subsidiaries, taken as a whole. When evaluated in the context of any of the
Exhibit 2.1 - Page 5
Companies, the term "Material Adverse Change" shall take into account all of the
Companies taken as a whole. When evaluated in the context of the Purchaser, the
term "Material Adverse Change" shall take into account the Purchaser and all of
its subsidiaries taken as a whole.
"Merging Entities" means Distribution, Stadtco, Opco, Licensco and
▇▇▇▇▇▇▇▇▇▇▇ U.S.A.
"Net Worth" means the consolidated net worth of the Company and its
Subsidiaries, as determined as of a particular date in accordance with GAAP,
consistently applied, subject to Section 2.5.4.
"Net Debt" means, as of a particular date, (x) the aggregate amount of
indebtedness (principal, interest and premium, if any), including amounts
payable on capital leases, owed by the Company and its Subsidiaries (other than
indebtedness of Stadt Solutions LLC as to which none of the Companies, other
than Stadt Solutions LLC, is liable) to banks, other secured lenders, the
Canadian Corporation or any Affiliate of the Canadian Corporation (other than
the Company and its Subsidiaries) minus (y) the sum of (i) the aggregate amount
of cash held by the Company and its Subsidiaries (other than Stadt Solutions
LLC) in bank and other similar accounts on such date plus (ii) three hundred and
eighty thousand seven hundred dollars ($380,700), plus (z) $7,943,697,
representing the amount owed to Purchaser by the Companies as of January 15,
1999 which was not paid and which was reflected as an addition to the Net Debt
as of January 20, 1999 as shown on the Net Debt Certificate.
"Ordinary Course of Business" means actions which are (a) consistent
with the past practices of the designated entity, (b) similar in nature and
style to actions customarily taken by the designated entity and (c) do not
require, and in the past have not received, specific authorization by the board
of directors of the designated entity.
"Outside Date" means March 31, 1999, subject to the operation of
Section 6.22.4; provided, however, if the Canadian Corporation's Shareholders'
Meeting shall not have been held by March 31, 1999, "Outside Date" means May 31,
1999, subject to the operation of Section 6.22.4.
"PharMerica" means PharMerica, Inc., a Delaware corporation having its
principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
"PharMerica Business Combination" means (a) any merger, consolidation,
share exchange, business combination or similar transaction involving PharMerica
(other than a transaction in which the shareholders of PharMerica will, after
such transaction, continue to own at least 50.1% of the shares of the successor
corporation and the members of the Board of Directors immediately preceding the
transaction will continue to represent at least a majority of the members of the
Board of Directors of the successor corporation), (b) any sale, lease or
transfer of substantially all of the assets of PharMerica, (c) any tender or
exchange offer made generally to the shareholders of PharMerica and (d) any
Exhibit 2.1 - Page 6
other transaction which, if consummated, would be required by the SEC to be
reported in response to Item 1 of the Current Report on Form 8-K.
"PharMerica Shares" has the meaning set forth in the Recitals.
"Person" means an individual, partnership, corporation, limited
liability company, joint stock company, unincorporated organization or
association, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Proprietary Rights" means all of the (i) patents, inventions,
trademarks, service marks, industrial designs, trade names, trade styles, trade
dress, service names, logos, slogans, brand names, brand marks, computer
software, copyrights and the like (whether registered with federal, state or
other governments of any country or unregistered) and applications,
registrations, permits and licenses relating thereto and any reissues,
continuations, continuations-in-part and extensions thereof, (ii) computer
software and licenses related thereto and (iii) processes, methods, information,
data, plans, art works, blueprints, specifications, designs, drawings,
engineering reports, test reports, material standards, processing standards,
performance standards, know-how, formulas, trade secrets, concepts,
applications, procedures, marketing and technical data, customer and vendor
lists and other confidential information used in or otherwise necessary for the
conduct of the Businesses of the Companies.
"Proxy" means a letter agreement and a related irrevocable proxy
relating to PharMerica, to be given by the Canadian Corporation and any
subsidiary of the Canadian Corporation that owns PharMerica Shares as of the
Closing Date, to the Purchaser, dated the Closing Date, in the form and
substance of the letter agreement and proxy annexed hereto as Appendix 1.3.
"Qualified Investor" means an investor that is not reasonably regarded
by the Purchaser as a competitor with respect to one or more of the Company's
products or services.
"Regulated Substances" means pollutants, contaminants, hazardous or
toxic substances, compounds or related materials or chemicals, hazardous
materials, hazardous waste, flammable explosives, radon, radioactive materials,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum products (including, but not limited to, waste petroleum
and petroleum products) as regulated under any applicable Environmental Law.
"Stadtco" means Stadtco Holdings, Inc., a Delaware corporation.
"▇▇▇▇▇▇▇▇▇▇▇ Common Stock" means the Common Stock, no par value, of the
▇▇▇▇▇▇▇▇▇▇▇ Company.
Exhibit 2.1 - Page 7
"▇▇▇▇▇▇▇▇▇▇▇ Mergers" means, collectively, the Distribution/Stadtco
Merger, the Stadtco/Company Merger, the Company/Opco Merger and the
U.S.A./Licensco Merger.
"▇▇▇▇▇▇▇▇▇▇▇ U.S.A." means ▇▇▇▇▇▇▇▇▇▇▇ U.S.A., Inc., a Delaware
corporation.
"Subsidiaries" means, at any date, any Person (i) the accounts of which
would be consolidated with those of the Company in the Company's consolidated
financial statements if such financial statements were prepared in accordance
with GAAP as of such date, or (ii) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests or more than 50% of the profits or losses of which
are, as of such date, owned, controlled or held by the Company or one or more
subsidiaries of the Company. The term "Subsidiaries" shall include, with respect
to the ▇▇▇▇▇▇▇▇▇▇▇ Company, without limitation, the following entities: Stadtco,
Distribution, ▇▇▇▇▇▇▇▇▇▇▇ U.S.A. and Stadt Solutions LLC.
"Tax" means any of the following, and "Taxes" means all of the
following, imposed by or payable to any Governmental Authority: any income,
gross receipts, license, payroll, employment, excise, severance, stamp,
business, occupation, premium, windfall profits, environmental (including taxes
under section 59A of the Code), capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, or value added tax, any
alternative or add-on minimum tax, any estimated tax, and any levy, impost,
duty, assessment, withholding or any other governmental charge of any kind
whatsoever, in each case including any interest, penalty, or addition thereto,
whether disputed or not.
"Total Option Appreciation" means the total Aggregate Appreciation on
all Stock Options held by all Optionees immediately prior to the consummation of
the Closing.
"Transaction Agreements" means this Agreement and, in the case of the
Canadian Corporation, the term "Transaction Agreements" also means the Voting
Trust Agreement, the Proxy, the Assignment and the Back-Up Option Agreement, in
the case of the US Seller the term "Transaction Agreements" also means the
Assignment and in the case of the Purchaser, the term "Transaction Agreements"
also means the Voting Trust Agreement.
"Voting Trust Agreement" means a voting trust agreement among the
Purchaser, the Canadian Corporation and those subsidiaries of the Canadian
Corporation that own PharMerica Shares, dated the Closing Date, in the form and
substance of the voting trust agreement annexed hereto as Appendix 1.4.
Section 1.2 Terms Defined in Other Sections. The following terms are
defined elsewhere in this Agreement in the following Sections:
Exhibit 2.1 - Page 8
Acceleration Indebtedness 6.18
Acquisition Agreement 6.8.2
Act 2.3.1
Aggregate Appreciation 6.13.1.6
Allocation Schedule 6.9.1
Antitrust Division 6.10
Assignment 6.21
Audit Firm 6.22.4
Bank Debt 6.18
BBC Delivered Shares 2.4.2
BBC SEC Documents 5.6.1
BBC Shares 2.3.1
Bona Fide Offer 6.15.2
Businesses 3.1
Business Combination 8.8.2
Canadian Corporation Debt 6.18
Canadian Corporation's Board Recommendation 4.9
Canadian Corporation's SEC Documents 4.8
Cash Election Notice 2.2.4.1
Closing 2.7
Closing Date 2.7
Companies' Disclosure Schedule 3.1
Company/Opco Merger 1A.4
Company Permits 3.21.1
Company's Bylaws 3.1
Company's Articles 3.1
Competing Transaction 6.8.1
Confidential Information 6.6
Contract ......... 3.17
Controlled Group Liability 3.16.1
Counselcare 4.1B
Counsel Healthcare 4.1B
Damages 9.2
DCAmerica 4.1B
Decreased Consideration 2.2.3.2
Designated Optionee 6.13.1.5
Designated Optionee Option Cancellation Agreements 7.2.9
Disposition Notice 6.15.2
Distribution/Stadtco Merger 1A.2
Employee Agreements 3.28
Environmental Laws 3.22
Environmental Permit 3.22
ERISA Affiliate 3.16.1
Exhibit 2.1 - Page 9
Estimated Net Purchase Price 2.2.1.1
Fee-Related Bank Debt 6.18
Final Accounting Report 2.5.1.2
Financial Statements 3.15.1
Firm 2.5.1.3
FDA 3.21.2.2
FTC 6.10
Fully Diluted Number 6.13.1.2
Hazardous Materials 3.22
HSR Act 3.5.4
Increased Consideration 2.2.3.1
Indemnified Party 9.2.3
Indemnifying Party 9.2.3
Information Circular 6.17.2
Initial Accounting Report 2.5.1.1
Interests 4.5.1
Interim Audited Balance Sheet 6.22.1
Interim Balance Sheet 3.15.1
Interim Income and Stockholders' Equity Statements 3.15.1
Interim Audited Financial Statements 6.22.1
Last Price 2.2.2.1
Licensco 4.1A
LLC Assignments 2.1
Material Contract 3.17
Merger Agreements 4.2
Multiemployer Plan 3.16.6
Multiple Employer Plan 3.16.6
Net Purchase Price 2.2.1.2
Non-Designated Optionee 6.13.1.5
Non-Designated Optionee Option Cancellation Agreements 7.2.9
Offeror 6.15.2
Opco 4.1A
Option Cancellation Agreements 7.2.9
Optionee 6.13.1.5
Outside Date 8.1.3
Plans 3.16.1
Premises 6.16
Programs 3.12.2
Proposed Statement 2.5.1.1
Purchaser's Disclosure Schedule 5.4
Purchaser Operating Subsidiary 1A.8
Purchaser Licensing Subsidiary 1A.8
Qualified Plan 3.16.3
Exhibit 2.1 - Page 10
Quarterly Period 2.4.2
Registration Statement 2.3.3
Reimbursable Fees 6.18
Report 6.10
Retained Employees 6.14
Royalty Agreements 1A.5
SEC 2.3.3
September 30 Net Worth 6.22.5
Share Price 6.13.1.3
Stadtco/Company Merger 1A.3
Stock Appreciation Figure 6.13.1.1
Stock Dividend 1A.6
Stock Secured Debt 6.18
Stock Option 6.13.1.4
Subject PharMerica Shares 6.15
Support Agreements 3.25
Survival Period 9.1
Tax returns 3.8.4
Third Party Claim 9.3
Total Price 6.13.1.1
Transferring Entities 4.1B
Transitional Consulting Agreements 6.14
U.S.A./Licensco Merger 1A.7
U.S.A. Stock 1A.3
Withdrawal Liability 3.16.1
Year 2000 Compliant 3.24
338(h)(10) Election 6.9
Section 1.3 Interpretation. Unless otherwise indicated to the contrary
herein by the context or use thereof: (i) the words, "herein," "hereto,"
"hereof" and words of similar import refer to this Agreement as a whole and not
to any particular Section or paragraph hereof; (ii) words importing the
masculine gender shall also include the feminine and neutral genders, and vice
versa; (iii) words importing the singular shall also include the plural, and
vice versa; (iv) all references to "$" or "dollars" shall be references to U.S.
dollars; and (v) the word "including" means "including without limitation".
Exhibit 2.1 - Page 11
ARTICLE IA
Changes in Structure
The Canadian Corporation, the US Seller and the ▇▇▇▇▇▇▇▇▇▇▇ Company
jointly and severally warrant and represent to the Purchaser that the following
changes in structure have been effected:
Section 1A.1 Transfer of Shares. Prior to the Closing and prior to the
steps described in Section 1A.4, the US Seller has transferred beneficial
ownership of all of the outstanding capital stock of the ▇▇▇▇▇▇▇▇▇▇▇ Company,
consisting of 2,004,008 shares of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock, to Opco in exchange
for ownership of 100% of the membership interests in Opco.
Section 1A.2 Merger of Distribution. Prior to the Closing, Distribution
has been merged with and into Stadtco pursuant to a certificate of ownership and
merger in the form and substance of the certificate annexed hereto as Appendix
1A.2A. The US Seller caused Stadtco to execute such certificate and file it with
the Secretary of State of the State of Delaware, prior to the Closing. The
merger referred to in such certificate is referred to herein as the
"Distribution/Stadtco Merger." Prior to filing the aforesaid certificate,
Stadtco was qualified to transact business in Pennsylvania as a foreign
corporation under Section 4121 of the Pennsylvania Corporations Law. Immediately
after consummation of the Distribution/Stadtco Merger, the US Seller caused
Stadtco to execute and file with the Secretary of State of the Commonwealth of
Pennsylvania, a statement of merger (in form and substance satisfactory to the
Purchaser and the US Seller) with respect to the Distribution/Stadtco Merger.
Section 1A.3 Merger of Stadtco. Prior to the Closing and after the
Distribution/Stadtco Merger has been consummated, Stadtco, as the surviving
corporation in the Distribution/Stadtco Merger, merged with and into the
▇▇▇▇▇▇▇▇▇▇▇ Company pursuant to a certificate of ownership and merger in the
form and substance of the certificate annexed hereto as Appendix 1A.3A and a
plan of merger and articles of merger in the form and substance of the plan and
articles annexed hereto as Appendix 1A.3B. The ▇▇▇▇▇▇▇▇▇▇▇ Company executed such
certificate and filed such certificate with the Secretary of State of the State
of Delaware prior to the Closing and after the Distribution/Stadtco Merger was
consummated. The ▇▇▇▇▇▇▇▇▇▇▇ Company and Stadtco have executed such articles
(with such plan attached) and filed such articles (with such plan attached) with
the Secretary of State of the Commonwealth of Pennsylvania. The merger referred
to in such certificate, plan and articles is referred to herein as the
"Stadtco/Company Merger". Immediately after consummation of the Stadtco/Company
Merger, the certificates evidencing the shares of ▇▇▇▇▇▇▇▇▇▇▇ U.S.A. (the
"U.S.A. Stock") stock held by Stadtco immediately prior to consummation of the
Stadtco/Company Merger, have been canceled, and, without further consideration,
re-issued in the name of the ▇▇▇▇▇▇▇▇▇▇▇ Company as the survivor of the
Stadtco/Company Merger.
Exhibit 2.1 - Page 12
Section 1A.4 Merger of the ▇▇▇▇▇▇▇▇▇▇▇ Company. Prior to the Closing
and after the Stadtco/Company Merger has been consummated, the ▇▇▇▇▇▇▇▇▇▇▇
Company, as the survivor of the Stadtco/Company Merger, merged with and into
Opco pursuant to an agreement of merger in the form and substance of the
agreement annexed hereto as Appendix 1A.4A and a plan of merger and articles of
merger in the form and substance of the plan and articles annexed hereto as
Appendix 1A.4B. Opco and the ▇▇▇▇▇▇▇▇▇▇▇ Company executed such agreement of
merger and filed with the Secretary of State of the State of Delaware, prior to
the Closing and after the Stadtco/Company Merger was consummated, a certificate
of merger (executed by Opco and the ▇▇▇▇▇▇▇▇▇▇▇ Company) in the form and
substance of the certificate of merger annexed hereto as Appendix 1A.4C. The
▇▇▇▇▇▇▇▇▇▇▇ Company and Stadtco executed such articles (with such plan attached)
and filed such articles (with such plan attached) with the Secretary of State of
the Commonwealth of Pennsylvania. The merger referred to in such agreement of
merger, certificate, articles and plan is referred to herein as the
"Company/Opco Merger." Immediately after consummation of the Company/Opco
Merger, the certificates evidencing the U.S.A. Stock held by the Company
immediately prior to consummation of the Company/Opco Merger, were canceled,
and, without further consideration, re-issued in the name of Opco as the
survivor of the Company/Opco Merger. Prior to filing such certificate of merger
and articles, Opco was qualified to transact business in Pennsylvania as a
foreign limited liability company under Section 8981 of the Pennsylvania Limited
Liability Company Act.
Section 1A.5 Acknowledgment and Consent. Prior to the Closing and after
the Company/Opco Merger was consummated and the certificates representing U.S.A.
Stock were re-issued in the name of Opco, ▇▇▇▇▇▇▇▇▇▇▇ U.S.A. delivered to Opco
an acknowledgment and consent, in the form and substance of the acknowledgment
and consent annexed hereto as Appendix 1A.5, pursuant to which ▇▇▇▇▇▇▇▇▇▇▇
U.S.A. (a) consented to the assumption, first by Stadtco, second by the
▇▇▇▇▇▇▇▇▇▇▇ Company and ultimately by Opco, of all of the obligations of
Distribution under each of the royalty agreements heretofore executed and
delivered by Distribution and ▇▇▇▇▇▇▇▇▇▇▇ U.S.A. (the "Royalty Agreements"),
copies of which have been delivered to the Purchaser prior to the execution of
this Agreement, and (b) acknowledged that Opco, as the successor of
Distribution, Stadtco and the ▇▇▇▇▇▇▇▇▇▇▇ Company, has succeeded to all of the
rights of Distribution under the Royalty Agreements.
Section 1A.6 Dividend of ▇▇▇▇▇▇▇▇▇▇▇ U.S.A. Stock. Prior to the Closing
and after ▇▇▇▇▇▇▇▇▇▇▇ U.S.A. delivered the acknowledgment and consent described
in Section 1A.5, the US Seller caused Opco, as the survivor of the Company/Opco
Merger, to authorize and pay a dividend to US Seller consisting of all of the
U.S.A Stock (the "Stock Dividend"). Immediately after completion of the Stock
Dividend, the certificates evidencing the the U.S.A. Stock held by Opco
immediately prior to the completion of the Stock Distribution were canceled,
and, without further consideration, re-issued in the name of the US Seller.
Exhibit 2.1 - Page 13
Section 1A.7 Merger of ▇▇▇▇▇▇▇▇▇▇▇ U.S.A. Prior to the Closing and
after the transfer of the stock of ▇▇▇▇▇▇▇▇▇▇▇ U.S.A. to the US Seller pursuant
to Section 1A.6, the US Seller shall cause ▇▇▇▇▇▇▇▇▇▇▇ U.S.A. to be merged with
and into Licensco pursuant to an agreement of merger in the form and substance
of the agreement annexed hereto as Appendix 1A.7A. The US Seller shall cause
▇▇▇▇▇▇▇▇▇▇▇ U.S.A. and Licensco to execute such agreement of merger and file
with the Secretary of State of the State of Delaware, prior to the Closing and
after the dividend of the stock of ▇▇▇▇▇▇▇▇▇▇▇ U.S.A. to the US Seller pursuant
to Section 1A.6, a certificate of merger (executed by Licensco) in the form and
substance of the certificate of merger annexed hereto as Appendix 1A.7B. The
merger referred to in such merger agreement and certificate of merger is
referred to herein as the "U.S.A./Licensco Merger."
Section 1A.8 Formation of Acquisition Subsidiaries. Prior to the
Closing, the Purchaser shall form two subsidiaries which, at the time of the
Closing, shall be wholly-owned subsidiaries of the Purchaser. For purposes of
this Agreement, (a) such subsidiaries shall be designated by the Purchaser as
the "Purchaser Licensing Subsidiary" and the "Purchaser Operating Subsidiary",
(b) the subsidiary to be designated by the Purchaser as the "Purchaser Licensing
Subsidiary" shall be referred to herein as the "Purchaser Licensing Subsidiary"
and (c) the subsidiary to be designated by the Purchaser as the "Purchaser
Operating Subsidiary" shall be referred to herein as the "Purchaser Operating
Subsidiary."
Section 1A.9 Further Assurances. Prior to and following the
consummation of each of the ▇▇▇▇▇▇▇▇▇▇▇ Mergers, the Counsel Entities shall
cause each of their subsidiaries, as applicable, to take all steps, actions and
deeds, execute any and all documents, instruments and certificates, make all
filings, and obtain all consents and clearances, as are reasonably deemed
necessary to complete such ▇▇▇▇▇▇▇▇▇▇▇ Mergers as of the effective times and
date of such ▇▇▇▇▇▇▇▇▇▇▇ Mergers in accordance with the laws of each of the
states applicable to such ▇▇▇▇▇▇▇▇▇▇▇ Mergers.
ARTICLE II
Purchase and Sale; Grant of the Back-up Option Agreement and Other Rights;
Additional Covenants
Section 2.1 Purchase and Sale of the Interests; Grant of the Back-up
Option Agreement and Other Rights. Upon the terms and consideration contained
herein, subject to the conditions of this Agreement and on the basis of the
representations, warranties and agreements contained herein, at the Closing ,
simultaneously, (i) the US Seller shall (A) assign its membership interest in
Licensco to the Purchaser Licensing Subsidiary, (B) withdraw as a member of
Licensco, (C) cause the Purchaser Licensing Subsidiary to be added as the sole
member of Licensco and (D) cause Licensco's limited liability company agreement
to be amended to reflect the Purchaser Licensing Subsidiary as the sole member
of Licensco, all such steps to be in accordance with documentation (including,
without limitation, an assignment and such amendment of such limited liability
agreement) in form and substance satisfactory to the Purchaser and the Canadian
Exhibit 2.1 - Page 14
Corporation, (ii) the US Seller shall (A) assign ninety-nine percent (99%) of
its membership interest in Opco to the Purchaser Operating Subsidiary and one
percent (1%) of its membership interest in Opco to Bergen ▇▇▇▇▇▇▇▇ Drug Co.,
Inc., a wholly-owned subsidiary of the Purchaser, (B) withdraw as a member of
Opco, (C) cause the Purchaser Operating Subsidiary and Bergen ▇▇▇▇▇▇▇▇ Drug Co.,
Inc. to be added as the sole members of Opco and (D) cause Opco's limited
liability company agreement to be amended and restated to contain the terms and
conditions set forth in Appendix 2.1 annexed hereto, such amendment and
restatement to reflect the Purchaser Operating Subsidiary and Bergen ▇▇▇▇▇▇▇▇
Drug Co., Inc., as the sole members of Opco, all such steps to be in accordance
with documentation (including, without limitation, an assignment and such
amendment and restatement of such limited liability agreement) in form and
substance satisfactory to the Purchaser and the Canadian Corporation, (iii) the
Canadian Corporation shall (and shall cause its subsidiaries to) grant to the
Purchaser the Proxy and the Back-up Option Agreement and the rights conferred
upon the Purchaser pursuant to the Voting Trust Agreement and (iv) the Purchaser
shall pay the Estimated Net Purchase Price to the US Seller in the manner
provided for herein, and thereby (a) the Purchaser Licensing Subsidiary shall
become the sole member of Licensco, (b) the Purchaser Operating Subsidiary and
Bergen ▇▇▇▇▇▇▇▇ Drug Co., Inc. shall become the sole members of Opco and (c) the
Purchaser shall receive from the Canadian Corporation and its subsidiaries the
Back-up Option Agreement and the Proxy and the rights conferred upon the
Purchaser pursuant to the Voting Trust Agreement. The assignments referred to in
this Section 2.1 (the "LLC Assignments") shall be in the form and substance of
the assignments annexed hereto as Appendix 2.1A.
Section 2.2 Estimated Net Purchase Price; Adjustments to the Estimated
Purchase Price; Payment of Consideration.
2.2.1 Certain Definitions.
2.2.1.1 The term "Estimated Net Purchase Price" shall mean
(i) Three Hundred Million Dollars ($300,000,000) plus (ii) the amount, if any,
by which the Certified Net Debt is less than One Hundred Million Dollars
($100,000,000) minus (iii) the amount, if any, by which the Certified Net Debt
is greater than One Hundred Million Dollars ($100,000,000) and minus (iv) the
Total Option Appreciation.
2.2.1.2 The term "Net Purchase Price" shall mean (i) Three
Hundred Million Dollars ($300,000,000) plus (ii) the amount, if any, by which
the Net Worth as of the Closing Date (as reflected in the Final Accounting
Report prepared pursuant to Section 2.5) exceeds the September 30 Net Worth plus
(iii) the amount, if any, by which the Final Net Debt is less than One Hundred
Million Dollars ($100,000,000) minus (iv) the amount, if any, by which the
September 30 Net Worth exceeds the Net Worth as of the Closing Date (as
reflected in the Final Accounting Report prepared pursuant to Section 2.5) minus
(v) the amount, if any, by which the Final Net Debt is greater than One Hundred
Exhibit 2.1 - Page 15
Million Dollars ($100,000,000) and minus (vi) the Total Option Appreciation.
2.2.2 Payment of the Estimated Net Purchase Price. Subject
to Section 2.2.4, upon the terms and subject to the conditions of this Agreement
and on the basis of the representations, warranties and agreements contained
herein, at the Closing, the Purchaser shall pay the Estimated Net Purchase Price
to the US Seller by (i) paying to the US Seller in cash a sum equal to fifty
percent (50%) of the Estimated Net Purchase Price by wire transfer to an account
or accounts specified in writing by the US Seller and (ii) issuing and
delivering to the US Seller a stock certificate or certificates (as reasonably
requested by the US Seller), registered in the US Seller's name, representing a
number of shares of BBC Common Stock equal to (A) fifty percent (50%) of the
Estimated Net Purchase Price divided by (B) the Market Value.
2.2.3 Adjustments to the Estimated Net Purchase Price.
2.2.3.1 Increased Consideration. Subject to Section 2.2.4,
if the Net Purchase Price is greater than the Estimated Net Purchase Price,
then, upon final determination of the Net Worth as of the Closing Date and the
Net Debt as of the Closing Date pursuant to Section 2.5 and calculation of the
amount by which the Net Purchase Price exceeds the Estimated Net Purchase Price
(such excess amount plus Interest (as defined below), the "Increased
Consideration"), the Purchaser shall pay the Increased Consideration to the US
Seller by (i) paying to the US Seller in cash a sum equal to fifty percent (50%)
of the Increased Consideration by wire transfer to an account or accounts
specified in writing by the Canadian Corporation and (ii) issuing and delivering
to the US Seller a stock certificate or certificates (as reasonably requested by
the US Seller), registered in the US Seller's name, representing a number of
shares of BBC Common Stock equal to (x) fifty percent (50%) of the Increased
Consideration divided by (y) the Market Value.
2.2.3.2 Decreased Consideration. Subject to Section 2.2.4,
if the Net Purchase Price is less than the Estimated Net Purchase Price, then,
upon final determination of the Net Worth as of the Closing Date and the Net
Debt as of the Closing Date pursuant to Section 2.5 and calculation of the
amount by which the Estimated Net Purchase Price exceeds the Net Purchase Price
(such excess amount plus Interest, the "Decreased Consideration"), the Counsel
Entities jointly and severally agree that they shall refund the Decreased
Consideration to the Purchaser as follows: (i) the Counsel Entities shall pay to
the Purchaser in cash a sum equal to fifty (50%) of the Decreased Consideration
by wire transfer to an account or accounts specified in writing by the Purchaser
and (ii) the Counsel Entities shall transfer to the Purchaser a stock
certificate, registered in the US Seller's name or the Canadian Corporation's
name and duly endorsed for transfer, representing a number of shares of BBC
Common Stock equal to (x) fifty percent (50%) of the Decreased Consideration
divided by (y) the Market Value.
Exhibit 2.1 - Page 16
2.2.3.3 Interest. For purposes of this Section 2.2.3
"Interest" shall be the interest calculated on the Increased Consideration or
Decreased Consideration (prior to any Interest), as the case may be, at the
prime rate as published in the Wall Street Journal from time to time during the
period from the date of Closing through the date of payment.
2.2.4 Notwithstanding any provision herein to the contrary,
if the Market Value is less than $24.8125, the Purchaser shall have the right to
change the nature of the consideration to be paid to the US Seller in accordance
with the following provisions:
2.2.4.1 At any time prior to the consummation of the
Closing, the Purchaser shall have the right to deliver to the US Seller a notice
(the "Cash Election Notice") advising the US Seller that the Purchaser desires
to pay the entire Net Purchase Price in cash rather than pay the Net Purchase
Price partly in cash and partly in shares of BBC Common Stock. In the event that
the Purchaser delivers a Cash Election Notice to the US Seller prior to the
consummation of the Closing, then, notwithstanding any provision herein to the
contrary, the following provisions shall apply:
2.2.4.1.1 The Purchaser shall not have any obligation to
issue or deliver any shares of BBC Common Stock pursuant to Section 2.2.2.
2.2.4.1.2 In addition to the cash payment contemplated by
clause (i) of Section 2.2.2 and in lieu of the issuance of shares of BBC Common
Stock pursuant to clause (ii) of Section 2.2.2, the Purchaser shall pay to the
US Seller in cash a sum equal to fifty percent (50%) of the Estimated Net
Purchase Price by wire transfer to an account or accounts specified in writing
by the US Seller.
2.2.4.1.3 If the Net Purchase Price is greater than the
Estimated Net Purchase Price, the Purchaser shall not have any obligation to
issue or deliver any shares of BBC Common Stock pursuant to Section 2.2.3.1.
2.2.4.1.4 If the Net Purchase Price is greater than the
Estimated Net Purchase Price, then, in addition to the cash payment contemplated
by clause (i) of Section 2.2.3.1 and in lieu of the issuance of shares of BBC
Common Stock pursuant to clause (ii) of Section 2.2.3.1, the Purchaser shall pay
to the US Seller in cash a sum equal to fifty percent (50%) of the Increased
Consideration by wire transfer to an account or accounts specified in writing by
the US Seller.
2.2.4.1.5 If the Net Purchase Price is less than the
Estimated Net Purchase Price, the Counsel Entities shall not have any obligation
to refund any shares of BBC Common Stock pursuant to Section 2.2.3.2.
Exhibit 2.1 - Page 17
2.2.4.1.6 If the Net Purchase Price is less than the
Estimated Net Purchase Price, then, in addition to the cash refund contemplated
by clause (i) of Section 2.2.3.2 and in lieu of the refund of shares of BBC
Common Stock pursuant to clause (ii) of Section 2.2.3.2, the Counsel Entities
jointly and severally agree that they shall refund to the Purchaser in cash a
sum equal to fifty percent (50%) of the Decreased Consideration by wire transfer
to an account or accounts specified in writing by the Purchaser.
2.2.4.2 In the event that the Purchaser delivers a Cash
Election Notice to the Counsel Entities prior to the consummation of the
Closing, Sections 2.3 and 2.4 of this Agreement shall cease to apply.
2.2.4.3 In the event that (i) the Purchaser delivers a Cash
Election Notice to the Counsel Entities prior to the consummation of the Closing
and (ii) there is an inconsistency between this Section 2.2.4 and any other
provision of this Agreement, the provisions of this Section 2.2.4 shall govern.
2.2.5 Notwithstanding any provision herein to the contrary,
the Purchaser shall not issue fractional shares of BBC Common Stock hereunder.
In lieu of issuing a fractional share, the Purchaser shall pay a cash amount
equal to the applicable fraction multiplied by the Market Value.
Section 2.3 Securities Law Matters.
2.3.1 Private Offering. The US Seller acknowledges that the
shares of BBC Common Stock to be issued and delivered to the US Seller hereunder
(the "BBC Shares") will not be registered under the Securities Act of 1933, as
amended (the "Act"), but will be issued in reliance upon the exemption afforded
by Section 4(2) of the Act, and that the Purchaser is relying upon the truth and
accuracy of the representations set forth in Section 4.7. Each certificate
representing BBC Shares issued pursuant to this Agreement shall bear the
following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
WITHOUT REGISTRATION PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND
MAY NOT BE TRANSFERRED UNLESS THEY ARE SO REGISTERED OR, IN THE OPINION
OF COUNSEL REASONABLY ACCEPTABLE TO THIS CORPORATION, SUCH TRANSFER IS
EXEMPT FROM REGISTRATION."
"IN THE EVENT THAT THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE REGISTERED FOR RESALE PURSUANT TO THE ABOVE-MENTIONED LAWS, SUCH
SHARES MAY ONLY BE TRANSFERRED BY SALE ON THE NEW YORK STOCK EXCHANGE
PURSUANT TO SEC RULE 153 WHILE SUCH REGISTRATION IS EFFECTIVE, UNLESS,
Exhibit 2.1 - Page 18
IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THIS CORPORATION,
SUCH TRANSFER IS EXEMPT FROM REGISTRATION."
The Purchaser shall give instructions to its transfer agent consistent with the
foregoing legends.
2.3.2 No Transfer. The US Seller will not sell, pledge or
otherwise transfer the BBC Shares unless the BBC Shares are registered under the
Act and under all applicable securities laws of other jurisdictions or are
exempt therefrom in the opinion of counsel reasonably satisfactory to the
Purchaser, it being agreed that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ & Manner, P.C. is
acceptable to the Purchaser.
2.3.3 Agreement to Register. Prior to the Closing, the
Purchaser shall prepare a registration statement on Form S-3 (the "Registration
Statement") pursuant to the Act covering the resale of BBC Shares to be issued
pursuant to this Agreement and shall file such Registration Statement with the
SEC on or before the first Business Day following the Closing, provided that the
Purchaser has available to it, in form satisfactory for filing, any consolidated
financial information and pro forma financial information regarding the Company
necessary or appropriate for filing with the SEC. The Purchaser and the Counsel
Entities shall both use their best efforts to expedite the preparation of such
information to the maximum extent practicable. Subsequent to the initial filing
of the Registration Statement, the Purchaser shall thereafter use its best
efforts to have such Registration Statement (covering the resale of all of the
BBC Shares to be issued pursuant to this Agreement) declared effective by the
Securities and Exchange Commission ("SEC") promptly after the Closing Date, and
to keep that Registration Statement current, subject to the provisions set forth
in Appendix 2.3.7 annexed hereto regarding the temporary suspension of use of
the Registration Statement, until the two year anniversary of the Closing Date.
The Purchaser reserves the right to include other shares of BBC Common Stock in
the Registration Statement, provided that such inclusion does not adversely
affect the US Seller in any substantive respect. The Purchaser agrees to use its
best efforts to cover in the Registration Statement, either initially or by
amendment when applicable, any of the BBC Shares which are pledged by one or
more of the Counsel Entities to a lender and subsequently resold by such lender
upon a default by the applicable borrower and any other BBC Shares which are
held by a Person to whom registration rights are transferred in accordance with
Section 2.3.6.
2.3.4 Costs. The Purchaser shall bear all costs incurred in
preparing and filing the Registration Statement, including, without limitation,
all applicable legal fees (excluding the fees of counsel to the Counsel
Entities), accounting fees, printing fees, and SEC filing fees; provided,
however, that the Purchaser shall not be responsible for any underwriting
commissions or discounts, brokerage fees or legal fees or disbursements incurred
by any person or entity (other than the Purchaser) that sells any shares of BBC
Common Stock pursuant to the Registration Statement. Subject to the
Exhibit 2.1 - Page 19
qualifications in the immediately preceding sentence, the Purchaser shall also
bear all costs of keeping the Registration Statement current during the
applicable period described in Section 2.3.3.
2.3.5 Information. The Counsel Entities will furnish the
Purchaser with all information concerning the Counsel Entities reasonably
required for inclusion in the Registration Statement. The Counsel Entities and
the Purchaser represent and warrant that no information to be furnished for the
Registration Statement will contain any statement which, at the time and in the
light of the circumstances under which it is made, is false or misleading with
respect to any material fact, or which omits to state any material fact
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier information furnished
hereunder which has become false or misleading.
2.3.6 Personal Rights. The registration rights set forth in
this Section 2.3 are personal to the Counsel Entities and may not be transferred
or assigned by the Counsel Entities to any other person or entity other than (a)
an Affiliate of the Canadian Corporation or the US Seller, (b) a lender who
receives such shares in accordance with Section 2.4 and pursuant to a bona
pledge by the Canadian Corporation or the US Seller or (c) a Qualified Investor,
provided, however, that such rights shall not be assigned to a Qualified
Investor unless the Purchaser was offered the opportunity, in writing , to
purchase the BBC Shares offered to the Qualified Investor on terms no less
favorable to the Purchaser than the terms offered to the Qualified Investor, the
Purchaser did not accept such offer within ten Business Days of the date that
the offer is delivered to the Purchaser and the Qualified Investor completes
such purchase within 120 days of the date that such offer was made to the
Purchaser.
2.3.7 Registration Rights. The Purchaser and the Counsel
Entities shall abide by the registration rights provisions set forth in Appendix
2.3.7 annexed hereto.
Section 2.4 Restrictions on Sales and Other Transfers.
2.4.1 General Restrictions. Except as otherwise provided in
Section 2.4.2, during the first 540 calendar days after the Closing Date, the
Counsel Entities shall not (x) effect an offer, pledge (other than a pledge
which, by its terms, subjects the pledgee to the same restrictions to which the
Counsel Entities are subject under this Section 2.4 pursuant to an agreement
acceptable to the Purchaser, such acceptance not to be unreasonably withheld),
sale, contract of sale, sale of any option or contract to purchase, purchase of
any option or contract to sell, grant of any option, right or warrant to
purchase, or other transfer or disposition of, directly or indirectly, any of
the BBC Shares or any securities convertible into or exercisable or exchangeable
for the BBC Shares (including, without limitation, BBC Shares or securities
convertible into or exercisable or exchangeable for BBC Shares which may be
deemed to be beneficially owned by the Counsel Entities in accordance with the
rules and regulations of the SEC) or (y) enter into any swap or other
Exhibit 2.1 - Page 20
arrangement that transfers all or a portion of the economic consequences
associated with the ownership of any BBC Shares (regardless of whether any of
the transactions described in clause (x) or (y) (each, a "Disposition") are to
be settled by the delivery of BBC Shares, or such other securities, in cash or
otherwise). The Counsel Entities authorize the Purchaser to cause the
Purchaser's transfer agent to decline to transfer and/or to note stop transfer
restrictions on the transfer books and records of the Purchaser with respect to
any of the BBC Shares and any securities convertible into or exercisable or
exchangeable for the BBC Shares for which the Counsel Entities are the
beneficial or record holder and agree to cause the record holder to cause the
transfer agent to decline to transfer and/or to note stop transfer restrictions
on such books and records with respect to such shares or securities except to
the extent that such transfers are permitted pursuant to this Agreement.
2.4.2 Sequential Lapse of Restrictions. During the First
Quarterly Period, the Counsel Entities have the right to make a Disposition of
up to thirty percent (30%) of the BBC Shares issued to the US Seller at the
Closing or subsequent to the Closing pursuant to the terms hereof (the "BBC
Delivered Shares"), less any such BBC Delivered Shares which are subject to a
Disposition by or on behalf of any lender during the First Quarterly Period upon
default of any loan made to either of the Counsel Entities. During each of the
Second Quarterly Period, Third Quarterly Period, Fourth Quarterly Period and
Fifth Quarterly Period (each, a "Quarterly Period"), the Counsel Entities shall
have the right to effect a Disposition of up to (x) ten percent (10%) of the BBC
Delivered Shares, less any BBC Delivered Shares which are subject to a
Disposition by or on behalf of any lender during such current Quarterly Period
upon default of any loan made to either of the Counsel Entities, plus any BBC
Delivered Shares which the Counsel Entities had the right to subject to a
Disposition, but did not subject to a Disposition, during any prior Quarterly
Period; provided, however, that the Counsel Entities shall not subject to a
Disposition more than thirty percent (30%) of the BBC Delivered Shares in any
one Quarterly Period, less any BBC Delivered Shares which are subject to a
Disposition by or on behalf of any lender during such Quarterly Period upon
default of any loan made to either of the Counsel Entities. During the Sixth
Quarterly Period, the Counsel Entities shall have the right to subject to a
Disposition up to thirty percent (30%) of the BBC Delivered Shares, less any BBC
Delivered Shares which are subject to a Disposition by or on behalf of any
lender during the Sixth Quarterly Period upon default of any loan made to either
of the Counsel Entities. The restrictions set forth in Section 2.4.1 shall cease
to apply after the last day of the Sixth Quarterly Period. In the event that
either of the Counsel Entities utilize any of the BBC Delivered Shares as
collateral on a loan on or before the last day of the Sixth Quarterly Period,
the Counsel Entities shall require that the lender execute an agreement, a copy
of which shall be delivered to the Purchaser and shall be acceptable to the
Purchaser, such acceptance not to be unreasonably withheld, that (a) expressly
states that the lender will not effect a Disposition of a greater number of BBC
Delivered Shares in any of the above-mentioned periods than the Counsel Entities
are entitled to subject to a Disposition in such periods and (b) acknowledges
that the Purchaser is entitled to rely upon such agreement.
Exhibit 2.1 - Page 21
2.4.3 The Counsel Entities agree that the certificates
representing the BBC Shares shall also bear a legend referring to the
restrictions set forth in this Section 2.4.
Section 2.5 Determination of the Net Worth as of the Closing Date.
2.5.1 Accountants' Reports.
2.5.1.1 Proposed Statement and Initial Accounting Report.
The Counsel Entities shall prepare at their expense, and furnish to the
Purchaser and CPA, a proposed consolidated balance sheet of the Company as of
the Closing Date prepared in accordance with GAAP, consistently applied (the
"Proposed Statement"). Such Proposed Statement shall provide sufficient detail
to establish, among other things, the Net Debt as of the Closing Date and the
Net Worth as of the Closing Date. The CPA shall submit the Proposed Statement to
a Limited Audit and, based upon the results of that Limited Audit, the Purchaser
shall render a draft report (the "Initial Accounting Report") to the Counsel
Entities and the Purchaser with respect to the Net Worth as of the Closing Date
and the Net Debt as of the Closing Date. As soon as practicable, but, in any
event, not more than ninety (90) calendar days after the Purchaser receives the
Proposed Statement and any information that the Purchaser or the CPA reasonably
and promptly requests from the Counsel Entities and/or the Accountants to
complete the Initial Accounting Report, the Purchaser shall furnish the Initial
Accounting Report to the Counsel Entities, along with a schedule of the
adjustments made to the Proposed Statement.
2.5.1.2 Time for Objections. After the Purchaser shall have
furnished the Initial Accounting Report to the Counsel Entities, if the Counsel
Entities should object to that report on the grounds that it is not consistent
with GAAP, consistently applied, the Counsel Entities may give written notice of
their objection to the Purchaser within twenty (20) calendar days after the
Counsel Entities' receipt of that report. If requested by the Counsel Entities
at the time of delivery of such notice, the Purchaser shall cause the CPA
promptly to make available to the Counsel Entities and the Accountants any
report prepared by the CPA with respect to the matters in dispute in connection
with the Initial Accounting Report. If no such objection is made within such
twenty (20) day period, or if the Purchaser and the Counsel Entities agree upon
all matters in dispute, that Initial Accounting Report, as adjusted to reflect
any such agreements, shall be final and binding on all parties hereto for the
purpose of determining the Net Worth as of the Closing Date and the Net Debt as
of the Closing Date and shall be referred to as the "Final Accounting Report".
2.5.1.3 Dispute Resolution. If the Purchaser and the Counsel
Entities are unable to resolve all items in dispute (with respect to the
calculation of the Net Worth as of the Closing Date and the Net Debt as of the
Closing Date) within fifteen (15) calendar days after the Purchaser's receipt of
Exhibit 2.1 - Page 22
the Counsel Entities' written objections to the Initial Accounting Report, then
those items in dispute shall be submitted for resolution to a firm of
independent certified public accountants acceptable to the Counsel Entities and
the Purchaser (the "Firm"). The Firm shall resolve such disputes by application
of GAAP, consistently applied, and such procedures as the Firm, in its
discretion, determines to be appropriate. The determination of the Firm with
respect to those items in dispute, together with the determinations of the
Purchaser and the Counsel Entities with respect to those items not in dispute,
shall become the "Final Accounting Report" and shall be final and binding upon
all parties hereto for purposes of determining the Net Worth as of the Closing
Date and the Net Debt as of the Closing Date. The Purchaser and the Counsel
Entities will use reasonable efforts to resolve these matters as rapidly as
possible.
2.5.1.4. Payment of Fees. The Counsel Entities shall pay the
fees of its accountants, including without limitation the Accountants to the
extent that the Accountants are involved, in connection with the preparation
and/or review of the Proposed Statement, the Initial Accounting Report and/or
the Final Accounting Report and the Purchaser shall pay the fees of the CPA,
including fees in connection with the preparation and/or review of the Initial
Accounting Report and the Final Accounting Report. The fees and disbursements of
any Firm employed pursuant to the provisions of Section 2.5.1.3 shall be borne
one-half by the Purchaser and one-half by the Counsel Entities.
2.5.2 Asset Value. In determining the Net Worth as of the
Closing Date, the consolidated assets of the Company and its Subsidiaries shall
be valued as of the Closing Date in accordance with GAAP, consistently applied.
2.5.3 Liability Value. In determining the Net Worth as of
the Closing Date, the consolidated liabilities of the Company and its
Subsidiaries shall be valued as of the Closing Date in accordance with GAAP,
consistently applied, provided that notwithstanding any provision herein to the
contrary and regardless of the application of GAAP, any prepayment fees,
breakage fees or similar fees paid by any of the Companies or the Purchaser at
or after the Closing with respect to any indebtedness of any of the Companies as
of the Closing Date shall be treated as a liability of the Companies as of the
Closing Date for purposes of determining the Net Worth as of the Closing Date.
2.5.4 Option Cancellation Impact. Notwithstanding anything
to the contrary contained herein or as may be required by GAAP, in calculating
Net Worth as of the Closing Date, the parties agree that the impact of the
Option Cancellation Agreements shall be excluded from such calculation (except
that the calculation of the Companies' cumulative tax liability (if any) shall
reflect the benefit of the tax deduction created by the Option Cancellation
Agreements) and the impact of the cash payable by Purchaser to satisfy the
Companies' obligations under the Option Cancellation Agreements shall be
excluded from the calculation of Net Debt.
Exhibit 2.1 - Page 23
Section 2.6 Determination of September 30 Net Worth. The September 30
Net Worth shall be determined in accordance with Section 6.22.
Section 2.7 Closing. Subject to the rights of the parties to terminate
this Agreement in accordance with Article VIII and subject to Section 6.22.4,
(i) the closing of the transactions contemplated hereby (the "Closing") shall
take place at the offices of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ at 10:00 A.M. on the fifth Business Day after the
satisfaction or waiver of the conditions set forth in Article VII (but in no
event prior to the twenty-first calendar day after the Purchaser receives the
Interim Audited Financial Statements pursuant to Section 6.22), or at such other
time and place as is mutually agreed in writing by the Purchaser and the
Canadian Corporation. The time and date of the Closing is herein called the
"Closing Date".
ARTICLE III
Representations and Warranties Regarding the Companies
The ▇▇▇▇▇▇▇▇▇▇▇ Company, the Canadian Corporation and the US Seller (i)
jointly and severally represent and warrant to the Purchaser as follows as of
November 8, 1998 and (ii) jointly and severally represent and warrant to the
Purchaser that all of the following representations and warranties are true and
correct in all material respects (other than representations and warranties
which are qualified in any respect as to materiality, which representations and
warranties are true and correct in all respects) on the date hereof (except for
representations and warranties made as of November 8, 1998 or an earlier
specified date, which shall be measured only as of November 8, 1998 or such
other specified date):
Section 3.1. Organization and Standing; Business. Each of the Companies
is a corporation or limited liability company duly organized, validly existing
and in good standing under the laws of the state of its organization with full
corporate power and authority to own, lease, use and operate its properties and
to conduct its business as and where now owned, leased, used, operated and
conducted. Each of the Companies is duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business conducted by
it or the property it owns, leases or operates requires it to so qualify, except
where the failure to be so qualified or in good standing in such jurisdiction
would not reasonably be expected to result in a Material Adverse Change with
respect to the Companies taken as a whole. None of the Companies is in default
in the performance, observance or fulfillment of any provision of its
certificate of incorporation, as amended and restated, or its Bylaws, as in
effect on November 8, 1998 and the date hereof, or its limited liability company
operating agreement. The ▇▇▇▇▇▇▇▇▇▇▇ Company has heretofore furnished to the
Purchaser a complete and correct copy of the ▇▇▇▇▇▇▇▇▇▇▇ Company's Articles of
Incorporation, as amended and restated (the "Company's Articles"), and the
▇▇▇▇▇▇▇▇▇▇▇ Company's Bylaws, as in effect on November 8, 1998 (the "Company's
Exhibit 2.1 - Page 24
By-Laws"). Listed in Section 3.1 to the disclosure schedule delivered by the
Counsel Entities to the Purchaser and dated November 8, 1998 (the "Companies'
Disclosure Schedule") is each jurisdiction in which any of the Companies was
qualified to do business and in good standing as of November 8, 1998. Section
3.1 of the Companies' Disclosure Schedule also sets forth a brief description of
each of the businesses in which the Companies are engaged (the "Businesses").
Section 3.2. Subsidiaries. The Company does not own, directly or
indirectly, any equity or other ownership interest in any corporation,
partnership, joint venture, limited liability company or other entity or
enterprise, except for the subsidiaries and other entities set forth in Section
3.2 to the Companies' Disclosure Schedule. Except as set forth in Section 3.2 to
the Companies' Disclosure Schedule, none of the Companies is subject to any
obligation or requirement to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any of the Companies that
is not wholly owned by one or more of the Companies. Except as set forth in
Section 3.2 to the Companies' Disclosure Schedule, the Company owns directly or
indirectly each of the outstanding shares of capital stock (or other ownership
interests having by their terms ordinary voting power to elect a majority of
directors or others performing similar functions with respect to such
subsidiary) of each of the subsidiaries and other entities identified in Section
3.2 of the Companies' Disclosure Schedule. Each of the outstanding shares of
capital stock or other ownership interests of each of such subsidiaries and
other entities is duly authorized, validly issued, fully paid and nonassessable,
and at the Closing will be owned, directly or indirectly, by Opco or Licensco
free and clear of all liens, pledges, security interests, claims or other
encumbrances. As of the Closing Date, the US Seller will be the sole member of
Opco and Licensco, no other Person will own any equity interest (or any interest
convertible or exchangeable into such an equity interest) in Opco or Licensco
and Opco and Licensco shall have succeeded to all of the assets, liabilities,
businesses and properties which, immediately prior to the transactions described
in Article IA, were the assets, liabilities, businesses and properties of the
▇▇▇▇▇▇▇▇▇▇▇ Company and its Subsidiaries. The following information for each
subsidiary of the Company is set forth in Section 3.2 to the Companies'
Disclosure Schedule, as applicable: (i) its name and jurisdiction of
incorporation or organization; (ii) for a subsidiary which is not wholly owned,
directly or indirectly, by the Company, its authorized capital stock or share
capital or other authorized equity; and (iii) for a subsidiary which is not
wholly owned, directly or indirectly, by the Company, the number of issued and
outstanding shares of capital stock or share capital or other equity interests,
the record owner(s) thereof to the extent known to the Counsel Entities or the
Company and the number of issued and outstanding shares of capital stock or
share capital or other equity interests beneficially owned, directly or
indirectly, by the Company. Other than as set forth in Section 3.2 to the
Companies' Disclosure Schedule or in Article IA, there are no outstanding
subscriptions, options, warrants, puts, calls, agreements, understandings,
claims or other commitments or rights of any type relating to the issuance, sale
or transfer of any securities or other equity interests of any subsidiary or
other entity listed in Section 3.2 to the Companies' Disclosure Schedule, nor
Exhibit 2.1 - Page 25
are there outstanding any securities or other equity interests which are
convertible into or exchangeable for any shares of capital stock or other equity
interests of any such subsidiary or other entity, and none of the Companies has
any obligation of any kind to issue any additional securities or grant any
additional equity interests of any subsidiary or other entity listed in Section
3.2 of the Companies' Disclosure Schedule or to pay for or repurchase any
securities or other equity interests of any such subsidiary or other entity or
any predecessor thereof.
Section 3.3. Corporate Power and Authority. The Company has all
requisite corporate power and authority to enter into and deliver the
Transaction Agreements, to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of the Transaction Agreements by the Company have been duly
authorized by all necessary corporate or other action on the part of the
Company. This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
against it in accordance with its terms, except insofar as its enforcement may
be limited by (a) bankruptcy, insolvency, moratorium or similar laws affecting
the enforcement of creditors' rights generally and (b) equitable principles
limiting the availability of equitable remedies. All persons who executed this
Agreement on behalf of the Company have been duly authorized to do so.
Section 3.4. Capitalization of the ▇▇▇▇▇▇▇▇▇▇▇ Company. As of November
8, 1998 and the date hereof, the ▇▇▇▇▇▇▇▇▇▇▇ Company's authorized capital stock
consisted and consists solely of 10,000,000 shares of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock,
of which (i) 2,004,008 shares were and are issued and outstanding, (ii) no
shares were or are issued and held in treasury and no shares were or are held by
subsidiaries of the ▇▇▇▇▇▇▇▇▇▇▇ Company and (iii) 237,773 shares were and are
reserved for issuance upon the exercise of outstanding options, 162,227 shares
were and are reserved for issuance upon the exercise of options which have not
been granted and no shares were or are reserved for issuance for any other
reason. Each outstanding share of the ▇▇▇▇▇▇▇▇▇▇▇ Company's capital stock is
duly authorized and validly issued, fully paid and nonassessable, and has not
been issued in violation of any preemptive or similar rights. Other than as set
forth in the first sentence hereof or in Section 3.4 to the Companies Disclosure
Schedule, there are no (and immediately prior to the Company/Opco Merger there
were no) outstanding subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other commitments or rights of any type relating to
the issuance, sale, repurchase or transfer by the ▇▇▇▇▇▇▇▇▇▇▇ Company of any
securities of the ▇▇▇▇▇▇▇▇▇▇▇ Company, nor are there (nor, immediately prior to
the consummation of the Company/Opco Merger, were there) outstanding any
securities which are convertible into or exchangeable for any shares of capital
stock of the ▇▇▇▇▇▇▇▇▇▇▇ Company, and neither the ▇▇▇▇▇▇▇▇▇▇▇ Company nor any
subsidiary of the ▇▇▇▇▇▇▇▇▇▇▇ Company has (or, immediately prior to the
consummation of the Company/Opco Merger, had) any obligation of any kind to
issue any additional securities or to pay for or repurchase any securities of
the ▇▇▇▇▇▇▇▇▇▇▇ Company or any predecessor. Section 3.4 of the Companies'
Disclosure Schedule accurately sets forth as of November 8, 1998 and as of the
date hereof the names of, and the number of shares of each class (including the
Exhibit 2.1 - Page 26
number of shares issuable upon exercise of stock options and the exercise price
and vesting schedule with respect thereto) and the number of options held by,
all holders of options to purchase the ▇▇▇▇▇▇▇▇▇▇▇ Company's capital stock. The
Company has no agreement, arrangement or understandings to register any
securities of the Company or any of its subsidiaries under the Securities Act of
1933, as amended, or under any state securities law and has not granted
registration rights to any person or entity (other than agreements, arrangements
or understandings with respect to registration rights that were no longer in
effect as of November 8, 1998). Unless any Stock Options are canceled, expire or
are otherwise terminated prior to the consummation of the Company/Opco Merger,
the Fully Diluted Number shall be 2,337,282 plus the number of shares subject to
the options described in Section IV,C. of the ▇▇▇▇▇▇▇ Agreement if any such
options are granted.
Section 3.5. Conflicts; Consents and Approvals. Except as set forth in
Section 3.5 of the Companies' Disclosure Schedule, neither the execution and
delivery of this Agreement or any of the other Transaction Agreements, nor the
consummation of the transactions contemplated hereby or thereby, will:
3.5.1 conflict with, or result in a breach of any provision
of, the Company's Articles, the Company's Bylaws, the limited liability company
agreements of Opco or Licensco or the certificate of incorporation, bylaws or
other organizational document of any subsidiary of the Company that is not,
directly or indirectly, wholly owned by the Company;
3.5.2 violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the giving of
notice, the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or otherwise)
to terminate, accelerate, modify or call a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of any of the Companies under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
contract, undertaking, agreement, lease or other instrument or obligation to
which any of the Companies is a party;
3.5.3 violate any order, writ, injunction, decree, statute,
rule or regulation applicable to any of the Companies or any of their respective
properties or assets; or
3.5.4 require any action or consent or approval of, or review
by, or registration or filing by the Company or any of its affiliates with, any
third party or any Governmental Authority, other than (i) approval of the
transactions contemplated hereby by the shareholders of the Canadian
Corporation, (ii) actions required by the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and (iii) registrations or
other actions required under Canadian, federal and state securities laws as are
contemplated by this Agreement.
Exhibit 2.1 - Page 27
except in the case of Sections 3.5.2, 3.5.3 and 3.5.4 for any of the foregoing
that would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Change with respect to the Companies taken as a
whole or a material adverse effect on the ability of the parties hereto to
consummate the transactions contemplated hereby.
Section 3.6. No Material Adverse Change; Other Changes. Except as
disclosed in any report filed by the Canadian Corporation with the SEC prior to
the date of this Agreement, in the Financial Statements or in any other
statement made in the Companies' Disclosure Schedule, since December 31, 1997,
there has been no change in the assets, liabilities, results of operations or
financial condition of the Companies which would constitute a Material Adverse
Change with respect to the Companies taken as a whole or any event, occurrence
or development which would have a material adverse effect on the ability of the
Company, the Merging Entities, the Transferring Entities or the Counsel Entities
to consummate the transactions contemplated hereby. Except as disclosed in any
report filed by the Canadian Corporation with the SEC prior to the date of this
Agreement, in the Financial Statements or in any other statement made in the
Companies' Disclosure Schedule, no event has occurred since December 31, 1997
which, if such event had occurred subsequent to November 8, 1998, would
constitute a breach of Section 6.3.
Section 3.7 Intentionally omitted.
Section 3.8. Taxes. Except as set forth in Section 3.8 to the
Companies' Disclosure Schedule and except for such matters that would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Change with respect to the Companies taken as a whole:
3.8.1 The Companies (i) have duly filed, or have received valid
extensions for the filing of, all federal, state, local and foreign income,
franchise, excise, real and personal property and other Tax returns and reports
(including, but not limited to, those filed on a consolidated, combined or
unitary basis) required to have been filed by the Companies prior to the date
hereof, all of which foregoing Tax returns and reports are true and correct;
(ii) have within the time and manner prescribed by applicable law paid or, prior
to the Closing Date, will pay all Taxes, interest and penalties required to be
paid in respect of the periods covered by such returns or reports or otherwise
due to any federal, state, foreign, local or other taxing authority; (iii) have
adequate reserves on their financial statements for any Taxes in excess of the
amounts so paid; (iv) are not delinquent in the payment of any Tax and have not
requested or filed any document having the effect of causing any extension of
time within which to file any returns in respect of any fiscal year which have
not since been filed; and (v) have not received written notice of any
deficiencies for any Tax from any taxing authority, against any of the Companies
for which there are not adequate reserves. None of the Companies is the subject
of any currently ongoing Tax audit. As of the date of this Agreement, there are
no pending requests for waivers of the time to assess any Tax, other than those
Exhibit 2.1 - Page 28
made in the Ordinary Course of Business and for which payment has been made or
there are adequate reserves. With respect to any taxable period ended prior to
December 31, 1993, all federal income tax returns including any of the Companies
have been audited by the Internal Revenue Service or are closed by the
applicable statute of limitations. None of the Companies has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency. There are no liens with respect to
Taxes upon any of the properties or assets, real or personal, tangible or
intangible, of any of the Companies (other than liens for Taxes not yet due).
Since January 1, 1996, no claim has been made in writing by an authority in a
jurisdiction where none of Companies and its subsidiaries files Tax returns that
any of the Companies is or may be subject to taxation by that jurisdiction. None
of the Companies has filed an election under Section 341(f) of the Code to be
treated as a consenting corporation. Neither of Opco nor Licensco has made any
election to be classified for federal income tax purposes as an association
under Treas. Reg. ss.301.7701-3(c) or any comparable election under state, local
or foreign tax law.
3.8.2 None of the Companies is obligated by any contract,
agreement or other arrangement to indemnify any other Person with respect to
Taxes. None of the Companies is now or has ever been a party to or bound by any
agreement or arrangement (whether or not written and including, without
limitation, any arrangement required or permitted by law) binding any of the
Companies which (i) requires any of the Companies to make any Tax payment to
(other than payments made prior to September 30, 1998 or payments which are
adequately reserved on the Company's consolidated balance sheet as of September
30, 1998 delivered to the Purchaser prior to November 8, 1998) or for the
account of any other Person, (ii) affords any other Person the benefit of any
net operating loss, net capital loss, investment Tax credit, foreign Tax credit,
charitable deduction or any other credit or Tax attribute which could reduce
Taxes (including, without limitation, deductions and credits related to
alternative minimum Taxes) of any of the Companies, or (iii) requires or permits
the transfer or assignment of income, revenues, receipts or gains to any of the
Companies, from any other Person.
3.8.3 The Companies have withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party,
other than Taxes the payment of which would not result in a Material Adverse
Change with respect to the Companies taken as a whole.
3.8.4 "Tax returns" means returns, reports and other forms to
be filed (whether on a mandatory or elective basis) with any Governmental
Authority of the United States or any other jurisdiction responsible for the
imposition or collection of Taxes.
Exhibit 2.1 - Page 29
Section 3.9. Compliance with Law. Except as set forth in Section 3.9 to
the Companies' Disclosure Schedule, each of the Companies is in compliance, and
at all times since June 30, 1996 has been in compliance, with all applicable
laws relating to the Companies or the Businesses or the Companies' properties,
except where the failure to be in compliance with such laws (individually or in
the aggregate) would not reasonably be expected to result in a Material Adverse
Change with respect to the Companies taken as a whole or where such
non-compliance has been cured prior to November 8, 1998. Except as disclosed in
Section 3.9 to the Companies' Disclosure Schedule, no investigation or review by
any Governmental Authority with respect to any of the Companies is pending, or,
to the knowledge of the Company or the Counsel Entities, threatened, nor, to the
knowledge of the Company and the Counsel Entities, has any Governmental
Authority indicated in writing an intention to conduct the same, other than
those the outcome of which would not reasonably be expected to result in a
Material Adverse Change with respect to the Companies taken as a whole.
Section 3.10. Intellectual Property. Except as would not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Change with respect to the Companies taken as a whole, the Companies own or
possess adequate licenses or other valid rights to use all of their Proprietary
Rights, and there has not been any written or, to the knowledge of the Company
and the Counsel Entities, oral assertion or claim against any of the Companies
challenging the validity or the use by any of the Companies of any of the
foregoing. Other than licenses generally available to the public at reasonable
cost and material licenses or rights to use set forth in Section 3.10 to the
Companies' Disclosure Schedule, the Companies own all of the Proprietary Rights
and no material licenses or other grant of valid rights from any third party to
use any of the Companies' Proprietary Rights is necessary for the use of these
Proprietary Rights in substantially the same manner as they are presently used
by the Companies in the conduct of the Businesses. Except as set forth in
Section 3.10 of the Companies' Disclosure Schedule or with respect to
commercially and readily available third party software, the Companies have the
right and license to use, copy, modify, create derivative work from and
distribute all software programs and technical documentation therefor that is
included in the Proprietary Rights. The conduct of the Businesses as currently
conducted by the Companies does not conflict with or infringe upon any patent,
patent right, license, trademark, trademark right, trade dress, trade name,
trade name right, service ▇▇▇▇, copyright or other intellectual property right
of any third party except for any conflict or infringement that, individually or
in the aggregate, would not reasonably be expected to result in a Material
Adverse Change with respect to the Companies taken as a whole. Except as would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Change with respect to the Companies taken as a whole, there
are no infringements by any third party of any of the Proprietary Rights owned
by or licensed by or to any of the Companies and no Proprietary Rights of any of
the Companies is the subject of any pending administrative, judicial or other
legal proceeding.
Exhibit 2.1 - Page 30
Section 3.11. Title to and Condition of Properties. The Companies own
or lease all real property, plants, machinery and equipment necessary for the
conduct of the Businesses of the Companies as presently conducted, except where
the failure to own or so hold such property, plants, machinery and equipment
would not reasonably be expected to result in a Material Adverse Change with
respect to the Companies taken as a whole.
Section 3.12. Medicare and Medicaid; Reimbursement by Payors; Related
Legislation and Regulations.
3.12.1 For each of the Companies, Section 3.12 of the
Companies' Disclosure Schedule contains a list of those jurisdictions in which
it is licensed under Medicare or Medicaid. The Companies have not received any
notice of investigation, evaluation or suspension of any such licenses, permits,
orders, approvals or authorizations. To the knowledge of the Company and the
Counsel Entities, no suspension or cancellation of any such licenses, permits,
orders, approvals and authorizations has been threatened or is contemplated.
3.12.2 One or more of the Companies participate in the Medicare
and Medicaid Programs (the "Programs"). Section 3.12 of the Companies'
Disclosure Schedule contains a list of all Medicare and Medicaid provider
numbers assigned to the Companies and other documents evidencing such
participation.
3.12.3 Except as set forth in Section 3.12 of the Companies'
Disclosure Schedule, the Companies have not received notice of any offsets
against future reimbursements under or pursuant to the Programs. To the
knowledge of the Company and the Counsel Entities, no factual basis for any such
offsets exists. Except as set forth in Section 3.12 of the Companies' Disclosure
Schedule, there are no pending appeals, adjustments, challenges, audits,
litigation and notices of intent to recoup past or present reimbursements with
respect to the Programs. Except as set forth in Section 3.12 of the Companies'
Disclosure Schedule , the Companies have not been subject to, or threatened
with, loss or waiver of liability for utilization review denials with respect to
the Programs during the past 12 months, nor have the Companies received notice
of any pending, threatened or possible decertification, or audit, offset, other
action or other loss of participation in any of the Programs. Except as set
forth in Section 3.12 of the Companies' Disclosure Schedule, to the knowledge of
the Company and the Counsel Entities, no validity review or program integrity
review related to any of the Companies has been conducted by any Governmental
Authority in connection with any of the Programs and no such review, audit or
audit assessment is scheduled, pending or threatened against any of the
Companies, their businesses or their assets.
3.12.4 Except as set forth in Section 3.12 of the Companies'
Disclosure Schedule , (i) the Companies have not failed to file cost reports or
other documentation or reports, if any, required to be filed by any commercial
third-party payors or Governmental Authorities in connection with applicable
Exhibit 2.1 - Page 31
contractual provisions and/or laws, regulations and rules, and (ii) there are no
Claims (including notices of any offsets against future reimbursements) pending
or, to the knowledge of the Company and the Seller, threatened or scheduled
before any Person, including without limitation any intermediary, carrier, the
Health Care Financing Administration, or any other state or federal agency with
respect to Medicare or Medicaid Claims filed by the Companies, or program
compliance matters, in either case (i.e., clause (i) or clause (ii)) which would
result in a Material Adverse Change with respect to the Companies taken as a
whole. The Companies have delivered to the Purchaser accurate and complete
copies of any Claims, actions, inquiries or other correspondence or appeals
listed in Section 3.12 of the Companies' Disclosure Schedule.
3.12.5 To the knowledge of the Company and the Counsel
Entities, (i) the Companies deliver goods and services, charge rates and ▇▇▇▇
for services which are in all material respects legal and proper, (ii) the
Companies in all material respects properly pay any appropriate refunds, ▇▇▇▇
and use all reasonable efforts to collect deductibles and co-payment amounts and
apply all payments received, (iii) the Companies have not engaged in any
activities in connection with the Businesses which are prohibited under, and
have complied in all material respects with, the Controlled Substances Act, 21
U.S. C. Section 801 et seq., all legislation relating to the Programs and the
regulations promulgated pursuant to such statutes and any related state or local
statutes or regulations concerning the dispensing and sale of controlled
substances and the provision of healthcare products and service to the general
public and (iv) the Companies have complied in all material respects with all
laws and regulations pertaining to the return of pharmaceutical products.
Section 3.13. Litigation. Except as set forth in Section 3.13 to the
Companies' Disclosure Schedule, there is no Action pending or, to the knowledge
of the Company or the Counsel Entities, threatened against any of the Companies
or any executive officer or director of the Companies which, individually or in
the aggregate, would reasonably be expected to result in a Material Adverse
Change with respect to the Companies taken as a whole or a material adverse
effect on the ability of the Company and the Counsel Entities to consummate the
transactions contemplated hereby. None of the Companies is subject to any
outstanding order, writ, injunction or decree which, individually or in the
aggregate, insofar as can be reasonably foreseen, would reasonably be expected
to result in a Material Adverse Change with respect to the Companies taken as a
whole or a material adverse effect on the ability of the Company or the Counsel
Entities to consummate the transactions contemplated hereby. Except as set forth
in Section 3.13 to the Companies' Disclosure Schedule, since December 31, 1994,
none of the Companies has been subject to any outstanding order, writ,
injunction or decree relating to the Companies' methods of doing business or the
Companies' relationships with past, existing or future users or purchasers of
any goods or services of any of the Companies. To the knowledge of the Counsel
Entities and the Company, Section 3.13 of the Companies' Disclosure Schedule
sets forth an accurate description of any pending or threatened investigations
regarding the Companies, other than those which, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Exhibit 2.1 - Page 32
Change with respect to the Companies taken as a whole or a material adverse
effect on the ability of the Company and the Counsel Entities to consummate the
transactions contemplated hereby.
Section 3.14. Brokerage and Finder's Fees; Expenses. Neither any of the
Companies nor any stockholder, director, officer or employee thereof, has
incurred or will incur on behalf of any of the Companies, any brokerage,
finder's, legal, accounting or similar fee in connection with the transactions
contemplated by this Agreement.
Section 3.15. Financial Statements.
3.15.1 Section 3.15 of the Companies' Disclosure Schedule
contains the following annual and interim consolidated financial statements of
the Companies: the audited consolidated balance sheets of the Companies as of
December 31, 1996 and 1997 and the related audited consolidated statements of
income, changes in stockholders' equity and cash flows of the Companies for the
period from June 23, 1997 through December 31, 1997, the period from January 1,
1997 through June 22, 1997, and the years ended December 31, 1996 and 1995 and
the unaudited consolidated balance sheet of the Companies as of September 30,
1998 (the "Interim Balance Sheet") and the related unaudited consolidated
statements of income and changes in stockholders' equity of the Companies for
the nine month periods ended September 30, 1997 and 1998 (the "Interim Income
and Stockholders' Equity Statements"). The audited and unaudited financial
statements delivered pursuant to this Section 3.15.1 are hereinafter referred to
as the "Financial Statements". The Financial Statements fairly present the
consolidated financial condition of the Companies and the consolidated results
of the Companies' operations and cash flows as at the dates and for the periods
to which they apply, as the case may be, and such statements have been prepared
in conformity with GAAP (except as may otherwise be indicated in the notes
thereto and except that certain footnotes required by GAAP and normal year-end
adjustments with respect to interim periods have been omitted). The Financial
Statements for all interim periods include all adjustments (subject only to
normal year-end adjustments) necessary for a fair presentation of the Companies'
consolidated financial position, results of operations and cash flows.
3.15.2 Section 3.15 of the Companies' Disclosure Schedule sets
forth the Companies' policy with respect to the capitalization and expensing of
software, which policy has been adhered to in all material respects by the
Companies for the periods covered by the Financial Statements.
3.15.3 Intentionally omitted.
3.15.4 Intentionally omitted.
3.15.5 No unrecorded funds or assets of the Companies have been
established for any purpose; no accumulation or use of the funds of the
Exhibit 2.1 - Page 33
Companies has been made without being properly accounted for in the respective
books and records of the Companies; all payments by or on behalf of the
Companies have been duly and properly recorded and accounted for in the
Companies' books and records; no false or artificial entry has been made in the
books and records of the Companies for any reason; no payment has been made by
or on behalf of the Companies with the understanding that any part of such
payment is to be used for any purpose other than that described in the documents
supporting such payment; and the Companies have not made, directly or
indirectly, any illegal contributions to any political party or candidate,
either domestic or foreign, or any contribution, gift, bribe, rebate, payoff,
influence payment or kickback, whether in cash, property or services, to any
individual, corporation, partnership or other entity, to secure business or to
pay for business secured.
3.15.6 No operations have been discontinued by the Companies
within the last five years other than in the Ordinary Course of Business.
3.15.7 Intentionally omitted.
3.15.8 The Companies do not have any outstanding binding
commitments with respect to capital expenditures other than the commitments
described in Section 3.15 of the Companies' Disclosure Schedule.
Section 3.16. Employee Benefit Plans.
3.16.1 For purposes of this Section 3.16, the following terms
have the definitions given below:
"Controlled Group Liability" means any and all liabilities
under (i) Title IV of ERISA, (ii) section 302 of ERISA, (iii) sections 412 and
4971 of the Code, (iv) the continuation coverage requirements of section 601 et
seq. of ERISA and section 4980B of the Code, and (v) corresponding or similar
provisions of foreign laws or regulations, in each case other than pursuant to
the Plans.
"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to Section 4001(a)(13) of ERISA.
"Plans" means all "employee welfare benefit plans" within the
meaning of Section 3(1) of ERISA and all "employee pension benefit plans" within
the meaning of Section 3(2) of ERISA sponsored or maintained by any of the
Companies at any time since September 30, 1998 or to which any of the Companies
has contributed or has been obligated to contribute at any time since September
30, 1998.
Exhibit 2.1 - Page 34
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.
3.16.2 With respect to each Plan in effect on November 8,
1998, the Company has provided to the Purchaser a true, correct and complete
copy of the following (where applicable): (i) each writing constituting a part
of such Plan, including without limitation all plan documents, trust agreements,
and insurance contracts and other funding vehicles; (ii) the three most recent
Annual Reports (Forms 5500 Series) and accompanying schedules, if any; (iii) the
current summary plan description, if any; (iv) the most recent annual financial
report, if any; and (v) the most recent determination letter from the Internal
Revenue Service, if any.
3.16.3 Except as set forth in Section 3.16(c) to the
Companies' Disclosure Schedule, the Internal Revenue Service has issued a
favorable determination letter with respect to each Plan that is intended to be
a "qualified plan" within the meaning of Section 401(a) of the Code (a
"Qualified Plan") and no circumstance exists nor has any event occurred that
could adversely affect the qualified status of any Qualified Plan or the related
trust in a manner that would result in a Material Adverse Change with respect to
the Companies taken as a whole.
3.16.4 All contributions required to be made to any Plan by
any applicable laws or by any plan document or other contractual undertaking,
and all premiums due or payable with respect to insurance policies funding any
Plan, before November 8, 1998 have been made or paid in full on or before the
final due date thereof (or, if not made or paid in full, would not result in a
Material Adverse Change with respect to the Companies) and through the Closing
Date will be made or paid in full on or before the final due date thereof.
3.16.5 Each of the Companies has complied, and is now in
compliance, in all material respects, with all provisions of ERISA, the Code and
all laws and regulations applicable to the Plans. Each Plan has been operated in
material compliance with its terms. There is not now, and there are no existing
circumstances that would give rise to, any requirement for the posting of
security with respect to a Plan or the imposition of any lien on the assets of
any of the Companies under ERISA or the Code. No circumstance exists, and no
event has occurred, which could cause the Companies to incur liability, whether
directly or indirectly, through indemnification or otherwise, for any tax or
penalty imposed pursuant to Section 4971, 4972, 4975, 4976, 4977, 4978, 4978B,
4979, 4980 or 4980B of the Code or arising under Sections 502(i) or 502(l) of
ERISA.
3.16.6 Except as set forth in Section 3.16(f) to the
Companies' Disclosure Schedule, no Plan is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that
has two or more contributing sponsors at least two of whom are not under common
Exhibit 2.1 - Page 35
control, within the meaning of Section 4063 of ERISA (a "Multiple Employer
Plan"), nor have any of the Companies or any of their respective ERISA
Affiliates, at any time within six years before November 8, 1998, contributed to
or been obligated to contribute to any Multiemployer Plan or Multiple Employer
Plan. With respect to each Multiemployer Plan described in Section 3.16(f) to
the Companies' Disclosure Schedule: (i) neither any of the Companies nor any of
their ERISA Affiliates has incurred any Withdrawal Liability that has not been
satisfied in full; and (ii) neither any of the Companies nor any of their ERISA
Affiliates has received any notification, nor has any reason to believe, that
any such plan is in reorganization, is insolvent, has been terminated, or would
be in reorganization, be insolvent, or be terminated. Except for Multiemployer
Plans described in Section 3.16(f) to the Companies' Disclosure Schedule, no
Plan is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of
the Code.
3.16.7 No circumstance exists, and no event has occurred, that
would result in, any material Controlled Group Liability that would be a
liability of any of the Companies following the Closing. Without limiting the
generality of the foregoing, neither any of the Companies nor any of their
respective ERISA Affiliates has engaged in any transaction described in Section
4069 or Section 4203 of ERISA.
3.16.8 Except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA and except as set forth
in Section 3.16(h) to the Companies Disclosure Schedule, none of the Companies
has any material liability for life, health, medical or other welfare benefits
to former employees or beneficiaries or dependents thereof.
3.16.9 Except as disclosed in Section 3.16(i) to the
Companies' Disclosure Schedule, neither the execution and delivery of any of the
Transaction Agreements nor the consummation of the transactions contemplated
hereby or thereby will result in, cause the accelerated vesting or delivery of,
or increase the amount or value of, any payment or benefit to any employee,
officer, director or consultant of any of the Companies. Without limiting the
generality of the foregoing, except as set forth in Section 3.16(i) to the
Companies' Disclosure Schedule, no amount paid or payable by any of the
Companies in connection with the transactions contemplated by the Transaction
Agreements either solely as a result thereof or as a result of such transactions
in conjunction with any other events will be an "excess parachute payment"
within the meaning of Section 280G of the Code.
3.16.10 Except as disclosed in Section 3.16(j) to the
Companies' Disclosure Schedule, there are no pending or, to the knowledge of the
Company or the Counsel Entities, threatened claims (other than claims for
benefits in the Ordinary Course of Business), lawsuits or arbitrations which
have been asserted or instituted against the Plans, any fiduciaries thereof with
respect to their duties to the Plans or the assets of any of the trusts under
any of the Plans.
Exhibit 2.1 - Page 36
3.16.11 Section 3.16(k) to the Companies' Disclosure Schedule
sets forth a list of each employment, severance or similar agreement under which
any of the Companies is or could become obligated to provide compensation or
benefits in excess of $200,000 in any one calendar year, and the Company has
provided to the Purchaser a copy of each such agreement.
3.17. Contracts. Section 3.17 to the Companies' Disclosure Schedule
lists all contracts, agreements, guarantees, leases and executory commitments
that existed as of November 8, 1998 other than Plans (each a "Contract") to
which any of the Companies is a party and which fall within any of the following
categories: (a) Contracts not entered into in the Ordinary Course of Business
other than those that are not material to the Businesses, (b) joint venture and
partnership agreements, (c) Contracts containing covenants purporting to limit
the freedom of any of the Companies to compete in any line of business in any
geographic area or to hire any individual or group of individuals, (d) Contracts
which after the Closing Date would have the effect of limiting the freedom of
the Purchaser or its subsidiaries to compete in any line of business in any
geographic area or to hire any individual or group of individuals, (e) Contracts
which contain minimum purchase conditions in excess of $1,000,000 with respect
to inventory purchases for resale, and $500,000 in the case of everything else,
or requirements or other terms that restrict or limit the purchasing
relationships of any of the Companies, or any customer, licensee or lessee
thereof, (f) Contracts relating to any outstanding commitment for capital
expenditures in excess of $250,000, (g) indentures, mortgages, promissory notes,
loan agreements or guarantees of borrowed money in excess of $1,000,000, letters
of credit or other agreements or instruments of any of the Companies or
commitments for the borrowing or the lending of amounts in excess of $1,000,000
by any of the Companies or providing for the creation of any charge, security
interest, encumbrance or lien upon any of the assets of any of the Companies
with an aggregate value in excess of $100,000, (h) Contracts providing for
"earn-outs" or other contingent payments by any of the Companies involving more
than $100,000 over the term of the Contract, and (i) Contracts with or for the
benefit of any Affiliate of any of the Companies or immediate family member
thereof (other than subsidiaries of the Company) involving more than $60,000 in
the aggregate per Affiliate. All such Contracts and all contracts to which
Companies is a party and which involve annual revenues to the Businesses of the
Companies in excess of 2.5% of the Companies' consolidated annual revenues
(each, a "Material Contract") are valid and binding obligations of one or more
of the Companies and, to the knowledge of the Company and the Counsel Entities,
the valid and binding obligation of each other party thereto except such
Contracts or Material Contracts which if not so valid and binding would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Change with respect to the Companies taken as a whole. Neither any of
the Companies nor, to the knowledge of the Company or the Counsel Entities, any
other party thereto is in violation of or in default in respect of, nor has
there occurred an event or condition which with the passage of time or giving of
notice (or both) would constitute a default under or permit the termination of,
any such Contract or Material Contract except such violations or defaults under
Exhibit 2.1 - Page 37
or terminations which, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Change with respect to the Companies
taken as a whole. Set forth in Section 3.17(j) to the Companies' Disclosure
Schedule is a description of any material changes to the amount and terms of the
indentures of any of the Companies from the descriptions thereof in the notes to
the financial statements previously delivered to the Purchaser.
3.18. Labor Matters. Except as set forth in Section 3.18 to the
Companies' Disclosure Schedule, none of the Companies has any consulting
agreements providing for compensation of any individual in excess of $150,000
annually, or any labor contracts or collective bargaining agreements with any
persons employed by any of the Companies or any persons otherwise performing
services primarily for any of the Companies. There is no labor strike, dispute
or stoppage pending or, to the knowledge of the Company and the Counsel
Entities, threatened against any of the Companies, and none of the Companies has
experienced any labor strike, dispute or stoppage since December 31, 1996.
3.19. Undisclosed Liabilities. Except (i) as and to the extent
disclosed or reserved against on the Company's consolidated balance sheet as of
September 30, 1998 previously furnished to the Purchaser, (ii) as incurred after
the date thereof in the Ordinary Course of Business consistent with prior
practice and not prohibited by this Agreement or (iii) as set forth in Section
3.19 to the Companies' Disclosure Schedule, the Companies do not have any
liabilities or obligations of any nature, whether known or unknown, absolute,
accrued, contingent or otherwise and whether due or to become due, that,
individually or in the aggregate, result or would result in a Material Adverse
Change with respect to the Companies taken as a whole.
3.20. Operation of the Businesses; Relationships.
3.20.1 Since September 30, 1998 through the date of this
Agreement, none of the Companies has engaged in any transaction which, if done
after execution of this Agreement, would violate in any material respect
Sections 6.2 or 6.3 except as set forth in Section 3.20.1 to the Companies'
Disclosure Schedule.
3.20.2 Except as set forth in Section 3.20.2 to the Companies'
Disclosure Schedule, since January 1, 1998 no material customer of any of the
Companies has indicated that it will stop or materially decrease purchasing
materials, products or services from any of the Companies and no material
supplier of any of the Companies has indicated that it will stop or materially
decrease the supply of materials, products or services to any of the Companies,
in each case, the effect of which would result in a Material Adverse Change with
respect to the Companies taken as a whole.
3.21. Permits; Compliance.
3.21.1 Each of the Companies is in possession of all material
franchises, grants, authorizations, licenses, permits, easements, variances,
Exhibit 2.1 - Page 38
exemptions, consents, certificates, approvals and orders necessary to own, lease
and operate its properties and to carry on its business as it is now being
conducted (collectively, the "Company Permits"), except where the failure to be
in possession of such Companies Permits would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Change with
respect to the Companies taken as a whole or a material adverse effect on the
ability of the parties to consummate the transactions contemplated hereby, and
there is no Action pending or, to the knowledge of the Company and the Counsel
Entities, threatened regarding any of the Company Permits which, if successful,
would result in a Material Adverse Change with respect to the Companies taken as
a whole or a material adverse effect on the ability of the parties to consummate
the transactions contemplated hereby. None of the Companies is in conflict with,
or in default (or would be in default with the giving of notice, the passage of
time, or both) or violation of, any of the Company Permits, except for any such
conflicts, defaults or violations which, individually or in the aggregate, would
not reasonably be expected to result in a Material Adverse Change with respect
to the Companies taken as a whole.
3.21.2 Except as set forth in Section 3.21.2 of the Companies'
Disclosure Schedule or as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change with respect to
the Companies taken as a whole, none of the Companies or any of their officers
(during the term of such person's employment by any of the Companies) has made
any untrue statement of a material fact or fraudulent statement to any
Governmental Authority or failed to disclose a material fact required to be
disclosed to any Governmental Authority
Section 3.22. Environmental Matters. Except for matters disclosed in
Schedule 3.22 of the Companies' Disclosure Schedule and except for matters that
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Change with respect to the Companies taken as a whole, (a)
the properties, operations and activities of the Companies are in compliance
with all applicable Environmental Laws and all past noncompliance of any of the
Companies with any Environmental Laws or Environmental Permits that has been
resolved with any Governmental Authority has been resolved without any pending,
ongoing or future obligation, cost or liability; (b) the Companies and the
properties and operations of the Companies are not subject to any existing,
pending or, to the knowledge of the Company and the Counsel Entities, threatened
action, suit, investigation, inquiry or proceeding by or before any court or
governmental authority under any Environmental Law; (c) there has been no
release of any hazardous substance, pollutant or contaminant into the
environment by any of the Companies or in connection with their properties or
operations; (d) to the best of the knowledge of the Company and the Counsel
Entities, there has been no exposure of any person or property to any hazardous
substance, pollutant or contaminant in connection with the properties,
operations and activities of the Companies; and (e) the Companies have made
available to the Purchaser all internal and external environmental audits and
reports (in each case relevant to the Companies) prepared since January 1, 1994
and in the possession of any of the Companies. The term "Environmental Laws"
Exhibit 2.1 - Page 39
means all federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or industrial,
toxic or hazardous substances or wastes (collectively, "Hazardous Materials")
into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder, as in effect on November 8, 1998. "Environmental Permit" means any
permit, approval, identification number, license or other authorization required
under or issued pursuant to any applicable Environmental Law.
Sections 3.23. Intentionally omitted.
Section 3.24 Year 2000. The Companies have taken the steps described in
Section 3.24 with respect to the Companies' computer systems and software
relating to the specification of dates in, into and between the 20th and 21st
centuries.
3.25. Anti-takeover Laws; Support Agreements. Prior to November 8,
1998, the Boards of Directors of the Company and the Counsel Entities have taken
all action necessary to exempt under or make not subject to any takeover or
other law that purports to limit or restrict business combinations: (i) the
execution of this Agreement and the support agreements dated as of November 8,
1998 between the Purchaser and the Persons identified in Section 3.25 of the
Companies' Disclosure Schedule (the "Support Agreements") and (ii) the
transactions contemplated hereby and by the other Transaction Agreements. Copies
of the Support Agreements executed by the Persons identified in Section 3.25 of
the Companies' Disclosure Schedule have been delivered to the Purchaser. Section
3.25 of the Companies' Disclosure Schedule sets forth the number of shares of
the Canadian Corporation's capital stock beneficially owned by each Person named
therein.
Section 3.26. Accounts Receivable and Inventories.
3.26.1 All accounts and notes receivable of the Companies have
arisen in the Ordinary Course of Business and the accounts receivable reserve
reflected in the Company's consolidated balance sheet as of September 30, 1998
previously furnished to the Purchaser was established in accordance with GAAP.
3.26.2 The Companies' assets which are inventories have a net
realizable value on September 30, 1998 at least equal to the FIFO value at which
such inventories are carried on the Company's consolidated balance sheet as of
September 30, 1998 previously furnished to the Purchaser; and have been
purchased by the Companies directly from the manufacturer thereof or from an
Exhibit 2.1 - Page 40
authorized distributor of such products in accordance with the Federal
Prescription Drug Marketing Act, if applicable.
Section 3.27. Insurance. Section 3.27 to the Companies' Disclosure
Schedule sets forth a list of the policies of fire, theft, liability and other
insurance maintained with respect to the assets or businesses of the Companies
(copies of all of which policies have been previously provided to the
Purchaser), which policies have terms expiring as set forth in Section 3.27 to
the Companies' Disclosure Schedule.
Section 3.28. Employee Agreements; Option Cancellation Agreements. Each
of the employees of the Companies specified in Section 3.28 to the Companies'
Disclosure Schedule has duly executed and delivered an employment agreement or
an amendment to an existing employment agreement with the Company (the "Employee
Agreements"), and such Employee Agreements have not been amended or terminated.
The Designated Optionees other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ have executed Designated
Optionee Option Cancellation Agreements and such Option Cancellation Agreements
have not been amended or terminated other than to conform to Article IA. The
Company has previously provided to the Purchaser copies of all such Employee
Agreements and Designated Optionee Option Cancellation Agreements.
Section 3.29. Director Compensation. Section 3.29 to the Companies'
Disclosure Schedule sets forth a list and a brief summary of the material terms
of all plans, programs, agreements, arrangements or understandings of the
Companies under which any director of any of the Companies may be entitled to
payment or compensation from any of the Companies (i) in connection with or as a
result of any of the transactions contemplated by this Agreement or (ii) after
the Closing Date.
ARTICLE IV
Representations and Warranties Regarding the Counsel Entities
The Counsel Entities (i) jointly and severally represent and
warrant to the Purchaser as follows as of November 8, 1998 and (ii) jointly and
severally represent and warrant to the Purchaser that all of the following
representations and warranties are true and correct in all material respects
(other than representations and warranties which are qualified in any respect as
to materiality, which representations and warranties are true and correct in all
respects) on the date hereof (except for representations and warranties made as
of November 8, 1998 or an earlier specified date, which shall be measured only
as of November 8, 1998 or such other specified date):
Section 4.1 Organization and Qualification of the Counsel Entities. The
Canadian Corporation is a corporation duly organized, validly existing and in
Exhibit 2.1 - Page 41
good standing under the laws of the Province of Ontario, with full power and
authority, corporate and other, to own or lease its property and assets and to
carry on its business as presently conducted. The US Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware, with full power and authority, corporate and other, to own or
lease its property and assets and to carry on its business as presently
conducted.
Section 4.1A. Limited Liability Companies. The US Seller has heretofore
formed two single member limited liability companies organized under Delaware
law, ▇▇▇▇▇▇▇▇▇▇▇ Operating Company, L.L.C. ("Opco") and ▇▇▇▇▇▇▇▇▇▇▇ Licensing
Company, L.L.C. ("Licensco"). The US Seller is the sole member of Opco and the
sole member of Licensco. Section 4.1A of the Companies Disclosure Schedule sets
forth the certificate of formation (as filed with the Secretary of State of the
State of Delaware) and the limited liability company agreement of each of Opco
and Licensco. Other than assets, liabilities and obligations to which Opco and
Licensco will succeed pursuant to the transactions described in Article IA, as
of the date on which this Agreement is executed and as of the Closing, Opco and
Licensco do not and will not have any assets, liabilities or obligations. Except
as set forth in Article IA, there are no (and as of the Closing there will be
no) outstanding subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other commitments or rights of any type relating to
the issuance, sale, repurchase or transfer by any Person of any membership
interest in Opco or Licensco, nor are there (nor as of the Closing will there
be) outstanding any securities which are convertible into or exchangeable for
any membership interests in Opco or Licensco, and no Person has any obligation
of any kind to issue any membership interest in Opco or Licensco or to pay for
or repurchase any membership interest in Opco or Licensco. As of the Closing,
each of Opco and Licensco will be duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business conducted by
it or the property it owns, leases or operates requires it to so qualify, except
where the failure to be so qualified or in good standing in such jurisdiction
would not reasonably be expected to result in a Material Adverse Change with
respect to Opco and Licensco taken as a whole.
Section 4.1B Prior to the date hereof, the Canadian Corporation (i)
transferred beneficial ownership to Counsel Healthcare Assets Inc. (an Ontario
corporation and at the time a wholly-owned subsidiary of the Canadian
Corporation, hereinafter referred to as "Counsel Healthcare") of all 279,760
shares of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock owned by the Canadian Corporation, (ii)
caused Counsel Healthcare to transfer beneficial ownership of such shares to
Counselcare, Ltd. (a Delaware corporation and a wholly-owned subsidiary of
Counsel Healthcare, hereinafter referred to as "Counselcare"), (iii) caused
Counselcare to transfer beneficial ownership of such shares to DCAmerica Inc. (a
Delaware corporation and a wholly-owned subsidiary of Counselcare, hereinafter
referred to as "DCAmerica" and, collectively with Counsel Healthcare and
Counselcare, the "Transferring Entities"), (iv) caused DCAmerica to transfer
beneficial ownership of such shares to the US Seller and (v) caused the US
Seller to recapitalize and issue certain nonvoting shares of stock to
unaffiliated entities in a transaction not related hereto. Such transfers were
Exhibit 2.1 - Page 42
effected through the delivery by each transferor to each transferee of a blank
stock power and such 279,760 shares were re-issued in the name of the US Seller,
evidence of which has been provided to the Purchaser and included in the stock
records of the ▇▇▇▇▇▇▇▇▇▇▇ Company. Upon completion of the transfers provided
for in this Section 4.1B, the US Seller owned, and owns as of the date hereof,
all of the outstanding capital stock of the ▇▇▇▇▇▇▇▇▇▇▇ Company, consisting of
2,004,008 shares of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock.
Section 4.2 Corporate Power and Authority. Each of the Counsel Entities
has all requisite corporate power and authority to enter into and deliver the
Transaction Agreements, to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby, subject to
approval of the transactions contemplated hereby by the shareholders of the
Canadian Corporation. Each of the Merging Companies and each of the Transferring
Entities has all requisite corporate and other power and authority to perform
each of the steps required of it in Article IA. The execution and delivery of
the Transaction Agreements by each of the Counsel Entities have been duly
authorized by all necessary corporate action on the part of each of the Counsel
Entities, subject to approval of the transactions contemplated hereby by the
shareholders of the Canadian Corporation. The execution and delivery of each of
the documents which the Merging Entities and the Transferring Entities are
required to execute pursuant to Article IA have been duly authorized by all
necessary corporate and other action on the part of each of the Merging Entities
and each of the Transferring Entities. This Agreement has been duly executed and
delivered by the Counsel Entities and constitutes the legal, valid and binding
obligation of the Counsel Entities enforceable against the Counsel Entities in
accordance with its terms, except insofar as its enforcement may be limited by
(a) bankruptcy, insolvency, moratorium or similar laws affecting the enforcement
of creditors' rights generally and (b) equitable principles limiting the
availability of equitable remedies. The merger agreements referred to in Article
IA (the "Merger Agreements"), when executed by the Merging Entities required to
execute such merger agreements, will constitute the legal, valid and binding
obligation of the Merging Entities executing such merger agreements, enforceable
against such Merging Entities in accordance with their terms, except insofar as
their enforcement may be limited by (a) bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights generally and (b)
equitable principles limiting the availability of equitable remedies. All
persons who executed this Agreement on behalf of the Counsel Entities have been
duly authorized to do so. Prior to November 8, 1998, the Counsel Entities have
taken all actions, if any, necessary to exempt under or make not subject to any
takeover or other law that purports to limit or restrict business combinations:
(i) the execution of this Agreement and the Support Agreements and (ii) the
consummation of the transactions contemplated hereby and by the Support
Agreements.
Section 4.3 Conflicts; Consents and Approvals. Neither the execution
and delivery of this Agreement, any of the other Transaction Agreements or the
Exhibit 2.1 - Page 43
Merger Agreements, nor the consummation of the transactions contemplated hereby
or thereby, will:
4.3.1 conflict with, or result in a breach of any provision
of, the certificate of incorporation, bylaws or other organizational document of
the Counsel Entities, the Merging Entities or the Transferring Entities;
4.3.2 violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the giving of
notice, the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or otherwise)
to terminate, accelerate, modify or call a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of any of the Counsel Entities, Merging Entities or
Transferring Entities under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, contract, undertaking,
agreement, lease or other instrument or obligation to which any of the Counsel
Entities, Merging Entities or Transferring Entities is a party except to the
extent waived in writing by the other party thereto;
4.3.3 violate any order, writ, injunction, decree, statute,
rule or regulation applicable to any of the Counsel Entities, Merging Entities
or Transferring Entities or any of their respective properties or assets; or
4.3.4 require any action or consent or approval of, or review
by, or registration or filing by any of the Counsel Entities, Merging Entities
or Transferring Entities or any of their affiliates with, any third party or any
Governmental Authority, other than (i) approval of the transactions contemplated
hereby by the shareholders of the Canadian Corporation, (ii) actions required by
the HSR Act, (iii) registrations or other actions required under Canadian,
federal and state securities laws as are contemplated by this Agreement, (iv)
filing of the certificates described in Article IA with respect to the Merger
Agreements and (v) consents or approvals of any Governmental Authority set forth
in Section 4.3 to the Companies' Disclosure Schedule;
except in the case of Sections 4.3.2, 4.3.3 and 4.3.4 for any of the foregoing
that would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Change with respect to the Counsel Entities taken
as a whole or a material adverse effect on the ability of the parties hereto to
consummate the transactions contemplated hereby.
Section 4.4 Indemnification. Section 4.4 of the Companies' Disclosure
Schedule describes (a) all indemnification agreements or arrangements extended
to either of the Counsel Entities with respect to any aspect of the Businesses
or the Companies and (b) all agreements, arrangements, documents and instruments
that expand, reduce, terminate or otherwise modify any such indemnification
agreements or arrangements.
Exhibit 2.1 - Page 44
Section 4.5 Ownership of Shares and Interests.
4.5.1 The Counsel Entities own all of the outstanding shares
of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock beneficially and of record. At the Closing, the
Counsel Entities will own all of the membership and any other equity interests
in Opco and Licensco (collectively, the "Interests") free and clear of any
security interests, liens, encumbrances, claims or restrictions of any kind.
There are no voting trust arrangements, shareholder agreements or other
agreements (i) granting to any Person any option, warrant or right of first
refusal with respect to any shares of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock or with respect
to any Interests, (ii) restricting the right of the Counsel Entities to sell the
Interests to the Purchaser, the Purchaser Operating Subsidiary and the Purchaser
Licensing Subsidiary or (iii) restricting any other right of the Counsel
Entities with respect to any shares of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock or with respect
to the Interests. The Counsel Entities have the absolute and unrestricted right,
power and capacity to sell, assign and transfer the Interests to the Purchaser,
the Purchaser Operating Subsidiary and the Purchaser Licensing Subsidiary free
and clear of any security interests, liens, encumbrances, claims or restrictions
of any kind (except for restrictions imposed generally by applicable securities
laws). Upon delivery to the Purchaser, the Purchaser Operating Subsidiary and
the Purchaser Licensing Subsidiary of the LLC Assignments referred to in Section
2.1 at the Closing in exchange for the consideration to be delivered by the
Purchaser at the Closing, the Purchaser, the Purchaser Operating Subsidiary and
the Purchaser Licensing Subsidiary will acquire good, valid and marketable title
to the Interests, free and clear of any Encumbrances of any kind (except for
restrictions created by the Purchaser and restrictions imposed generally by
applicable securities laws).
4.5.2 The Canadian Corporation owns 7,819,315 PharMerica
Shares beneficially and of record, and as of the Closing will own such shares
free and clear of any security interests, liens, encumbrances, claims or
restrictions of any kind. Except as contemplated by the Transaction Agreements,
there are no voting trust arrangements, shareholder agreements or other
agreements (i) granting any option, warrant, right to vote or right of first
refusal with respect to such PharMerica Shares to any Person, (ii) restricting
the right of the Canadian Corporation or its subsidiaries to execute, deliver
and perform the Transaction Documents, or (iii) restricting any other right of
the Canadian Corporation or its subsidiaries with respect to the PharMerica
Shares. The Canadian Corporation and its subsidiaries have the absolute and
unrestricted right, power and capacity to confer upon the Purchaser, pursuant to
this Agreement, the rights of the Purchaser under the Voting Trust Agreement and
the Proxy and the right to vote the PharMerica Shares to the extent provided for
therein and herein.
4.5.3 The Canadian Corporation owns, directly or indirectly,
all of the outstanding capital stock or other equity interests of Counselcare,
Ltd. (an entity organized under Delaware law) and DC America Inc. (a corporation
organized under Delaware law). As of November 8, 1998 and at the time of the
transfers of all of the shares of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock described in Section
Exhibit 2.1 - Page 45
4.1B, the Canadian Corporation owned all of the outstanding capital stock or
other equity interests of Counsel Healthcare Assets Inc. (a corporation
organized under Canadian law).
Section 4.6 Brokers. With the exception of ▇▇▇▇▇▇▇▇▇, Lufkin &
▇▇▇▇▇▇▇▇, CIBC Oppenheimer Corporation and CIBC Wood Gundy Toronto, no Person is
or will be entitled to a broker's, finder's, investment banker's, financial
adviser's or similar fee from either of the Counsel Entities in connection with
this Agreement or any of the transactions contemplated hereby. Except as set
forth in Section 10.2, the fees and expenses of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
CIBC Oppenheimer Corporation and CIBC Wood Gundy Toronto are the sole
responsibility of, and shall be paid by, the Counsel Entities.
Section 4.7 Securities and Related Matters.
4.7.1 The Counsel Entities have received copies of the
following documents:
(1) Bergen's Annual Report on Form 10-K for the year ended
September 30, 1997, as amended;
(2) Bergen's Quarterly Reports on Form 10-Q for the quarters
ended December 31, 1997, March 31, 1998 and June 30, 1998;
(3) Bergen's Current Reports on Form 8-K dated March 16, 1998
and August 7, 1998;
(4) Bergen's proxy statement for its 1998 annual meeting of
shareowners; and
(5) Bergen's press releases dated August 7, 1998, September 1,
1998, September 24, 1998, October 2, 1998 and October 7, 1998.
4.7.2 Intentionally omitted
4.7.3 The Counsel Entities acknowledge that the BBC Shares are
being acquired by the US Seller for investment purposes and not for purposed of
resale other than pursuant to the Registration Statement.
4.7.4 The Counsel Entities understand that after the Closing,
unless the BBC Shares are sold pursuant to the Registration Statement, the BBC
Shares must be held indefinitely unless a subsequent disposition thereof is
registered under the Act and under all applicable securities laws of other
jurisdictions or is exempt from such registration requirements in the opinion of
counsel reasonably acceptable to the Purchaser, it being agreed that ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ & Manner, P.C. is acceptable to the Purchaser. The Counsel
Exhibit 2.1 - Page 46
Entities agree that they will not sell, transfer, pledge or otherwise dispose of
the BBC Shares unless such transaction is registered under the Act or such
transaction is exempt from such registration in the opinion of counsel
reasonably satisfactory to the Purchaser.
4.7.5 None of the information included in the Information
Circular, at the time that the Information Circular becomes effective, at the
date of mailing of the Information Circular and at the date of the Canadian
Corporation's Shareholders' Meeting to be held to consider the transactions
contemplated hereby, will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Information Circular will comply as to form
in all material respects with the provisions of all applicable laws and
regulations.
4.8. Intentionally omitted.
4.9. Board Recommendation. The Board of Directors of the Canadian
Corporation has, by written consent signed by all of the Canadian Corporation's
directors (who constituted 100% of the directors then in office), (i) determined
that this Agreement and the transactions contemplated hereby are fair to and in
the best interests of the Canadian Corporation's shareholders and (ii) resolved
to recommend that the Canadian Corporation's shareholders approve the
transactions contemplated hereby (the "Canadian Corporation's Board
Recommendation").
ARTICLE V
Representations and Warranties Regarding the Purchaser
The Purchaser (i) represents and warrants to the Counsel Entities and
the Company as follows as of November 8, 1998 and (ii) represents and warrants
to the Counsel Entities and the Company that all of the following
representations and warranties are true and correct in all material respects
(other than representations and warranties which are qualified in any respect as
to materiality, which representations and warranties are true and correct in all
respects) on the date hereof (except for representations and warranties made as
of November 8, 1998 or on an earlier specified date, which shall be measured
only as of November 8, 1998 or such other specified date):
Section 5.1 Organization and Standing. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
state of New Jersey with full power and authority (corporate and other) to own,
lease, use and operate its properties and to conduct its business as and where
Exhibit 2.1 - Page 47
now owned, leased, used, operated and conducted. The Purchaser is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the property it owns, leases
or operates, makes such qualification necessary, except where the failure to be
so qualified or in good standing in such jurisdiction would not result in a
Material Adverse Change with respect to the Purchaser and its subsidiaries,
taken as a whole. The copies of the Restated Certificate of Incorporation and
by-laws of the Purchaser previously provided to the Counsel Entities' counsel
are true, correct and complete copies of such documents as in effect as of the
date of this Agreement.
Section 5.2 Corporate Power and Authority. The Purchaser has all
requisite corporate power and authority to enter into the Transaction Agreements
and to consummate the transactions contemplated by the Transaction Agreements.
The execution and delivery of the Transaction Agreements and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of the Purchaser. No other corporate
proceedings on the part of the Purchaser are necessary to consummate the
transactions contemplated by the Transaction Agreements. Each of the Transaction
Agreements has been (or, in the case of agreements to be executed at the
Closing, will be) duly executed and delivered by the Purchaser, and constitutes
(or, in the case of agreements to be executed at the Closing, will constitute)
the legal, valid and binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms, except insofar as its enforcement may be
limited by (a) bankruptcy, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally and (b) equitable principles limiting
the availability of equitable remedies. All persons who executed this Agreement
on behalf of the Purchaser have been duly authorized to do so.
Section 5.3 Capitalization of the Purchaser. As of September 30, 1998,
the Purchaser's outstanding capital stock consisted solely of shares of BBC
Common Stock, of which 51,441,165 shares were issued and outstanding. As of
September 30, 1998, 2,594,472 shares of BBC Common Stock were reserved for
issuance upon the exercise or conversion of outstanding options, warrants or
convertible securities granted or issuable by the Purchaser. Each outstanding
share of BBC Common Stock is, and all shares of BBC Common Stock to be issued in
connection with the transactions contemplated hereby will be, duly authorized
and validly issued, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof, and each outstanding share of BBC Common
Stock has not been, and all shares of BBC Common Stock to be issued in
connection with the transactions contemplated hereby will not be, subject to or
issued in violation of any preemptive or similar rights. As of September 30,
1998, except as set forth above or in the "BBC SEC Documents" (as defined
herein) and except for shares issuable in connection with business acquisitions,
the Purchaser did not have and was not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of BBC Common Stock or BBC Preferred
Exhibit 2.1 - Page 48
Stock or any other equity securities of the Purchaser or any securities
representing the right to purchase or otherwise receive any shares of BBC Common
Stock or BBC Preferred Stock.
Section 5.4 Conflicts; Consents and Approvals. Except as set forth in
Section 5.4 to the disclosure schedule delivered by the Purchaser to the Counsel
Entities and dated November 8, 1998 (the "Purchaser's Disclosure Schedule"),
neither the execution and delivery of the Transaction Agreements by the
Purchaser nor the consummation of the transactions contemplated hereby or
thereby will:
5.4.1 conflict with, or result in a breach of any provision of,
the Purchaser's restated certificate of incorporation or by-laws, as amended;
5.4.2 violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the giving of
notice, the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or otherwise)
to terminate, accelerate, modify or call a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Purchaser or any of its subsidiaries under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, contract, undertaking, agreement, lease or other instrument
or obligation to which the Purchaser or any of its subsidiaries is a party;
5.4.3 violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Purchaser or any of its subsidiaries or
their respective properties or assets; or
5.4.4 require any action or consent or approval of, or review
by, or registration or filing by the Purchaser or any of its Affiliates with,
any third party or any Governmental Authority, other than (i) registrations or
other actions required under federal and state securities laws as are
contemplated by this Agreement, or (ii) as required by the HSR Act,
except, in the case of Sections 5.4.2, 5.4.3 and 5.4.4, for any of the foregoing
that would not, individually or in the aggregate, have a material adverse effect
on the consolidated financial condition or consolidated results of operations of
the Purchaser or upon the ability of the parties to consummate the transactions
contemplated hereby.
Section 5.5 Brokers. With the exception of ▇▇▇▇▇▇ Brothers, no Person
is or will be entitled to a broker's, finder's, investment banker's, financial
adviser's or similar fee from the Purchaser in connection with this Agreement or
any of the transactions contemplated hereby. The fees and expenses of ▇▇▇▇▇▇
Brothers are the sole responsibility of, and shall be paid by, the Purchaser.
Exhibit 2.1 - Page 49
Section 5.6 BBC SEC Documents and Other Public Disclosures.
5.6.1 The Purchaser has timely filed with the SEC all forms,
reports, schedules, statements and other documents required to be filed by it
since September 1, 1996 under the Exchange Act (such documents, as supplemented
and amended since the time of filing, collectively, the "BBC SEC Documents").
The BBC SEC Documents, including, without limitation, any financial statements
or schedules included therein, at the time filed (a) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (b) complied
in all material respects with the applicable requirements of the Exchange Act.
The Purchaser has previously provided to the Counsel Entities" counsel true,
correct and complete copies of the BBC SEC Documents. The financial statements
of the Purchaser included in the BBC SEC Documents at the time filed complied as
to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by Form
10-Q of the SEC), and fairly present (subject, in the case of unaudited
statements, to normal, recurring audit adjustments) the consolidated financial
position of the Purchaser and its consolidated subsidiaries as at the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended.
5.6.2 Since December 31, 1997, except for events publicly
disclosed by the Purchaser prior to November 8, 1998, there has been no change
in the assets, liabilities, results of operations or financial condition of the
Purchaser and its Subsidiaries which would constitute a Material Adverse Change
with respect to the Purchaser and its Subsidiaries taken as a whole or any
event, occurrence or development which would have a material adverse effect on
the ability of the Purchaser to consummate the transactions contemplated hereby.
ARTICLE VI
Covenants and Agreements
Section 6.1 Access and Information. Prior to the Closing, the Purchaser
shall be entitled to make or cause to be made such investigation of the
Companies, and the financial and legal condition thereof, as the Purchaser deems
necessary or advisable, and the Company and the Counsel Entities shall cooperate
with any such investigation. In furtherance of the foregoing, but not in
limitation thereof, the Company shall (a) permit the Purchaser and its agents
Exhibit 2.1 - Page 50
and representatives or cause them to be permitted to have full and complete
access to the premises, operating systems, computer systems (hardware and
software) and books and records of the Companies upon reasonable notice during
regular business hours, (b) furnish or cause to be furnished to the Purchaser
such financial and operating data, projections, forecasts, business plans,
strategic plans and other data relating to the Companies and the Businesses as
the Purchaser shall request from time to time and (c) cause the Accountants to
furnish to the Purchaser and its accountants access to all work papers relating
to any of the periods covered by the Financial Statements. Prior to the Closing,
the Purchaser shall not use any information provided to it in confidence for any
purpose unrelated to the Transaction Agreements. The Counsel Entities and the
Company shall not use any information provided to them in confidence by the
Purchaser for any purposes unrelated to the Transaction Agreements. Except with
respect to publicly available documents, in the event that this Agreement is
terminated, (a) the Purchaser will deliver to the Company all documents obtained
by it from the Companies or the Counsel Entities in confidence and any copies
thereof in the possession of the Purchaser or its agents and representatives or,
at the option of the Purchaser, the Purchaser shall cause all of such documents
and all of such copies to be destroyed and shall certify the destruction thereof
to the Company and the Counsel Entities and (b) the Counsel Entities and the
Company will deliver to the Purchaser all documents obtained by them from the
Purchaser in confidence and any copies thereof in the possession of the Company
and/or either of the Counsel Entities or their agents and representatives or, at
the option of the Company and the Counsel Entities, the Company and the Counsel
Entities shall cause all of such documents and all of such copies to be
destroyed and shall certify the destruction thereof to the Purchaser.
No investigation by the Purchaser heretofore or hereafter made shall
modify or otherwise affect (a) any representations and warranties of the Company
or the Counsel Entities made pursuant to this Agreement, which shall survive any
such investigation, or (b) the conditions to the obligation of the Purchaser to
consummate the transactions contemplated hereby, provided that the Purchaser
shall promptly notify the Counsel Entities in writing of any facts and
circumstances of which it obtains knowledge prior to the Closing that indicate
that any such representations and warranties are inaccurate in any material
respect (except for any representation and warranty which is qualified hereunder
as to materiality, as to which such notification shall be given if the Purchaser
obtains knowledge that such representation and warranty is inaccurate in any
respect); failure to comply with this notification obligation with respect to
particular facts and circumstances shall preclude the Purchaser from relying
upon such facts and circumstances in bringing any action hereunder for
indemnification.
Section 6.2 Affirmative Covenants. Prior to the Closing, except as
otherwise expressly provided herein, the Company shall (and the Company shall
cause each of its Subsidiaries to):
Exhibit 2.1 - Page 51
6.2.1 conduct its business only in the ordinary and regular
course of business consistent with past practices;
6.2.2 use its best efforts to keep in full force and effect
its corporate existence and all material rights, franchises, Proprietary Rights
and goodwill relating or obtaining to the Businesses;
6.2.3 endeavor to retain its employees and preserve its
present relationships with customers, suppliers, contractors, distributors,
correctional facilities and employees, and continue to compensate its employees
consistent with past practices;
6.2.4 use its best efforts to maintain the Proprietary Rights
so as not to affect adversely the validity or enforcement thereof; maintain its
other assets in customary repair, order and condition and maintain insurance
reasonably comparable to that in effect on the date of this Agreement; and in
the event of any casualty, loss or damage to any of its assets repair or replace
such assets with assets of comparable quality;
6.2.5 maintain its books, accounts and records in accordance
with GAAP;
6.2.6 use its best efforts to obtain all authorizations,
consents, waivers, approvals or other actions and to make all filings and
applications necessary or desirable to consummate the transactions contemplated
hereby and to cause the other conditions to the Purchaser's obligation to close
to be satisfied; and
6.2.7 promptly notify the Purchaser in writing if, prior to the
consummation of the Closing, to its knowledge any of the representations and
warranties contained in Article III or Article IV cease to be accurate and
complete in all material respects (except for any representation and warranty
which is qualified hereunder as to materiality, as to which such notification
shall be given if the Company or its subsidiaries obtain knowledge that such
representation and warranty is inaccurate in any respect).
Section 6.3 Negative Covenants. Prior to the Closing, without the prior
written consent of the Purchaser (which, in the case of (x) a Limited Size
Acquisition or (y) a restructuring of indebtedness among the Companies which
would not affect the calculation of the Net Debt or Net Worth of the Companies,
shall not be unreasonably withheld) or as otherwise expressly provided herein,
the Company will not, the Company will cause the Subsidiaries not to, and the
Counsel Entities will not:
6.3.1 take any action or omit to take any action which would
result in any of the Companies' (a) incurring any trade accounts payable outside
of the Ordinary Course of Business or making any commitment to purchase
quantities of any item of inventory in excess of quantities normally purchased
by any of the Companies in the Ordinary Course of Business; (b) increasing any
Exhibit 2.1 - Page 52
of the Companies' indebtedness for borrowed money except in the Ordinary Course
of Business; (c) guaranteeing the obligations of any Person other than Companies
which are wholly-owned, directly or indirectly, by the Company, (d) making any
purchases of ▇▇▇▇ Goods; (e) merging or consolidating with, purchasing
substantially all of the assets of, or otherwise acquiring any business or any
proprietorship, firm, association, limited liability company, corporation or
other business organization; (f) increasing or decreasing the rate of
compensation of or paying any unusual compensation to any officer, employee or
consultant of any of the Companies (other than regularly scheduled increases in
base salary and annual bonuses consistent with prior practice); (g) entering
into or amending any collective bargaining agreement, or creating or modifying
any pension or profit-sharing plan, bonus, deferred compensation, death benefit,
or retirement plan, or any other employee benefit plan, or increasing the level
of benefits under any such plan, or increasing or decreasing any severance or
termination pay benefit or any other fringe benefit; (h) making any
representation to anyone indicating any intention of the Purchaser to retain,
institute, or provide any employee benefit plans; (i) declaring or paying any
dividend or making any distribution with respect to, or purchasing or redeeming,
shares of the capital stock of the Company; (j) selling or disposing of any
assets otherwise than in the Ordinary Course of Business of the Companies; (k)
making any capital expenditures other than those disclosed in Section 3.15 of
the Companies' Disclosure Schedule; (l) issuing any shares of the capital stock
of any kind of any of the Companies, transferring from the treasury of any of
the Companies any shares of the capital stock of any of the Companies or issuing
or granting any subscriptions, options, rights, warrants, convertible securities
or other agreements or commitments to issue, or contracts or any other
agreements obligating any of the Companies to issue, or to transfer from
treasury, any shares of capital stock of any class or kind, or securities
convertible into any such shares; (m) agreeing to any amendment or modification
of any of the Employee Agreements; (n) agreeing to do any of the foregoing; or
(o) entering into any other transaction outside of the Ordinary Course of
Business;
6.3.2 enter into any contract, agreement or commitment or take
any other action which, if entered into or taken prior to the date of this
Agreement, (i) would cause any representation or warranty herein of the Company
or the Counsel Entities to be untrue or (ii) would be required to be disclosed
in one or more sections of the Companies' Disclosure Schedule;
6.3.3 incur or create any Encumbrance on any shares of
▇▇▇▇▇▇▇▇▇▇▇ Common Stock or on the Interests;
6.3.4 except as contemplated herein, take any action or omit to
take any action which would prejudice the Purchaser's rights to consummate each
of the transactions contemplated by this Agreement or to compel performance of
each of the obligations of the Company and the Counsel Entities under this
Agreement;
Exhibit 2.1 - Page 53
6.3.5 take or omit to be taken any action, or permit its
Affiliates to take or to omit to take any action, which could reasonably be
expected to result in a Material Adverse Change with respect to the Companies;
6.3.6 take any action or omit to be taken any action, or permit
its Affiliates to take or to omit to take any action, which would result in (a)
the disposition, assignment or any other transfer of ownership by ▇▇▇▇▇▇▇▇▇▇▇
U.S.A., Inc. of any intangible asset (including any trade name, trademark or
goodwill) or (b) any modification of any licensing agreement with respect to any
such intangible asset; or
6.3.7 agree or commit to take any action precluded by this
Section 6.3.
Section 6.4 Closing Documents. The Company and the Counsel Entities
shall, prior to or on the Closing Date, execute and deliver, or cause to be
executed and delivered to the Purchaser, the documents or instruments described
in Section 7.2. The Purchaser shall, prior to or on the Closing Date, execute
and deliver, or cause to be executed and delivered, to the Counsel Entities, the
documents or instruments described in Section 7.3.
Section 6.5 Transfer and Other Taxes.
6.5.1 The US Seller shall pay any stamp, stock transfer, sales,
purchase, use or similar Tax under the laws of any Governmental Authority
arising out of or resulting from the purchase of the Interests by the Purchaser
and its subsidiaries hereunder. The US Seller shall prepare and file the
required Tax returns and other required documents with respect to the Taxes and
fees required to be paid by it pursuant to the preceding sentence and shall
promptly provide the Purchaser with evidence of the payment of such Taxes and
fees.
6.5.2 Opco and Licensco shall furnish Tax information to the US
Seller for inclusion in the US Seller's consolidated federal income tax return
and state and local income or franchise tax returns for the period which
includes the Closing Date in accordance with the Companies' past custom and
practice. The US Seller shall allow the Purchaser an opportunity to review and
comment upon such Tax returns (including any amended returns) to the extent that
they relate to the Companies and would adversely affect the Purchaser or the
Companies after the Closing Date. The income of the Companies shall be
apportioned to the period up to and including the Closing Date and the period
after the Closing Date by closing the books of the Companies as of the close of
business on the Closing Date. Notwithstanding the foregoing, information which
is subject to a confidentiality agreement shall not be released except to the
extent required by law.
6.5.3 Any Tax sharing agreement between any of the Counsel
Entities (or any Affiliate of any of the Counsel Entities) and any of the
Companies shall be terminated as of the Closing Date and shall have no further
Exhibit 2.1 - Page 54
effect for any taxable year (whether the current year, a future year or a past
year). At or before the Closing, the Counsel Entities shall provide to the
Purchaser evidence of such termination, in form satisfactory to the Purchaser.
6.5.4 The US Seller shall allow the Purchaser and its counsel
to participate in any audits of the US Seller's consolidated federal income tax
returns to the extent that such returns relate to the Companies. The US Seller
shall not settle any such audit in a manner that would adversely affect the
Purchaser or the Companies after the Closing Date without the Purchaser's prior
written consent, which consent shall not be unreasonably withheld.
6.5.5 Prior to the Closing, the US Seller shall furnish the
Purchaser with a certification of the US Seller's nonforeign status in
accordance with Treas. Reg. ss.1.1445-2(b)(2).
Section 6.6 Non-Competition and Confidentiality Agreement. For a period
of five years after the Closing Date, the Counsel Entities will not, and the
Counsel Entities will cause their Subsidiaries (other than Subsidiaries that are
not at least majority-owned) not to, (a) directly or indirectly, anywhere within
the United States, engage in a Competitive Business or (b) without the written
consent of the Purchaser, directly or indirectly employ, engage, contract for or
solicit the services in any capacity of any Person (other than ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇ Sas) who was employed by any of the Companies on November
8, 1998, unless the employment of such Person is terminated by the Purchaser
prior to any solicitation of employment or employment; or (c) use for its own
benefit or divulge or convey to any third party, any Confidential Information
(as hereinafter defined) relating to any of the Companies. For purposes of this
Exhibit 2.1 - Page 55
Agreement, the Counsel Entities shall not be deemed to have violated clause (a)
of this Section 6.6 in the event that (i) the Counsel Entities or their
Affiliates acquire the capital stock or a substantial portion of the assets of a
Person whose revenues during its last fiscal year attributable to a Competitive
Business represent (x) less than $50,000,000 and (y) less than twenty five
percent (25%) of such Person's aggregate revenues, (ii) the Counsel Entities
promptly offer to sell such Competitive Business to the Purchaser on
commercially reasonable terms at a price that is either agreed upon by the
Counsel Entities and the Purchaser or is determined by a valuation firm mutually
acceptable to the Counsel Entities and the Purchaser to represent the fair
market value of such Competitive Business and (iii) if the Purchaser does not
accept such offer, the Counsel Entities dispose of the Competitive Business
promptly, but in no event more than twelve months after the acquisition of the
Competitive Business by the Counsel Entities. For purposes of this Agreement,
the Counsel Entities shall not be deemed to have violated clause (a) of this
Section 6.6 by virtue of their combined ownership (together with the ownership
of their Subsidiaries) of (x) less than five percent (5%) of the issued and
outstanding stock of a publicly held corporation, (y) the shares of the capital
stock of PharMerica or (z) shares of the capital stock of American Home Patient
Inc., a Delaware corporation. For purposes of this Agreement, "Confidential
Information" consists of all information, knowledge or data relating to any of
the Companies including, without limitation, customer and supplier lists,
formulae, trade know-how, processes, secrets, consultant contracts, pricing
information, marketing plans, product development plans, business acquisition
plans and all other information relating to the operation of the Companies not
in the public domain or otherwise publicly available which are or were treated
as confidential by the Companies. Information which enters the public domain or
is publicly available loses its confidential status hereunder so long as neither
the Counsel Entities nor its Affiliates directly or indirectly cause such
information to enter the public domain.
The Counsel Entities acknowledge that the restrictions contained in
this Section 6.6 are reasonable and necessary to protect the legitimate
interests of the Purchaser and that any breach by the Counsel Entities of any
provision of this Section 6.6 will result in irreparable injury to the
Purchaser. The Counsel Entities acknowledge that, in addition to all remedies
available at law, the Purchaser shall be entitled to equitable relief, including
injunctive relief, and an equitable accounting of all earnings, profits or other
benefits arising from any such breach and shall be entitled to receive such
other damages, direct or consequential, as may be appropriate. The Purchaser
shall not be required to post any bond or other security in connection with any
proceeding to enforce this Section 6.6.
Section 6.7 Reasonable Efforts; Further Assurances. Subject to the
terms and conditions herein provided, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Each of the ▇▇▇▇▇▇▇▇▇▇▇ Company,
the Counsel Entities and the Purchaser will use all reasonable efforts to obtain
consents of all Governmental Authorities and third parties necessary to the
consummation of the transactions contemplated by this Agreement. In the event
that at any time after Closing any further action is necessary to carry out the
purposes of this Agreement or to obtain any licenses or consents required,
necessary or advisable in connection with the operation of any of the
Businesses, the Counsel Entities or the Purchaser, as the case may be, shall
take all such action without any further consideration therefor.
Section 6.8 Third Party Proposals.
6.8.1 Each of the ▇▇▇▇▇▇▇▇▇▇▇ Company, the US Seller and the
Canadian Corporation agrees that, during the term of this Agreement, it shall
not, and shall not authorize or permit any of its subsidiaries or any of its or
its subsidiaries' directors, officers, employees, agents or representatives to,
directly or indirectly, solicit, initiate, encourage or facilitate, or furnish
or disclose non-public information in furtherance of, any inquiries or the
making of any proposal with respect to any recapitalization, merger,
consolidation or other business combination involving the Companies, or
acquisition of any capital stock from or membership interests in the Companies
or any assets of the Companies in a transaction outside of the Ordinary Course
of Business, or any acquisition by any of the Companies of any material assets
Exhibit 2.1 - Page 56
or capital stock of any other person or any combination of the foregoing (a
"Competing Transaction"), or negotiate, explore or otherwise engage in
discussions with any person (other than the Purchaser, a wholly-owned subsidiary
of the Purchaser or their respective directors, officers, employees, agents and
representatives) with respect to any Competing Transaction or enter into any
agreement, arrangement or understanding requiring it to terminate this Agreement
or abandon, terminate or fail to consummate the Closing or any other
transactions contemplated by this Agreement; provided that, at any time prior to
the approval of the transactions contemplated hereby by the shareholders of the
Canadian Corporation, the Canadian Corporation may furnish information to, and
negotiate or otherwise engage in discussions with, any party who delivers a
written proposal for a Competing Transaction which was not solicited or
encouraged after November 8, 1998 if and so long as the Board of Directors of
the Canadian Corporation determines in good faith by a majority vote, after
consultation with and receipt of advice from its outside legal counsel, that
failing to take such action would be inconsistent with the fiduciary duties of
the Board of Directors of the Canadian Corporation under applicable laws and
determines that such a proposal is, after consulting with ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ (or any other nationally recognized investment banking firm), more
favorable to the Canadian Corporation's shareholders from a financial point of
view than the transactions contemplated by this Agreement (including any
adjustment to the terms and conditions proposed by the Purchaser in response to
such Competing Transaction). The ▇▇▇▇▇▇▇▇▇▇▇ Company and the Counsel Entities
will immediately cease all existing activities, discussions and negotiations
with any parties conducted heretofore with respect to any proposal for a
Competing Transaction. Notwithstanding any other provision of this Section
6.8.1, in the event that, prior to the approval of the transactions contemplated
hereby by the shareholders of the Canadian Corporation, the Board of Directors
of the Canadian Corporation determines in good faith by a majority vote, after
consultation with and receipt of advice from outside legal counsel, that failure
to do so would be inconsistent with the fiduciary duties of the Canadian
Corporation's Board of Directors, the Board of Directors of the Canadian
Corporation may (subject to this and the following sentences) withdraw, modify
or change, in a manner adverse to the Purchaser, its recommendation in favor of
the transactions contemplated hereby, provided that it uses all reasonable
efforts to give the Purchaser two calendar days prior written notice of its
intention to do so (provided that the foregoing shall in no way limit or
otherwise affect the Purchaser's right to terminate this Agreement pursuant to
Section 8.1.14). The Canadian Corporation's Board of Directors shall not, in
connection with any such withdrawal, modification or change of its
recommendation with respect to the transactions contemplated hereby, take any
action to change the approval of the Board of Directors of the Canadian
Corporation for purposes of causing any takeover statute or other law to be
applicable to the transactions contemplated hereby, including the Closing or the
performance of the Support Agreements. From and after the execution of this
Agreement, the ▇▇▇▇▇▇▇▇▇▇▇ Company and the Counsel Entities shall immediately
advise the Purchaser in writing of the receipt, directly or indirectly, of any
inquiries, discussions, negotiations, or proposals relating to a Competing
Transaction (including the specific terms thereof and the identity of the other
Exhibit 2.1 - Page 57
party or parties involved) and furnish to the Purchaser within 24 hours of such
receipt an accurate description of all material terms (including any changes or
adjustments to such terms as a result of negotiations or otherwise) of any such
written proposal in addition to any information provided to any third party
relating thereto. In addition, the ▇▇▇▇▇▇▇▇▇▇▇ Company and the Counsel Entities
shall immediately advise the Purchaser, in writing, if the Board of Directors of
the Canadian Corporation shall make any determination as to any Competing
Transaction as contemplated by the proviso to the first sentence of this Section
6.8.1.
6.8.2 If, prior to the approval of the transactions
contemplated hereby by the shareholders of the Canadian Corporation, the Board
of Directors of the Canadian Corporation shall determine in good faith, after
consultation with its financial and legal advisors, with respect to any written
proposal from a third party for a Competing Transaction received after November
8, 1998 that was not solicited or encouraged by the Canadian Corporation or any
of its subsidiaries or Affiliates in violation of this Agreement, that failure
to enter into such Competing Transaction would be inconsistent with the
fiduciary duties of the Board of Directors of the Canadian Corporation and that
such Competing Transaction is more favorable to the shareholders of the Canadian
Corporation from a financial point of view than the transactions contemplated by
this Agreement (including any adjustment to the terms and conditions of such
transaction proposed in writing by the Purchaser in response to such Competing
Transaction) and is in the best interest of the Canadian Corporation's
shareholders and the Canadian Corporation has received (x) the advice of its
outside legal counsel as to whether failure to enter into such a Competing
Transaction would be inconsistent with a breach of the Board of Directors'
fiduciary duties and (y) advice from ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ (or any other
nationally recognized investment banking firm) that the Competing Transaction is
more favorable from a financial point of view to the Canadian Corporation's
shareholders than the transactions contemplated by this Agreement (including any
adjustment to the terms and conditions of such transaction proposed in writing
by the Purchaser), the Canadian Corporation may terminate this Agreement and
enter into a letter of intent, agreement-in-principle, acquisition agreement or
other similar agreement (each, an "Acquisition Agreement") with respect to such
Competing Transaction provided that, prior to any such termination, (i) the
Canadian Corporation has provided the Purchaser with written notice that it
intends to terminate this Agreement pursuant to this Section 6.8.2, identifying
the Competing Transaction then determined to be more favorable and the parties
thereto and delivering an accurate description of all material terms (including
any changes or adjustments to such terms as a result of negotiations or
otherwise) of the Acquisition Agreement to be entered into for such Competing
Transaction, and (ii) at least three full Business Days after the Canadian
Corporation has provided the notice referred to in clause (i) above (provided
that the advice referred to in clauses (x) and (y) above shall continue in
effect without revocation, revision or modification), the Canadian Corporation,
as a condition to termination, delivers to the Purchaser (A) a written notice of
termination of this Agreement pursuant to this Section 6.8.2 and (B) a certified
or bank cashier's check in the amount of twelve million dollars ($12,000,000).
Exhibit 2.1 - Page 58
Section 6.9 Tax Election. The parties hereto intend that the purchase
and sale of the Interests hereunder be treated for purposes of federal, state,
local and foreign tax law as a purchase and sale of the assets of the Companies.
Consequently, the US Seller shall join with the Purchaser in making any
elections (collectively, the "338(h)(10) Elections") necessary to accomplish
that result under the laws of any Governmental Authority in which either Opco or
Licensco is characterized for tax purposes as an association (or other entity
having an identity distinct from the US Seller), and shall otherwise comply with
the following provisions:
6.9.1 The Purchaser shall determine the allocation of the Net
Purchase Price and the liabilities of the Companies (plus other relevant items)
to the assets of the Companies and shall furnish to the US Seller a schedule
(the "Allocation Schedule") setting forth that allocation. Neither the Purchaser
nor the US Seller shall take any action or any position that is inconsistent
with the Allocation Schedule on any Tax return or in any administrative or
judicial proceeding.
6.9.2 The Purchaser and the US Seller shall on a timely basis
file all forms required under the laws of any Governmental Authority to effect
the 338(h)(10) Elections, if any, which forms shall be prepared consistently
with the Allocation Schedule.
6.9.3 At the Closing, the Purchaser shall pay to the US Seller
the sum of twenty-eight million dollars ($28,000,000) as consideration for the
US Seller's compliance with the provisions of this Section 6.9.
6.9.4 Notwithstanding any other provisions of this Section 6.9,
the US Seller will be responsible for paying any Taxes imposed as a result of
the transactions contemplated by the Transaction Agreements and the Counsel
Entities will indemnify and hold harmless the Purchaser and the Companies
against any Damages arising out of any failure to pay such Taxes.
Section 6.10 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filings. Each of the Purchaser, the
▇▇▇▇▇▇▇▇▇▇▇ Company and the Counsel Entities will use all reasonable efforts to
file with the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the Federal Trade Commission (the "FTC") within five Business
Days after November 8, 1998 the notification and report form (the "Report")
required under the HSR Act with respect to the transactions contemplated hereby.
Each of the ▇▇▇▇▇▇▇▇▇▇▇ Company, the Counsel Entities and the Purchaser shall
cooperate with each other to the extent necessary to assist each other in the
preparation of its Report, shall request early termination of the waiting period
required by the HSR Act and, if requested, will promptly amend or furnish
additional information thereunder if requested by the Antitrust Division and/or
the FTC.
Section 6.11 Notification by the Purchaser. The Purchaser shall
promptly inform the Counsel Entities in writing if, prior to the consummation of
Exhibit 2.1 - Page 59
the Closing, any of the representations and warranties contained in Article V
cease to be accurate and complete.
Section 6.12 Agreements. At the Closing, the Purchaser and the Canadian
Corporation shall (and shall cause its subsidiaries to) execute and deliver the
Voting Trust Agreement and make all deliveries required thereunder and the
Canadian Corporation shall (and shall cause its subsidiaries to) execute and
deliver the Proxy and the Back-Up Option Agreement.
Section 6.13 Company Options.
6.13.1 The following terms shall have the following meanings:
6.13.1.1 "Total Price" means (a) $300,000,000 plus (b) the
aggregate amount of cash payable to the ▇▇▇▇▇▇▇▇▇▇▇ Company upon the exercise in
full of all Stock Options outstanding immediately prior to the consummation of
the Company/Opco Merger plus (c) the amount, if any, by which the Certified Net
Debt is less than $100,000,000 plus (d) the Stock Appreciation Figure minus (e)
the amount, if any, by which the Certified Net Debt is greater than
$100,000,000. For purposes of this Agreement, the term "Stock Appreciation
Figure" shall mean 6,045,340 (representing $150,000,000 divided by $24.8125)
multiplied by the extent, if any, by which the Market Value Average exceeds
$24.8125. It is understood that the Stock Appreciation Figure shall be zero in
the event that the Market Value Average is less than or equal to $24.8125.
6.13.1.2 "Fully Diluted Number" means the sum of (i) the
aggregate number of shares of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock outstanding immediately
prior to the consummation of the Company/Opco Merger plus (ii) the aggregate
number of shares of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock covered by subscriptions, options,
rights, warrants, convertible securities or other agreements or commitments to
issue, or contracts or any other agreements obligating the ▇▇▇▇▇▇▇▇▇▇▇ Company
to issue, or to transfer from treasury, any shares of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock,
or securities convertible into any such shares, which options, warrants or other
rights are outstanding immediately prior to the consummation of the Company/Opco
Merger.
6.13.1.3 "Share Price" means the "Total Price" divided by the
Fully Diluted Number.
6.13.1.4 "Stock Option" means an option to purchase one or more
shares of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock pursuant to the ▇▇▇▇▇▇▇▇▇▇▇ Company's 1996
Incentive and Non-qualified Stock Option Plan for Key Personnel and Directors or
pursuant to any other plan or agreement approved by the Board of Directors of
the ▇▇▇▇▇▇▇▇▇▇▇ Company; provided, however, that the exercise price of such
option is the same for each share of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock covered thereby.
Accordingly, a Person who owns stock options to purchase ▇▇▇▇▇▇▇▇▇▇▇ Common
Exhibit 2.1 - Page 60
Stock at more than one exercise price shall be deemed to own one Stock Option
for each separate exercise price.
6.13.1.5 "Optionee" shall mean each Person who owns one or more
Stock Options immediately prior to the transactions described in Article IA and
who executes an Option Cancellation Agreement prior to such transactions; the
Counsel Entities covenant that all other Stock Options shall be cancelled in
connection with the Company/Opco Merger. "Designated Optionee" shall mean each
of ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ Sas and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. "Non-Designated
Optionee" shall mean each Optionee other than the Designated Optionees.
6.13.1.6 "Aggregate Appreciation" for an Optionee means, for
each Stock Option held by such Optionee immediately prior to the consummation of
the Company/Opco Merger, (a) the amount by which the Share Price exceeds the
exercise price of such Stock Option, multiplied by (b) the number of shares of
▇▇▇▇▇▇▇▇▇▇▇ Common Stock covered by such Stock Option.
6.13.2 Prior to the consummation of the Company/Opco Merger,
the Company shall enter into Designated Optionee Option Cancellation Agreements
with each of the Designated Optionees and Non-Designated Optionee Option
Cancellation Agreements with each of the Non-Designated Optionees. Each of the
Option Cancellation Agreements shall provide that (a) concurrent with the
Closing, the Company shall pay to the applicable Optionee, in cash, a dollar
amount equal to such Optionee's Aggregate Appreciation for each of such
Optionee's Stock Options and (b) upon receipt of such payment, all of such
Optionee's rights with respect to the Stock Options shall be canceled.
Section 6.14 Retained Employees. It is understood that on and after the
Closing, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ Sas (the "Retained Employees")
shall cease to be employees of the Companies and shall become, or continue to
be, employees of the Counsel Entities. The Counsel Entities agree that, subject
to the terms of the Transitional Consulting Agreements, the Counsel Entities
shall assume, and shall indemnify the Companies against, all liabilities arising
after the Closing with respect to the post-Closing employment of the Retained
Employees, including without limitation all liabilities arising under any
employment agreement or employment benefit plan applicable to any of the
Retained Employees. Concurrent with the execution of the Prior Contract, the
Purchaser and the Retained Employees entered into transitional consulting
agreements in the form and substance of the agreements annexed hereto as
Appendix 6.14 (the "Transitional Consulting Agreements"). For the first thirty
(30) days after the Closing, the Counsel Entities shall make ▇▇▇▇▇ Sas available
to the Companies as a consultant on an as requested basis for up to fifty
percent (50%) of ▇▇▇▇▇ Sas' work week. For the next one hundred and fifty (150)
days thereafter, the Counsel Entities shall make ▇▇▇▇▇ Sas available to the
Companies on an as requested basis for up to twenty percent (20%) of ▇▇▇▇▇ Sas'
work week. The Purchaser shall cause the Company to reimburse the Counsel
Exhibit 2.1 - Page 61
Entities for work performed by ▇▇▇▇▇ Sas at the Company's request at a rate of
$130 per hour. In the performance of such work, ▇▇▇▇▇ Sas shall be employed as
an employee of one or both of the Counsel Entities or an affiliate thereof and
shall be designated by the Counsel Entities to provide consulting services to
the Purchaser in accordance with this Section 6.14.
Section 6.15 PharMerica Shares. The Canadian Corporation agrees as
follows with respect to the PharMerica Shares that it and its subsidiaries now
or may hereinafter beneficially own or otherwise hold (the "Subject PharMerica
Shares"):
6.15.1 Without the prior written consent of the Purchaser,
until December 31, 1999, the Canadian Corporation will not (and will not permit
its subsidiaries to), directly or indirectly, offer, sell, pledge (other than
the pledge existing on November 8, 1998, which pledge does not preclude the
Canadian Corporation or its Subsidiaries from voting any Subject PharMerica
Shares), transfer, contract to sell, grant any option to purchase or otherwise
dispose of any Subject PharMerica Shares or any securities convertible into,
derivative of or exercisable or exchangeable for any Subject PharMerica Shares,
provided, however, that this Section 6.15.1 shall not prohibit the Canadian
Corporation from distributing Subject PharMerica Shares to its shareholders as a
dividend at any time after December 25, 1999 and shall not prohibit the Canadian
Corporation or its subsidiaries from selling the Subject PharMerica Shares
pursuant to Section 6.15.2 at any time. At or prior to the Closing, the Canadian
Corporation shall (and shall cause each of its subsidiaries that then owns
PharMerica Shares to) use its best efforts to cause the stock certificates
representing the Subject PharMerica Shares to be legended, in a manner
reasonably satisfactory to the Purchaser, to reflect the restrictions set forth
in this Section 6.15.
6.15.2 In the event that the Canadian Corporation or any of
its subsidiaries receives, and desires to accept, a Bona Fide Offer from a
third-party (an "Offeror") to purchase for consideration any of the Subject
PharMerica Shares, the Canadian Corporation will (or will cause its subsidiaries
to) promptly deliver to the Purchaser written notice of the intended disposition
(the "Disposition Notice") and the basic terms and conditions of the proposed
disposition, including the identity of the Offeror. The Purchaser will have the
right, exercisable upon written notice to the Canadian Corporation within ten
(10) Business Days after receipt of the Disposition Notice, to purchase the
Subject PharMerica Shares covered by such Bona Fide Offer on the same terms and
conditions as those set forth in the Disposition Notice. The Canadian
Corporation will not (and will cause its subsidiaries not to) sell any of such
Subject PharMerica Shares to the Offeror unless and until either (i) the
Purchaser notifies the Canadian Corporation (or its subsidiaries, if applicable)
that the Purchaser does not intend to meet the terms set forth in the
Disposition Notice or (ii) the Purchaser fails to advise the Canadian
Corporation (or its subsidiaries, if applicable) in writing, prior to the
expiration of such ten (10) Business Day period, that the Purchaser agrees to
Exhibit 2.1 - Page 62
purchase such Subject PharMerica Shares on the terms set forth in the
Disposition Notice. In the event that the Purchaser advises the Canadian
Corporation (or its subsidiaries, if applicable) of such agreement within such
ten (10) Business Day period, the Canadian Corporation will (or will cause its
subsidiaries to) sell to the Purchaser, and the Purchaser will purchase from the
Canadian Corporation (or its subsidiaries, if applicable), the Subject
PharMerica Shares covered by the Bona Fide Offer upon the terms and conditions
set forth in the Disposition Notice at a closing to be held on the later of (x)
the fifth Business Day after the Canadian Corporation's (or its subsidiaries',
if applicable) receipt of notice of acceptance from the Purchaser or (y) the
second Business Day after the parties to such closing shall have received all
regulatory approvals necessary to consummate such closing. If the Purchaser does
not elect to purchase such Subject PharMerica Shares, the Canadian Corporation
(or its subsidiaries, if applicable) will be permitted to sell such Subject
PharMerica Shares to the Offeror upon the terms and conditions set forth in the
Disposition Notice. If such sale is not consummated within 120 calendar days of
the mailing of the original Disposition Notice, the procedures of this paragraph
shall be followed again. For purposes of this Agreement, the term "Bona Fide
Offer" shall mean a bona fide offer to acquire some or all of the Subject
PharMerica Shares, provided that (x) the Offeror is not an Affiliate of the
Canadian Corporation, (b) if the offer is a cash offer, such offer is fully
financed, (c) if the offer is not a cash offer, it is an offer of marketable
securities having a readily ascertainable market and (d) the offer is not
subject to any conditions other than conditions, if any, imposed pursuant to the
HSR Act. The provisions of this Section 6.15.2 shall cease to apply on the
sooner of (x) December 31, 1999 and (y) the first date on which the Canadian
Corporation and its subsidiaries, having complied with this Section 6.15, no
longer beneficially own or otherwise hold any Subject PharMerica Shares.
6.15.3 In the event that the shareholders of PharMerica are
asked to vote (either by vote, solicitation of proxies, solicitation of consents
or otherwise) with respect to a PharMerica Business Combination involving
PharMerica at any time prior to December 31, 2001, the Canadian Corporation
shall (and shall cause its subsidiaries to) (a) notify the Purchaser that such
vote is being conducted promptly after the Canadian Corporation is advised that
such vote is to be taken and (b) vote all of the Subject PharMerica Shares then
owned by the Canadian Corporation in accordance with the Purchaser's written
instructions if the Purchaser provides the Canadian Corporation and such
subsidiaries with such instructions prior to the date of the meeting of Party's
shareholders or the date three (3) Business Days prior to the last date on which
consents may be submitted. The provisions of this Section 6.15.3 shall terminate
as to Subject PharMerica Shares transferred or distributed in accordance with
Sections 6.15.1 or 6.15.2 upon such transfer or distribution.
Section 6.16 Environmental Matters. Prior to the Closing, the Purchaser
shall have the right, at its expense, to make such environmental studies of each
of the premises at which the Companies perform the Businesses (the "Premises"),
including reviewing records, inspecting the properties and testing the air,
subsoil, groundwater and building materials at the Premises, as it shall deem
necessary to determine whether the Premises are in compliance with all
applicable Environmental Laws and whether any Regulated Substances are present
Exhibit 2.1 - Page 63
at the Premises, but shall indemnify and hold the Companies harmless from any
loss, cost or damage proximately caused by such inspection. Such inspection
shall be scheduled and performed so as not to unreasonably interfere with the
Companies' business.
Section 6.17 Canadian Corporation's Shareholders' Meeting.
6.17.1 The Canadian Corporation shall take all action in
accordance with all applicable laws necessary to convene a special meeting of
the shareholders of the Canadian Corporation (the "Canadian Corporations'
Shareholders Meeting") to be held on the earliest practical date after November
8, 1998 and use its best efforts to obtain the consent and approval of the
Canadian Corporation's shareholders with respect to the transactions
contemplated hereby.
6.17.2 The Canadian Corporation shall, as soon as is reasonably
practicable, prepare an information circular in accordance with all applicable
laws and regulations pertaining thereto (the "Information Circular") for review
by the Purchaser. Subject to the consent of the Purchaser (which shall not be
unreasonably withheld), the Canadian Corporation shall prepare and file the
Information Circular with the requisite Canadian regulatory authorities as soon
as is reasonably practicable following receipt of comments from the Purchaser's
representatives and shall use all reasonable efforts to have the Information
Circular declared effective by the requisite Canadian regulatory authorities or
otherwise comply with all prerequisites to delivery of the Information Circular
to the Canadian Corporation's shareholders and shall use all reasonable efforts
to comply with all applicable legal requirements with respect to the Information
Circular through the date of the Canadian Corporations' Shareholders Meeting.
If, at any time prior to the date of such meeting, the Canadian Corporation
shall obtain knowledge of any information contained in or omitted from the
Information Circular that would require an amendment or supplement to the
Information Circular, the Canadian Corporation will so advise the Purchaser in
writing and will promptly take such action, if any, as shall be required by law
to amend or supplement the Information Circular. Such Information Circular shall
include the Canadian Corporation's Board Recommendation. The Canadian
Corporation also shall take such other reasonable actions (other than qualifying
to do business in any jurisdiction in which it is not so qualified) required to
be taken under any jurisdiction's securities laws in connection with the
Canadian Corporation's Shareholders Meeting.
Section 6.18 Payment of Certain Debt. Subsequent to the Closing, the
Purchaser shall cause the Companies to pay the debt of the Companies included
within the Net Debt as of the Closing Date, except that any such debt secured by
any assets of the Companies shall be paid contemporaneously with the Closing.
Pursuant to such obligation, the Purchaser shall cause the Company to pay,
contemporaneously with the Closing (to the extent that the debt is secured by
any assets of the Companies) or as soon as practicable after the Closing Date,
any such indebtedness owed by the Company to the Canadian Corporation and,
subject to the next sentence hereof, any such indebtedness owed by the Company
to any financial institution ("Bank Debt"). Notwithstanding the foregoing, in
Exhibit 2.1 - Page 64
the event that at least three Business Days prior to the Closing, (a) the
Canadian Corporation advises the Purchaser that such payment of any portion of
the Bank Debt will result in the payment of prepayment, breakage or other
similar fees (which fees will be included as liabilities in determining the Net
Worth as of the Closing Date pursuant to Section 2.5.3 if paid by any of the
Companies), (b) the Canadian Corporation advises the Purchaser that the Canadian
Corporation is willing to assume all of the Companies' obligations with respect
to such portion of the Bank Debt upon payment by the Company to the Canadian
Corporation of an amount equal to the aggregate dollar amount of such
obligations (limited to principal and interest through the date of payment) as
of the Closing Date (the "Fee-Related Bank Debt") and (c) the lender of the
Fee-Related Bank Debt provides the Company with documentation, in form and
substance satisfactory to the Purchaser, to the effect that upon payment of the
Fee-Related Bank Debt by the Company to the Canadian Corporation, (i) the
Companies will be discharged from any and all liability with respect to the
Fee-Related Bank Debt (including, without limitation, any obligation to pay any
principal, interest or premium with respect to the Fee-Related Bank Debt and any
obligation to pay any prepayment, breakage or similar fee) and (ii) such lender
will release all liens, encumbrances and security interests securing the payment
of such Fee-Related Bank Debt with respect to any assets or other property of
the Companies, then, in lieu of causing the Company to repay the Fee-Related
Bank Debt, the Purchaser shall cause the Company, contemporaneous with the
Closing, to pay to the Canadian Corporation an amount equal to the Fee-Related
Bank Debt, provided that at the time of such payment the Companies shall receive
such discharges and releases as the Purchaser and the Company shall reasonably
request. Any debt paid contemporaneously with the Closing pursuant to this
Section 6.18 and any amount paid to the Canadian Corporation contemporaneous
with the Closing pursuant to this Section 6.18 shall be deemed to be part of the
Net Debt of the Companies as of the Closing Date for purposes of Article II and
shall be liabilities of the Companies for purposes of determining the Net Worth
as of the Closing Date, notwithstanding any provision herein to the contrary.
Section 6.19 Pharmaceutical Supply Agreement and Shared Services
Agreement. Following the Closing, the Canadian Corporation and Purchaser will
negotiate in good faith a pharmaceutical supply agreement and a shared services
agreement, which is independent of the terms of this Agreement.
Section 6.20 Access to Prepare the Proposed Statement and to Review
Other Documents. Subsequent to the Closing, the Purchaser shall cause the
Companies to grant to the Counsel Entities' representatives access to the
premises, books and records of the Companies upon reasonable notice during
regular business hours for the purpose of enabling the Counsel Entities to
prepare the Proposed Statement and of enabling the Counsel Entities to perform
their responsibilities and exercise their rights under Section 2.5. The Counsel
Entities shall not use any information obtained pursuant to this Section 6.1 for
any purpose unrelated to the matters referred to in Section 2.5. Such
Exhibit 2.1 - Page 65
information shall constitute "Confidential Information" subject to the
limitations provided for in Section 6.6.
Section 6.21 Assignment of Rights. At the Closing, the Counsel Entities
shall execute a non-exclusive assignment (the "Assignment"), in the form and
substance of the assignment annexed hereto as Appendix 6.21, pursuant to which
the Counsel Entities shall assign on a non-exclusive basis to the Purchaser all
of the rights of indemnification that the Counsel Entities have received from
third-parties with respect to the Companies, including without limitation the
rights of indemnification, if any, granted to the Counsel Entities with respect
to the proceedings described in Section 3.13 of the Companies' Disclosure
Schedule, to the extent that the Counsel Entities have the right to effect such
assignments. At the Purchaser's request, the Counsel Entities will use
commercially reasonable efforts to obtain any necessary consents to such
assignments.
Section 6.22 Audited Financial Statements.
6.22.1 As promptly as practicable after the execution of this
Agreement and, in all events, prior to the Closing, the Counsel Entities shall
provide to the Purchaser an audited consolidated balance sheet of the Companies
as of September 30, 1998 (the "Interim Audited Balance Sheet") and audited
consolidated statements of income, cash flows and changes in shareholders'
equity of the Companies for the nine months ended September 30, 1998, together
with an unqualified report thereon of the Accountants which report is in form
and substance satisfactory to the Purchaser. Such financial statements (the
"Interim Audited Financial Statements") shall be prepared in accordance with
GAAP, consistently applied, and shall conform to all provisions of the SEC's
Regulation S-X, such that the Interim Audited Financial Statements are suitable
for filing by the Purchaser with the SEC in response to Items 2 and 7 of the
SEC's Current Report on Form 8-K.
6.22.2 At the Closing, the Counsel Entities shall cause the
Accountants to deliver to the Purchaser an executed consent, in form and
substance satisfactory to the Purchaser and suitable for filing by the Purchaser
with the SEC, which consent shall authorize the Purchaser to file with the SEC
the report referred to in Section 6.22.1 and all reports delivered by the
Accountants with respect to the Financial Statements included within Section
3.15 of the Companies' Disclosure Schedule.
6.22.3 Upon the Purchaser's request, contemporaneous with the
delivery of the Interim Audited Financial Statements pursuant to Section 6.22.1,
the Counsel Entities shall cause the Accountants to make available to the
Purchaser and its representatives the work papers generated in connection with
the Accountants' audit of the Interim Audited Financial Statements.
6.22.4 In the event that (i) the Purchaser disputes any aspect
of the Interim Audited Financial Statements on the basis that, in any respect,
Exhibit 2.1 - Page 66
the Interim Audited Financial Statements were not prepared in accordance with
GAAP, consistently applied, (ii) the Purchaser notifies the Counsel Entities of
such dispute or disputes within fourteen (14) calendar days after the
Purchaser's receipt of such financial statements and (iii) the Purchaser and the
Counsel Entities are unable to resolve such dispute or disputes within seven (7)
calendar days after the Purchaser delivers such notice to the Counsel Entities,
the Purchaser shall have the right to refer such dispute or disputes to an
independent accounting firm mutually acceptable to the Purchaser and the Counsel
Entities (the "Audit Firm"). In the event of such a referral, the Purchaser, the
Counsel Entities and the Company shall cooperate with the Audit Firm in
providing the Audit Firm with such information as the Audit Firm shall
reasonably request for purposes of resolving such disputed items. The
conclusions of the Audit Firm shall be binding upon the parties hereto with
respect to (a) any claims that may be made hereunder with respect to the
representations made by the Company and the Counsel Entities regarding the
Interim Balance Sheet and the Interim Income, Stockholders' Equity and Cash Flow
Statements and (b) the calculation of the Net Worth as of September 30, 1998. In
the event that any such dispute or disputes is or are referred by the Purchaser
to the Audit Firm, (a) the Closing shall not be held prior to the fifth Business
Day after the Audit Firm has delivered to the parties hereto its written report
with respect to the items in dispute and (b) the Outside Date shall be extended
by the number of calendar days that elapse from the date of such referral to the
sixth Business Day after such delivery has been made. The Counsel Entities shall
pay the fees of its accountants, including without limitation the Accountants,
and the Purchaser shall pay the fees of the CPA to the extent that the CPA is
involved, in connection with the preparation and review of the Interim Audited
Financial Statements. The fees and disbursements of any Audit Firm retained
pursuant to the provisions of this Section 6.22 shall be borne one-half by the
Purchaser and one-half by the Counsel Entities.
6.22.5 For purposes of this Agreement, the term "September 30
Net Worth" shall mean (x) the Net Worth reflected in the Interim Audited Balance
Sheet in the event that the Purchaser does not provide the notice referred to in
clause (ii) of Section 6.22.4, (y) the Net Worth as of September 30, 1998 that
the Purchaser and the Counsel Entities shall agree upon in writing in the event
that the Purchaser provides the notice referred to in clause (ii) of Section
6.22.4 but such agreement of the Purchaser and the Counsel Entities is reached
prior to the resolution of any disputed matters by the Audit Firm pursuant to
this Section 6.22 and (z) the Net Worth as of September 30, 1998 as determined
by the Audit Firm (which firm shall determine such Net Worth by combining its
conclusions with respect to all matters in dispute with the conclusions of the
Counsel Entities and the Purchaser with respect to all matters not in dispute)
in the event that the Purchaser provides the notice referred to in clause (ii)
of Section 6.22.4 and the Purchaser and the Counsel Entities are unable to agree
upon the disputed matters prior to the resolution of any disputed matters by the
Audit Firm.
Section 6.23 Waiver The Purchaser waives compliance by the Counsel
Entities with all applicable bulk sales laws.
Exhibit 2.1 - Page 67
Section 6.24 Name Change. Subsequent to the Closing, the Counsel
Entities shall take such actions as the Purchaser shall reasonably request to
assure that Opco is entitled to utilize the names "▇▇▇▇▇▇▇▇▇▇▇ Drug",
"▇▇▇▇▇▇▇▇▇▇▇ Drug Distribution" and any derivatives thereof in any jurisdictions
designated by the Purchaser.
Section 6.25 Stadt Solutions. After the Closing, Opco and Purchaser
will use their good faith efforts to negotiate a resolution with PMR
Corporation, the other member of Stadt Solutions, LLC ("Solutions"), of any
dispute which may arise concerning the matters referred to in Section9.2.1(xiv).
ARTICLE VII
Conditions to Closing
Section 7.1 Mutual Conditions The respective obligations of each party
to consummate the transactions contemplated by this Agreement shall be subject
to the fulfillment at or prior to Closing of the following conditions:
7.1.1 No Governmental Authority of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order which is in effect or
commenced any action or proceeding, which in either case would prohibit
consummation of the transactions contemplated by this Agreement or would
threaten the imposition of material damages upon consummation of such
transactions.
7.1.2 The waiting period required by the HSR Act, and any
extensions thereof obtained by request or other action of the FTC and/or the
Antitrust Division, shall have expired or been terminated by the FTC and the
Antitrust Division.
7.1.3 The shareholders of the Canadian Corporation shall have
approved the transactions contemplated hereby.
7.1.4 No third-party shall have instituted any suit or
proceeding against any party hereto to restrain, enjoin or otherwise prevent the
consummation of the transactions contemplated hereby, or to seek damages from or
impose obligations upon any party hereto by reason of the transactions
contemplated hereby, which, in such party's reasonable judgment, would involve
expense or lapse of time that would be materially adverse to such party's
interest.
7.1.5 The BBC Shares required to be delivered by the Purchaser
at the Closing shall have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance.
Exhibit 2.1 - Page 68
Section 7.2 Conditions to the Purchaser's Obligations. The obligations
of the Purchaser to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment prior to or at Closing of each of the
following conditions:
7.2.1 The representations and warranties of the Company and the
Counsel Entities set forth in Articles IA, III and IV shall be true and correct
in all material respects (other than representations and warranties which are
qualified as to materiality, which representations and warranties shall be true
in all respects) on November 8, 1998 and on and as of the Closing Date as though
made on and as of the Closing Date (except for representations and warranties
made as of a specified date, which shall be measured only as of such specified
date).
7.2.2 Each of the US Seller, the Canadian Corporation and the
Company shall have performed in all material respects each obligation and
agreement and shall have complied in all material respects with each covenant to
be performed and complied with by it under the Transaction Agreements at or
prior to the Closing.
7.2.3 During the period from September 30, 1998 through the
Closing Date, there shall not have been any Material Adverse Change affecting
the Companies taken as a whole, nor any loss or damage to the assets of the
Companies, whether or not insured, which materially affects the Companies'
ability to conduct the Businesses. The Purchaser shall have received a
certificate (executed by the President or any Vice President of the Canadian
Corporation to such officer's best knowledge), dated the Closing Date, to the
foregoing effect and to the further effect that any liabilities of the Companies
at the Closing Date which were not reflected on the Interim Balance Sheet are
either (a) liabilities incurred in the Ordinary Course of Business subsequent to
the date of that Interim Balance Sheet, (b) liabilities contemplated by this
Agreement or (c) liabilities which are not required by GAAP to be disclosed in a
balance sheet or the notes thereto.
7.2.4 (i) All authorizations, consents, waivers, approvals or
other actions required in connection with the execution, delivery and
performance of this Agreement by the Company and the Counsel Entities and the
consummation by the Company and the Counsel Entities of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect; (ii) the Company and the Counsel Entities shall have obtained any
authorizations, consents, waivers, approvals or other actions required to
prevent a material breach or default by any of the Companies under any contract
to which any of the Companies is a party or for the continuation of any
agreement to which any of the Companies is a party; and (iii) all
authorizations, consents, waivers, approvals or other actions necessary to
permit the Purchaser to own the Interests shall have been obtained and shall be
in full force and effect.
7.2.5 Prior to or at the Closing, the US Seller shall have
executed and delivered the LLC Assignments to the Purchaser, the Purchaser
Operating Subsidiary and the Purchaser Licensing Subsidiary. Prior to or at the
Exhibit 2.1 - Page 69
Closing, the Canadian Corporation and each subsidiary of the Canadian
Corporation that own PharMerica Shares shall have executed and delivered to the
Purchaser the Voting Trust Agreement (and the Canadian Corporation and such
subsidiaries shall have made all deliveries required thereunder), the Proxy and
the Back-Up Option Agreement. The Transitional Consulting Agreements shall
remain in full force and effect.
7.2.6 Each of the Employee Agreements and each of the Option
Cancellation Agreements executed by the Optionees shall remain in full force and
effect and shall not have been amended (other than to give effect to the
transactions contemplated by Article IA) without the Purchaser's consent at any
time between November 8, 1998 and the Closing Date.
7.2.7 Prior to or at the Closing, the Counsel Entities and the
Company shall have delivered such other closing documents as shall be reasonably
requested by the Purchaser in form and substance acceptable to the Purchaser's
counsel (which acceptance shall not be unreasonably withheld), including the
following:
(i) a certificate of the President or a Vice
President of each of the US Seller and the Canadian Corporation and of
a representative of Opco and Licensco, dated the Closing Date, to the
effect that (1) the person signing such certificate is familiar with
this Agreement and (2) to the best of such person's knowledge, the
conditions specified in Section 7.2.1, 7.2.2, 7.2.3 and 7.2.4 have been
satisfied;
(ii) a certificate of the Secretary or Assistant
Secretary of each of the US Seller and the Canadian Corporation and of
a representative of Opco and Licensco, dated the Closing Date, as to
the incumbency of any officer of such entity executing this Agreement
or any document related hereto and covering such other matters as the
Purchaser may reasonably request;
(iii) a certified copy of (1) the Certificate of
Incorporation and by-laws of the ▇▇▇▇▇▇▇▇▇▇▇ Company and all amendments
thereto in effect immediately prior to the consummation of the
Company/Opco Merger and (2) the resolutions of the ▇▇▇▇▇▇▇▇▇▇▇
Company's Board of Directors authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated
hereby;
(iv) a certified copy of (1) the Certificate of
Incorporation and by-laws of the US Seller and all amendments thereto
and (2) the resolutions of the US Seller's Board of Directors
authorizing the execution, delivery and consummation of this Agreement,
the Assignment and the transactions contemplated hereby and thereby;
(v) a certified copy of (1) the organizational
documents of the Canadian Corporation and all amendments thereto and
Exhibit 2.1 - Page 70
(2) the resolutions of the Canadian Corporation's Board of Directors
authorizing the execution, delivery and consummation of this Agreement,
the Voting Trust Agreement, the Proxy, the Assignment and the Back-Up
Option Agreement and the transactions contemplated hereby and thereby;
(vi) an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ &
Manner, P.C., counsel to the ▇▇▇▇▇▇▇▇▇▇▇ Company, Licensco, Opco and
the Counsel Entities, dated the Closing Date, and substantially in the
form and substance of the letter annexed hereto as Appendix 7.2.7A
(provided that such firm may rely on other attorneys with respect to
issues of local law if such attorneys are reasonably acceptable to the
Purchaser, the firm of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ & Manner, P.C.
advises the Purchaser that it is reasonable to rely on such attorneys
and such attorneys' opinion is furnished directly to the Purchaser); an
opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, counsel to the Canadian
Corporation, dated the Closing Date, and substantially in the form and
substance of the letter annexed hereto as Appendix 7.2.7B; and an
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, counsel to the Company, dated the Closing
Date, and substantially in the form and substance of the letter annexed
hereto as Appendix 7.2.7C;
(vii) copies, certified by the Secretary of the US
Seller, of the limited liability company agreements of each of Opco and
Licensco in effect immediately prior to the Closing; and
(viii) such other documents or instruments as the
Purchaser reasonably requests to effect the transactions contemplated
hereby.
7.2.8 Prior to or at the Closing, to the extent requested by
the Purchaser, each of the Companies shall have received the written
resignations (in form and substance reasonably satisfactory to the Purchaser) of
each of its directors and officers or persons holding similar positions in
entities which do not have directors or officers, effective as of the Closing.
7.2.9 On or before the Closing Date, (a) the Company and each
of the Designated Optionees shall have entered into option cancellation
agreements in the form and substance of the agreement annexed hereto as Appendix
7.2.9A (the "Designated Optionee Option Cancellation Agreements") and (b) the
Company and each of the Non-Designated Optionees shall have entered into option
cancellation agreements in the form and substance of the agreement annexed
hereto as Appendix 7.2.9B (the "Non-Designated Optionee Option Cancellation
Agreements" and, collectively with the Designated Optionee Option Cancellation
Agreements, the "Option Cancellation Agreements") .
7.2.10 The operating agreement for Stadt Solutions LLC shall
have been amended, in form and substance satisfactory to the Purchaser, to
Exhibit 2.1 - Page 71
assure that neither the Purchaser nor any of its Subsidiaries (other than the
Companies) shall be obligated under any of the covenants set forth in that
agreement.
7.2.11 The Counsel Entities shall have provided to the
Purchaser the Interim Audited Financial Statements in accordance with Section
6.22.1, together with an unqualified report thereon of the Accountants, which
report shall be in form and substance satisfactory to the Purchaser.
7.2.12 Each of the transactions contemplated by Article IA
shall have been consummated prior to the Closing in the order set forth in, and
in accordance with, Article IA.
7.2.13 No shares of ▇▇▇▇▇▇▇▇▇▇▇ Common Stock shall have been
issued at any time from November 8, 1998 through the consummation of the
Closing, no shares of such stock shall be issuable subsequent to the Closing
pursuant to the exercise of any Stock Options and all Stock Options shall be
cancelable upon payment of the Total Option Appreciation.
7.2.14 Intentionally omitted.
Section 7.3 Conditions to the Counsel Entities' Obligations. The
obligations of the Counsel Entities to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment at or prior to the Closing
of each of the following conditions:
7.3.1 The representations and warranties of the Purchaser set
forth in Article V shall be true and correct in all material respects (other
than representations and warranties which are qualified as to materiality, which
representations and warranties shall be true in all respects) on November 8,
1998 and on and as of the Closing Date as though made on and as of the Closing
Date (except for representations and warranties made as of a specified date,
which shall be measured only as of such specified date).
7.3.2 The Purchaser shall have performed in all material
respects each obligation and agreement and shall have complied in all material
respects with each covenant to be performed and complied with by it under the
Transaction Agreements at or prior to the Closing.
7.3.3 All authorizations or approvals or other action required
in connection with the execution, delivery and performance of this Agreement by
the Purchaser and the consummation by the Purchaser of the transactions
contemplated hereby and thereby shall have been obtained and shall be in full
force and effect.
7.3.4 Prior to or at the Closing, Purchaser shall have
delivered such other closing documents as shall be reasonably requested by the
Exhibit 2.1 - Page 72
Counsel Entities in form and substance acceptable to the Counsel Entities'
counsel (which acceptance shall not be unreasonably withheld), including the
following:
(i) a certificate of the President or a Vice
President of the Purchaser, dated the Closing Date, to the effect that
(1) the person signing such certificate is familiar with this Agreement
and (2) to the best of such person's knowledge, the conditions
specified in Section 7.3.1 and 7.3.2 have been satisfied;
(ii) a certificate of the Secretary or Assistant
Secretary of the Purchaser, dated the Closing Date, as to the
incumbency of any officer of the Purchaser executing this Agreement or
any document related hereto and covering such other matters as the
Counsel Entities may reasonably request;
(iii) a certified copy of (1) the Certificate of
Incorporation and by-laws of the Purchaser and all amendments thereto
and (2) the resolutions of the Purchaser's Board of Directors (or
Executive Committee thereof) authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated hereby
and thereby;
(iv) an opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC, counsel to
the Purchaser, dated the Closing Date, and substantially in the form
and substance of the letter annexed hereto as Appendix 7.3.4 (provided
that such firm may rely on other attorneys with respect to issues of
local law if such attorneys are reasonably acceptable to the Counsel
Entities, the firm of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC advises the Counsel
Entities that it is reasonable to rely on such attorneys and such
attorneys' opinion is furnished directly to the Counsel Entities) , and
(v) such other documents or instruments as the
Counsel Entities reasonably request to effect the transactions
contemplated hereby.
7.3.5 During the period from June 30,1998 through the Closing
Date, there shall not have been any Material Adverse Change affecting the
Purchaser, other than events publicly disclosed by the Purchaser prior to
November 8, 1998. The Counsel Entities shall have received a certificate
(executed by the President or any Vice President of the Purchaser to such
officer's best knowledge), dated the Closing Date, to the foregoing effect
7.3.6 Intentionally omitted.
7.3.7 At the Closing, the Purchaser shall have tendered payment
of the Estimated Net Purchase Price in accordance with Section 2.2.2 and shall
have executed and delivered the Voting Trust Agreement.
Exhibit 2.1 - Page 73
ARTICLE VIII
Termination
8.1 Termination. This Agreement may be terminated at any time prior to
the consummation of the Closing, whether before or after approval and adoption
of this Agreement by the Canadian Corporation's shareholders, under the
following circumstances:
8.1.1 by mutual written consent of the Counsel Entities and the
Purchaser;
8.1.2 by either the Purchaser or the Counsel Entities if any
permanent injunction or other order of a court or other competent governmental
authority preventing the consummation of the transactions contemplated hereby
shall have become final and nonappealable;
8.1.3 by either the Purchaser or the Counsel Entities if the
Closing shall not have been consummated on or before the Outside Date (provided
that the right to terminate this Agreement under this Section 8.1.3 shall not be
available to any party whose willful act or willful failure to act or whose
Affiliate's willful act or willful failure to act has been the cause of or
resulted in the failure of the Closing to be consummated on or before the
Outside Date);
8.1.4 by the Purchaser or the Counsel Entities if, at or before
the completion of the Closing, it shall have discovered that any representation
or warranty made in the Transaction Agreements for its benefit, or in any
certificate, exhibit or document furnished to it pursuant to the Transaction
Agreements, is untrue in any material respect (other than representations and
warranties which are qualified as to materiality, which representations and
warranties will give rise to termination if untrue in any respect);
8.1.5 by the Purchaser if the Counsel Entities or the
▇▇▇▇▇▇▇▇▇▇▇ Company shall have defaulted in the performance of any material
obligation under the Transaction Agreements; provided, however, that in order to
terminate this Agreement under this Section 8.1.5, the Purchaser shall, upon
discovery of such a breach or default, give written notice thereof to the
breaching party and the breaching party shall fail to cure the breach or default
by the earlier of twenty (20) calendar days after receipt of such notice or the
Closing Date;
8.1.6 by the Counsel Entities or the ▇▇▇▇▇▇▇▇▇▇▇ Company if the
Purchaser shall have defaulted in the performance of any material obligation
under the Transaction Agreements; provided, however, that in order to terminate
this Agreement under this Section 8.1.6, the Counsel Entities and/or the
Exhibit 2.1 - Page 74
▇▇▇▇▇▇▇▇▇▇▇ Company shall, upon discovery of such a breach or default, give
written notice thereof to the Purchaser and the Purchaser shall fail to cure the
breach or default by the earlier of twenty (20) calendar days after receipt of
such notice or the Closing Date;
8.1.7 by either the Purchaser or the Counsel Entities, if at
the Canadian Corporation's Shareholders Meeting (including any adjournment or
postponement thereof) the requisite vote of the Canadian Corporation's
shareholders to approve the transactions contemplated hereby shall not have been
obtained;
8.1.8 by the Purchaser if any authorization, consent, waiver or
approval required for the consummation of the transactions contemplated hereby
shall require the divestiture or cessation of any of the present business or
operations conducted by the Purchaser or the Companies or shall impose any other
condition or requirement, which divestiture, cessation, condition or requirement
the Purchaser determines, in its good faith judgment, to be materially
burdensome or to deny to the Purchaser in any material respect the benefits
intended to be obtained by the Purchaser pursuant to the transactions
contemplated by this Agreement;
8.1.9 by the Purchaser, in the event that the conditions to its
obligations set forth in Article VII hereof have not been satisfied or waived by
the date set for the Closing or in the event that the Purchaser reasonably
determines that any such condition cannot possibly be satisfied prior to the
Outside Date;
8.1.10 by the Counsel Entities, in the event that the
conditions to their obligations set forth in Article VII hereof have not been
satisfied or waived by the date set for the Closing or in the event that the
Counsel Entities reasonably determines that any such condition cannot possibly
be satisfied prior to the Outside Date;
8.1.12 by the Purchaser if any of the Persons designated in
Section 3.25 of the Companies' Disclosure Schedule shall have breached in any
material respect any of his, her or its obligations under any of the Support
Agreements;
8.1.13 by the Canadian Corporation pursuant to Section 6.8.2;
8.1.14 by the Purchaser if the Board of Directors of the
Canadian Corporation shall withdraw, modify or change its recommendation, made
on or before November 8, 1998, that the shareholders of the Canadian Corporation
approve the transactions contemplated hereby, or if the Board of Directors of
the Canadian Corporation shall have refused to affirm such recommendation as
promptly as practicable (but in any case within ten (10) Business Days) after
receipt of any request from the Purchaser which request was made on a reasonable
basis; or
8.1.15 by the Canadian Corporation in the event that the
Canadian Corporation determines, and the Purchaser concurs (such concurrence not
to be unreasonably withheld), that the number of shares of the Canadian
Exhibit 2.1 - Page 75
Corporation's capital stock for which dissenters' rights have been exercised in
connection with the Canadian Corporation's Shareholders' Meeting is so
substantial as to materially adversely affect the Canadian Corporation's
financial condition.
Section 8.2 Effect of Termination
8.2.1 In the event of the termination of this Agreement
pursuant to Section 8.1, this Agreement, except for the provisions of Sections
6.1, 10.2 and 10.9 and this Section 8.2, shall become void and have no effect,
without any liability on the part of any party or its directors, officers or
stockholders. Notwithstanding the foregoing, nothing in this Section 8.2 shall
relieve any party to this Agreement of liability for a material breach of any
provision of this Agreement and provided, further, however, that if it shall be
judicially determined that termination of this Agreement was caused by an
intentional breach of this Agreement, then, in addition to other remedies at law
or equity for breach of this Agreement, the party so found to have intentionally
breached this Agreement shall indemnify and hold harmless the other parties for
their respective out-of-pocket costs, including the fees and expenses of their
counsel, accountants, financial advisors and other experts and advisors as well
as fees and expenses incident to the negotiation, preparation and execution of
this Agreement and related documentation.
8.2.2 The Canadian Corporation agrees that, if:
8.2.2.1 the Canadian Corporation terminates this Agreement
pursuant to Sections 6.8.2 and 8.1.13;
8.2.2.2 the Purchaser terminates this Agreement pursuant to
Section 8.1.12 or 8.1.14;
8.2.2.3 (A) the Purchaser or the Canadian Corporation
terminates this Agreement pursuant to Section 8.1.7, (B) at the time of such
failure by the Canadian Corporation's shareholders to so approve the
transactions contemplated hereby there is a publicly announced or disclosed
Competing Transaction with respect to any of the Companies or any of the Counsel
Entities involving a third party, and (C) within 12 months after such
termination, any of the Companies shall enter into an Acquisition Agreement for
a Business Combination or consummates a Business Combination; or
8.2.2.4 the Canadian Corporation terminates this Agreement
pursuant to Section 8.1.15,
then, (W) in the case of a termination by the Purchaser as described in Section
8.2.2.2, within three (3) Business Days following any such termination, (X) in
the case of a termination by the Canadian Corporation as described in Section
8.2.2.1, concurrently with such termination, (Y) in the case of a termination by
the Canadian Corporation as described in Section 8.2.2.4 upon the earlier of a
consummation of a Competing Transaction or execution of a definitive agreement
Exhibit 2.1 - Page 76
with respect thereto if either such consummation or such execution occurs within
twelve months after such termination by the Canadian Corporation, or (Z) in the
case of a termination by the Canadian Corporation or the Purchaser as described
in Section 8.2.2.3 where a Competing Transaction has been publicly announced or
publicly disclosed prior to the Canadian Corporation's Shareholders Meeting
(including any adjournment or postponement thereof), prior to the earlier
consummation of a Business Combination or execution of a definitive agreement
with respect thereto, in any such case described in clauses (W), (X), (Y) or
(Z), the Canadian Corporation will pay to the Purchaser in cash by wire transfer
in immediately available funds to an account designated by the Purchaser the sum
of twelve million dollars ($12,000,000), inclusive of the Purchaser's costs. For
purposes of this Agreement, "Business Combination" means (i) a merger,
consolidation, share exchange, business combination or similar transaction
involving any of the Companies or either of the Counsel Entities as a result of
which the shareholders or members thereof reduce their percentage ownership
interest in the equity interests of the entity surviving or resulting from such
transaction (or the ultimate parent entity thereof) below seventy-five percent
(75%) of such percentage ownership interest as such percentage ownership
interest existed immediately prior to the commencement of negotiations of such
transaction, (ii) a sale, lease, exchange, transfer or other disposition of all
or substantially all of the assets of any of the Companies, or (iii) the
acquisition, by a Person (other than the Purchaser or any affiliate thereof) or
group (as such term is defined under Section 13(d) of the Exchange Act and the
rules and regulations thereunder) of beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of an equity interest of more than twenty-five
percent (25%) in any of the Companies or in either of the Counsel Entities
beyond the equity interests that such Person or group beneficially owned on
November 8, 1998.
ARTICLE IX
Survival of Representations and Warranties; Indemnification
Section 9.1 Survival of Representations and Warranties. Except as set
forth below, the representations and warranties provided for in this Agreement
shall survive the Closing and remain in full force and effect for one year from
the Closing Date for the benefit of the parties hereto and their successors and
assigns. The representations and warranties provided for in Section 3.8 shall
survive the Closing and remain in full force and effect for the benefit of the
parties hereto and their successors and assigns until thirty (30) calendar days
after the expiration of the applicable statute of limitations. The
representations and warranties provided for in Section 3.22 shall survive the
Closing and remain in full force and effect for two years from the Closing Date
for the benefit of the parties hereto and their successors and assigns. The
survival period of each representation or warranty as provided in this Section
9.1 is hereinafter referred to as the "Survival Period."
Exhibit 2.1 - Page 77
Section 9.2 Indemnification
9.2.1 The Counsel Entities, subject to the limitations set
forth in Section 9.2.4, shall jointly and severally indemnify and hold harmless
the Purchaser, its Affiliates, officers, directors, employees, agents and
representatives, the Companies, and any Person claiming by or through any of the
foregoing, against and in respect of any and all claims, costs, expenses,
damages, liabilities, losses or deficiencies (including, without limitation,
attorneys' fees and other costs and expenses incident to any suit, action or
proceeding) (the "Damages") arising out of, resulting from or incurred in
connection with (i) subject to Section 9.6, any inaccuracy in any representation
or the breach of any warranty made by the Counsel Entities or the ▇▇▇▇▇▇▇▇▇▇▇
Company in this Agreement for the applicable Survival Period, (ii) any claim
made after the Closing that any of the Companies are responsible for any Taxes
with respect to any period on or before the Closing Date, other than liabilities
for Taxes accrued in determining the Net Worth as of the Closing Date hereunder
and other than claims resulting from actions which the Companies voluntarily
elect to take after the Closing, but are not required to take, which actions are
inconsistent with positions taken by the Company prior to the Closing, (iii) any
liabilities of any of the Companies with respect to any of the Plans in effect
as of the Closing Date, other than liabilities accrued in determining the Net
Worth as of the Closing Date hereunder, (iv) any matter described in Section
3.13 of the Companies' Disclosure Schedule, (v) any liability of any of the
Companies for Taxes of any Person, other than any of the Companies, under Treas.
Reg. ss.1.1502-6 or any comparable provision of state, local or foreign law, as
a transferee or successor, by contract, or otherwise, (vi) the breach by any of
the Counsel Entities of any covenant or agreement to be performed by any of the
Counsel Entities hereunder; (vii) any payment made by the Company pursuant to
Sections VIII,A and/or XI,A of the CEO Contract in excess of the amounts set
forth in Section 9.2.1 of the Companies' Disclosure Schedule (but excluding from
the Schedule for this purpose the reference to the option acceleration); (viii)
the failure by the Purchaser to acquire at the Closing one hundred percent
(100%) of the Interests free and clear of all security interests, liens,
encumbrances, claims or restrictions of any kind or the failure by Opco and
Licensco to own, as of the Closing, directly or indirectly, one hundred percent
(100%) of the equity interests in the Subsidiaries (except to the extent that
the ▇▇▇▇▇▇▇▇▇▇▇ Company did not own, as of November 8, 1998, one hundred percent
(100%) of such equity interests, as described in Section 3.2 of the Companies'
Disclosure Schedule and except to the extent such Subsidiaries have directly or
indirectly merged with and into Opco or Licensco in accordance with Article IA),
free and clear of all security interests, liens, encumbrances, claims or
restrictions of any kind; (ix) any claim by any Person that such Person owns
more Stock Options than the number of Stock Options set forth in Section 3.4 of
the Companies' Disclosure Schedule and/or that the exercise price of such
Person's Stock Options is different than the exercise price et forth in Section
3.4 of the Companies' Disclosure Schedule; (x) any failure by either of the
Counsel Entities to comply with any applicable bulk sales law; (xi) any increase
in any income or franchise Tax imposed by any state or local Governmental
Exhibit 2.1 - Page 78
Authority which increase is due to the disallowance or reduction of deductions
attributable to the Royalty Agreements and that results from the transactions
described in Article IA and Section 4.1B unless such disallowance or reduction
would have been effected if the Prior Contract had not been amended and
restated; (xii) the litigation currently pending in the United States District
Court for the Northern District of Texas entitled IVP Pharmaceutical Care, Inc.
▇. ▇▇▇▇▇▇▇▇▇▇▇ Pharmacy, or in connection with any matters which are the subject
of or relate to such litigation, as it may be amended, modified, restated, or
refiled; (xiii) the cancellation or acceleration of any Stock Options or any
claims, suits, or actions arising therefrom (including claims to the shares or
benefits arising from any Stock Options); (xiv) with respect to any claim,
dispute, proceeding (including any arbitration proceeding), suit or other action
asserted or commenced at any time within two years and three months after the
date of the Closing (A) under or in connection with Article XII of the Operating
Agreement of Stadt Solutions, LLC, a Delaware limited liability company
("Solutions"), including without limitation a dispute, proceeding, suit or other
action commenced by Opco or any Affiliate thereof, relating to any business
operated at Closing by the Purchaser or any of its Affiliates, the Company or
PharMerica, Inc., (B) under or in connection with the Transition and Services
Agreement dated as of July 1, 1998 to which Solutions and Distribution are
parties arising out of the mergers described in Article 1A or the transactions
effected hereby, or (C) asserting on the basis of any of the provisions of
Article VIII of the Operating Agreement of Solutions that Opco has not succeeded
to the full membership interest of Distribution in Solutions as a result of the
mergers described in Article 1A or the transactions effected hereby or is not
entitled to exercise all of the rights, title and interest as a member of
Solutions to the same extent as Distribution would have been entitled, and (xv)
the failure to withhold any income Taxes, employment Taxes and similar Taxes
with respect to the payments made under the Option Cancellation Agreements to
individuals who are also directors of the Canadian Corporation.
9.2.2 The Purchaser, subject to the limitations set forth in
Section 9.2.4, shall indemnify and hold harmless the Counsel Entities and their
respective Affiliates, officers, directors, employees, agents and
representatives, and any Person claiming by or through any of them, against and
in respect of any and all Damages arising out of, resulting from or incurred in
connection with (i) subject to Section 9.6, any inaccuracy in any representation
or the breach of any warranty made by the Purchaser in this Agreement for the
applicable Survival Period, (ii) the breach by the Purchaser of any covenant or
agreement to be performed by it hereunder or (iii) the operation of the Company
after the Closing, except to the extent that the Purchaser is indemnified
hereunder with respect to such matter.
9.2.3 Any Person providing indemnification pursuant to the
provisions of this Section 9.2 is hereinafter referred to as an "Indemnifying
Party" and any Person entitled to be indemnified pursuant to the provisions of
this Section 9.2 is hereinafter referred to as an "Indemnified Party."
Exhibit 2.1 - Page 79
9.2.4 The Counsel Entities' indemnification obligations
contained in Sections 9.2.1(i), 9.2.1(iii), 9.2.1(iv) and 9.2.1(xi) hereunder
shall not apply to any claim for Damages until the aggregate of all such claims
total $2,000,000, in which event the Seller's indemnity obligation contained in
Sections 9.2.1(i), 9.2.1(iii), 9.2.1(iv) and 9.2.1(xi) hereunder shall apply to
the total amount in excess of $2,000,000, subject to a maximum liability to the
Purchaser of $25,000,000 for all claims under Section 9.2.1(i), 9.2.1(iii),
9.2.1(iv) and 9.2.1(xi) in the aggregate (provided, however, that to the extent
that Section 3.13 of the Companies Disclosure Schedule is amended to include the
litigation referred to in Section 9.2.1(xii), the minimum and maximum liability
provisions of this Section 9.2.4 shall not take into account any indemnification
obligation to the Purchaser arising under Section 9.2.1(xii). The Purchaser's
indemnification obligation contained in Sections 9.2.2(i) and 9.2.2(iii)
hereunder shall not apply to any claim for Damages until the aggregate of all
such claims total $2,000,000, in which event the Purchaser's indemnity
obligation contained in Sections 9.2.2(i) and 9.2.2(iii) shall apply to the
total amount in excess of $2,000,000, subject to a maximum liability to the
Counsel Entities of $25,000,000 for all claims under Sections 9.2.2(i) and
9.2.2(iii) in the aggregate. All such claims made during the relevant Survival
Period shall be counted in determining whether the thresholds specified above
have been achieved.
9.2.5 The provisions of Article IX shall constitute the sole
and exclusive remedy of any Indemnified Party for Damages arising out of,
resulting from or incurred in connection with any inaccuracy in any
representation or the breach of any warranty made by the Purchaser, the Company
or the Counsel Entities in this Agreement.
Section 9.3 Procedures for Third Party Claims. In the case of
any claim for indemnification arising from a claim of a third party (a "Third
Party Claim"), an Indemnified Party shall give prompt written notice to the
Indemnifying Party of any claim or demand of which such Indemnified Party has
knowledge and as to which it may request indemnification hereunder. The
Indemnifying Party shall have the right to defend and to direct the defense
against any such Third Party Claim, in its name or in the name of the
Indemnified Party, as the case may be, at the expense of the Indemnifying Party,
and with counsel selected by the Indemnifying Party unless (i) such Third Party
Claim seeks an order, injunction or other equitable relief against the
Indemnified Party, or (ii) the Indemnified Party shall have reasonably concluded
that (x) there is a conflict of interest between the Indemnified Party and the
Indemnifying Party in the conduct of the defense of such Third Party Claim or
(y) the Indemnified Party has one or more defenses not available to the
Indemnifying Party. Notwithstanding anything in this Agreement to the contrary,
the Indemnified Party shall, at the expense of the Indemnifying Party, cooperate
with the Indemnifying Party, and keep the Indemnifying Party fully informed, in
the defense of such Third Party Claim. The Indemnified Party shall have the
right to participate in the defense of any Third Party Claim with counsel
employed at its own expense; provided, however, that, in the case of any Third
Party Claim described in clause (i) or (ii) of the second preceding sentence or
as to which the Indemnifying Party shall not in fact have employed counsel to
assume the defense of such Third Party Claim, the reasonable fees and
disbursements of such counsel shall be at the expense of the Indemnifying Party.
Exhibit 2.1 - Page 80
The Indemnifying Party shall have no indemnification obligations with respect to
any Third Party Claim which shall be settled by the Indemnified Party without
the prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. Notwithstanding anything to the contrary in
this Section 9.3, subject to the provisions of Section 6.25 hereof, Opco and
Purchaser shall have the right to control all claims, proceedings, suits or
other actions subject to indemnification by the Counsel Entities under Section
9.2.1(xiv), including the selection of legal counsel, provided that the Counsel
Entities shall have the right to participate in such Third Party Claim with
legal counsel at its own expense, shall be kept advised of developments and
shall cooperate with Opco and Purchaser therein, and no such Third Party Claim
may be settled by Opco or Purchaser without the Counsel Entities' consent, which
shall not be unreasonably withheld or delayed.
Section 9.4 Procedures for Inter-Party Claims. In the event that an
Indemnified Party determines that it has a claim for Damages against an
Indemnifying Party hereunder (other than as a result of a Third Party Claim),
the Indemnified Party shall give prompt written notice thereof to the
Indemnifying Party, specifying the amount of such claim and any relevant facts
and circumstances relating thereto. The Indemnified Party shall provide the
Indemnifying Party with reasonable access to its books and records for the
purpose of allowing the Indemnifying Party a reasonable opportunity to verify
any such claim for Damages. The Indemnified Party and the Indemnifying Party
shall negotiate in good faith regarding the resolution of any disputed claims
for Damages. Promptly following the final determination of the amount of any
Damages claimed by the Indemnified Party, the Indemnifying Party shall pay such
Damages to the Indemnified Party by wire transfer or check made payable to the
order of the Indemnified Party, without interest. In the event that the
Indemnified Party is required to institute legal proceedings in order to recover
Damages hereunder, the cost of such proceedings (including costs of
investigation and reasonable attorneys' fees and disbursements) shall be added
to the amount of Damages payable to the Indemnified Party.
Section 9.5 Intentionally omitted.
Section 9.6 Limitations Arising from Knowledge of Claims.
Notwithstanding any provision herein to the contrary, neither the Counsel
Entities nor the Purchaser shall be entitled to indemnification with respect to
any claim under either Section 9.2.1(i) or 9.2.2(i) in the event that the party
seeking indemnification had knowledge of the substance and approximate magnitude
of such claim prior to the Closing.
Exhibit 2.1 - Page 81
ARTICLE X
Miscellaneous
Section 10.1 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile, by overnight courier or sent by certified or registered mail, postage
prepaid, and shall be deemed given when so delivered personally, or when so
received by facsimile or courier, or if mailed, three calendar days after the
date of mailing, as follows:
If to the Purchaser: Bergen ▇▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Milan A. Sawdei, Esq.
with a copy(which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to the ▇▇▇▇▇▇▇▇▇▇▇ Company/Counsel Entities:
Counsel Corporation
Exchange Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
With a copy(which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ & Manner, P.C.
18th Floor First American Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ Manner, Esq.
Exhibit 2.1 - Page 82
or to such other address as any party hereto shall notify the other parties
hereto (as provided above) from time to time.
Section 10.2 Expenses. Regardless of whether the transactions provided
for in this Agreement are consummated, except as otherwise provided herein, each
of the Canadian Corporation, the US Seller and the Purchaser shall pay its own
expenses incident to this Agreement and the transactions contemplated herein
(including without limitation legal fees, accounting fees and investment banking
fees). No portion of such expenses shall be borne by any of the Companies.
Except in the event of a Special Termination, the Purchaser, upon receipt of
invoices from the Counsel Entities, shall reimburse the Counsel Entities for a
portion of the fees and disbursements paid to the investment bankers, attorneys
and accountants representing the Counsel Entities and the Companies (the "Fees
and Disbursements"), such portion to equal the lesser of $2,500,000 and one half
of such Fees and Disbursements. The Purchaser shall not be responsible for any
of the Fees and Disbursements in the event of a Special Termination. For
purposes of this Agreement, the term "Special Termination" shall mean (a) any
termination of this Agreement described in Section 8.2.2 and (b) any termination
resulting from a breach of a covenant or representation by the Counsel Entities
or the ▇▇▇▇▇▇▇▇▇▇▇ Company.
Section 10.3 Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of Delaware, without reference to the choice of law principles thereof.
Each of the parties hereto irrevocably submits to the non-exclusive jurisdiction
of the courts of the states of Pennsylvania, New Jersey and California and the
United States District Court for any District within such states for the purpose
of any suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement. Each of the parties hereto irrevocably consents
to the jurisdiction of any such court in any such suit, action or proceeding and
to the laying of venue in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
Section 10.4 Assignment; Successors and Assigns; No Third Party Rights.
Except as otherwise provided herein, this Agreement may not be assigned by
operation of law or otherwise, and any attempted assignment shall be null and
void. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns and legal
representatives. This Agreement shall be for the sole benefit of the parties to
this Agreement, their respective successors, assigns and legal representatives,
and any Person who is an Indemnified Party, and is not intended, nor shall be
construed, to give any Person, other than the parties hereto and their
respective successors, assigns and legal representatives and any Person who is
Exhibit 2.1 - Page 83
an Indemnified Party, any legal or equitable right, remedy or claim hereunder.
Section 10.5 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 10.6 Titles and Headings. The headings and table of contents in
this Agreement are for reference purposes only, and shall not in any way affect
the meaning or interpretation of this Agreement.
Section 10.7 Entire Agreement. This Agreement (including the disclosure
schedules delivered in connection with this Agreement and the agreements
referenced in the appendices attached hereto), the Support Agreements and the
confidentiality agreements among the parties dated as of September 30, 1998 and
August 27, 1998 constitute the entire agreement among the parties with respect
to the matters covered hereby and thereby and supersede all previous written,
oral or implied understandings among them (including, without limitation, the
Prior Contract) with respect to such matters.
Section 10.8 Amendment and Modification. This Agreement may be amended
by the parties hereto, by action taken or authorized by their respective Boards
of Directors (or executive committees thereof), at any time before or after
approval by the shareholders of the Canadian Corporation of the transactions
contemplated hereby, but after any such approval, no amendment shall be made
which by law requires further approval or authorization by the shareholders of
the Canadian Corporation without such further approval or authorization.
Notwithstanding the foregoing, this Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 10.9 Publicity. Unless otherwise required by applicable laws or
the requirements of any national securities exchange (and in that event only if
time does not permit), at all times prior to the earlier of the consummation of
the Closing or termination of this Agreement pursuant to Section 8.1, the
Counsel Entities and the Purchaser shall consult with each other before issuing
any press release with respect to the transactions contemplated hereby and shall
not issue any such press release prior to such consultation.
Section 10.10 Waiver. Any of the terms or conditions of this Agreement
may be waived at any time by the party or parties entitled to the benefit
thereof, but only by a writing signed by the party or parties waiving such terms
or conditions.
Section 10.11 Severability. The invalidity of any portion hereof shall
not affect the validity, force or effect of the remaining portions hereof. If it
Exhibit 2.1 - Page 84
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
Section 10.12 No Strict Construction. Each of the Purchaser, the
▇▇▇▇▇▇▇▇▇▇▇ Company and the Counsel Entities acknowledge that this Agreement has
been prepared jointly by the parties hereto, and shall not be strictly construed
against any party.
Section 10.13 Knowledge. To the extent that any representation is made
to the knowledge of the Company and/or the Counsel Entities and to the extent
that knowledge of the Counsel Entities is relevant for purposes of Section 9.6,
such knowledge shall refer to the actual knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ Sas, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Law, ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇. To the extent that knowledge of
the Purchaser is relevant for purposes of Sections 6.1 and 9.6, such knowledge
shall refer to the actual knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
Milan Sawdei, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇.
Section 10.14 Subsidiaries' Ownership of PharMerica Shares. To the
extent that any provisions of this Agreement require the Canadian Corporation to
take certain actions with respect to its subsidiaries' conduct relating to the
PharMerica Shares, such provisions shall only relate to those subsidiaries of
the Canadian Corporation that own any PharMerica Shares.
Exhibit 2.1 - Page 85
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
▇▇▇▇▇▇▇▇▇▇▇ DRUG CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Gen. Counsel and Asst. Secretary
COUNSEL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Sr. Vice President and Secretary
STADT HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President and Secretary
BERGEN ▇▇▇▇▇▇▇▇ CORPORATION
By: /s/ Milan A. Sawdei
-------------------------------------------
Name: Milan A. Sawdei
Title: Executive Vice President
[Amended and Restated Purchase Agreement]
Exhibit 2.1 - Page 86