EXHIBIT 99.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CARDINAL HEALTH, INC.
("CARDINAL"),
BRUIN MERGER CORP.
a wholly owned direct subsidiary of Cardinal
("Subcorp"),
and
BERGEN ▇▇▇▇▇▇▇▇ CORPORATION
("BERGEN")
August 23, 1997
TABLE OF CONTENTS
Page
AGREEMENT AND PLAN OF MERGER............................... 1
PRELIMINARY STATEMENTS..................................... 1
AGREEMENT ............................................... 1
ARTICLE I. THE MERGER..................................... 2
1.1 The Merger..................................... 2
1.2 Effective Time.................................. 2
1.3 Effects of the Merger........................... 2
1.4 Certificate of Incorporation and Bylaws......... 2
1.5 Directors and Officers of the Surviving
Corporation.................................... 2
1.6 Additional Actions............................. 3
ARTICLE II. CONVERSION OF SECURITIES ...................... 3
2.1 Conversion of Capital Stock.................... 3
2.2 Exchange Ratio; Fractional Shares; Adjustments. 3
2.3 Exchange of Certificates....................... 4
(a) Exchange Agent........................... 4
(b) Exchange Procedures...................... 4
(c) Distributions with Respect to
Unexchanged Shares....................... 5
(d) No Further Ownership Rights in Bergen
Common Stock............................. 5
(e) Termination of Exchange Fund............. 6
(f) No Liability............................. 6
(g) Investment of Exchange Fund.............. 6
2.4 Treatment of Stock Options..................... 6
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF CARDINAL
AND SUBCORP ................................. 7
3.1 Organization and Standing.................... 7
3.2 Subsidiaries................................. 8
3.3 Corporate Power and Authority................ 8
3.4 Capitalization of Cardinal and Subcorp....... 8
3.5 Conflicts; Consents and Approval............. 9
3.6 Brokerage and Finder's Fees.................. 10
3.7 Accounting Matters; Reorganization........... 10
3.8 Cardinal SEC Documents....................... 10
3.9 Registration Statement....................... 11
3.10 Compliance with Law.......................... 11
3.11 Litigation................................... 12
3.12 Board Recommendation......................... 12
3.13 No Material Adverse Change................... 12
3.14 Title to and Condition of Properties......... 12
3.15 Undisclosed Liabilities...................... 12
3.16 Operation of Cardinal's Business;
Relationships................................ 13
3.17 Interested Stockholder or Acquiring Person... 13
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BERGEN .... 13
4.1 Organization and Standing..................... 13
4.2 Subsidiaries................................. 14
4.3 Corporate Power and Authority................ 14
4.4 Capitalization of Bergen..................... 14
4.5 Conflicts; Consents and Approvals............ 15
4.6 No Material Adverse Change................... 16
4.7 Bergen SEC Documents......................... 16
4.8 Taxes........................................ 17
4.9 Compliance with Law.......................... 18
4.10 Intellectual Property........................ 19
4.11 Title to and Condition of Properties......... 19
4.12 Registration Statement; Joint Proxy
Statement.................................... 19
4.13 Litigation................................... 19
4.14 Brokerage and Finder's Fees; Expenses........ 20
4.15 Accounting Matters; Reorganization........... 20
4.16 Employee Benefit Plans....................... 20
4.17 Contracts.................................... 23
4.18 Labor Matters................................ 24
4.19 Undisclosed Liabilities...................... 24
4.20 Operation of Bergen's Business;
Relationships................................ 24
4.21 Permits; Compliance.......................... 24
4.22 Environmental Matters........................ 25
4.23 Opinion of Financial Advisors................ 26
4.24 Board Recommendation......................... 26
4.25 New Jersey Shareholders Protection Act and
Rights Agreement............................. 26
4.26 Accounts Receivable and Inventories.......... 27
4.27 Insurance.................................... 27
4.28 Employee Agreements.......................... 27
4.29 Director Compensation........................ 28
ARTICLE V. COVENANTS OF THE PARTIES .................... 28
5.1 Mutual Covenants............................. 28
(a) HSR Act Filings; Reasonable Efforts;
Notification............................. 28
(b) Pooling-of-Interests..................... 30
(c) Tax-Free Treatment....................... 30
(d) Public Announcements..................... 31
5.2 Covenants of Cardinal.......................... 31
(a) Cardinal Shareholders Meeting............ 31
(b) Preparation of Registration Statement.... 31
(c) Conduct of Cardinal's Operations......... 32
(d) Indemnification; Directors' and
Officers' Insurance...................... 32
(e) Merger Sub............................... 33
(f) NYSE Listing............................. 33
(g) Access................................... 33
(h) Board of Directors of Cardinal........... 33
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(i) Corporate Name........................... 34
(j) Affiliates of Cardinal................... 34
(k) Notification of Certain Matters.......... 34
(l) Employees and Employee Benefit........... 34
5.3 Covenants of Bergen............................ 35
(a) Bergen Shareholders Meeting.............. 35
(b) Information for the Registration
Statement and Preparation of Joint
Proxy Statement.......................... 35
(c) Conduct of Bergen's Operations........... 36
(d) No Solicitation.......................... 38
(e) Termination Right........................ 40
(f) Affiliates of Bergen..................... 41
(g) Access................................... 41
(h) Notification of Certain Matters.......... 41
(i) Subsequent Financial Statements.......... 41
(j) Employee Agreements; Trust Amendment..... 42
ARTICLE VI. CONDITIONS .................................... 42
6.1 Conditions to the Obligations of Each Party.... 42
6.2 Conditions to Obligations of Bergen............ 43
6.3 Conditions to Obligations of Cardinal and
Subcorp........................................ 45
ARTICLE VII. TERMINATION AND AMENDMENT .................... 46
7.1 Termination.................................... 46
7.2 Effect of Termination.......................... 48
7.3 Amendment...................................... 49
7.4 Liquidated Damages............................. 50
7.5 Exclusive Remedy............................... 50
7.6 Extension; Waiver.............................. 50
ARTICLE VIII. MISCELLANEOUS .............................. 51
8.1 Survival of Representations and Warranties..... 51
8.2 Notices........................................ 51
8.3 Interpretation................................. 52
8.4 Counterparts................................... 53
8.5 Entire Agreement............................... 53
8.6 Third Party Beneficiaries...................... 54
8.7 Governing Law.................................. 54
8.8 Consent to Jurisdiction; Venue................. 54
8.9 Specific Performance........................... 54
8.10 Assignment..................................... 54
8.11 Expenses....................................... 54
Exhibit A-1 Form of Bergen Affiliate Letter
Exhibit A-2 Form of Cardinal Affiliate Letter
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement")
is made and entered into as of the 23rd day of August, 1997, by
and among Cardinal Health, Inc., an Ohio corporation
("Cardinal"), Bruin Merger Corp., a New Jersey corporation and
a wholly owned subsidiary of Cardinal ("Subcorp"), and Bergen
▇▇▇▇▇▇▇▇ Corporation, a New Jersey corporation ("Bergen").
PRELIMINARY STATEMENTS
A. Cardinal desires to combine its pharmaceutical
distribution business and other businesses with the
pharmaceutical distribution business and other businesses
operated by Bergen through the merger of Subcorp with and into
Bergen, with Bergen as the surviving corporation (the
"Merger"), pursuant to which each share of Bergen Common Stock
(as defined in Section 4.4) outstanding at the Effective Time
(as defined in Section 1.2) will be converted into the right to
receive Cardinal Common Shares (as defined in Section 3.4) as
more fully provided herein.
B. The Board of Directors of Bergen has determined
that the Merger is consistent with and in furtherance of the
long-term business strategy of Bergen and Bergen desires to
combine its pharmaceutical distribution business and other
businesses with the healthcare service businesses operated by
Cardinal and for the holders of shares of Bergen Common Stock
("Bergen Shareholders") to have a continuing equity interest in
the combined Cardinal/Bergen businesses through the ownership
of Cardinal Common Shares.
C. The parties intend that the Merger constitute a
tax-free "reorganization" within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
(the "Code"), by reason of Section 368(a)(2)(E) thereof.
D. The parties intend that the Merger be accounted
for as a pooling-of-interests for financial reporting purposes.
E. The respective Boards of Directors of Cardinal,
Subcorp and Bergen have determined the Merger in the manner
contemplated herein to be desirable and in the best interests
of their respective shareholders and, by resolutions duly
adopted, have approved and adopted this Agreement.
AGREEMENT
Now, therefore, in consideration of these premises
and the mutual and dependent promises hereinafter set forth,
the parties hereto agree as follows:
ARTICLE I.
THE MERGER
1.1 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the provisions of the
New Jersey Business Corporation Act (the "NJBCA"), Subcorp
shall be merged with and into Bergen at the Effective Time. As
a result of the Merger, the separate corporate existence of
Subcorp shall cease and Bergen shall continue its existence
under the laws of the State of New Jersey. Bergen, in its
capacity as the corporation surviving the Merger, is
hereinafter sometimes referred to as the "Surviving
Corporation."
1.2 Effective Time. As promptly as possible on the
Closing Date (as defined below), the parties shall cause the
Merger to be consummated by filing with the Secretary of State
of the State of New Jersey (the "New Jersey Secretary of
State") a certificate of merger (the "Certificate of Merger")
in such form as is required by and executed in accordance with
Section 14A:10-4.1 of the NJBCA. The Merger shall become
effective (the "Effective Time") when the Certificate of Merger
has been filed with the New Jersey Secretary of State or at
such later time as shall be agreed upon by Cardinal and Bergen
and specified in the Certificate of Merger. Prior to the
filing referred to in this Section 1.2, a closing (the
"Closing") shall be held at the offices of Cardinal, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or such other place as the
parties may agree as soon as practicable (but in any event
within ten business days) following the date upon which all
conditions set forth in Article VI hereof have been satisfied
or waived, or at such other date as Cardinal and Bergen may
agree; provided, that the conditions set forth in Article VI
have been satisfied or waived at or prior to such date. The
date on which the Closing takes place is referred to herein as
the "Closing Date." For all tax purposes, the Closing shall be
effective at the end of the day on the Closing Date.
1.3 Effects of the Merger. From and after the
Effective Time, the Merger shall have the effects set forth in
Section 14A:10-6 of the NJBCA.
1.4 Certificate of Incorporation and Bylaws. At the
Effective Time (i) the Certificate of Incorporation of the
Surviving Corporation as in effect immediately prior to the
Effective Time shall be amended as of the Effective Time so as
to contain the provisions, and only the provisions, contained
immediately prior thereto in the Amended and Restated
Certificate of Incorporation of Subcorp, except for Article I
thereof which shall continue to read "The name of the
corporation is 'BERGEN ▇▇▇▇▇▇▇▇ CORPORATION'", and (ii) the
Bylaws of Subcorp in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation; in each
case until amended in accordance with applicable law. Cardinal
agrees not to amend the Certificate of Incorporation of the
Surviving Corporation for a period of at least one year from
the Effective Time.
1.5 Directors and Officers of the Surviving
Corporation. From and after the Effective Time, the officers
of Bergen shall be the officers of the Surviving Corporation
and the
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directors of Subcorp shall be the directors of the
Surviving Corporation, in each case until their respective
successors are duly elected and qualified. On or prior to the
Closing Date, Bergen shall deliver to Cardinal a written
acknowledgment reasonably satisfactory to Cardinal from each
director of Bergen that they will not be directors of Bergen
or the Surviving Corporation effective as of the Effective
Time.
1.6 Additional Actions. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be
advised that any further deeds, assignments or assurances in
law or any other acts are necessary or desirable to (a) vest,
perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of
the rights, properties or assets of Bergen, or (b) otherwise
carry out the provisions of this Agreement, Bergen and its
officers and directors shall be deemed to have granted to the
Surviving Corporation an irrevocable power of attorney to
execute and deliver all such deeds, assignments or assurances
in law and to take all acts necessary, proper or desirable to
vest, perfect or confirm title to and possession of such
rights, properties or assets in the Surviving Corporation and
otherwise to carry out the provisions of this Agreement, and
the officers and directors of the Surviving Corporation are
authorized in the name of Bergen or otherwise to take any and
all such action.
ARTICLE II.
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the
part of Cardinal, Subcorp or Bergen or their respective
shareholders:
(a) Each share of common stock, $0.01 par value, of
Subcorp issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common
stock, $0.01 par value, of the Surviving Corporation.
Such newly issued shares shall thereafter constitute all
of the issued and outstanding capital stock of the
Surviving Corporation.
(b) Subject to the other provisions of this Article
II, each share of Bergen Common Stock issued and
outstanding immediately prior to the Effective Time shall
be converted into and represent a number of Cardinal
Common Shares equal to the Exchange Ratio (as defined in
Section 2.2(a)).
(c) Each share of capital stock of Bergen held in
the treasury of Bergen shall be cancelled and retired and
no payment shall be made in respect thereof.
2.2 Exchange Ratio; Fractional Shares; Adjustments.
(a) The "Exchange Ratio" shall be equal to 0.775.
No certificates for fractional Cardinal Common Shares
shall be issued as a result of the conversion provided for
in Section 2.1(b).
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(b) In lieu of any such fractional shares, the
holder of a certificate previously evidencing Bergen
Common Stock, upon presentation of such fractional
interest represented by an appropriate certificate for
Bergen Common Stock to the Exchange Agent pursuant to
Section 2.3, shall be entitled to receive a cash payment
therefor in an amount equal to the value (determined with
reference to the closing price of Cardinal Common Shares
as reported on the New York Stock Exchange ("NYSE")
Composite Tape ("NYSE Composite Tape") on the last full
trading day immediately prior to the Closing Date) of such
fractional interest. Such payment with respect to
fractional shares is merely intended to provide a
mechanical rounding off of, and is not a separately
bargained for, consideration. If more than one
certificate representing shares of Bergen Common Stock
shall be surrendered for the account of the same holder,
the number of Cardinal Common Shares for which
certificates have been surrendered shall be computed on
the basis of the aggregate number of shares represented by
the certificates so surrendered.
(c) In the event that prior to the Effective Time
Cardinal shall declare a stock dividend or other
distribution payable in Cardinal Common Shares or
securities convertible into Cardinal Common Shares, or
effect a stock split, reclassification, combination or
other change with respect to Cardinal Common Shares, the
Exchange Ratio set forth in this Section 2.2 shall be
adjusted to reflect such dividend, distribution, stock
split, reclassification, combination or other change.
2.3 Exchange of Certificates.
(a) Exchange Agent. Promptly following the
Effective Time, Cardinal shall deposit with ChaseMellon
Shareholder Services, Inc. or such other exchange agent as
may be designated by Cardinal (the "Exchange Agent"), for
the benefit of Bergen Shareholders, for exchange in
accordance with this Section 2.3, certificates
representing Cardinal Common Shares issuable pursuant to
Section 2.1 in exchange for outstanding shares of Bergen
Common Stock and shall from time-to-time deposit cash in
an amount reasonably expected to be paid pursuant to
Section 2.2 (such Cardinal Common Shares and cash,
together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange
Fund").
(b) Exchange Procedures. As soon as practicable
after the Effective Time, Cardinal shall instruct the
Exchange Agent to mail to each holder of record of a
certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented
outstanding shares of Bergen Common Stock whose shares
were converted into the right to receive Cardinal Common
Shares pursuant to Section 2.1(b), (i) a letter of
transmittal (the form and substance of which shall have
been reasonably approved by Bergen prior to the Effective
Time and which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such
other customary provisions as Cardinal may reasonably
specify) and (ii) instructions for effecting the surrender
of the Certificates in exchange for certificates
representing
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Cardinal Common Shares. Upon surrender of a Certificate
for cancellation to the Exchange Agent, together with a
duly executed letter of transmittal, the holder of such
Certificate shall be entitled to receive in exchange
therefor (x) a certificate or certificates representing
that whole number of Cardinal Common Shares which such
holder has the right to receive pursuant to Section 2.1 in
such denominations and registered in such names as such
holder may request and (y) a check representing the amount
of cash in lieu of fractional shares, if any, and unpaid
dividends and distributions, if any, which such holder has
the right to receive pursuant to the provisions of this
Article II, after giving effect to any required
withholding tax. The shares represented by the
Certificate so surrendered shall forthwith be cancelled.
No interest will be paid or accrued on the cash in lieu of
fractional shares, if any, and unpaid dividends and
distributions, if any, payable to holders of shares of
Bergen Common Stock. In the event of a transfer of
ownership of shares of Bergen Common Stock which is not
registered on the transfer records of Bergen, a
certificate representing the proper number of Cardinal
Common Shares, together with a check for the cash to be
paid in lieu of fractional shares, if any, and unpaid
dividends and distributions, if any, may be issued to such
transferee if the Certificate representing such shares of
Bergen Common Stock held by such transferee is presented
to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to
evidence that any applicable stock transfer taxes have
been paid. Until surrendered as contemplated by this
Section 2.3, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to
receive upon surrender a certificate representing Cardinal
Common Shares and cash in lieu of fractional shares, if
any, and unpaid dividends and distributions, if any, as
provided in this Article II.
(c) Distributions with Respect to Unexchanged
Shares. Notwithstanding any other provisions of this
Agreement, no dividends or other distributions declared or
made after the Effective Time with respect to Cardinal
Common Shares having a record date after the Effective
Time shall be paid to the holder of any unsurrendered
Certificate, and no cash payment in lieu of fractional
shares shall be paid to any such holder, until the holder
shall surrender such Certificate as provided in this
Section 2.3. Subject to the effect of Applicable Laws (as
defined in Section 3.10), following surrender of any such
Certificate, there shall be paid to the holder of the
certificates representing whole Cardinal Common Shares
issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time
theretofore payable with respect to such whole Cardinal
Common Shares and not paid, less the amount of any
withholding taxes which may be required thereon, and (ii)
at the appropriate payment date subsequent to surrender,
the amount of dividends or other distributions with a
record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender
payable with respect to such whole Cardinal Common Shares,
less the amount of any withholding taxes which may be
required thereon.
(d) No Further Ownership Rights in Bergen Common
Stock. All Cardinal Common Shares issued upon surrender
of Certificates in accordance with the terms
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hereof (including any cash paid pursuant to this Article
II) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of
Bergen Common Stock represented thereby, and there shall
be no further registration of transfers on the stock
transfer books of Bergen of shares of Bergen Common Stock
outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be
cancelled and exchanged as provided in this Section 2.3.
Certificates surrendered for exchange by any person
constituting an "affiliate" of Bergen for purposes of Rule
145(c) under the Securities Act of 1933, as amended (the
"Securities Act"), shall not be exchanged until Cardinal
has received written undertakings from such person in the
form attached hereto as Exhibit A-1.
(e) Termination of Exchange Fund. Any portion of
the Exchange Fund which remains undistributed to Bergen
Shareholders six months after the date of the mailing
required by Section 2.3(b) shall be delivered to Cardinal,
upon demand therefor, and holders of Certificates
previously representing shares of Bergen Common Stock who
have not theretofore complied with this Section 2.3 shall
thereafter look only to Cardinal for payment of any claim
to Cardinal Common Shares, cash in lieu of fractional
shares thereof, or dividends or distributions, if any, in
respect thereof.
(f) No Liability. None of Cardinal, the Surviving
Corporation or the Exchange Agent shall be liable to any
person in respect of any shares of Bergen Common Stock (or
dividends or distributions with respect thereto) or cash
from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been
surrendered prior to seven years after the Effective Time
of the Merger (or immediately prior to such earlier date
on which any cash, any cash in lieu of fractional shares
or any dividends or distributions with respect to whole
shares of Bergen Common Stock in respect of such
Certificate would otherwise escheat to or become the
property of any Governmental Authority (as defined in
Section 3.5)), any such cash, dividends or distributions
in respect of such Certificate shall, to the extent
permitted by Applicable Laws, become the property of
Cardinal, free and clear of all claims or interest of any
person previously entitled thereto.
(g) Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund, as
directed by Cardinal, on a daily basis. Any interest and
other income resulting from such investments shall be paid
to Cardinal upon termination of the Exchange Fund pursuant
to Section 2.3(e).
2.4 Treatment of Stock Options.
(a) Prior to the Effective Time, Cardinal and Bergen
shall take all such actions as may be necessary to cause
each unexpired and unexercised option under stock option
plans of Bergen in effect on the date hereof which has
been granted to current or former directors, officers or
employees of Bergen by Bergen (or which has been granted
by Bergen prior to the Effective Time pursuant to
agreements in compliance with the terms of this Agreement)
(each, a "Bergen Option") to be automatically converted at
the
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Effective Time into an option (a "Cardinal Exchange
Option") to purchase that number of Cardinal Common Shares
equal to the number of shares of Bergen Common Stock
issuable immediately prior to the Effective Time upon
exercise of the Bergen Option (without regard to actual
restrictions on exercisability) multiplied by the Exchange
Ratio, with an exercise price equal to the exercise price
which existed under the corresponding Bergen Option
divided by the Exchange Ratio, and with other terms and
conditions that are the same as the terms and conditions
of such Bergen Option immediately before the Effective
Time; provided that with respect to any Bergen Option that
is an "incentive stock option" within the meaning of
Section 422 of the Code, the foregoing conversion shall be
carried out in a manner satisfying the requirements of
Section 424(a) of the Code. In connection with the
issuance of Cardinal Exchange Options, Cardinal shall (i)
reserve for issuance the number of Cardinal Common Shares
that will become subject to Cardinal Exchange Options
pursuant to this Section 2.4 and (ii) from and after the
Effective Time, upon exercise of Cardinal Exchange
Options, make available for issuance all Cardinal Common
Shares covered thereby, subject to the terms and
conditions applicable thereto.
(b) Bergen agrees to issue treasury shares of
Bergen, to the extent available, upon the exercise of
Bergen Options prior to the Effective Time.
(c) Cardinal agrees to use its reasonable efforts to
file with the Securities and Exchange Commission (the
"Commission") within 15 business days after the Closing
Date a registration statement on Form S-8 or other
appropriate form under the Securities Act to register
Cardinal Common Shares issuable upon exercise of the
Cardinal Exchange Options and use its reasonable efforts
to cause such registration statement to remain effective
until the exercise or expiration of such options.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF CARDINAL AND SUBCORP
In order to induce Bergen to enter into this
Agreement, Cardinal and Subcorp hereby represent and warrant to
Bergen that the statements contained in this Article III are
true, correct and complete.
3.1 Organization and Standing. Each of Cardinal and
Subcorp is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation
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
Cardinal and Subcorp 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, makes such qualification necessary, except where the
failure to be so qualified or in good standing in such
jurisdiction would not reasonably be expected to have a
Material Adverse Effect (as defined in Section 8.3) on
Cardinal. Cardinal is not in default in the performance,
observance or fulfillment of any provision of its Articles of
Incorporation, as amended and restated (the "Cardinal
Articles"), or its Code of Regulations, as amended and restated
(the "Cardinal Code of
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Regulations"), and Subcorp is not in default in the
performance, observance or fulfillment of any provisions of its
Amended and Restated Certificate of Incorporation or Bylaws.
Cardinal has heretofore furnished to Bergen a complete and
correct copy of the Cardinal Articles and Cardinal Code of
Regulations.
3.2 Subsidiaries. Except as set forth in Section
3.2 to the disclosure schedule delivered by Cardinal to Bergen
and dated the date hereof (the "Cardinal Disclosure Schedule"),
Cardinal 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 Cardinal's subsidiaries.
3.3 Corporate Power and Authority. Each of Cardinal
and Subcorp has all requisite corporate power and authority to
enter into and deliver this Agreement, subject to approval of
(i) amendments to the Cardinal Articles to change Cardinal's name as
provided for in Section 5.2(i) and to increase the number of
authorized Cardinal Common Shares, and (ii) the issuance of
Cardinal Common Shares issuable in the Merger and the
transactions contemplated hereby by the Cardinal Shareholders
(such proposals to amend the Cardinal Articles and to authorize
the issuance of Cardinal Common Shares collectively the
"Cardinal Shareholder Proposals"), to perform its obligations
hereunder and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on
the part of each of Cardinal and Subcorp, subject to approval
by the Cardinal Shareholders of the Cardinal Shareholder
Proposals. This Agreement has been duly executed and delivered
by each of Cardinal and Subcorp, and constitutes the legal,
valid and binding obligation of each of Subcorp and Cardinal
enforceable against each of them in accordance with its terms.
3.4 Capitalization of Cardinal and Subcorp.
(a) As of August 7, 1997, Cardinal's authorized
capital stock consisted solely of (a) 150,000,000 common
shares, without par value ("Cardinal Common Shares"), of which
(i) 109,097,646 shares were issued and outstanding, (ii)
240,709 shares were issued and held in treasury (which does not
include the shares reserved for issuance as set forth in clause
(a)(iii) below) and (iii) 6,000,434 shares were reserved for
issuance upon the exercise or conversion of options, warrants
or convertible securities granted or issuable by Cardinal, (b)
5,000,000 Class B common shares, without par value, none of
which was issued and outstanding or reserved for issuance, and
(c) 500,000 Non-Voting Preferred Shares, without par value,
none of which was issued and outstanding or reserved for
issuance. Each outstanding share of Cardinal capital stock is,
and all Cardinal Common Shares to be issued in connection with
the Merger will be, duly authorized and validly issued, fully
paid and nonassessable, and each outstanding share of Cardinal
capital stock has not been, and all Cardinal Common Shares to
be issued in connection with the Merger will not be, issued in
violation of any preemptive or similar rights. As of the date
hereof, other than as set forth in the first sentence hereof or
in
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Section 3.4 to the Cardinal Disclosure Schedule, 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, repurchase,
transfer or registration by Cardinal of any equity securities
of Cardinal, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital
stock of Cardinal and neither Cardinal nor any Cardinal
subsidiary has any obligation of any kind to issue any
additional securities or to pay for or repurchase any
securities of Cardinal, its subsidiaries or its or their
predecessors. The Cardinal Common Shares (including those
shares to be issued in the Merger) are registered under the
Securities Exchange Act of 1934, as amended (together with the
rules and regulations thereunder, the "Exchange Act"). Except
as set forth in Section 3.4 to the Cardinal Disclosure
Schedule, Cardinal has no agreement, arrangement or
understanding to register any securities of Cardinal or any of
its subsidiaries under the Securities Act 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 are no
longer in effect as of the date of this Agreement); copies of
all such agreements have previously been provided to Bergen.
(b) Subcorp's authorized capital stock consists
solely of 1,000 shares of Common Stock, par value $.01 per
share ("Subcorp Common Stock"), of which, as of the date
hereof, 100 were issued and outstanding and none were reserved
for issuance. As of the date hereof, all of the outstanding
shares of Subcorp Common Stock are owned free and clear of any
liens, claims or encumbrances by Cardinal.
3.5 Conflicts; Consents and Approval. Neither the
execution and delivery of this Agreement by Cardinal or Subcorp
nor the consummation of the transactions contemplated hereby
will:
(a) conflict with, or result in a breach of any
provision of the Cardinal Articles or Cardinal Code of
Regulations or the Amended and Restated Certificate of
Incorporation or Bylaws of Subcorp, subject to approval by
the Cardinal Shareholders of the Cardinal Shareholder
Proposals;
(b) 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 Cardinal 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 Cardinal or any of
its subsidiaries is a party;
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(c) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Cardinal or any
of its subsidiaries or any of their respective properties
or assets; or
(d) require any action or consent or approval of, or
review by, or registration or filing by Cardinal or any of
its affiliates with, any third party or any local,
domestic, foreign or multi-national court, arbitral
tribunal, administrative agency or commission or other
governmental or regulatory body, agency, instrumentality
or authority (a "Governmental Authority"), other than (i)
approval by the Cardinal Shareholders of the Cardinal
Shareholder Proposals, (ii) authorization for inclusion of
the Cardinal Common Shares to be issued in the Merger and
the transactions contemplated hereby on the NYSE, subject
to official notice of issuance, (iii) actions required by
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"), (iv) registrations or other
actions required under federal and state securities laws
as are contemplated by this Agreement, or (v) consents or
approvals of any Governmental Authority set forth in
Section 3.5 to the Cardinal Disclosure Schedule;
except in the case of (b), (c) and (d) for any of the foregoing
that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Cardinal or a
material adverse effect on the ability of the parties to
consummate the transactions contemplated hereby.
3.6 Brokerage and Finder's Fees. Except as set
forth in Section 3.6 of the Cardinal Disclosure Schedule,
neither Cardinal nor any shareholder, director, officer or
employee thereof has incurred or will incur on behalf of
Cardinal any brokerage, finder's or similar fee in connection
with the transactions contemplated by this Agreement.
3.7 Accounting Matters; Reorganization. Neither
Cardinal nor any of its affiliates has taken or agreed to take
any action that (without giving effect to any actions taken or
agreed to be taken by Bergen or any of its affiliates) would
(a) prevent Cardinal from accounting for the business
combination to be effected by the Merger as a pooling-of-
interests for financial reporting purposes or (b) prevent the
Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
3.8 Cardinal SEC Documents. Cardinal has timely
filed with the Commission all forms, reports, schedules,
statements and other documents required to be filed by it since
December 31, 1994 under the Exchange Act or the Securities Act
(such documents, as supplemented and amended since the time of
filing, collectively, the "Cardinal SEC Documents"). The
Cardinal SEC Documents, including, without limitation, any
financial statements or schedules included therein, at the time
filed (and, in the case of registration statements and proxy
statements, on the dates of effectiveness and the dates of
mailing, respectively) (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) except as set forth in Section
3.8 to the Cardinal Disclosure Schedule, complied in all
material respects with the
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applicable requirements of the Exchange Act and the Securities
Act, as the case may be. The financial statements of Cardinal
included in the Cardinal SEC Documents at the time filed (and,
in the case of registration statements and proxy statements, on
the dates of effectiveness and the dates of mailing,
respectively) complied as to form in all material respects with
applicable accounting requirements and with the published rules
and regulations of the Commission 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 Commission), and fairly present (subject in the case of
unaudited statements to normal, recurring audit adjustments)
the consolidated financial position of Cardinal and its
consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended.
3.9 Registration Statement. None of the information
provided by Cardinal in writing for inclusion in the
registration statement on Form S-4 (such registration statement
as amended, supplemented or modified, the "Registration
Statement") to be filed with the Commission by Cardinal under
the Securities Act, including the prospectus relating to
Cardinal Common Shares to be issued in the Merger (as amended,
supplemented or modified, the "Prospectus") and the joint proxy
statement and form of proxies relating to the vote of Bergen
Shareholders with respect to the Merger and the vote of
Cardinal Shareholders with respect to the Cardinal Shareholder
Proposals (as amended, supplemented or modified, the "Joint
Proxy Statement"), at the time the Registration Statement
becomes effective or, in the case of the Joint Proxy Statement,
at the date of mailing and at the date of the Bergen
Shareholders Meeting or the Cardinal Shareholders Meeting
(each, as hereinafter defined) to consider the Merger and the
transactions contemplated thereby, 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. Each of the Registration
Statement and Joint Proxy Statement, except for such portions
thereof that relate only to Bergen, will comply as to form in
all material respects with the provisions of the Securities Act
and Exchange Act.
3.10 Compliance with Law. Cardinal and its
subsidiaries are in compliance with, and at all times since
September 30, 1994 have been in compliance with, all applicable
laws, statutes, orders, rules, regulations, policies or
guidelines promulgated, or judgments, decisions or orders
entered by any Governmental Authority, including, without
limitation, the Federal Prescription Drug Marketing Act and
comparable or related state law provisions, the Federal
Controlled Substances Act of 1970, the Food, Drug and Cosmetic
Act (the "FDCA"), the Good Manufacturing Practices standards of
the Food and Drug Administration (the "FDA"), federal Medicare
and Medicaid statutes, including, without limitation, 42 U.S.C.
Section 1320a-7b and 42 U.S.C. Section 1395nn or related state
or local statutes or regulations, applicable state laws
regulating pharmacy or wholesaling practices, the Occupational
Safety and Health Act and the regulations promulgated
thereunder (all such laws, statutes, orders, rules,
regulations, policies, guidelines, judgments, decisions and
orders, collectively, "Applicable Laws"), relating to Cardinal,
its subsidiaries or their respective business or properties,
except where the failure to be in compliance therewith
(individually or in the aggregate) would not reasonably be
expected to
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have a Material Adverse Effect on Cardinal or where such non-
compliance has been cured. Except as disclosed in Section 3.10
to the Cardinal Disclosure Schedule, no investigation or review
by any Governmental Authority with respect to Cardinal or its
subsidiaries is pending, or, to the knowledge of Cardinal,
threatened, nor 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 have a
Material Adverse Effect on Cardinal.
3.11 Litigation. Except as set forth in Section
3.11 to the Cardinal Disclosure Schedule or in the Cardinal SEC
Documents, there is no suit, claim, action, proceeding or
investigation (an "Action") pending or, to the knowledge of
Cardinal, threatened against Cardinal or any of its
subsidiaries which, individually or in the aggregate, would
have a Material Adverse Effect on Cardinal or a material
adverse effect on the ability of Cardinal to consummate the
transactions contemplated hereby. Neither Cardinal nor any of
its subsidiaries is subject to any outstanding order, writ,
injunction or decree which, individually or in the aggregate,
insofar as can be reasonably foreseen, could have a Material
Adverse Effect on Cardinal or a material adverse effect on the
ability of Cardinal to consummate the transactions contemplated
hereby. Except as set forth in Section 3.11 to the Cardinal
Disclosure Schedule, since September 30, 1994, neither Cardinal
nor any of its subsidiaries has been subject to any outstanding
order, writ, injunction or decree relating to Cardinal's method
of doing business or its relationship with past, existing or
future users or purchasers of any goods or services of
Cardinal.
3.12 Board Recommendation. The Board of Directors
of Cardinal, at a meeting duly called and held, has by
unanimous vote of those directors present (who constituted
100% of the directors then in office) (i) determined that this
Agreement and the transactions contemplated hereby, including
the Merger, taken together, are fair to and in the best
interests of Cardinal and the Cardinal Shareholders, and (ii)
resolved to recommend that the Cardinal Shareholders approve
and authorize the Cardinal Shareholder Proposals and the
transactions contemplated hereby.
3.13 No Material Adverse Change. Except as
disclosed in the Cardinal SEC Documents filed prior to the date
of this Agreement, since June 30, 1996, there has been no
change in the assets, liabilities, results of operations or
financial condition of Cardinal which would constitute a
Material Adverse Effect on Cardinal or any event, occurrence or
development which would have a material adverse effect on the
ability of Cardinal to consummate the transactions contemplated
hereby.
3.14 Title to and Condition of Properties.
Cardinal and its subsidiaries own or hold under valid leases
all real property, plants, machinery and equipment necessary
for the conduct of the business of Cardinal and its
subsidiaries as presently conducted, except where the failure
to own or so hold such property, plants, machinery and
equipment would not reasonably be expected to have a Material
Adverse Effect on Cardinal.
3.15 Undisclosed Liabilities. Except (i) as and to
the extent disclosed or reserved against on the restated
consolidated balance sheet of Cardinal as of June 30, 1996
included in the Cardinal SEC Documents, (ii) as incurred after
the date thereof in the ordinary
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course of business consistent with prior practice and not
prohibited by this Agreement or (iii) as set forth in Section
3.15 to the Cardinal Disclosure Schedule, Cardinal, together
with its subsidiaries, does 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, have or would have
a Material Adverse Effect on Cardinal.
3.16 Operation of Cardinal's Business;
Relationships.
(a) Since March 31, 1997, through the date of this
Agreement, neither Cardinal nor any of its subsidiaries has
engaged in any transaction which, if done after execution of
this Agreement, would violate in any material respect Section
5.2(c) hereof except as set forth in Section 3.16(a) to the
Cardinal Disclosure Schedule.
(b) Except as set forth in Section 3.16(b) to the
Cardinal Disclosure Schedule, since January 1, 1997, no
material customer of Cardinal or any of its subsidiaries has
indicated that it will stop or materially decrease purchasing
materials, products or services from Cardinal or its
subsidiaries and no material supplier of Cardinal or any of its
subsidiaries has indicated that it will stop or materially
decrease the supply of materials, products or services to
Cardinal or its subsidiaries, in each case, the effect of which
would have a Material Adverse Effect on Cardinal.
3.17 Interested Stockholder or Acquiring Person.
Neither Cardinal nor any of its affiliates is or has been an
"Interested Stockholder" as such term is defined in the New
Jersey Shareholders Protection Act (the "NJSPA") or an
"Acquiring Person" as such term is defined in the Bergen Rights
Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BERGEN
In order to induce Subcorp and Cardinal to enter into
this Agreement, Bergen hereby represents and warrants to
Cardinal and Subcorp that the statements contained in this
Article IV are true, correct and complete.
4.1 Organization and Standing. Bergen is a
corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey 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 Bergen
and each subsidiary of Bergen 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 have a Material Adverse
Effect on Bergen. Bergen is not in default in the performance,
observance or fulfillment of any provision of its Certificate
of Incorporation, as amended and restated (the "Bergen
Certificate"), or its Bylaws, as in effect on the date hereof
(the "Bergen Bylaws"). Bergen has heretofore furnished to
Cardinal a complete and correct copy of the Bergen Certificate
and the Bergen Bylaws. Listed in Section
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4.1 to the disclosure schedule delivered by Bergen to Cardinal
and dated the date hereof (the "Bergen Disclosure Schedule") is
each jurisdiction in which Bergen or a subsidiary of Bergen is
qualified to do business and in good standing as of the date of
the Agreement.
4.2 Subsidiaries. Bergen does not own, directly or
indirectly, any equity or other ownership interest in any
corporation, partnership, joint venture or other entity or
enterprise, except for the subsidiaries and other entities set
forth in Section 4.2 to the Bergen Disclosure Schedule. Except
as set forth in Section 4.2 to the Bergen Disclosure Schedule,
Bergen is not 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 such entity that is
not wholly owned by Bergen. Bergen 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 Bergen's
subsidiaries. Each of the outstanding shares of capital stock
of each of Bergen's subsidiaries is duly authorized, validly
issued, fully paid and nonassessable, and is owned, directly or
indirectly, by Bergen free and clear of all liens, pledges,
security interests, claims or other encumbrances. The
following information for each subsidiary of Bergen is set
forth in Section 4.2 to the Bergen Disclosure Schedule, as
applicable: (i) its name and jurisdiction of incorporation or
organization; (ii) for a subsidiary which is not wholly owned
by Bergen, its authorized capital stock or share capital; and
(iii) for a subsidiary which is not wholly owned by Bergen, the
number of issued and outstanding shares of capital stock or
share capital, the record owner(s) thereof to the extent known
to Bergen and the number of issued and outstanding shares of
capital stock or share capital beneficially owned by Bergen.
Other than as set forth in Section 4.2 to the Bergen Disclosure
Schedule, 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 of any subsidiary
of Bergen, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital
stock of any subsidiary of Bergen, and neither Bergen nor any
subsidiary of Bergen has any obligation of any kind to issue
any additional securities of any subsidiary of Bergen or to pay
for or repurchase any securities of any subsidiary of Bergen or
any predecessor thereof.
4.3 Corporate Power and Authority. Bergen has all
requisite corporate power and authority to enter into and
deliver this Agreement, to perform its obligations hereunder
and, subject to approval of the Merger and the transactions
contemplated hereby by Bergen Shareholders, to consummate the
transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Bergen have been duly authorized
by all necessary corporate action on the part of Bergen,
subject to approval of the Merger and the transactions
contemplated hereby by Bergen Shareholders. This Agreement has
been duly executed and delivered by Bergen and constitutes the
legal, valid and binding obligation of Bergen enforceable
against it in accordance with its terms.
4.4 Capitalization of Bergen. As of July 31, 1997,
Bergen's authorized capital stock consisted solely of (a)
100,000,000 shares of Class A common stock, par value $1.50 per
share ("Bergen Common Stock"), of which (i) 50,392,779 shares
were issued and outstanding, (ii) 5,454,983 shares were issued
and held in treasury (which does not include the shares
reserved
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for issuance set forth in clause (iii) below) and no shares
were held by subsidiaries of Bergen, (iii) 2,531,152 shares
were reserved for issuance upon the exercise of outstanding
options and no shares were reserved for issuance upon the
conversion or exchange of convertible or exchangeable
securities granted or issued by Bergen, (iv) 820,313 shares of
Bergen Common Stock were reserved for issuance under the Bergen
Elective Savings Retirement Plan and (v) 10,028,163 shares of
Bergen Common Stock were reserved for future issuance under the
Stock Option Agreement dated August 23, 1997 between Cardinal
and Bergen (the "Bergen Stock Option Agreement"); and (b)
3,000,000 shares of preferred stock, without par value ("Bergen
Preferred Stock"), none of which was issued and outstanding or
reserved for issuance, except for a series of 400,000 shares of
Bergen Preferred Stock designated as Series A Junior
Participating Preferred Stock reserved for issuance pursuant to
the Bergen Rights Agreement (as defined in Section 4.25), none
of which was issued and outstanding. Each outstanding share of
Bergen 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, in Section 4.4 to the
Bergen Disclosure Schedule or as contemplated by the Bergen
Stock Option Agreement, 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, repurchase or transfer by Bergen of any
securities of Bergen, nor are there outstanding any securities
which are convertible into or exchangeable for any shares of
capital stock of Bergen, and neither Bergen nor any subsidiary
of Bergen has any obligation of any kind to issue any
additional securities or to pay for or repurchase any
securities of Bergen or any predecessor. The Bergen Disclosure
Schedule accurately sets forth as of August 7, 1997 the names
of, and the number of shares of each class (including the
number of shares issuable upon exercise of Bergen Options and
the exercise price and vesting schedule with respect thereto)
and the number of options held by, all holders of options to
purchase Bergen capital stock. Except as set forth in Section
4.4 to the Bergen Disclosure Schedule, Bergen has no agreement,
arrangement or understandings to register any securities of
Bergen or any of its subsidiaries under the Securities Act 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 are no longer in effect as of the date of this
Agreement); copies of all such agreements have previously been
provided to Cardinal.
4.5 Conflicts; Consents and Approvals. Neither the
execution and delivery of this Agreement or the Bergen Stock
Option Agreement by Bergen, nor the consummation of the
transactions contemplated hereby or thereby will:
(a) conflict with, or result in a breach of any
provision of, the Bergen Certificate or the Bergen Bylaws;
(b) 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 Bergen under, any of the terms,
conditions or provisions of any
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note, bond, mortgage, indenture, deed of trust, license,
contract, undertaking, agreement, lease or other
instrument or obligation to which Bergen or any of its
subsidiaries is a party;
(c) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Bergen or any of
its subsidiaries or any of their respective properties or
assets; or
(d) require any action or consent or approval of, or
review by, or registration or filing by Bergen or any of
its affiliates with, any third party or any Governmental
Authority, other than (i) approval of the Merger and the
transactions contemplated hereby by Bergen Shareholders,
(ii) actions required by the HSR Act, (iii) registrations
or other actions required under federal and state
securities laws as are contemplated by this Agreement and
(iv) consents or approvals of any Governmental Authority
set forth in Section 4.5 to the Bergen Disclosure
Schedule;
except in the case of (b), (c) and (d) for any of the foregoing
that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Bergen or a
material adverse effect on the ability of the parties to
consummate the transactions contemplated hereby. Other than as
set forth on Schedule 4.5(b) to the Bergen Disclosure Schedule,
to the knowledge of Bergen, neither the execution and delivery
of this Agreement or the Bergen Stock Option Agreement by
Bergen, nor the consummation of the transactions contemplated
hereby or thereby will 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 material
properties or assets of Bergen under, any of the terms,
conditions or provisions of any material note, bond, mortgage,
indenture, deed of trust, license, contract, undertaking,
agreement, lease or other instrument or obligation to which
Bergen or any of its subsidiaries is a party.
4.6 No Material Adverse Change. Except as disclosed
in the Bergen SEC Documents (as defined in Section 4.7 hereof)
filed prior to the date of this Agreement, since September 30,
1996, there has been no change in the assets, liabilities,
results of operations or financial condition of Bergen which
would constitute a Material Adverse Effect on Bergen or any
event, occurrence or development which would have a material
adverse effect on the ability of Bergen to consummate the
transactions contemplated hereby.
4.7 Bergen SEC Documents. Bergen has timely filed
with the Commission all forms, reports, schedules, statements
and other documents required to be filed by it since December
31, 1994 under the Exchange Act or the Securities Act (such
documents, as supplemented and amended since the time of
filing, collectively, the "Bergen SEC Documents"). The Bergen
SEC Documents, including, without limitation, any financial
statements or schedules included therein, at the time filed
(and, in the case of registration statements and proxy
statements, on the dates of effectiveness and the dates of
mailing, respectively) (a) did not
-16-
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) except as set forth in Section 4.7 to the Bergen
Disclosure Schedule, complied in all material respects with the
applicable requirements of the Exchange Act and the Securities
Act, as the case may be. The financial statements of Bergen
included in the Bergen SEC Documents at the time filed (and, in
the case of registration statements and proxy statements, on
the dates of effectiveness and the dates of mailing,
respectively) complied as to form in all material respects with
applicable accounting requirements and with the published rules
and regulations of the Commission 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 Commission), and fairly present (subject in the case of
unaudited statements to normal, recurring audit adjustments)
the consolidated financial position of Bergen and its
consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended. No subsidiary of Bergen is subject to the
periodic reporting requirements of the Exchange Act or required
to file any form, report or other document with the Commission,
the NYSE, any other stock exchange or any other comparable
Governmental Authority.
4.8 Taxes. Except as set forth in Section 4.8 to the Bergen
Disclosure Schedule and except for such matters that would not,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Bergen:
(a) Bergen and its subsidiaries (i) have duly filed 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 Bergen or its
subsidiaries 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 Effective Time, 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 Bergen or any of its subsidiaries for which
there are not adequate reserves. Neither Bergen nor any of its
subsidiaries 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
made in the ordinary course and for which payment has been made
or there are adequate reserves. With respect to any taxable
period ended prior to September 30, 1992, all federal income
Tax Returns including Bergen or any of its subsidiaries have
been audited by the Internal Revenue Service or are closed by
the applicable statute of limitations. Neither Bergen nor any
of its subsidiaries 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
-17-
assets, real or personal, tangible or intangible of Bergen or
any of its subsidiaries (other than liens for Taxes not yet
due). No claim has ever been made in writing by an authority
in a jurisdiction where none of Bergen and its subsidiaries
files Tax Returns that Bergen or any of its subsidiaries is or
may be subject to taxation by that jurisdiction. Bergen has
not filed an election under Section 341(f) of the Code to be
treated as a consenting corporation.
(b) Neither Bergen nor any of its subsidiaries is
obligated by any contract, agreement or other arrangement to
indemnify any other person with respect to Taxes. Neither
Bergen nor any of its subsidiaries are now or have 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 Bergen or any of its
subsidiaries which (i) requires Bergen or any of its
subsidiaries to make any Tax payment to (other than payments
made prior to March 31, 1997 or payments which are adequately
reserved on Bergen's balance sheet as of September 30, 1996
included in the Bergen SEC Documents) 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 Bergen or any of its subsidiaries, or (iii)
requires or permits the transfer or assignment of income,
revenues, receipts or gains to Bergen or any of its
subsidiaries, from any other person.
(c) Bergen and its subsidiaries 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.
(d) "Tax Returns" means returns, reports and forms
required to be filed with any Governmental Authority of the
United States or any other jurisdiction responsible for the
imposition or collection of Taxes.
(e) "Taxes" means (i) all Taxes (whether federal,
state, local or foreign) based upon or measured by income and
any other Tax whatsoever, including, without limitation, gross
receipts, profits, sales, use, occupation, value added, ad
valorem, transfer, franchise, withholding, payroll, employment,
excise, or property Taxes, together with any interest or
penalties imposed with respect thereto and (ii) any obligations
under any agreements or arrangements with respect to any Taxes
described in clause (i) above.
4.9 Compliance with Law. Except as set forth in
Section 4.9 to the Bergen Disclosure Schedule, Bergen is in
compliance, and at all times since September 30, 1994 has been
in compliance, with all Applicable Laws relating to Bergen or
its business or properties, except where the failure to be in
compliance with such Applicable Laws (individually or in the
aggregate) would not reasonably be expected to have a Material
Adverse Effect on Bergen or where such non-compliance has been
cured. Except as disclosed in Section 4.9 to the Bergen
Disclosure Schedule, no investigation or review by any
Governmental Authority with respect to Bergen is pending, or,
to the knowledge of Bergen, threatened, nor has any
Governmental
-18-
Authority indicated in writing an intention to conduct the
same, other than those the outcome of which would not
reasonably be expected to have a Material Adverse Effect on
Bergen.
4.10 Intellectual Property. Except as would not,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Bergen, Bergen owns or
possesses adequate licenses or other valid rights to use all
patents, patent rights, trademarks, trademark rights, trade
names, trade dress, trade name rights, copyrights, service
marks, trade secrets, applications for trademarks and for
service marks, know-how and other proprietary rights and
information used or held for use in connection with the
businesses of Bergen ("Intellectual Property") as currently
conducted, and there has not been any written assertion or
claim against Bergen challenging the validity or the use by
Bergen 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 4.10 to the
Bergen Disclosure Schedule, no material licenses or other valid
rights to use all patents, patent rights, trademarks, trademark
rights, trade names, trade dress, trade name rights,
copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other
proprietary rights is necessary for the operation of the
business of Bergen in substantially the same manner as such
business is presently conducted. The conduct of the businesses
of Bergen as currently conducted does not conflict with or
infringe upon any patent, patent right, license, trademark,
trademark right, trade dress, trade name, trade name right,
service ▇▇▇▇ or copyright of any third party except for any
conflict or infringement that, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on Bergen. Except as would not, individually or
in the aggregate, reasonably be expected to have a Material
Adverse Effect on Bergen, there are no infringements of any of
the Intellectual Property owned by or licensed by or to Bergen
and the Intellectual Property is not the subject to any pending
Action.
4.11 Title to and Condition of Properties. Bergen
owns or holds under valid leases all real property, plants,
machinery and equipment necessary for the conduct of the
business of Bergen as presently conducted, except where the
failure to own or so hold such property, plants, machinery and
equipment would not reasonably be expected to have a Material
Adverse Effect on Bergen.
4.12 Registration Statement; Joint Proxy Statement.
None of the information provided in writing by Bergen for
inclusion in the Registration Statement at the time it becomes
effective or, in the case of the Joint Proxy Statement, at the
date of mailing and at the date of the Bergen Shareholders
Meeting or the Cardinal Shareholders Meeting, will 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. The Registration
Statement and Joint Proxy Statement, except for such portions
thereof that relate only to Cardinal and its subsidiaries, will
each comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act.
4.13 Litigation. Except as set forth in Section
4.13 to the Bergen Disclosure Schedule or specifically
identified in the Bergen SEC Documents filed prior to the date
of the Agreement, there is no Action pending or, to the
knowledge of Bergen, threatened against
-19-
Bergen or any executive officer or director of Bergen which,
individually or in the aggregate, would have a Material Adverse
Effect on Bergen or a material adverse effect on the ability of
Bergen to consummate the transactions contemplated hereby.
Bergen is not subject to any outstanding order, writ,
injunction or decree which, individually or in the aggregate,
insofar as can be reasonably foreseen, could have a Material
Adverse Effect on Bergen or a material adverse effect on the
ability of Bergen to consummate the transactions contemplated
hereby. Except as set forth in Section 4.13 to the Bergen
Disclosure Schedule, since September 30, 1994, Bergen has not
been subject to any outstanding order, writ, injunction or
decree relating to Bergen's method of doing business or its
relationship with past, existing or future users or purchasers
of any goods or services of Bergen.
4.14 Brokerage and Finder's Fees; Expenses. Except
for Bergen's obligations to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. ("▇▇▇▇▇▇▇
▇▇▇▇▇") (copies of all written agreements relating to such
obligations having previously been provided to Cardinal),
neither Bergen nor any stockholder, director, officer or
employee thereof, has incurred or will incur on behalf of
Bergen, any brokerage, finder's or similar fee in connection
with the transactions contemplated by this Agreement.
4.15 Accounting Matters; Reorganization. Neither
Bergen nor any of its affiliates has taken or agreed to take
any action that (without giving effect to any actions taken or
agreed to be taken by Cardinal or any of its affiliates) would
(a) prevent Cardinal from accounting for the business
combination to be effected by the Merger as a pooling-of-
interests for financial reporting purposes or (b) prevent the
Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
4.16 Employee Benefit Plans.
(a) For purposes of this Section 4.16, 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" means the Employee Retirement Income Security
Act of 1974, as amended, and the regulations thereunder.
"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)(14)
of ERISA.
-20-
"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 Bergen or
any of its subsidiaries or to which Bergen or any of its
subsidiaries contributes or is obligated to contribute.
"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.
(b) With respect to each Plan, Bergen has provided
to Cardinal 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 most recent Annual Report (Form 5500 Series)
and accompanying schedule, 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.
(c) Except as set forth in Section 4.16(c) to the
Bergen 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
there are no existing circumstances nor any events that have
occurred that would adversely affect the qualified status of
any Qualified Plan or the related trust in a manner that would
have a Material Adverse Effect.
(d) All contributions required to be made to any
Plan by 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 the date
hereof have been made or paid in full on or before the final
due date thereof and through the Closing Date will be made or
paid in full on or before the final due date thereof.
(e) Bergen and its subsidiaries have complied, and
are 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 Bergen or
any of its subsidiaries under ERISA or the Code.
(f) Except as set forth in Section 4.16(f) to the
Bergen 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
control, within the meaning of Section 4063 of ERISA (a
"Multiple Employer Plan"), nor has Bergen or any of its
subsidiaries or any of their respective ERISA Affiliates, at
any time within six years before the date hereof, contributed
to or been obligated to contribute to any Multiemployer Plan or
Multiple Employer Plan. With respect to each Multiemployer
Plan: (i) neither Bergen nor any of its ERISA Affiliates has
incurred any Withdrawal Liability that has not been satisfied
in full; and (ii) neither Bergen nor any ERISA
-21-
Affiliate 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, to be
insolvent, or to be terminated. Except for Multiemployer
Plans, no Plan is subject to Title IV or Section 302 of ERISA
or Section 412 or 4971 of the Code.
(g) There does not now exist, and there are no
currently existing circumstances that would result in, any
material Controlled Group Liability that would be a liability
of Bergen or any of its subsidiaries following the Closing.
Without limiting the generality of the foregoing, neither
Bergen nor any of its subsidiaries nor any of their respective
ERISA Affiliates has engaged in any transaction described in
Section 4069 or Section 4204 of ERISA.
(h) 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 4.16(h) to the Bergen
Disclosure Schedule, neither Bergen nor any of its subsidiaries
has any material liability for life, health, medical or other
welfare benefits to former employees or beneficiaries or
dependents thereof.
(i) Except as disclosed in Section 4.16(i) to the
Bergen Disclosure Schedule, neither the execution and delivery
of this Agreement nor the consummation of the transactions
contemplated hereby 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 Bergen or any of its subsidiaries. Without
limiting the generality of the foregoing, except as set forth
in Section 4.16(i) to the Bergen Disclosure Schedule, no amount
paid or payable by Bergen or any of its subsidiaries in
connection with the transactions contemplated hereby 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.
(j) Except as disclosed in Section 4.16(j) to the
Bergen Disclosure Schedule, there are no pending or to the
knowledge of Bergen threatened claims (other than claims for
benefits in the ordinary course), 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 which
would result in any material liability of Bergen or any of its
subsidiaries to the Pension Benefit Guaranty Corporation, the
Department of Treasury, the Department of Labor or any
Multiemployer Plan.
(k) Section 4.16(k) to the Bergen Disclosure
Schedule sets forth a list of each employment, severance or
similar agreement under which Bergen or any of its subsidiaries
is or could become obligated to provide compensation or
benefits in excess of $200,000 in any one calendar year, and
Bergen has provided to Cardinal a copy of each such agreement.
(l) The Bergen Amended and Restated Supplemental
Executive Retirement Plan (the "SERP") and the Amended and
Restated Bergen Capital Accumulation Plan (the "CAP") have been
amended, and the Company has executed an amendment (the "Trust
Amendment") to the Master Trust Agreement for Bergen ▇▇▇▇▇▇▇▇
Corporation Executive Deferral Plans dated as of December 27,
1994, between Bergen and Wachovia Bank of North Carolina, N.A.
(the "Trustee"), which amendment is subject to execution by the
Trustee. Such amendments provide
-22-
that, except as set forth in the immediately following
sentence, (i) the consummation of the Merger shall not
effectuate a "Change in Control" within the meaning thereof,
and (ii) effective as of the Effective Time, all provisions
thereof that relate to a "Change in Control" shall be null and
void and of no further force and effect, as if deleted.
Notwithstanding the foregoing, the consummation of the Merger
shall effectuate a "Change in Control" solely for purposes of
giving effect to (A) the provisions of Section 5.1(b)(i) of the
SERP that call for full vesting of the "Accrued Benefit" of
each "Participant" upon a "Change in Control" (as those terms
are defined in the SERP, as amended to exclude from
participation, contingent upon consummation of the Merger,
certain executives who previously participated therein), and
(B) the provisions of Section 5.4(a)(F) of the CAP that call
for the benefit of a "Participant" that is "Accrued" as of a
"Change in Control" (without giving effect to clauses (A)-(E)
of Section 5.4(a)) to become fully "Vested" as of a "Change in
Control" (as those terms are defined in the CAP, as similarly
amended to exclude from participation, contingent upon
consummation of the Merger, certain executives who previously
participated therein).
4.17 Contracts. Section 4.17 to the Bergen
Disclosure Schedule lists all contracts, agreements,
guarantees, leases and executory commitments that exist as of
the date hereof other than Plans (each a "Contract") to which
Bergen is a party and which fall within any of the following
categories: (a) Contracts not entered into in the ordinary
course of Bergen's business other than those that are not
material to the business of Bergen, (b) joint venture and
partnership agreements, (c) Contracts containing covenants
purporting to limit the freedom of Bergen 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 Effective Time would have the effect of limiting the
freedom of Cardinal or its subsidiaries (other than Bergen) 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
$10,000,000 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 Bergen or its affiliates, or any customer, licensee or
lessee thereof, (f) Contracts relating to any outstanding
commitment for capital expenditures in excess of $2,000,000,
(g) indentures, mortgages, promissory notes, loan agreements or
guarantees of borrowed money in excess of $2,000,000, letters
of credit or other agreements or instruments of Bergen or
commitments for the borrowing or the lending of amounts in
excess of $2,000,000 by Bergen or providing for the creation of
any charge, security interest, encumbrance or lien upon any of
the assets of Bergen with an aggregate value in excess of
$2,000,000, (h) Contracts providing for "earn-outs" or other
contingent payments by Bergen involving more than $100,000 over
the term of the Contract, and (i) except as specifically
described in Bergen SEC Documents filed prior to the date of
this Agreement, Contracts with or for the benefit of any
affiliate of Bergen or immediate family member thereof (other
than subsidiaries of Bergen) involving more than $60,000 in the
aggregate per affiliate. All such Contracts and all contracts
to which Bergen is a party and which involve annual revenues to
the business of Bergen in excess of 2.5% of Bergen's annual
revenues (each, a "Material Contract") are valid and binding
obligations of Bergen and, to the knowledge of Bergen, 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 have a Material Adverse Effect on Bergen.
Neither Bergen nor, to the knowledge of Bergen, any
-23-
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
or terminations which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on
Bergen. Set forth in Section 4.17(j) to the Bergen Disclosure
Schedule is a description of any material changes to the amount
and terms of the indentures of Bergen and its subsidiaries from
the description in the notes to the financial statements
incorporated in Bergen's Form 10-K for the period ending
September 30, 1996 filed with the Commission. Set forth in
Section 4.17(k) to the Bergen Disclosure Schedule is the amount
of the annual premium currently paid by Bergen for its
directors' and officers' liability insurance.
4.18 Labor Matters. Except as set forth in Section
4.18 to the Bergen Disclosure Schedule, Bergen does not have
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 Bergen or any persons otherwise performing services
primarily for Bergen. There is no labor strike, dispute or
stoppage pending or, to the knowledge of Bergen, threatened
against Bergen, and Bergen has not experienced any labor
strike, dispute or stoppage since September 30, 1994.
4.19 Undisclosed Liabilities. Except (i) as and to
the extent disclosed or reserved against on the balance sheet
of Bergen as of September 30, 1996 included in the Bergen SEC
Documents, (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 4.19 to the Bergen Disclosure Schedule, Bergen does 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, have or would have a Material Adverse Effect on
Bergen.
4.20 Operation of Bergen's Business; Relationships.
(a) Since March 31, 1997 through the date of this
Agreement, Bergen has not engaged in any transaction which, if
done after execution of this Agreement, would violate in any
material respect Section 5.3(c) hereof except as set forth in
Section 4.20(a) to the Bergen Disclosure Schedule.
(b) Except as set forth in Section 4.20(b) to the
Bergen Disclosure Schedule, since January 1, 1997 no material
customer of Bergen has indicated that it will stop or
materially decrease purchasing materials, products or services
from Bergen and no material supplier of Bergen has indicated
that it will stop or materially decrease the supply of
materials, products or services to Bergen, in each case, the
effect of which would have a Material Adverse Effect on Bergen.
4.21 Permits; Compliance. (a) Bergen is in
possession of all material franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease and
operate its properties and to carry on its
-24-
business as it is now being conducted (collectively, the
"Bergen Permits"), except where the failure to be in possession
of such Bergen Permits would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect on Bergen 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 Bergen,
threatened regarding any of the Bergen Permits which, if
successful, would have Material Adverse Effect on Bergen or a
material adverse effect on the ability of the parties to
consummate the transactions contemplated hereby. Bergen is not
in conflict with, or in default or violation of any of the
Bergen Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on
Bergen.
(b) Except as set forth in Section 4.21(b) of the
Bergen Disclosure Schedule or as would not, individually or in
the aggregate, reasonably be expected to have a Material
Adverse Effect on Bergen:
(i) all necessary clearances or approvals from
governmental agencies for all drug and device products
which are sold by Bergen and its subsidiaries have, to the
knowledge of Bergen, been obtained and Bergen and its
subsidiaries are in substantial compliance with the most
current form of each applicable clearance or approval with
respect to the storage, distribution, promotion and sale
by Bergen and its subsidiaries of such products;
(ii) none of Bergen, or any of its officers (during
the term of such person's employment by Bergen) has made
any untrue statement of a material fact or fraudulent
statement to the FDA or any similar governmental agency,
failed to disclose a material fact required to be
disclosed to the FDA or similar governmental agency, or
committed an act, made a statement or failed to make a
statement that would provide a basis for the FDA or
similar governmental agency to invoke its policy
respecting "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities" or similar governmental
policy, rule, regulation or law;
(iii) as to each article of drug, device, cosmetic
or vitamin manufactured (directly or indirectly) and/or,
to the knowledge of Bergen, distributed by Bergen, such
article is not adulterated or misbranded within the
meaning of the FDCA or any similar governmental act or law
of any jurisdiction; and
(iv) none of Bergen or any of its officers (during
the term of such person's employment by Bergen),
subsidiaries or affiliates has been convicted of any crime
or engaged in any conduct for which debarment or similar
punishment is mandated or permitted by any Applicable Law.
4.22 Environmental Matters. Except for matters
disclosed in Schedule 4.22 of the Bergen Disclosure Schedule
and except for matters that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect on Bergen, (a) the properties, operations and activities
of Bergen and its subsidiaries are in compliance with all
-25-
applicable Environmental Laws (as defined below) and all past
noncompliance of Bergen or any Bergen subsidiary with any
Environmental Laws or Environmental Permits (as defined below)
that has been resolved with any Governmental Authority has been
resolved without any pending, ongoing or future obligation,
cost or liability; (b) Bergen and its subsidiaries and the
properties and operations of Bergen and its subsidiaries are
not subject to any existing, pending or, to the knowledge of
Bergen, 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 Bergen or its subsidiaries or in connection with
their properties or operations; (d) to the best of Bergen's
knowledge, 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
Bergen and its subsidiaries; and (e) Bergen and its
subsidiaries have made available to Cardinal all internal and
external environmental audits and reports (in each case
relevant to Bergen or any of its subsidiaries) prepared since
January 1, 1994 and in the possession of Bergen or its
subsidiaries. The term "Environmental Laws" 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 the date hereof.
"Environmental Permit" means any permit, approval,
identification number, license or other authorization required
under or issued pursuant to any applicable Environmental Law.
4.23 Opinion of Financial Advisors. Bergen has
received the written opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇, its financial
advisor, to the effect that, as of the date of this Agreement,
the Exchange Ratio is fair to the Bergen Shareholders from a
financial point of view, Bergen has heretofore provided copies
of such opinion to Cardinal and such opinion has not been
withdrawn or revoked or modified in any material respect.
4.24 Board Recommendation. The Board of Directors
of Bergen, at a meeting duly called and held, has by
unanimous vote of those directors present (who constituted
100% of the directors then in office) (i) determined that this
Agreement and the transactions contemplated hereby, including
the Merger, and the Bergen Stock Option Agreement and the
transactions contemplated thereby, taken together, are fair to
and in the best interests of the Bergen Shareholders, and (ii)
resolved to recommend that the holders of the shares of Bergen
Common Stock approve this Agreement and the transactions
contemplated herein, including the Merger (the "Bergen Board
Recommendation").
4.25 New Jersey Shareholders Protection Act and
Rights Agreement. Prior to the date hereof, the Board of
Directors of Bergen has taken all action necessary to exempt
under or make not subject to (x) the provisions of the NJSPA
and (y) any other New Jersey or California
-26-
takeover law or New Jersey or California law that purports to
limit or restrict business combinations: (i) the execution of
this Agreement, the Bergen Stock Option Agreement and the
Support/Voting Agreement dated as of August 23, 1997 between
Cardinal and ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Support Agreement"),
(ii) the Merger and (iii) the transactions contemplated hereby
and by the Bergen Stock Option Agreement and the Support
Agreement. The Rights Agreement, dated as of February 8, 1994
(the "Bergen Rights Agreement"), between Bergen and Chemical
Trust Company of California, a California banking corporation,
has been amended so that Cardinal is exempt from the definition
of "Acquiring Person" contained in the Bergen Rights Agreement,
no "Stock Acquisition Date" or "Distribution Date" (as such
terms are defined in the Bergen Rights Agreement) will occur as
a result of the execution of this Agreement or the Bergen Stock
Option Agreement or the consummation of the Merger pursuant to
this Agreement or the acquisition or transfer of shares of
Bergen Common Stock by Cardinal pursuant to the Bergen Stock
Option Agreement and the Bergen Rights Agreement will expire
immediately prior to the Effective Time, and the Bergen Rights
Agreement, as so amended, has not been further amended or
modified. Copies of all such amendments to the Bergen Rights
Agreement have been previously provided to Cardinal.
4.26 Accounts Receivable and Inventories.
(a) All accounts and notes receivable of Bergen have
arisen in the ordinary course of business and the accounts
receivable reserve reflected in the balance sheet of
Bergen as of March 31, 1997 included in the Bergen SEC
Documents is as of such date adequate and established in
accordance with generally accepted accounting principles
consistently applied.
(b) The Bergen assets which are inventories have a
net realizable value on March 31, 1997 at least equal to
the sum of the LIFO values and the corresponding LIFO
reserve at which such inventories are carried on the
balance sheet of Bergen as of March 31, 1997 included in
the Bergen SEC Documents; and have been purchased by
Bergen directly from the manufacturer thereof or from an
authorized distributor of such products in accordance with
the Federal Prescription Drug Marketing Act, if
applicable.
4.27 Insurance. Section 4.27 to the Bergen
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 Bergen (copies of all of which
policies have been previously provided to Cardinal), which
policies have terms expiring as set forth in Section 4.27 to
the Bergen Disclosure Schedule.
4.28 Employee Agreements. Each of the employees of
Bergen specified in Section 4.28 to the Bergen Disclosure
Schedule has duly executed and delivered an employee agreement
with Bergen substantially in the form attached to Section 4.28
to the Bergen Disclosure Schedule (the "Employee Agreements"),
and such Employee Agreements have not been amended or
terminated. Bergen has previously provided to Cardinal copies
of all such Employee Agreements.
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4.29 Director Compensation. Section 4.29 to the
Bergen Disclosure Schedule sets forth a list and a brief
summary of the material terms of all plans, programs,
agreements, arrangements or understandings of Bergen under
which any director of Bergen may be entitled to payment or
compensation from Bergen or its subsidiaries (i) in connection
with or as a result of any of the transactions contemplated by
this Agreement or (ii) after the Effective Time.
ARTICLE V.
COVENANTS OF THE PARTIES
The parties hereto agree that:
5.1 Mutual Covenants.
(a) HSR Act Filings; Reasonable Efforts;
Notification.
(i) Each of Cardinal and Bergen shall (A) make
or cause to be made the filings required of such party or
any of its subsidiaries or affiliates under the HSR Act
with respect to the transactions contemplated hereby as
promptly as practicable and in any event within ten
business days after the date of this Agreement, (B) comply
at the earliest practicable date with any request under
the HSR Act for additional information, documents, or
other materials received by such party or any of its
subsidiaries from the Federal Trade Commission or the
Department of Justice or any other Governmental Authority
in respect of such filings or such transactions, and (C)
cooperate with the other party in connection with any such
filing (including, with respect to the party making a
filing, providing copies of all such documents to the non-
filing party and its advisors prior to filing and, if
requested, to accept all reasonable additions, deletions
or changes suggested in connection therewith) and in
connection with resolving any investigation or other
inquiry of any such agency or other Governmental Authority
under any Antitrust Laws (as hereinafter defined) with
respect to any such filing or any such transaction. Each
party shall use all reasonable efforts to furnish to each
other all information required for any application or
other filing to be made pursuant to any Applicable Law in
connection with the Merger and the other transactions
contemplated by this Agreement. Each party shall promptly
inform the other party of any communication with, and any
proposed understanding, undertaking, or agreement with,
any Governmental Authority regarding any such filings or
any such transaction. Neither party shall independently
participate in any formal meeting with any Governmental
Authority in respect of any such filings, investigation,
or other inquiry without giving the other party prior
notice of the meeting and, to the extent permitted by such
Governmental Authority, the opportunity to attend and/or
participate. The parties hereto will consult and
cooperate with one another, in connection with any
analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or
on behalf of any party hereto in connection with
proceedings under or relating to the HSR Act or other
Antitrust Laws.
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(ii) Each of Cardinal and Bergen shall use all
reasonable efforts to resolve such objections, if any, as
may be asserted by any Governmental Authority with respect
to the transactions contemplated by this Agreement under
the HSR Act, the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act,
as amended, the Federal Trade Commission Act, as amended,
and any other federal, state or foreign statues, rules,
regulations, orders, decrees, administrative or judicial
doctrines or other laws that are designed to prohibit,
restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade (collectively,
"Antitrust Laws"). In connection therewith, if any
administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging
any transaction contemplated by this Agreement as
violative of any Antitrust Law, each of Cardinal and
Bergen shall cooperate and use all reasonable efforts
vigorously to contest and resist any such action or
proceeding, including any legislative, administrative or
judicial action, and to have vacated, lifted, reversed, or
overturned any decree, judgment, injunction or other order
whether temporary, preliminary or permanent (each an
"Order"), that is in effect and that prohibits, prevents,
or restricts consummation of the Merger or any other
transactions contemplated by this Agreement, including,
without limitation, by vigorously pursuing all available
avenues of administrative and judicial appeal and all
available legislative action, unless by mutual agreement
Cardinal and Bergen decide that litigation is not in their
respective best interests. Notwithstanding the foregoing
or any other provision of this Agreement, nothing in this
Section 5.1(a) shall limit a party's right to terminate
this Agreement pursuant to Section 7.1, so long as such
party has up to then complied in all material respects
with its obligations under this Section 5.1(a). Each of
Cardinal and Bergen shall use all reasonable efforts to
take such action as may be required to cause the
expiration of the notice periods under the HSR Act or
other Antitrust Laws with respect to such transactions as
promptly as possible after the execution of this
Agreement.
(iii) Each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this
Agreement, including (A) the obtaining of all other
necessary actions or nonactions, waivers, consents,
licenses, permits, authorizations, orders and approvals
from Governmental Authorities and the making of all other
necessary registrations and filings (including filings
under the New Jersey Industrial Site Recovery Act, if
applicable, and other filings with Governmental
Authorities, if any), (B) the obtaining of all consents,
approvals or waivers from third parties related to or
required in connection with the Merger that are necessary
to consummate the Merger and the transactions contemplated
by this Agreement or required to prevent a Material
Adverse Effect on Cardinal or Bergen from occurring prior
to or after the Effective Time, (C) the preparation of the
Joint Proxy Statement, the Prospectus and the Registration
Statement, (D) the taking of all action necessary to
ensure that it is a "poolable entity" eligible to
participate in a transaction to be accounted for as a
pooling of interests for financial reporting purposes and
to ensure that the Merger constitutes a tax-free
reorganization within the meaning of Section 368(a)(1)(A),
and (E) the execution and delivery of any
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additional instruments necessary to consummate the transaction
contemplated by, and to fully carry out the purposes of,
this Agreement.
(iv) Notwithstanding anything to the contrary
in this Agreement, neither Cardinal nor Bergen shall be
required to hold separate (including by trust or
otherwise) or divest any of their respective businesses or
assets, provided , however, that unless Cardinal and
Bergen otherwise agree, if required to avoid an HSR
Authority instituting an Action challenging the
transactions under this Agreement under the Antitrust Laws
and seeking to enjoin or prohibit the consummation of any
of the transactions contemplated by this Agreement,
Cardinal shall and, at the direction of Cardinal, Bergen
shall, hold separate (including by trust or otherwise) or
divest any of their respective businesses or assets, or
take or agree to take any action or agree to any
limitation required to avoid an HSR Authority instituting
an Action challenging the transactions under this
Agreement under the Antitrust Laws and seeking to enjoin
or prohibit the consummation of any of the transactions
contemplated hereby unless such action would reasonably be
expected to have a material adverse effect on the assets,
liabilities, results of operations or financial condition
of Cardinal combined with the Surviving Corporation after
the Effective Time, or would reasonably be expected to
substantially impair the overall benefits expected, as of
the date hereof, to be realized from consummation of the
Merger. Notwithstanding any other provision of this
Section 5.1(a)(iv) neither party shall be required to (i)
waive any of the conditions to the Merger set forth in
Article VI of this Agreement as they apply to such party,
or (ii) divest any of their respective businesses or
assets if the divestitures would be required to be
consummated prior to the Effective Time.
(b) Pooling-of-Interests. Each of the parties
agrees that it shall not, and shall not permit any of its
subsidiaries to, take any actions which would, or would be
reasonably likely to, prevent Cardinal from accounting, and
shall use its best efforts (including, without limitation,
providing appropriate representation letters to Cardinal's
accountants) to allow Cardinal to account, for the Merger in
accordance with the pooling-of-interests method of accounting
under the requirements of Opinion No. 16 "Business
Combinations" of the Accounting Principles Board of the
American Institute of Certified Public Accountants, as amended
by applicable pronouncements by the Financial Accounting
Standards Board, and all related published rules, regulations
and policies of the Commission ("APB No. 16"), and to obtain a
letter, in form and substance reasonably satisfactory to
Cardinal, from Deloitte & Touche LLP dated the date of the
Effective Time and, if requested by Cardinal, dated the date of
the Joint Proxy Statement stating that they concur with
management's conclusion that the Merger will qualify as a
transaction to be accounted for by Cardinal in accordance with
the pooling of interests method of accounting under the
requirements of APB No. 16.
(c) Tax-Free Treatment. Each of the parties shall
use its best efforts to cause the Merger to constitute a tax-
free "reorganization" under Section 368(a) of the Code and to
cooperate with one another in obtaining an opinion from
▇▇▇▇▇▇▇▇▇▇, Sandler, Kohl, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A. ("▇▇▇▇▇▇▇▇▇▇,
Sandler"), counsel to Bergen, as provided for in Section
6.2(d). In connection therewith, each of Cardinal and Bergen
shall deliver to ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
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representation letters and Bergen shall use all reasonable
efforts to obtain representation letters from appropriate
shareholders of Bergen and shall deliver any such letters
obtained to Lowenstein, Sandler, in each case in form and
substance reasonably satisfactory to ▇▇▇▇▇▇▇▇▇▇, Sandler.
(d) Public Announcements. The initial press release
concerning the Merger and the transactions contemplated hereby
shall be a joint press release, which shall state, among other
matters, that subject to the consummation of the transactions
contemplated hereby, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall be appointed
Chairman of the Board of Directors of Cardinal to serve in such
office until the annual meeting of Cardinal Shareholders in the
year 2000. Unless otherwise required by Applicable Laws or
requirements of the NYSE (and in that event only if time does
not permit), at all times prior to the earlier of the Effective
Time or termination of this Agreement pursuant to Section 7.1,
Cardinal and Bergen shall consult with each other before
issuing any press release with respect to the Merger and shall
not issue any such press release prior to such consultation.
5.2 Covenants of Cardinal.
(a) Cardinal Shareholders Meeting. Cardinal shall
take all action in accordance with the federal securities laws,
the Ohio Revised Code and the Cardinal Articles and Code of
Regulations, as amended and restated, necessary to convene a
special meeting of Cardinal Shareholders (the "Cardinal
Shareholders Meeting") to be held on the earliest practical
date determined by Cardinal, subject to the consent of Bergen
(which shall not be unreasonably withheld), and to obtain the
consent and approval of Cardinal Shareholders with respect to
the Cardinal Shareholder Proposals and the transactions
contemplated hereby, including recommending approval of the
Cardinal Shareholder Proposals and transactions contemplated by
this Agreement to the Cardinal Shareholders as set forth in
Section 3.12 of this Agreement.
(b) Preparation of Registration Statement. Cardinal
shall, as soon as is reasonably practicable, prepare the Joint
Proxy Statement for filing with the Commission on a
confidential basis. Consistent with the timing for the
Cardinal Shareholders Meeting and the Bergen Shareholders
Meeting as determined by Cardinal, subject to the consent of
Bergen (which shall not be unreasonably withheld), Cardinal
shall prepare and file the Registration Statement with the
Commission as soon as is reasonably practicable following
clearance of the Joint Proxy Statement by the Commission and
reasonable approval of the Joint Proxy Statement by Bergen and
shall use all reasonable efforts to have the Registration
Statement declared effective by the Commission as promptly as
practicable and to maintain the effectiveness of the
Registration Statement through the Effective Time. If, at any
time prior to the Effective Time, Cardinal shall obtain
knowledge of any information pertaining to Cardinal contained
in or omitted from the Registration Statement that would
require an amendment or supplement to the Registration
Statement or the Joint Proxy Statement, Cardinal will so advise
Bergen in writing and will promptly take such action as shall
be required to amend or supplement the Registration Statement
and/or the Joint Proxy Statement. Cardinal shall promptly
furnish to Bergen all information concerning it as may be
required for the Joint Proxy Statement and any supplements or
amendments thereto. Cardinal shall cooperate with Bergen in
the preparation of the Joint
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Proxy Statement in a timely fashion and shall use all
reasonable efforts to assist Bergen in clearing the Joint Proxy
Statement with the Staff of the Commission, such Joint Proxy
Statement to include the recommendation of the Cardinal Board
of Directors referred to in Section 3.12 above. Cardinal 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 applicable state
securities laws in connection with the issuance of Cardinal
Common Shares in the Merger.
(c) Conduct of Cardinal's Operations. During the
period from the date of this Agreement to the Effective Time,
Cardinal shall use its reasonable efforts to maintain and
preserve its business organization and to retain the services
of its officers and key employees and maintain relationships
with customers, suppliers and other third parties to the end
that their goodwill and ongoing business shall not be impaired
in any material respect. Without limiting the generality of
the foregoing, during the period from the date of this
Agreement to the Effective Time, Cardinal shall not, except as
otherwise expressly contemplated by this Agreement and the
transactions contemplated hereby or as set forth in Section
5.2(c) to the Cardinal Disclosure Schedule, without the prior
written consent of Bergen:
(i) change any method or principle of
accounting in a manner that is inconsistent with past
practice except to the extent required by generally
accepted accounting principles as advised by Cardinal's regular
independent accountants;
(ii) take any action that could likely result
in the representations and warranties set forth in Article
III becoming false or inaccurate in any material respect;
(iii) make any changes in the Cardinal Articles
that would adversely affect in any material respect the
rights and preferences of the holders of Cardinal Common
Shares or make any changes in the Amended and Restated
Certificate of Incorporation of Subcorp;
(iv) acquire a material amount of assets or
capital stock of any other person if such acquisition
would materially and adversely affect the ability of
Section 6.1(b) to be satisfied on or prior to April 30,
1998 (and, in any case, Cardinal agrees to give Bergen
reasonable prior notice of any acquisition of a material
amount of assets or capital stock of any other person);
(v) permit or cause any subsidiary to do any of
the foregoing or agree or commit to do any of the
foregoing; or
(vi) agree in writing or otherwise to take any
of the foregoing actions.
(d) Indemnification; Directors' and Officers'
Insurance.
(i) From and after the Effective Time, Cardinal
shall cause (including, to the extent required, providing
sufficient funding to enable the Surviving Corporation to
satisfy all of its obligations under this Section
5.2(d)(i)), the Surviving Corporation to
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indemnify, defend and hold harmless the present and former
officers and directors of Bergen in respect of acts or
omissions occurring prior to the Effective Time to the fullest
extent provided or permitted under the Bergen Certificate, as
amended and restated, the Bergen Bylaws, and the
indemnification agreements disclosed in Section 5.2(d) to the
Bergen Disclosure Schedule in effect on the date hereof.
(ii) Cardinal shall use all reasonable efforts
to cause the Surviving Corporation or Cardinal to obtain
and maintain in effect for a period of six years after the
Effective Time policies of directors' and officers'
liability insurance at no cost to the beneficiaries
thereof with respect to acts or omissions occurring prior
to the Effective Time with substantially the same coverage
and containing substantially similar terms and conditions
as existing policies; provided, however, that neither the
Surviving Corporation nor Cardinal shall be required to
pay an aggregate premium for such insurance coverage in
excess of 325% of the amount set forth in Section 4.17(k)
to the Bergen Disclosure Schedule.
(iii) Cardinal covenants and agrees from and
after the Effective Time to (A) provide to the directors
of Bergen who become directors of Cardinal directors' and
officers' liability insurance on the same basis and to the
same extent as that, if any, provided to other directors
of Cardinal, and (B) enter into indemnification agreements
with the directors of Bergen who become directors of
Cardinal on terms entered into with other directors of
Cardinal generally.
(e) Merger Sub. Prior to the Effective Time,
Subcorp shall not conduct any business or make any investments
other than as specifically contemplated by this Agreement and
will not have any assets (other than a de minimis amount of
cash paid to Subcorp for the issuance of its stock to Cardinal)
or any material liabilities.
(f) NYSE Listing. Cardinal shall use its reasonable
efforts to cause the Cardinal Common Shares issuable pursuant
to the Merger (including, without limitation, the Cardinal
Common Shares issuable upon the exercise of the Cardinal
Exchange Options) to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Effective
Time.
(g) Access. Cardinal shall permit representatives
of Bergen to have appropriate access at all reasonable times to
Cardinal's premises, properties, books, records, contracts,
documents, customers and suppliers. Information obtained by
Bergen pursuant to this Section 5.2(g) shall be subject to the
provisions of the confidentiality agreement between Cardinal
and Bergen dated July 23, 1997 (the "Confidentiality
Agreement"), which agreement remains in full force and effect.
No investigation conducted pursuant to this Section 5.2(g)
shall affect or be deemed to modify any representation or
warranty made in this Agreement.
(h) Board of Directors of Cardinal. The Board of
Directors of Cardinal shall take all action necessary
immediately following the Effective Time to elect each of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and two other persons
from the Board of Directors of Bergen as of the date of this
Agreement (designated by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and reasonably
acceptable to Cardinal) as a director of Cardinal (with Messrs.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ being
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assigned to the class of directors whose term of office expires
at Cardinal's third annual meeting of shareholders after the
Effective Time and second annual meeting of shareholders after
the Effective Time, respectively, and the other two persons
being assigned to the class or classes of directors with a
vacancy (other than those vacancies to be filled by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇) and with the longest term of
office available) effective as of the Effective Time, for a
term expiring at Cardinal's next annual meeting of stockholders
following the Effective Time at which the term of the class to
which such director belongs expires, subject to being
renominated as a director at the discretion of Cardinal's Board
of Directors. The Board of Directors of Cardinal shall take
all action necessary immediately following the Effective Time
to (i) elect ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as the Chairman of the Board of
Cardinal; (ii) elect ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as the Chairman of the
Executive Committee of the Board of Directors of Cardinal;
(iii) reformulate the Executive Committee of the Cardinal Board
of Directors by appointing each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and three other members designated by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to the Executive Committee of the Board of
Directors of Cardinal; and (iv) elect ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as Co-
President of Cardinal, effective as of the Effective Time, to
hold such offices until his successor is elected and qualified,
subject to being reelected or reappointed to such positions at
the discretion of Cardinal's Board of Directors.
(i) Corporate Name. Subject to approval of the
holders of Cardinal Common Shares (the "Cardinal Shareholders")
at the Cardinal Shareholders Meeting of an amendment to Article
First of the Cardinal Articles, as soon as practicable
following the Effective Time, Article First of the Cardinal
Articles shall read "The name of the corporation shall be
'Cardinal Bergen Health, Inc.'" At any time prior to the
Cardinal Shareholders Meeting, Cardinal and Bergen may agree to
change the proposed name for Cardinal following the Effective
Time.
(j) Affiliates of Cardinal. Cardinal shall cause
each such person who may be at the Effective Time or was on the
date hereof an "affiliate" of Cardinal for purposes of
applicable accounting releases of the Commission with respect
to pooling of interests accounting treatment, to execute and
deliver to Bergen no less than 30 days prior to the date of the
Cardinal Shareholders Meeting, the written undertakings in the
form attached hereto as Exhibit A-2 (the "Cardinal Affiliate
Letter").
(k) Notification of Certain Matters. Cardinal shall
give prompt notice to Bergen of (i) the occurrence or non-
occurrence of any event the occurrence or non-occurrence of
which would cause any Cardinal representation or warranty
contained in this Agreement to be untrue or inaccurate at or
prior to the Effective Time in any material respect and (ii)
any material failure of Cardinal to comply with or satisfy any
covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.2(k) shall not limit
or otherwise affect the remedies available hereunder to Bergen.
(l) Employees and Employee Benefit. From and after
the Effective Time, Cardinal shall treat all service by Bergen
Employees (as defined below) with Bergen and their respective
predecessors prior to the Effective Time for all purposes as
service with Cardinal (except to the extent such treatment
would result in duplicative accrual on or after the Closing
Date of benefits for the same period of service), and, with
respect to any medical or dental
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benefit plan in which Bergen Employees participate after the
Effective Time, Cardinal shall waive or cause to be waived any
pre-existing condition exclusions and actively-at-work
requirements (provided, however, that no such waiver shall
apply to a pre-existing condition of any Bergen Employee who
was, as of the Effective Time, excluded from participation in a
Bergen Benefit Plan by virtue of such pre-existing condition),
and shall provide that any covered expenses incurred on or
before the Effective Time by a Bergen Employee or a Bergen
Employee's covered dependent shall be taken into account for
purposes of satisfying applicable deductible, coinsurance and
maximum out-of-pocket provisions after the Effective Time to
the same extent as such expenses are taken into account for the
benefit of similarly situated employees of Cardinal and
subsidiaries of Cardinal. For purposes of this Section 5.2(1),
"Bergen Employees" shall mean persons who are, as of the
Effective Time, employees of Bergen.
5.3 Covenants of Bergen.
(a) Bergen Shareholders Meeting. Bergen shall take
all action in accordance with the federal securities laws, the
NJBCA and the Bergen Certificate and the Bergen Bylaws
necessary to convene a special meeting of Bergen Shareholders
(the "Bergen Shareholders Meeting") to be held on the earliest
practicable date determined by Cardinal, subject to the consent
of Bergen (which shall not be unreasonably withheld), to
consider and vote upon approval of the Merger, this Agreement
and the transactions contemplated hereby.
(b) Information for the Registration Statement and
Preparation of Joint Proxy Statement. Bergen shall promptly
furnish Cardinal with all information concerning it as may be
required for inclusion in the Registration Statement. Bergen
shall cooperate with Cardinal in the preparation of the
Registration Statement in a timely fashion and shall use all
reasonable efforts to assist Cardinal in having the
Registration Statement declared effective by the Commission as
promptly as practicable consistent with the timing for the
Cardinal Shareholders Meeting and the Bergen Shareholders
Meeting as determined by Cardinal, subject to the consent of
Bergen (which shall not be unreasonably withheld). If, at any
time prior to the Effective Time, Bergen obtains knowledge of
any information pertaining to Bergen that would require any
amendment or supplement to the Registration Statement or the
Joint Proxy Statement, Bergen shall so advise Cardinal and
shall promptly furnish Cardinal with all information as shall
be required for such amendment or supplement and shall promptly
amend or supplement the Registration Statement and/or Joint
Proxy Statement. Bergen shall use all reasonable efforts to
cooperate with Cardinal in the preparation and filing of the
Joint Proxy Statement with the Commission on a confidential
basis. Consistent with the timing for the Cardinal Shareholders
Meeting and the Bergen Shareholders Meeting as determined by
Cardinal, subject to the consent of Bergen (which shall not be
unreasonably withheld), Bergen shall use all reasonable efforts
to mail at the earliest practicable date to Bergen Shareholders
the Joint Proxy Statement, which shall include all information
required under Applicable Law to be furnished to Bergen
Shareholders in connection with the Merger and the transactions
contemplated thereby and shall include the Bergen Board
Recommendation to the extent not previously withdrawn in
compliance with Section 5.3(d) and the written opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇ described in Section 4.23.
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(c) Conduct of Bergen's Operations. Bergen shall
conduct its operations in the ordinary course except as
expressly contemplated by this Agreement and the transactions
contemplated hereby and shall use all reasonable efforts to
maintain and preserve its business organization and its
material rights and franchises and to retain the services of
its officers and key employees and maintain relationships with
customers, suppliers, lessees, licensees and other third
parties, and to maintain all of its operating assets in their
current condition (normal wear and tear excepted), to the end
that its goodwill and ongoing business shall not be impaired in
any material respect. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to
the Effective Time, Bergen shall not, except as otherwise
expressly contemplated by this Agreement and the transactions
contemplated hereby or as set forth in Section 5.3(c) to the
Bergen Disclosure Schedule, without the prior written consent
of Cardinal:
(i) do or effect any of the following actions
with respect to its securities: (A) adjust, split,
combine or reclassify its capital stock, (B) make, declare
or pay any dividend (other than regular quarterly
dividends on Bergen Common Stock of $0.12 per share with
record and payment dates consistent with past practice) or
distribution on, or directly or indirectly redeem,
purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, (C)
grant any person any right or option to acquire any shares
of its capital stock, provided, however, that Bergen may
grant options with a fair market value exercise price to
purchase up to 1% of the number of shares of Bergen Common
Stock outstanding as of the date of this Agreement to
employees of Bergen in the ordinary course consistent with
prior practice or in connection with acquisitions of
assets or capital stock permitted pursuant to clause (v)
below, (D) issue, deliver or sell or agree to issue,
deliver or sell any additional shares of its capital stock
or any securities or obligations convertible into or
exchangeable or exercisable for any shares of its capital
stock or such securities (except pursuant to the exercise
of Bergen Options which are outstanding as of the date
hereof or which are granted by Bergen prior to the
Effective Time in compliance with the terms of this
Agreement), or (E) enter into any agreement, understanding
or arrangement with respect to the sale, voting,
registration or repurchase of its capital stock;
(ii) directly or indirectly sell, transfer,
lease, pledge, mortgage, encumber or otherwise dispose of
any of its property or assets other than in the ordinary
course of business;
(iii) make or propose any changes in the Bergen
Certificate or the Bergen Bylaws;
(iv) merge or consolidate with any other person
(other than as permitted, in each case, by Section
5.3(d));
(v) acquire for cash a material amount of
assets or capital stock of any other person valued, giving
effect to assumed indebtedness, at more than $50 million
per transaction and $100 million in the aggregate (and, in
each case, Bergen shall give Cardinal reasonable prior
notice of any such acquisition or agreement to make such
an
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acquisition); provided, that to the extent Cardinal
consents to any such acquisition, such acquisition shall
not be taken into account in computing the dollar
limitations in this clause (v); and provided further, that
Bergen shall not make any acquisition if such acquisition
would materially and adversely affect the ability of
Section 6.1(b) to be satisfied on or prior to April 30,
1998;
(vi) amend or modify, or propose to amend or
modify, the Bergen Rights Agreement, as amended as of the
date hereof;
(vii) except pursuant to existing credit
arrangements, incur, create, assume or otherwise become
liable for any indebtedness for borrowed money or assume,
guarantee, endorse or otherwise as an accommodation become
responsible or liable for the obligations of any other
individual, corporation or other entity, other than in the
ordinary course of business, consistent with past practice
or in connection with a refinancing of existing
indebtedness (which refinancing shall not increase the
aggregate amount of indebtedness permitted to be
outstanding thereunder and shall not include any covenants
that shall be more burdensome to Bergen in any material
respect or increase costs to the Surviving Corporation
after the Effective Time in any material respect);
(viii) create any subsidiaries other than in
connection with acquisitions of assets or capital stock
permitted pursuant to clause (v) of this Section 5.3(c);
(ix) enter into or modify any employment,
severance, termination or similar agreements or
arrangements with, or grant any bonuses, salary increases,
severance or termination pay to, any officer, director,
consultant or employee other than in the ordinary course
of business consistent with past practice (except for
change-of-control severance agreements that in all cases
shall require the prior written consent of Cardinal), or
otherwise increase the compensation or benefits provided
to any officer, director, consultant or employee except as
may be required by Applicable Law or in the ordinary
course of business consistent with past practice;
provided, however, that Bergen may implement a stay-bonus
program providing for bonuses in an aggregate amount,
together with any severance benefits payable to Bergen
employees in such program or otherwise, not to exceed
$13.75 million for employees of Bergen (other than
employees of Bergen who are in a position of Tier 1 or
Tier 2) and will consult with, but need not have the
approval of, Cardinal prior to implementing any such
plans;
(x) enter into, adopt or amend any employee
benefit or similar plan except as may be required by
Applicable Law;
(xi) change any method or principle of
accounting in a manner that is inconsistent with past
practice except to the extent required by generally
accepted accounting principles as advised by Bergen's
regular independent accountants;
(xii) modify, amend or terminate, or waive,
release or assign any material rights or claims with
respect to, any Contract set forth in Section 4.17 to the
Bergen Disclosure Schedule or any Material Contract other
than with respect to modifications or
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amendments to, terminations of, waivers or releases under,
or assignments of (A) Contracts or Material Contracts with
customers or suppliers entered into in the ordinary course
of business, (B) Contracts relating to existing
indebtedness which may be refinanced in compliance with
Section 5.3(c)(vii) hereof, (C) Contracts relating to the
incurrence of or commitment to any capital expenditures up
to $1 million individually or $5 million in the aggregate
or as set forth in the budget set forth in Section 5.3(c)
to the Bergen Disclosure Schedule, or (D) without the
prior written consent of Cardinal (which consent shall not
be unreasonably withheld) any other material Contract or
Material Contract to which Bergen is a party or any
confidentiality agreement to which Bergen is a party;
(xiii) enter into any confidentiality agreements
or arrangements other than in the ordinary course of
business consistent with past practice;
(xiv) incur or commit to any capital
expenditures, individually or in the aggregate, in excess
of 120% of the amount set forth in Bergen's capital
expenditure budget, which amount is set forth in Section
5.3(c) to the Bergen Disclosure Schedule;
(xv) except as contemplated by Section
5.2(d)(ii), make any payments in respect of policies of
directors' and officers' liability insurance (premiums or
otherwise) other than amounts paid pursuant to current
policies or any policies replacing such policies not in
excess of 200% of the amount set forth in Section 4.17(k)
to the Bergen Disclosure Schedule;
(xvi) take any action to exempt or make not
subject to (x) the provisions of the NJSPA or (y) any
other state takeover law or state law that purports to
limit or restrict business combinations or the ability to
acquire or vote shares, any person or entity (other than
Cardinal or its subsidiaries) or any action taken thereby,
which person, entity or action would have otherwise been
subject to the restrictive provisions thereof and not
exempt therefrom;
(xvii) take any action that will likely result in
the representations and warranties set forth in Article IV
becoming false or inaccurate in any material respect;
(xviii) enter into or carry out any other
transaction other than in the ordinary and usual course of
business or other than as permitted pursuant to the other
clauses in this Section 5.3(c);
(xix) permit or cause any subsidiary to do any of
the foregoing or agree or commit to do any of the
foregoing; or
(xx) agree in writing or otherwise to take any
of the foregoing actions.
(d) No Solicitation. Bergen 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, directly or indirectly, to solicit, initiate,
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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 Bergen,
or acquisition of any capital stock from Bergen (other than
upon exercise of Bergen Options which are outstanding as of the
date hereof and other than to the extent specifically permitted
by Section 5.3(c)(i)) or 15% or more of the assets of Bergen
and its subsidiaries, taken as a whole, in a single transaction
or a series of related transactions, or any acquisition by
Bergen of any material assets or capital stock of any other
person (other than to the extent specifically permitted by
Section 5.3(c)(v)), or any combination of the foregoing
(a "Competing Transaction"), or negotiate, explore or otherwise
engage in discussions with any person (other than Cardinal,
Subcorp 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 abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by
this Agreement; provided that, at any time prior to the
approval of the Merger by the Bergen Shareholders, Bergen 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 the date of this Agreement if and so long as the Board of
Directors of Bergen 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
constitute a breach of the fiduciary duties of the Board of
Directors of Bergen under Applicable Law and determines that
such a proposal is, after consulting with ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or any
other nationally recognized investment banking firm), more
favorable to Bergen's Stockholders from a financial point of
view than the transactions contemplated by this Agreement
(including any adjustment to the terms and conditions proposed
by Cardinal in response to such Competing Transaction). Bergen
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 5.2(d), in the event that
prior to the approval of the Merger by the Bergen Shareholders
the Board of Directors of Bergen 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
constitute a breach of the fiduciary duties of the Bergen Board
of Directors under Applicable Law, the Board of Directors of
Bergen may (subject to this and the following sentences)
withdraw, modify or change, in a manner adverse to Cardinal,
the Bergen Board Recommendation and, to the extent applicable,
comply with Rule 14e-2 promulgated under the Exchange Act with
respect to a Competing Transaction by disclosing such
withdrawn, modified or changed Bergen Board Recommendation in
connection with a tender or exchange offer for Bergen
securities, provided that it uses all reasonable efforts to
give Cardinal two days prior written notice of its intention to
do so (provided that the foregoing shall in no way limit or
otherwise affect Cardinal's right to terminate this Agreement
pursuant to Section 7.1(d)). The Bergen Board of Directors
shall not, in connection with any such withdrawal, modification
or change of the Bergen Board Recommendation, take any action
to change the approval of the Board of Directors of Bergen for
purposes of causing any state takeover statute or other state
law to be inapplicable to the transactions contemplated hereby,
including the Merger, the Bergen Stock Option Agreement or the
Support Agreement. From and after the execution of this
Agreement, Bergen shall immediately advise Cardinal in writing
of the receipt, directly or indirectly, of any inquiries,
discussions, negotiations, or proposals relating to a Competing
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Transaction (including the specific terms thereof and the
identity of the other party or parties involved) and furnish to
Cardinal 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, Bergen shall immediately advise Cardinal, in writing,
if the Board of Directors of Bergen shall make any
determination as to any Competing Transaction as contemplated
by the proviso to the first sentence of this Section 5.3(d).
(e) Termination Right. If prior to the approval of
the Merger by the Bergen Shareholders the Board of Directors of
Bergen 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 the date hereof that was not solicited or
encouraged by Bergen or any of its subsidiaries or affiliates
in violation of this Agreement that failure to enter into such
Competing Transaction would constitute a breach of the
fiduciary duties of the Board of Directors of Bergen under
Applicable Law and that such Competing Transaction is more
favorable to the Bergen Shareholders 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 Cardinal in response to such
Competing Transaction) and is in the best interest of the
Bergen Shareholders and Bergen has received (x) the advice of
its outside legal counsel as to whether failure to enter into
such a Competing Transaction would constitute a breach of the
Board of Directors' fiduciary duties under Applicable Law and
(y) an opinion (a copy of which, if delivered in writing, has
been delivered to Cardinal) from ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or any other
nationally recognized investment banking firm) that the
Competing Transaction is more favorable from a financial point
of view to the Bergen Shareholders than the transactions
contemplated by this Agreement (including any adjustment to the
terms and conditions of such transaction proposed in writing by
Cardinal), Bergen 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) Bergen has provided Cardinal
written notice that it intends to terminate this Agreement
pursuant to this Section 5.3(e), 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
Bergen has provided the notice referred to in clause (i) above
(provided that the advice and opinion referred to in clauses
(x) and (y) above shall continue in effect without revocation,
revision or modification), Bergen delivers to Cardinal (A) a
written notice of termination of this Agreement pursuant to
this Section 5.3(e), (B) a check in the amount of Cardinal's
Costs (as defined in Section 7.2) as the same may have been
estimated by Cardinal in good faith prior to the date of such
delivery (subject to an adjustment payment between the parties
upon Cardinal's definitive determination of such Costs), plus
the amount of the termination fee as provided in Section 7.2,
(C) a written acknowledgment from Bergen that (x) the
termination of this Agreement and the entry into the
Acquisition Agreement for the Competing Transaction will be a
"Purchase Event" as defined in the Bergen Stock Option
Agreement and (y) the Bergen Stock Option Agreement shall be
honored in accordance with its terms and (D) a written
acknowledgment from each other party to
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such Competing Transaction that it is aware of the substance of
Bergen's acknowledgment under clause (C) above and waives any
right it may have to contest the matters thus acknowledged by
Bergen.
(f) Affiliates of Bergen. Bergen shall cause each
such person who may be at the Effective Time or was on the date
hereof an "affiliate" of Bergen for purposes of Rule 145 under
the Securities Act or applicable accounting releases of the
Commission with respect to pooling of interests accounting
treatment, to execute and deliver to Cardinal no less than 30
days prior to the date of the Bergen Shareholders Meeting, the
written undertakings in the form attached hereto as Exhibit A-1
(the "Bergen Affiliate Letter"). No later than 45 days prior
to the date of the Bergen Shareholders Meeting, Bergen, after
consultation with its outside counsel, shall provide Cardinal
with a letter (reasonably satisfactory to outside counsel to
Cardinal) specifying all of the persons or entities who, in
Bergen's opinion, may be deemed to be "affiliates" of Bergen
under the preceding sentence. The foregoing notwithstanding,
Cardinal shall be entitled to place legends as specified in the
Bergen Affiliate Letter on the certificates evidencing any of
the Cardinal Common Shares to be received by (i) any such
"affiliate" of Bergen specified in such letter or (ii) any
person Cardinal reasonably identifies (by written notice to
Bergen) as being a person who may be deemed an "affiliate" for
purposes of Rule 145 under the Securities Act or applicable
accounting releases of the Commission with respect to pooling
of interests accounting treatment, pursuant to the terms of
this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Cardinal Common
Shares, consistent with the terms of the Bergen Affiliate
Letter, regardless of whether such person has executed the
Bergen Affiliate Letter and regardless of whether such person's
name appears on the letter to be delivered pursuant to the
preceding sentence.
(g) Access. Bergen shall permit representatives of
Cardinal to have appropriate access at all reasonable times to
Bergen's premises, properties, books, records, contracts,
documents, customers and suppliers. Information obtained by
Cardinal pursuant to this Section 5.3(g) shall be subject to
the provisions of the Confidentiality Agreement, which
agreement remains in full force and effect. No investigation
conducted pursuant to this Section 5.3(g) shall affect or be
deemed to modify any representation or warranty made in this
Agreement.
(h) Notification of Certain Matters. Bergen shall
give prompt notice to Cardinal of (i) the occurrence or non-
occurrence of any event the occurrence or non-occurrence of
which would cause any Bergen representation or warranty
contained in this Agreement to be untrue or inaccurate at or
prior to the Effective Time in any material respect and (ii)
any material failure of Bergen to comply with or satisfy any
covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.3(h) shall not limit
or otherwise affect the remedies available hereunder to
Cardinal.
(i) Subsequent Financial Statements. Bergen shall
consult with Cardinal prior to making publicly available its
financial results for any period after the date of this
Agreement and prior to filing any Bergen SEC Documents after
the date of this Agreement.
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(j) Employee Agreements; Trust Amendment. Bergen
shall use its reasonable efforts to cause each of the employees
of Bergen specified in Section 5.3(j) to the Bergen Disclosure
Schedule to execute and deliver an Employee Agreement with
Bergen substantially in the form attached to Section 4.28 to
the Bergen Disclosure Schedule as soon as possible after the
date of this Agreement. Bergen shall use its best efforts to
cause the Trustee to execute the Trust Amendment as soon as
possible after the date of this Agreement.
ARTICLE VI.
CONDITIONS
6.1 Conditions to the Obligations of Each Party.
The obligations of Bergen, Cardinal and Subcorp to consummate
the Merger shall be subject to the satisfaction of the
following conditions:
(a) (i) This Agreement, the Merger and the
transactions contemplated hereby shall have been approved and
adopted by the Bergen Shareholders in the manner required by
any Applicable Law, and (ii) the issuance of the Cardinal
Common Shares to be issued in the Merger (and the transactions
contemplated hereby) and the increase in the number of
authorized Cardinal Common Shares shall have been approved by
the Cardinal Shareholders in the manner required by any
Applicable Law and the applicable rules of the NYSE.
(b) Any applicable waiting periods under the HSR Act
relating to the Merger and the transactions contemplated by
this Agreement shall have expired or been terminated.
(c) No provision of any applicable law or
regulation, as supported by written opinion of outside legal
counsel, and no judgment, injunction, order or decree shall
prohibit or enjoin the consummation of the Merger or the
transactions contemplated by this Agreement.
(d) There shall not be pending any Action by any
Governmental Authority (i) challenging or seeking to restrain
or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement, (ii) except to the
extent consistent with the obligations of Bergen and Cardinal
under Section 5.1(a), seeking to prohibit or limit the
ownership or operation by Cardinal, Bergen or any of their
respective subsidiaries of, or to compel Cardinal, Bergen or
any of their respective subsidiaries to dispose of or hold
separate, any material portion of the business or assets of
Cardinal, Bergen or any of their respective subsidiaries, as a
result of the Merger or any of the other transactions
contemplated by this Agreement, (iii) seeking to impose
limitations on the ability of Cardinal to acquire or hold, or
exercise full rights of ownership of, any shares of capital
stock of the Surviving Corporation, including the right to vote
such capital stock on all matters properly presented to the
stockholders of the Surviving Corporation or (iv) seeking to
prohibit Cardinal or any subsidiary of Cardinal from
effectively controlling in any material respect the business or
operations of Cardinal or the subsidiaries of Cardinal.
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(e) The Commission shall have declared the Cardinal
Registration Statement effective under the Securities Act, and
no stop order or similar restraining order suspending the
effectiveness of the Cardinal Registration Statement shall be
in effect and no proceedings for such purpose shall be pending
before or threatened by the Commission or any state securities
administrator.
(f) The Cardinal Common Shares to be issued in the
Merger (including, without limitation, the Cardinal Common
Shares issuable upon the exercise of the Cardinal Exchange
Options) shall have been approved for listing on the NYSE,
subject to official notice of issuance.
(g) Cardinal shall have received a letter, in form
and substance reasonably satisfactory to Cardinal and Bergen,
from Deloitte & Touche LLP dated the date of the Effective Time
stating that they concur with the conclusion of Cardinal's
management that the Merger will qualify as a transaction to be
accounted for by Cardinal in accordance with the pooling of
interests method of accounting under the requirements of APB
No. 16.
6.2 Conditions to Obligations of Bergen. The
obligations of Bergen to consummate the Merger and the
transactions contemplated hereby shall be subject to the
fulfillment of the following conditions unless waived by
Bergen:
(a) Each of the representations and warranties of
each of Cardinal and Subcorp set forth in Article III:
(i) which is qualified by materiality or
contains references to Material Adverse Effect shall
be true and correct in all respects on the date
hereof and on and as of the Closing Date as though
made on and as of the Closing Date (except for such
representations and warranties made as of a specified
date, the accuracy of which will be determined as of
the specified date); provided, however, that
(x) with respect to any Non-Recurring Non-
Attributable Change, the aggregate amount
excluded from the determination of whether there
has been a Material Adverse Effect on Cardinal
from all such Non-Recurring Non-Attributable
Changes applied to all of the representations
and warranties of Cardinal shall not exceed $30
million (without giving effect to any tax
consequences), and
(y) solely for purposes of Section
7.1(j)(iii) of this Agreement, Attributable
Changes with respect to Cardinal may be
considered in determining whether there has been
any Material Adverse Effect on Cardinal; and
(ii) which is not qualified by materiality and
does not contain any reference to Material Adverse
Effect shall be true and correct in all material
respects on the date hereof and on and as of the
Closing Date as though made on
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and as of the Closing Date (except for such
representations and warranties made as of a specified
date, the accuracy of which will be determined as of
the specified date).
The representations and warranties of each of Cardinal and
Subcorp set forth in Article III shall be true and correct in
all respects on the date hereof and on and as of the Closing
Date as though made on and as of the Closing Date (except for
such representations and warranties made as of a specified
date, the accuracy of which will be determined as of the
specified date), except where any such failure of the
representations and warranties in the aggregate to be true and
correct in all respects would not have a Material Adverse
Effect on Cardinal (disregarding, for purposes of this
provision, the Material Adverse Effect qualification in any
single representation and warranty); provided, however, that,
solely for purposes of Section 7.1(j)(iii) of this Agreement,
Attributable Changes with respect to Cardinal may be considered
in determining whether there has been any Material Adverse
Effect on Cardinal.
(b) Each of Cardinal and Subcorp 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 hereunder
at or prior to the Effective Time, except, in all such cases,
for acts and omissions of Cardinal which, in the aggregate, do
not have a Material Adverse Effect on Cardinal.
(c) Each of Cardinal and Subcorp shall have
furnished Bergen with a certificate dated the Closing Date
signed on behalf of it by the Chairman, President or any Vice
President to the effect that the conditions set forth in
Sections 6.2(a) and (b) have been satisfied.
(d) Bergen shall have received the opinion of
Lowenstein, Sandler, dated on or prior to the effective date of
the Registration Statement, to the effect that (i) the Merger
will constitute a reorganization under section 368(a) of the
Code, (ii) Bergen, Cardinal and Subcorp will each be a party to
that reorganization, and (iii) no gain or loss will be
recognized by the shareholders of Bergen upon the receipt of
Cardinal Common Shares in exchange for shares of Bergen Common
Stock pursuant to the Merger except with respect to cash
received in lieu of fractional share interests in Cardinal
Common Shares.
(e) There shall not be pending any Action which is
reasonably likely to have a Material Adverse Effect on
Cardinal.
(f) Since the date of this Agreement, there shall
not have been any change in the assets, liabilities, results of
operations or financial condition of Cardinal which would
constitute a Material Adverse Effect on Cardinal or any event,
occurrence or development which would have a material adverse
effect on the ability of Cardinal to consummate the
transactions contemplated hereby; provided, however, that
solely for purposes of Section 7.1(j)(iii) of this Agreement,
Attributable Changes with respect to Cardinal may be considered
in determining whether there has been any such material adverse
change that would constitute a Material Adverse Effect on
Cardinal.
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6.3 Conditions to Obligations of Cardinal and
Subcorp. The obligations of Cardinal and Subcorp to consummate
the Merger and the other transactions contemplated hereby shall
be subject to the fulfillment of the following conditions
unless waived by Cardinal:
(a) Each of the representations and warranties of
Bergen set forth in Article IV:
(i) which is qualified by materiality or
contains references to Material Adverse Effect shall
be true and correct in all respects on the date
hereof and on and as of the Closing Date as though
made on and as of the Closing Date (except for such
representations and warranties made as of a specified
date, the accuracy of which will be determined as of
the specified date); provided, however, that
(x) with respect to any Non-Recurring Non-
Attributable Change, the aggregate amount
excluded from the determination of whether there
has been a Material Adverse Effect on Bergen
from all such Non-Recurring Non-Attributable
Changes applied to all of the representations
and warranties of Bergen shall not exceed $30
million (without giving effect to any tax
consequences), and
(y) solely for purposes of Section
7.1(j)(iii) of this Agreement, Attributable
Changes with respect to Bergen may be considered
in determining whether there has been any
Material Adverse Effect on Bergen; and
(ii) which is not qualified by materiality and
does not contain any reference to Material Adverse
Effect shall be true and correct in all material
respects on the date hereof and on and as of the
Closing Date as though made on and as of the Closing
Date (except for such representations and warranties
made as of a specified date, the accuracy of which
will be determined as of the specified date).
The representations and warranties of Bergen set forth in
Article IV shall be true and correct in all respects on the
date hereof and on and as of the Closing Date as though made on
and as of the Closing Date (except for such representations and
warranties made as of a specified date, the accuracy of which
will be determined as of the specified date), except where any
such failure of the representations and warranties in the
aggregate to be true and correct in all respects would not have
a Material Adverse Effect on Bergen (disregarding, for purposes
of this provision, the Material Adverse Effect qualification in
any single representation and warranty); provided, however,
that, solely for purposes of Section 7.1(j)(iii) of this
Agreement, Attributable Changes with respect to Bergen may be
considered in determining whether there has been any Material
Adverse Effect on Bergen.
(b) Bergen 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
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and complied with by it hereunder at or prior to the Effective
Time, except, in all such cases, for acts and omissions of
Bergen which, in the aggregate, do not have a Material Adverse
Effect on Bergen.
(c) Bergen shall have furnished Cardinal with a
certificate dated the Closing Date signed on its behalf by its
Chairman, President or any Vice President to the effect that
the conditions set forth in Sections 6.3(a) and (b) have been
satisfied.
(d) Since the date of this Agreement, there shall
not have been any change in the assets, liabilities, results of
operations or financial condition of Bergen which would
constitute a Material Adverse Effect on Bergen or any event,
occurrence or development which would have a material adverse
effect on the ability of Bergen to consummate the transactions
contemplated hereby; provided, however, that solely for
purposes of Section 7.1(j)(iii) of this Agreement, Attributable
Changes with respect to Bergen may be considered in determining
whether there has been any such material adverse change that
would constitute a Material Adverse Effect on Bergen.
(e) There shall not have been a material breach of
the Bergen Stock Option Agreement.
(f) There shall not be pending any Action which is
reasonably likely to have a Material Adverse Effect on Bergen.
(g) The Employee Agreements between Bergen and each
employee of Bergen set forth in Section 4.28 to the Bergen
Disclosure Schedule, each as in effect as of the date of this
Agreement, shall be in full force and effect and shall not have
been terminated; provided, however, that it is understood that
this condition shall not fail to be satisfied with respect to
any such person who is no longer employed by Bergen so long as
Bergen shall not have modified, amended or terminated, granted
any waiver or release under, or assigned any material rights or
claims under the Employee Agreement with such former employee
other than in accordance with its terms.
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the
Effective Time (notwithstanding any approval of this Agreement
by Bergen Shareholders and Cardinal Shareholders):
(a) by mutual written consent of Cardinal and
Bergen;
(b) by either Cardinal or Bergen if there shall be
any law or regulation that, as supported by written opinion of
outside legal counsel, makes consummation of the Merger illegal
or otherwise prohibited, or if any judgment, injunction, order
or decree of a court or other
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competent Governmental Authority enjoining Cardinal or Bergen
from consummating the Merger shall have been entered and such
judgment, injunction, order or decree shall have become final
and nonappealable;
(c) by either Cardinal or Bergen if the Merger shall
not have been consummated before April 30, 1998, provided,
however, that the right to terminate this Agreement under this
Section 7.1(c) shall not be available to any party whose
failure or whose affiliate's failure to perform any material
covenant or obligation under this Agreement has been the cause
of or resulted in the failure of the Merger to occur on or
before such date;
(d) by Cardinal if the Board of Directors of Bergen
shall withdraw, modify or change the Bergen Board
Recommendation in a manner adverse to Cardinal, or if the Board
of Directors of Bergen shall have refused to affirm the Bergen
Board Recommendation as promptly as practicable (but in any
case within 10 business days) after receipt of any written
request from Cardinal which request was made on a reasonable
basis;
(e) by Cardinal or Bergen if at the Bergen
Shareholders Meeting (including any adjournment or postponement
thereof) the requisite vote of the Bergen Shareholders to
approve the Merger and the transactions contemplated hereby
shall not have been obtained;
(f) by Cardinal or Bergen if the authorization of
the Cardinal Shareholders with respect to the issuance of
Cardinal Common Shares in the Merger or the increase in the
number of authorized Cardinal Common Shares shall not have been
obtained by reason of the failure to obtain the required vote
at a meeting held for such purpose;
(g) by Bergen, pursuant to Section 5.3(e);
(h) by Cardinal if Bergen shall have breached in any
material respect any of its obligations under the Bergen Stock
Option Agreement or if ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have
breached in any material respect any of his obligations under
the Support Agreement with Cardinal;
(i) by Cardinal if at any time the representations
and warranties of Bergen set forth in Section 4.15 shall not be
true and correct and Cardinal shall have been advised by
Deloitte & Touche LLP that the condition set forth in Section
6.1(g) cannot be satisfied;
(j) by Cardinal or Bergen if:
(i) there shall have been a material
breach by the other of any of its representations,
warranties, covenants or agreements contained in this
Agreement, which breach would result in the failure
to satisfy one or more of the conditions set forth in
Section 6.2(a) or 6.2(b) (in the case of a breach by
Cardinal) or Section 6.3(a) or 6.3(b) (in the case of
a breach by Bergen) or would result in a material
adverse effect on the ability of Cardinal and/or
Bergen to consummate the transactions contemplated
hereby, and such breach shall not have been cured
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within 30 days after notice thereof shall have been
received by the party alleged to be in breach; or
(ii) the condition set forth in Section
6.3(d) (in the case of a termination by Cardinal) or
Section 6.2(f) (in the case of a termination by
Bergen) is not satisfied; or
(iii) the condition set forth in Sections
6.3(a) or 6.3(d) (in the case of a termination by
Cardinal) or Sections 6.2(a) or 6.2(f) (in the case
of a termination by Bergen) is not satisfied solely
because the proviso regarding Attributable Changes in
such section is considered in determining whether any
such condition has been satisfied, provided, that the
terminating party complies with Section 7.4(c)
hereof;
(k) by Bergen if at any time the representations and
warranties of Cardinal set forth in Section 3.7 shall not be
true and correct and Cardinal shall have been advised by
Deloitte & Touche LLP that the condition set forth in Section
6.1(g) cannot be satisfied; or
(l) by Cardinal or Bergen on one business day's
prior notice if either party has received any communication
from the Federal Trade Commission or the Department of Justice
(each an "HSR Authority") (such communication to be confirmed
to the other party by the Bureau Director of the Federal Trade
Commission or such Director's delegate or an Assistant Attorney
General or the latter's delegate) indicating that an HSR
Authority has authorized the institution of litigation
challenging the transactions contemplated by this Agreement
under the Antitrust Laws, which litigation will include a
motion seeking an order or injunction prohibiting the
consummation of any of the transactions contemplated by this
Agreement; provided, however, that the right to terminate this
Agreement pursuant to this Section 7.1(l) shall only be
exercisable within 10 business days after the receipt by either
party of the first such communication from an HSR Authority.
7.2 Effect of Termination.
(a) In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement, except for
the provisions of the second sentence of each of Section 5.2(g)
and Section 5.3(g) and the provisions of Sections 7.2 and 8.11,
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 7.2 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, fees and
expenses of their counsel, accountants, financial advisors and
other experts and advisors as well as fees and expenses
incident to negotiation, preparation and execution of this
Agreement and related documentation and shareholders' meetings
and consents ("Costs").
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(b) Bergen agrees that, if:
(i) Bergen terminates this Agreement pursuant
to Sections 5.3(e) and 7.1(g);
(ii) Cardinal terminates this Agreement
pursuant to Section 7.1(d) or 7.1(h); or
(iii) (A) Cardinal or Bergen terminates this
Agreement pursuant to Section 7.1(e), (B) at the time
of such failure by Bergen Shareholders to so approve
this Agreement there is a publicly announced or
disclosed Competing Transaction with respect to
Bergen involving a third party, and (C) within 12
months after such termination, Bergen shall enter
into an Acquisition Agreement for a Business
Combination (as defined herein) or consummates a
Business Combination;
then, (X) in the case of a termination by Cardinal, within
three business days following any such termination, (Y) in the
case of a termination by Bergen as described in clause (i)
above, concurrently with such termination, or (Z) in the case
of a termination by Bergen as described in clause (iii) above
where a Competing Transaction has been publicly announced or
publicly disclosed prior to the Bergen 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, Bergen will pay
to Cardinal in cash by wire transfer in immediately available
funds to an account designated by Cardinal (i) in reimbursement
for Cardinal's expenses an amount in cash equal to the
aggregate amount of Cardinal's Costs incurred in connection
with pursuing the transactions contemplated by this Agreement,
including, without limitation, legal, accounting and investment
banking fees, up to but not in excess of an amount equal to $12
million in the aggregate and (ii) a termination fee in an
amount equal to $75 million (such amounts collectively, the
"Termination Fee"). For the purposes of this Section 7.2,
"Business Combination" means (i) a merger, consolidation, share
exchange, business combination or similar transaction involving
Bergen as a result of which the Bergen Shareholders prior to
such transaction in the aggregate cease to own at least 85% of
the voting securities of the entity surviving or resulting from
such transaction (or the ultimate parent entity thereof), (ii)
a sale, lease, exchange, transfer or other disposition of more
than 15% of the assets of Bergen and its subsidiaries, taken as
a whole, in a single transaction or a series of related
transactions, or (iii) the acquisition, by a person (other than
Cardinal 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 more than 15% of the
Bergen Common Stock whether by tender or exchange offer or
otherwise.
7.3 Amendment. This Agreement may be amended by the
parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after
adoption of this Agreement by Bergen Shareholders, but after
any such approval, no amendment shall be made which by law
requires further approval or authorization by the Bergen
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Shareholders 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.
7.4 Liquidated Damages.
(a) In the event that the Board of Directors of
Cardinal shall withdraw or change in a manner adverse to Bergen
its recommendation as set forth in Section 3.12 of this
Agreement, and this Agreement shall have terminated in
accordance with the terms hereof as a result thereof, then
within 3 days after delivery of notice of such termination by
Bergen to Cardinal, Cardinal shall pay to Bergen in cash by
wire transfer of immediately available funds to an account
designated by Bergen, as liquidated damages (i) in
reimbursement for Bergen's expenses, an amount of cash equal to
the aggregate amount of Bergen's Costs up to but not equal to
$12 million in the aggregate and (ii) the amount of $75
million.
(b) In the event that this Agreement is terminated
by Cardinal or Bergen (the "Terminating Party") pursuant to
Section 7.1(j) hereof as a result of the failure of the other
party or its affiliates (the "Breaching Party") to perform its
material covenants and obligations under Section 5.1(a)(i) or
5.1(a)(ii) hereof, then within 3 days after such termination,
the Breaching Party shall pay to the Terminating Party in cash
by wire transfer of immediately available funds to an account
designated by the Terminating Party, as liquidated damages, an
amount of cash equal to $50 million.
(c) In the event that this Agreement is terminated
by Cardinal or Bergen pursuant to Section 7.1(j)(iii) as a
result, in whole or in part, of an Attributable Change with
respect to the other party, then contemporaneously with such
termination, the terminating party shall pay in cash by wire
transfer of immediately available funds to an account
designated by the other party as liquidated damages the amount
of $75 million.
7.5 Exclusive Remedy. In the event that any
Termination Fee is paid pursuant to Section 7.2 or any
liquidated damages are paid pursuant to Section 7.4,
notwithstanding any other provision of this Agreement, it is
understood and agreed that such Termination Fee or liquidated
damages, as the case may be, shall be the exclusive remedy for
any act or omission resulting in the termination of this
Agreement or other claim arising out of this Agreement or the
transactions contemplated hereby.
7.6 Extension; Waiver. At any time prior to the
Effective Time, Cardinal (with respect to Bergen) and Bergen
(with respect to Cardinal and Subcorp) by action taken or
authorized by their respective Boards of Directors, may, to the
extent legally allowed, (a) extend the time for the performance
of any of the obligations or other acts of such party, (b)
waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid
only if set forth in a written instrument signed on behalf of
such party.
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ARTICLE VIII.
MISCELLANEOUS
8.1 Survival of Representations and Warranties. The
representations and warranties made herein by the parties
hereto shall not survive the Effective Time. This Section 8.1
shall not limit any covenant or agreement of the parties
hereto, which by its terms contemplates performance after the
Effective Time or after the termination of this Agreement.
8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (which is confirmed) or
dispatched by a nationally recognized overnight courier service
to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Cardinal or Subcorp:
Cardinal Health, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇▇ ▇. ▇▇▇▇
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Bergen:
Bergen ▇▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Milan A. Sawdei
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, Sandler, Kohl, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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8.3 Interpretation.
(a) When a reference is made in this Agreement to an
Article or Section, such reference shall be to an Article or
Section of this Agreement unless otherwise indicated. The
headings and the table of contents contained in this Agreement
are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. When a
reference is made in this Agreement to Bergen, such reference
shall be deemed to include any and all subsidiaries of Bergen,
individually and in the aggregate, except for Sections 4.1,
4.2, 4.3, 4.4, 4.8, 4.16, 4.22, 4.23, 4.24, 4.25 and 8.3.
(b) For the purposes of any provision of this
Agreement, a "Material Adverse Effect" with respect to any
party shall be deemed to occur if any event, change or effect,
individually or in the aggregate with such other events,
changes or effects, has occurred which has a material adverse
effect on the assets (including intangible assets), liabilities
(contingent or otherwise), results of operations or financial
condition of such party and its subsidiaries taken as a whole;
provided, however, that a Material Adverse Effect with respect
to any party shall not include:
(i) any change in or effect upon the assets
(including intangible assets), liabilities
(contingent or otherwise), financial condition, or
results of operations of such party or any of its
subsidiaries directly or indirectly arising out of or
attributable to any decrease in the market price of
Cardinal Common Shares in the case of Cardinal or
Bergen Common Stock in the case of Bergen (but in
either case not any change or effect underlying such
decrease to the extent such change or effect would
otherwise constitute a Material Adverse Effect on
such party),
(ii) any change in or effect upon the assets
(including intangible assets), liabilities
(contingent or otherwise), financial condition, or
results of operations of such party or any of its
subsidiaries directly or indirectly arising out of or
attributable to conditions, events, or circumstances
generally affecting the industries in which Cardinal
(and its subsidiaries) and Bergen (and its
subsidiaries) operate,
(iii) except to the extent provided in Section
7.1(j)(iii) of this Agreement, Attributable Changes,
(iv) (A) a maximum of $30 million in the
aggregate (determined without giving effect to any
tax consequences) of Non-Recurring Non-Attributable
Changes in determining whether the conditions set
forth in Sections 6.3(d) or 6.2(f) have been
satisfied, and (B) in considering the accuracy of an
individual representation and warranty, such $30
million may be allocated among the various
representations and warranties so long as the
aggregate amount does not exceed $30 million
(determined without giving effect to any tax
consequences), or
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(v) any change in or effect upon the assets
(including intangible assets), liabilities
(contingent or otherwise), financial condition, or
results of operations of such party or any of its
subsidiaries directly attributable to a Permitted
Change.
(c) For the purposes of any provision of this
Agreement, a "Permitted Change" with respect to any party shall
mean any change specifically contemplated by the provisions of
this Agreement (without reference to the Bergen Disclosure
Schedule or the Cardinal Disclosure Schedule).
(d) For the purposes of any provision of this
Agreement, an "Attributable Change" with respect to any party
shall mean any change in or effect upon the assets (including
intangible assets), liabilities (contingent or otherwise),
financial condition, or results of operations of such party or
any of its subsidiaries directly or indirectly arising out of
or attributable to the loss by such party (and its
subsidiaries) of any of its customers (including business of
such customers), suppliers or employees (including, without
limitation, any financial consequence of such loss of customers
(including business of such customers), suppliers or employees)
due primarily to the transactions contemplated hereby or the
public announcement of this Agreement, in each case arising
after the date of this Agreement.
(e) For the purposes of any provision of this
Agreement, a "Non-Attributable Change" with respect to any
party shall mean any change in or effect upon the assets
(including intangible assets), liabilities (contingent or
otherwise), financial condition, or results of operations of
such party or any of its subsidiaries that is not an
Attributable Change, in each case arising after the date of
this Agreement.
(f) For the purposes of any provision of this
Agreement, a "Non-Recurring Non-Attributable Change" with
respect to any party shall mean any Non-Attributable Change
that is a change in or effect upon the results of operations of
such party directly attributable to any non-recurring event,
occurrence or development that would not materially impact the
continuing operations of such party.
(g) For purposes of this Agreement, a "subsidiary"
of any person means another person, an amount of the voting
securities or other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority
of its Board of Directors or other governing body (or, if there
are no such voting securities or interests, 50% or more of the
equity interests of which) is owned directly or indirectly by
such first person.
(h) For purposes of this Agreement, "knowledge" of a
party shall mean the actual knowledge of all officers of such
party with a title of executive vice president or higher.
8.4 Counterparts. This Agreement may be executed in
counterparts, which together shall constitute one and the same
Agreement. The parties may execute more than one copy of the
Agreement, each of which shall constitute an original.
8.5 Entire Agreement. This Agreement (including the
documents and the instruments referred to herein), the Support
Agreement, the Bergen Stock Option Agreement and
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the Confidentiality Agreement constitute the entire
agreement among the parties and supersede all prior agreements
and understandings, agreements or representations by or among
the parties, written and oral, with respect to the subject
matter hereof and thereof.
8.6 Third Party Beneficiaries. Except for the
agreement set forth in Section 5.2(d), nothing in this
Agreement, express or implied, is intended or shall be
construed to create any third party beneficiaries.
8.7 Governing Law. Except to the extent that the
laws of the jurisdiction of organization of any party hereto,
or any other jurisdiction, are mandatorily applicable to the
Merger or to matters arising under or in connection with this
Agreement, this Agreement shall be governed by the laws of the
State of New York. All actions and proceedings arising out of
or relating to this Agreement shall be heard and determined in
any state or federal court sitting in the City of New York.
8.8 Consent to Jurisdiction; Venue.
(a) Each of the parties hereto irrevocably submits
to the exclusive jurisdiction of the state courts of New York
and to the jurisdiction of the United States District Court for
the Southern District of New York, for the purpose of any
action or proceeding arising out of or relating to this
Agreement and each of the parties hereto irrevocably agrees
that all claims in respect to such action or proceeding may be
heard and determined exclusively in any New York state or
federal court sitting in the City of New York. Each of the
parties hereto agrees that a final judgment in any action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Each of the parties hereto irrevocably consents
to the service of any summons and complaint and any other
process in any other action or proceeding relating to the
Merger, on behalf of itself or its property, by the personal
delivery of copies of such process to such party. Nothing in
this Section 8.8 shall affect the right of any party hereto to
serve legal process in any other manner permitted by law.
8.9 Specific Performance. The transactions
contemplated by this Agreement are unique. Accordingly, each
of the parties acknowledges and agrees that, in addition to all
other remedies to which it may be entitled, each of the parties
hereto is entitled to a decree of specific performance,
provided such party is not in material default hereunder.
8.10 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the
other parties. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and
assigns.
8.11 Expenses. Subject to the provisions of Section
7.2 and the Bergen Stock Option Agreement, all costs and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by
the party incurring such expenses,
-54-
except that those expenses incurred in connection with filing,
printing and mailing the Registration Statement and the Joint
Proxy Statement (including filing fees related thereto) will be
shared equally by Cardinal and Bergen.
-55-
IN WITNESS WHEREOF, Cardinal, Subcorp and Bergen have
signed this Agreement as of the date first written above.
CARDINAL HEALTH, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
BRUIN MERGER CORP.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
BERGEN ▇▇▇▇▇▇▇▇ CORPORATION
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
-56-