As filed with the Securities and Exchange Commission on May 26, 1994
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------------------
BERGEN BRUNSWIG CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey 22-1444512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4000 Metropolitan Drive
Orange, California 92668-3510
(714) 385-4000
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
-----------------------
MILAN A. SAWDEI
Secretary
4000 Metropolitan Drive
Orange, California 92668-3510
(714) 385-4255
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------------
Copy to:
Richard M. Sandler, Esq.
Lowenstein, Sandler, Kohl, Fisher & Boylan, P.C.
65 Livingston Avenue
Roseland, New Jersey 07068
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Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement, as
determined by the Selling Shareholders. See "Selling Shareholders".
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
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<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
============================================================================================
<CAPTION>
Proposed
maximum
Title of each class of Proposed maximum aggregate Amount of
securities to be Amount to be offering price offering registration
registered registered per unit (1) price (1) fee
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock,
$1.50 par value 870,000 $ 17.1875 $14,953,125.00 $ 5,156.25
Rights to Purchase Series A 870,000 rights
Junior Participating
Preferred Stock
============================================================================================
<FN>
(1) Pursuant to Rule 457(c), the proposed maximum offering price per unit is
estimated solely for the purpose of calculating the registration fee and is
based on the average of the high and low sales prices of the Class A Common
Stock on the New York Stock Exchange Composite Transactions Tape on May 24,
1994.
</TABLE>
-----------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 26, 1994
BERGEN BRUNSWIG CORPORATION
-----------------------
870,000 Shares
Class A Common Stock
$1.50 Par Value
INTRODUCTION
This Prospectus relates to up to 870,000 shares of the Class A Common
Stock, $1.50 par value (the "Common Stock"), of Bergen Brunswig Corporation (the
"Company"), which will be offered by certain shareholders of the Company. See
"Selling Shareholders". The Company will not receive any of the proceeds from
the sale of shares by the selling shareholders.
The shares of Common Stock offered hereby were or will be issued by the
Company to Southeastern Hospital Supply Corporation, a North Carolina
corporation ("SHSC"), in connection with the acquisition by a subsidiary of the
Company of substantially all of the net assets and business of SHSC on April 29,
1994. It is anticipated that SHSC will liquidate and, in connection therewith,
distribute the shares offered hereby to its shareholders. Accordingly, the
shares offered hereby will be sold by the shareholders of SHSC (the "Selling
Shareholders"). The number of shares offered hereby is subject to reduction
under certain circumstances. See "Selling Shareholders".
The Common Stock is listed on the New York Stock Exchange. The shares of
Common Stock offered hereby are offered without underwriters at the market -
that is, at the price in effect on the New York Stock Exchange at the time of
sale by the Selling Shareholders. On May 24, 1994, the closing sales price of
the Common Stock on the New York Stock Exchange was $17.25 per share. The
Company will bear all expenses in connection with the registration of the Common
Stock being registered hereby, which expenses are estimated to be approximately
$15,000.00. The Selling Shareholders will pay all brokerage commissions
incurred in connection with the sale of shares of Common Stock at the market.
-----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------------------
The date of this Prospectus is , 1994.
<PAGE>
No person has been authorized to give any information or to make any
representations other than as contained in this Prospectus in connection with
the offer made hereby, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. The delivery of this Prospectus at any time does not imply that the
information herein is correct as of any time subsequent to the date hereof.
This Prospectus does not constitute an offer to sell securities in any
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the offices of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and the Commission's Regional Offices in New York (Seven World Trade
Center, 13th Floor, New York, New York 10048) and Chicago (Suite 1400, Northwest
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661), and copies of
such materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Reports, proxy statements and other information concerning the Company
may also be inspected at the offices of the New York Stock Exchange, Inc., at 20
Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following documents of
the Company heretofore filed by it with the Commission:
(a) Annual Report on Form 10-K for the year ended August 31, 1993,
including the portions of the Company's Annual Report to Shareowners
incorporated therein;
(b) Registration Statement on Form 8-A dated October 20, 1993;
(c) Registration Statement on Form 8-A dated February 14, 1994;
(d) Quarterly Report on Form 10-Q for the period ended December 31, 1993;
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<PAGE>
(e) Quarterly Report on Form 10-Q for the period ended March 31, 1994;
(f) Current Report on Form 8-K dated November 11, 1993.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
into this Prospectus. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any beneficial
owner of Common Stock, to whom this Prospectus is delivered, upon written or
oral request of such person, a copy of any and all of the documents that have
been incorporated by reference in this Prospectus (not including exhibits to
such documents unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to Bergen Brunswig
Corporation, 4000 Metropolitan Drive, Orange, California 92668-3510, Attention:
Milan A. Sawdei, Secretary; telephone number (714) 385-4255.
THE COMPANY
Bergen Brunswig Corporation, through its subsidiaries, is a diversified
pharmaceutical and health care product distribution organization and, as such,
is the nation's largest supplier of pharmaceuticals to hospitals and managed
care facilities, one of the largest suppliers of pharmaceuticals and health care
products to chain and independent pharmacies, and a supplier of medical and
surgical products to hospitals, clinics and alternate site health care
facilities.
The Company is incorporated in New Jersey and maintains its principal
executive offices at 4000 Metropolitan Drive, Orange, California 92668-3510;
telephone (714) 385-4000.
SELLING SHAREHOLDERS
On March 30, 1994, the Company, a subsidiary of the Company (the "Subsidiary"),
SHSC, and the shareholders of SHSC entered into an Agreement and Plan of
Reorganization (the "Agreement"). Pursuant to the terms of the Agreement, as
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<PAGE>
amended, the Subsidiary acquired substantially all of the business, assets and
property of SHSC. In exchange, the Subsidiary agreed to assume certain
liabilities of SHSC and the Company agreed to issue shares of Common Stock to
SHSC having a market value equal to the "Net Asset Value" of SHSC on April 29,
1994 (the "Closing Date") plus $5,000,000. The Net Asset Value of SHSC is
defined in the Agreement to mean SHSC's assets transferred to the Subsidiary,
valued in accordance with the terms and provisions of the Agreement, less the
liabilities assumed under the Agreement, valued in accordance with the terms and
provisions of the Agreement. Pursuant to the Agreement:
(i) On the Closing Date, the Company issued an aggregate of 785,452
shares of Common Stock, 549,816 of which were issued in the name of SHSC
free of escrow and 235,636 of which were delivered to an escrow agent (the
"Escrow Agent");
(ii) Accountants for the Company and SHSC are currently engaged in an
audit of SHSC as of the Closing Date. If the Net Asset Value as of the
Closing Date (the "Closing Net Asset Value") is determined to be less than
$8,284,345 (the "Estimated Net Asset Value"), the Company will be entitled
to a refund of that number of shares of Common Stock determined by taking
the excess of the Estimated Net Asset Value over the Closing Net Asset
Value and dividing such amount by the "Market Value," which is defined in
the Agreement as $16.913 per share (the average of the last sales prices of
the Common Stock on the New York Stock Exchange during the thirty (30)
trading days ended ten (10) days prior to the Closing Date). 70% of the
refund shares will be returned by SHSC and/or its shareholders and the 30%
balance will be returned by the Escrow Agent. If the Closing Net Asset
Value should exceed the Estimated Net Asset Value, the Company will issue
that number of additional shares of Common Stock determined by dividing
such excess by the Market Value. 70% of the additional number of shares
will be delivered to SHSC and the 30% balance to the Escrow Agent; and
(iii) The Escrow Agent (and SHSC and/or its shareholders, if
insufficient shares are available from the Escrow Agent) is required to
return shares of Common Stock to the Company in the event that (a) the
Subsidiary assigns to SHSC certain uncollected trade accounts receivable,
(b) debit memos of SHSC are rejected or not honored after the Closing Date,
(c) notes receivable assigned to the Subsidiary on the Closing Date go into
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<PAGE>
default, or (d) certain indemnification claims are made by the Company, all
as described in the Agreement.
The Company estimates that no more than 785,452 shares of Common Stock in
the aggregate will be issued in connection with the acquisition of SHSC.
However, the number of shares offered hereby may be increased to a maximum of
870,000 or reduced pursuant to the terms of the Agreement described above.
The Company has been advised that SHSC has adopted a plan of liquidation
pursuant to which SHSC's shareholders will receive all of the Common Stock
ultimately transferred to SHSC pursuant to the Agreement. The following table
sets forth information as to the number of shares of Common Stock that will be
beneficially owned by the Selling Shareholders, each of whom will own less than
one percent (1%) of the outstanding Common Stock, assuming that 785,452 shares
of Common Stock, including all those shares initially delivered to the Escrow
Agent, will be delivered to SHSC and transferred by SHSC pro rata to the Selling
Shareholders pursuant to SHSC's plan of liquidation.
<TABLE>
<CAPTION>
Number of
Shares Owned
Selling Shareholder Before Offering
- ----------------------------- ---------------
<S> <C>
Eleanor B. Manning 281,922
Ray Manning, Jr. 110,773
Betty Rouse 151,062
The O.R. Manning Trust 130,922
Carol M. Short 110,773
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TOTAL 785,452
- -----------------------------
<FN>
*It is anticipated that upon completion of this offering, the Selling
Shareholders will not own any shares of Common Stock. None of the Selling
Shareholders has ever held any position or office or had any material
relationship with the Company or any of its subsidiaries.
</TABLE>
MANNER OF SALE
The Common Stock is listed on the New York Stock Exchange. It is
anticipated that the Selling Shareholders will sell the shares of Common Stock
at the market, that is, at the price in effect on the New York Stock Exchange at
the time of sale to investors. Sales will be effected by registered
broker/dealers on the New York Stock Exchange.
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<PAGE>
EXPERTS
The consolidated financial statements and the related financial statement
schedules of the Company as of August 31, 1993 and 1992 and for each of the
three years in the period ended August 31, 1993, incorporated in this Prospectus
by reference to the Company's Annual Report on Form 10-K for the year ended
August 31, 1993, have been audited by Deloitte & Touche, independent public
accountants, as stated in their reports, which are incorporated herein by
reference, and have been so incorporated in reliance upon such reports given
upon the authority of said firm as experts in auditing and accounting.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission
registration fee ........................... $5,156.25
Legal fees and expenses ....................... $5,000.00
Accounting fees and expenses .................. $3,500.00
Miscellaneous expenses ........................ $1,343.75
----------
Total ....................................$15,000.00
==========
</TABLE>
No portion of the foregoing expenses will be borne by the Selling
Shareholders.
All expenses other than the Securities and Exchange Commission registration
fee are estimated.
Item 15. Indemnification of Directors and Officers
Under the Company's Restated Certificate of Incorporation, every person who
is or was a director, officer, employee or agent of the Company and the legal
representative of such a person is entitled to receive indemnification from the
Company to the fullest extent permitted by law. Under New Jersey law, directors
and officers may be indemnified in certain situations, subject to the Company's
having taken certain actions and the directors and officers having met certain
specified standards of conduct. In addition, in April, 1986, the Company
entered into agreements, which were amended on July 3, 1986 (collectively, the
"Indemnity Agreement"), to indemnify each of its directors against liabilities
and defense costs to the extent that such directors would have been insured
under the director and officer liability insurance policies which were in effect
on December 31, 1984 (the "1984 Policy"). The 1984 Policy afforded the broadest
coverage for liabilities arising under ERISA and the securities and anti-trust
laws. The obligation of the Company to indemnify a director under the Indemnity
Agreement is limited to $30 million, the maximum coverage available under the
1984 Policy. However, the Indemnity Agreement does not limit a director's right
to recover in excess of $30 million from the Company if the director is
otherwise entitled to statutory indemnification. The Indemnity Agreement was
ratified by the shareowners at the annual meeting held on December 17, 1986.
The Company currently maintains a directors' and officers' insurance policy
which provides liability coverage of $10 million.
II - 1
<PAGE>
In addition, the Company's Restated Certificate of Incorporation eliminates
the personal liability of directors and officers to the Company and its
shareowners for monetary damages for acts or omissions (including negligent and
grossly negligent acts or omissions) in violation of a director's or officer's
fiduciary duty of care. The duty of care refers to a fiduciary duty of
directors and officers to manage the affairs of the Company with the same degree
of care as would be applied by an "ordinarily prudent person under similar
circumstances". The provisions of the Company's Restated Certificate of
Incorporation which eliminate the personal liability of directors and officers
do not, in any way, eliminate or limit the liability of a director or officer
for breaching his duty of loyalty (i.e., the duty to refrain from fraud,
self-dealing and transactions involving improper conflicts of interest) to the
Company or its shareowners, failing to act in good faith, knowingly violating a
law or obtaining an improper personal benefit and do not have any effect on the
availability of equitable remedies.
See also the undertakings set forth in response to item 17 herein.
Item 16. Exhibits
2.1 Agreement and Plan of Reorganization, dated as of March 30, 1994,
among Bergen Brunswig Corporation, DMC Acquisition Corp., Southeastern
Hospital Supply Corporation and Ray Manning, Jr., Eleanor B. Manning,
Betty Rouse, The O.R. Manning Trust and Carol M. Short (without
Appendices or Exhibits)
2.2 Supplemental Agreement, dated as of March 30, 1994, among Bergen
Brunswig Corporation, DMC Acquisition Corp., Southeastern Hospital
Supply Corporation, Eleanor B. Manning, Ray Manning, Jr., Betty Rouse,
The O.R. Manning Trust and Carol Short (without Exhibits)
2.3 Amendment No. 1, dated April 29, 1994 to the Agreement and Plan of
Reorganization and the Supplemental Agreement (without Appendices or
Exhibits)
4.1 Restated Certificate of Incorporation
4.2 By-laws of Bergen Brunswig Corporation and Amendment to such By-laws
are incorporated by reference to Exhibits 3(a) and 3(b), respectively,
to the Company's Annual Report on Form 10-K for the year ended August
31, 1990
5.1 Opinion of Lowenstein, Sandler, Kohl, Fisher & Boylan, a Professional
Corporation
II - 2
<PAGE>
23.1 Consent of Deloitte & Touche
23.3 Consent of Lowenstein, Sandler, Kohl, Fisher & Boylan, A Professional
Corporation, is included in Exhibit 5.1
24.1 Power of Attorney
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
A. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Act"), unless the foregoing information is
contained in periodic reports filed by the Registrant pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
that are incorporated by reference in this Registration Statement; and
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement, unless the foregoing information is contained in
periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of
the Exchange Act that are incorporated by reference in this Registration
Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in the Registration Statement.
B. That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof;
C. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II - 3
<PAGE>
D. That for purposes of determining any liability under the Act, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in this Registration Statement shall be deemed to
be a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
E. That insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 15 above, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II - 4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Orange, State of California, on the 25th day of May,
1994.
BERGEN BRUNSWIG CORPORATION
By: /s/ Robert E. Martini
----------------------------
Robert E. Martini
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/ Robert E. Martini Chairman of the May 25, 1994
- ------------------------------ Board, Chief
Robert E. Martini Executive Officer
and Director
/s/ Rodney H. Brady* Director May 25, 1994
- ------------------------------
Rodney H. Brady
/s/ John Calasibetta* Senior Vice May 25, 1994
- ------------------------------ President and
John Calasibetta Director
/s/ Jose E. Blanco* Director May 25, 1994
- ------------------------------
Jose E. Blanco
/s/ Charles C. Edwards* Director May 25, 1994
- ------------------------------
Charles C. Edwards, M.D.
/s/ Charles J. Lee* Director May 25, 1994
- ------------------------------
Charles J. Lee
/s/ George R. Liddle* Director May 25, 1994
- ------------------------------
George R. Liddle
II - 5
<PAGE>
/s/ James R. Mellor* Director May 25, 1994
- ------------------------------
James R. Mellor
/s/ George E. Reinhardt, Jr.* Director May 25, 1994
- ------------------------------
George E. Reinhardt, Jr.
/s/ Francis G. Rodgers* Director May 25, 1994
- ------------------------------
Francis G. Rodgers
/s/ Dwight A. Steffensen* President and May 25, 1994
- ------------------------------ Director
Dwight A. Steffensen
/s/ Neil F. Dimick Chief Financial May 25, 1994
- ------------------------------ Officer and
Neil F. Dimick Principal Accounting
Officer
*By: /s/ Milan A. Sawdei May 25, 1994
---------------------------------------
Milan A. Sawdei, attorney-in-fact
II - 6
AGREEMENT
AND
PLAN OF REORGANIZATION
AMONG
BERGEN BRUNSWIG CORPORATION
DMC ACQUISITION CORP.
SOUTHEASTERN HOSPITAL SUPPLY
CORPORATION
ELEANOR B. MANNING
RAY MANNING, JR.
BETTY ROUSE
THE O.R. MANNING TRUST
AND
CAROL SHORT
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
AGREEMENT AND PLAN OF
REORGANIZATION ............................... 1-1
ARTICLE I DEFINITIONS.......................... 1-2
ARTICLE II ACQUISITION PROVISIONS.............. 2-1
2.01 Transfer and Assignment of Assets..... 2-1
2.02 Assets Not Being Acquired............. 2-3
2.03 Assumption And Payment Of Specific
Liabilities......................... 2-4
2.04 Consideration......................... 2-6
2.05 Post Closing Adjustments.............. 2-8
2.06 Adjustment Upon Recapitalization...... 2-9
2.07 Securities Law Matters................ 2-9
ARTICLE III REPRESENTATIONS AND WARRANTIES..... 3-1
ARTICLE IV ADDITIONAL COVENANTS AND AGREEMENTS
OF THE PARTIES...................... 4-1
4.01 Corporate Approval.................... 4-1
4.02 Stockholders' Agreement to Vote....... 4-1
4.03 Conduct Of Business................... 4-1
4.04 Negative Covenants.................... 4-2
4.05 Change of Name........................ 4-4
4.06 Recent Certified Financial Statements. 4-5
4.07 Access................................ 4-5
4.08 Security.............................. 4-6
4.09 Hart-Scott-Rodino Filings............. 4-6
4.10 Bulk Sales Compliance................. 4-7
4.11 Best Efforts.......................... 4-7
4.12 Brokers or Finders.................... 4-8
4.13 Notice to Customers................... 4-8
4.14 Covenants Not to Compete.............. 4-9
4.15 Employment Agreements................. 4-9
4.16 Reserved.............................. 4-9
4.17 Environmental Matters................. 4-9
4.18 Real Estate Matters................... 4-10
4.19 Indebtedness of Employees
and Stockholders.................... 4-10
4.20 Trade Accounts Receivable Aging....... 4-11
4.21 Debit Memos........................... 4-11
4.22 Assets Which May Be Purchased......... 4-11
4.23 Transitional Provisions............... 4-12
4.24 Press Release......................... 4-12
4.25 Exclusive Dealing..................... 4-12
4.26 Insurance Policies.................... 4-13
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<PAGE>
ARTICLE V AUDIT................................ 5-1
5.01 Accountant's Reports.................. 5-1
5.02 Asset Value........................... 5-3
5.03 Liability Value....................... 5-4
ARTICLE VI THE CLOSING......................... 6-1
6.01 The Closing........................... 6-1
6.02 Transfer of Title..................... 6-1
6.03 Risk of Loss.......................... 6-2
6.04 Other Aspects of Closing.............. 6-2
6.05 Termination........................... 6-3
6.06 Liability on Termination.............. 6-4
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF
EACH PARTY......................... 7-1
7.01 No Prohibition of Transaction......... 7-1
7.02 Compliance with Law................... 7-2
7.03 Proceedings, Documentation
and Consents......................... 7-2
ARTICLE VIII CONDITIONS TO THE OBLIGATION OF
PARENT AND SUBSIDIARY............. 8-1
8.01 Representations and Warranties True
at the Closing Date................. 8-1
8.02 No Material Adverse Change:
Officers' Certificates.............. 8-1
8.03 Corporation's Performance............. 8-2
8.04 Necessary Corporate Approvals......... 8-3
8.05 Resolutions Authorizing The
Execution Of This Agreement......... 8-3
8.06 Opinion Of Counsel.................... 8-3
8.07 Investment Letters.................... 8-3
8.08 Satisfactory Searches................. 8-4
8.09 Covenants Not To Compete.............. 8-4
8.10 Employment Agreements................. 8-4
8.11 Environmental Review.................. 8-4
8.12 Listing On New York Stock Exchange.... 8-4
8.13 Consents To Transaction............... 8-4
8.14 Prepayment Of Indebtedness............ 8-5
8.15 Greenville Option and Non-
disturbance Agreement............ 8-5
8.16 Bulk Sales Compliance................. 8-6
8.17 Tax Waivers........................... 8-6
8.18 Results of Investigation.............. 8-6
8.19 Consents to Assignments............... 8-6
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<PAGE>
ARTICLE IX CONDITIONS TO THE CORPORATION'S
OBLIGATION TO CLOSE............... 9-1
9.01 Representations and Warranties
True at the Closing................. 9-1
9.02 Parent's Performance.................. 9-1
9.03 No Material Adverse Change............ 9-2
9.04 Authority............................. 9-2
9.05 Opinion of Parent's Counsel........... 9-2
9.06 Listing on New York Stock Exchange.... 9-3
9.07 Employment Agreements................. 9-3
ARTICLE X SURVIVAL OF REPRESENTATIONS AND
INDEMNIFICATION...................... 10-1
10.01 Survival Of Representations
And Warranties..................... 10-1
10.02 Indemnification By The Corporation
and Stockholders................... 10-1
10.03 Indemnification by Parent............ 10-4
10.04 Enforcement of Indemnification
Rights............................. 10-5
10.05 Remedies Cumulative.................. 10-7
10.06 Liability for Deficiency............. 10-7
10.07 Access to Books and Records.......... 10-8
10.08 Taxes................................ 10-8
10.09 Insurance............................ 10-9
10.10 Termination of Employment............ 10-10
10.11 Environmental Cleanup................ 10-10
10.12 Trade Accounts Receivable Guarantee.. 10-10
10.13 Debit Memos.......................... 10-12
10.14 Notes Receivable..................... 10-12
10.15 Linen Business....................... 10-12
10.16 Power of Attorney.................... 10-14
10.17 Further Assurances................... 10-16
10.18 Directions to Escrow Agent........... 10-16
ARTICLE XI MISCELLANEOUS....................... 11-1
11.02 Notices.............................. 11-1
11.02 Assignability and Parties in
Interest............................ 11-1
11.03 Expenses............................. 11-2
11.04 Collections.......................... 11-2
11.05 Governing Law........................ 11-2
11.06 Counterparts......................... 11-2
11.07 Headings............................. 11-3
11.08 Pronouns, etc........................ 11-3
11.09 Complete Agreement................... 11-3
11.10 Modifications, Amendments
and Waivers......................... 11-3
11.11 Severability......................... 11-4
11.12 Consent to Option.................... 11-4
-iii-
<PAGE>
APPENDICES
SECTION
DESCRIPTION REFERENCE
------------- ---------
Appendix A Escrow Agreement 2.04(d)
Appendix B Private Placement Questionnaire 2.07(b)
Appendix C Covenant Not to Compete 4.14
Appendix D Employment Agreement 4.15
Appendix E Option to Buy Greenville, N.C.
Property from Certain
Stockholders 4.18(c)
Appendix F Opinion of Corporation's Counsel 8.06
Appendix G Opinion of Parent's Counsel 9.05
-iv-
<PAGE>
AGREEMENT
AND
PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") has been made and
entered into as of this 30th day of March, 1994, among BERGEN BRUNSWIG
CORPORATION, a New Jersey corporation ("Parent"), its wholly owned subsidiary
DMC ACQUISITION CORP., a North Carolina Corporation ("Subsidiary"), SOUTHEASTERN
HOSPITAL SUPPLY CORPORATION, a North Carolina corporation ("Corporation"), and
ELEANOR B. MANNING, RAY MANNING, JR., BETTY ROUSE, THE O.R. MANNING TRUST AND
CAROL SHORT ("Stockholders"),
R E C I T A L S:
1. The Parent desires that Subsidiary acquire substantially all of the
business, assets, and property of the Corporation, subject to certain of its
liabilities, in exchange solely for the Parent's Class A Common Stock, $1.50 par
value (the "Stock"), all on the terms and conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties adopt this Agreement as and for a Plan of Reorganization ("Plan")
under Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the
"Code"), and in order to implement such Plan, the parties represent, warrant,
covenant, and agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
The terms defined in this Article (except as otherwise expressly provided
in this Agreement) for all purposes of this Agreement shall have the respective
meanings specified in this Article.
1.01 Affiliate shall mean any entity controlling or controlled by the
Corporation or controlled by any entity which controls the Corporation.
1.02 Agreement shall mean this Agreement, the Supplemental Agreement and
all the exhibits and other documents attached to or referred to in either of
them, and all amendments and supplements, if any, to either of them.
1.03 Closing shall mean the meeting of the parties at which all Closing
Documents shall be exchanged by the parties, except for those documents, or
other items specifically required to be exchanged at a later time.
1.04 Closing Date shall mean April 29, 1994, or such other date as agreed
to by the parties on which the Closing, occurs.
1.05 Closing Documents shall mean the papers, instruments and documents
required to be executed and delivered at the Closing pursuant to this Agreement.
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1.06 CPA shall mean Deloitte & Touche.
1.07 Debit Memos shall mean memoranda issued by the corporation to its
vendors asserting its claim to a credit from such vendors with respect to
merchandise returned to the vendor, promotional allowances earned, chargebacks,
or rebates, whether such items are classified by the Corporation as receivables
from vendors or reductions of payables to vendors.
1.08 ERISA shall mean Employee Retirement Income Security Act.
1.09 Escrow Agent shall mean Wachovia Bank of North Carolina, N.A.
1.10 GAAP shall mean generally accepted accounting principles applied by
the Corporation in a manner consistent with prior periods.
1.11 Reserved.
1.12 Knowledge. Any limitation or qualification of a representation or
warranty made by the Corporation or the Stockholders in this Agreement or in the
Supplemental Agreement which is based on "knowledge" shall include facts known
to any of the Stockholders.
1.13 Market Value shall mean the average of the last sale prices of the
Stock on the New York Stock Exchange during the 30 trading days ending 10 days
prior to the Closing Date, but such Market Value shall be not greater than
$19-3/8 nor less than $16-3/8.
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1.14 Net Asset Value shall mean the Corporation's assets to be transferred
to Subsidiary pursuant to Section 2.01, as valued pursuant to Section 5.02, less
the Corporation's liabilities to be assumed by Subsidiary pursuant to Section
2.03, as valued pursuant to Section 5.03.
1.15 Notes Receivable shall mean the promissory notes which the Corporation
has received from its customers in connection either with the sale of opening
orders or to evidence past due open accounts.
1.16 Parent Representative shall mean any one of the following persons:
Robert E. Martini, Dwight A. Steffensen, Neil F. Dimick or Milan A. Sawdei.
1.17 Premises shall mean all locations at which the Corporation or its
Subsidiaries do business and, which are listed in Exhibit 2.7.1 to the
Supplemental Agreement.
1.18 Regulated Substances shall have the meaning ascribed to that term in
section 2.24 of the Supplemental Agreement.
1.19 Representative shall mean any of the following persons: Ray Manning,
Jr. or Sammy Short if Ray Manning, Jr. should be unable to act on any matter or
matters.
1.20 SEC shall mean the Securities and Exchange Commission.
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1.21 Supplemental Agreement shall mean an agreement executed concurrently
with this Agreement by the parties to this Agreement containing a series of
representations and warranties.
1.22 Trade Accounts Receivable shall mean all accounts receivable arising
from the sale or lease of goods or services to customers in the ordinary course
of the Corporation's business and to manufacturers for goods delivered to
manufacturers' salesmen.
1.23 Transaction shall mean the transaction contemplated by this Agreement.
1.24 Terms Defined in Other Sections. The following terms are defined
elsewhere in this Agreement in the following Sections:
Act 2.07(a)
Code Recital 2
Corporation Heading
Escrow Agreement 2.04(d)
Estimated Net Asset Value 2.04(b)
Final Accountant's Report 5.01(b)
HSR Act 4.09
Initial Accountant's Report 5.01(a)
Inventory 2.01(b)
Linen Business 10.15
Linen Cost 10.15
Linen Loss 10.15
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Linen Receivables 10.15
Loss or Losses 10.02
Obsolete Inventory 5.02(a)
Outside Date 6.01
Parent Heading
Permitted Encumbrances 8.08
Plan Recital 2
Preliminary Balance Sheet 2.04(b)
Proposed Statement 5.01(a)
Reassigned Receivables 10.12
Registration Statement 2.07(c)
Saleable Inventory 5.02(a)
Stockholders Heading
Stock Recital 1
Subsidiary Heading
1-5
<PAGE>
ARTICLE II
ACQUISITION PROVISIONS
2.01 Transfer and Assignment of Assets. On the Closing Date, subject to
the terms and conditions set forth in the Agreement, the Corporation shall
convey, transfer, assign and deliver to Subsidiary all the Corporation's assets,
properties, and business of every kind, character, and description, whether
tangible or intangible, whether real, personal, or mixed, and wherever located
on the Closing Date (except for those excluded by Section 2.02 hereof), and
Subsidiary shall accept those assets, including, but not limited to, the
following:
(a) cash. All cash in Corporation's banks or in its possession.
(b) inventory. All inventory located at or in route to the Premises which
shall be referred to herein as the "Inventory". The Corporation shall use its
best efforts prior to Closing to induce its customers to return promptly any
merchandise purchased from the Corporation which those customers intend to
return for credit.
(c) receivables. All Trade Accounts Receivable and Notes Receivable owned
by the Corporation.
(d) real estate. All real estate leases described on Exhibit 2.7 to the
Supplemental Agreement.
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(e) tangibles. All tangible personal property owned by the Corporation.
(f) equipment leases. Rights of the Corporation under all equipment
leases described in Exhibit 2.8 to the Supplemental Agreement.
(g) intangibles. All intangible personal property owned or used by the
Corporation, including but not limited to all distribution, franchise, license
agreements, trademarks, tradenames and other intangible assets listed on Exhibit
2.10.1 to the Supplemental Agreement, all computer programs listed on Exhibit
2.10.2 to the Supplemental Agreement, and all material contracts listed in
Exhibit 2.14.1 to the Supplemental Agreement.
(h) books and records. All books, papers, records and files pertaining in
any way to the business of the Corporation, including without limitation, sales
correspondence, customer lists, credit and sales records, purchasing records,
data processing records, and all documents and records pertaining to the
properties and assets to be transferred hereunder.
(i) purchase orders. All outstanding purchase orders received in the
ordinary course of business from the Corporation's customers.
(j) proposals. All outstanding proposals, quotations, or bids to
customers and all contracts entered into with customers in the ordinary course
of business.
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(k) telephone numbers. The Corporation's telephone numbers.
(1) claims. All claims for money due and owing, claims and rights to tax
loss carryforwards, rights, if any, under any condemnation proceedings, and all
other claims and rights of every kind existing and owned by the Corporation on
the Closing Date.
2.02 Assets Not Being Acquired. Excluded from the assets to be conveyed,
transferred, assigned by the Corporation and accepted by Subsidiary under
Section 2.01 are:
(a) cash for taxes. Cash in the amount sufficient to pay any federal,
state or local income, franchise, sales or other taxes or business license fees
measured by the business done by the Corporation through the Closing Date. The
cash retained by the Corporation pursuant to this section shall be used by the
Corporation to pay those taxes. The Corporation hereby agrees to pay the same
and to hold Subsidiary free and harmless from any claim with respect to those
taxes. In the event that the cash retained pursuant to this section would
exceed the amount required to discharge those taxes, the Corporation shall
promptly remit the excess cash to Subsidiary.
(b) certain assets of linen business. All raw materials and
work-in-progress of the Corporation's Linen Business.
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(c) home care business. All assets, consisting principally of accounts
receivable, inventory and equipment, of the Corporation's Home Care business.
(d) corporate records. All of the Corporation's stock transfer records
and all other records of the Corporation relating solely to its corporate
organization and structure, accounting books of original entry or original
supporting vouchers or general ledgers or any records which the Corporation is
required by law or government regulations to keep in its possession.
(e) malpractice claim. The pending malpractice claim which the
Corporation has asserted against its former law firm.
2.03 Assumption And Payment Of Specific Liabilities.
(a) debts assumed. As part consideration for the assignment, conveyance,
and transfer of substantially all of the assets, properties, and business of the
Corporation contemplated hereby, Subsidiary shall, subject to the limitations
contained herein, assume and discharge only the debts, liabilities, and
obligations of the Corporation hereinafter specified in this Section 2.03(a),
and no others:
(i) Debts, liabilities and obligations of the Corporation which are
expressly set forth as liabilities on the Corporation's most recent balance
sheet annexed to the Supplemental Agreement as Exhibit 2.25, in the amounts and
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only in the amounts of such debts, liabilities, and obligations stated in such
balance sheet; provided, however, that Subsidiary shall not assume and discharge
any debts, liabilities, and obligations set forth on such balance sheet which
have been discharged prior to Closing.
(ii) Debts, liabilities and obligations of the Corporation which arise in
the ordinary course and conduct of business by the Corporation subsequent to the
date of said balance sheet and prior to Closing, including liability for payment
for merchandise ordered by the Corporation and not yet received (if such
merchandise shall have been ordered in the ordinary course of the Corporation's
business) but excluding tax liability for taxes arising out of the business done
by the Corporation subsequent to June 30, 1993.
(iii) Debts, liabilities, and obligations of the Corporation which arise
after the Closing with respect to purchase orders to suppliers and from
customers entered into in the ordinary course of the Corporation's business and
contracts listed on Exhibit 2.14.1 to the Supplemental Agreement, providing
there has been no breach of warranty by the Corporation with respect thereto.
(iv) Indebtedness to United Carolina Bank in the amount of $500,000
incurred by the Corporation during February, 1994 to make leasehold improvements
in the Premises located at Greenville, North Carolina.
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<PAGE>
(b) limitation. Except for the debts, liabilities, and obligations of the
Corporation which Subsidiary has hereinabove expressly agreed to assume or
discharge, neither Parent nor Subsidiary shall be responsible for and neither of
them is assuming or agreeing to discharge any debts, liabilities, or obligations
of the Corporation or the Stockholders, whether accrued now or hereafter and
whether known, unknown, contingent, or otherwise.
2.04 Consideration.
(a) shares of stock at closing. In part consideration for the assignment,
conveyance and transfer by the Corporation contemplated by this Agreement,
Parent shall issue shares of Stock on the Closing Date having a Market Value (as
defined) equal to Estimated Net Asset Value plus $5,000,000, subject to later
adjustment as provided herein. The maximum number of shares of Stock to be
issued by the Parent pursuant to this Agreement shall be 870,000, subject to
adjustment pursuant to Section 2.06.
(b) estimated net asset value. Estimated Net Asset Value shall be the Net
Asset Value of the Corporation as of the end of the month immediately preceding
the Closing Date, and shall be based upon unaudited statements prepared by the
Corporation in accordance with GAAP as reflected on the most recent balance
sheet of the Corporation which is annexed as Exhibit 2.25 to the Supplemental
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Agreement, as modified in accordance with sections 5.02 and 5.03 of this
Agreement (the "Preliminary Balance Sheet"). The Preliminary Balance Sheet
shall be delivered to the Parent not later than two weeks prior to the Closing
Date and shall be accompanied by a certificate of Ray Manning, Jr. and Sammy
Short to the effect that it fairly presents their estimate of Net Asset Value as
of that date.
(c) outright. Seventy percent (70%) of the shares of Stock shall be
issued at the Closing in the name of the Corporation and delivered to the
Corporation free of escrow.
(d) escrow. Thirty percent (30%) of the shares of Stock issued at the
Closing shall be issued in the name of the Escrow Agent and delivered to the
Escrow Agent, and shall be held by the Escrow Agent pursuant to and in
accordance with the terms of an Escrow Agreement substantially in the form of
Appendix A hereto with such changes as may reasonably be required by the Escrow
Agent. When the post-closing adjustments contemplated by Section 2.05 have been
made, the Parent shall cause the Escrow Agent to deliver to the Corporation that
number of shares of Stock, if any, which exceed twenty percent (20%) of the
total number of shares of Stock issuable to the Corporation pursuant to the
Plan. When the Corporation or the Stockholders shall have discharged their
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obligations under Sections 10.12 and 10.13, the Parent shall cause the Escrow
Agent to release from the Escrow Sub-Accounts, in accordance with the Escrow
Agreement, that number of shares of Stock, if any, which exceed fifteen percent
(15%) of the total number of shares of Stock issuable to the Corporation
pursuant to the Plan. On May 1, 1999, the Parent shall cause the Escrow Agent
to release shares of Stock from escrow in accordance with the Escrow Agreement.
2.05 Post Closing Adjustments.
(a) increased consideration. If the Net Asset Value as of the Closing
Date, as shown by the Final Accountant's Report prepared pursuant to Article V
hereof, shall exceed Estimated Net Asset Value, then the Parent shall issue that
number of additional shares of Stock determined by dividing the excess of Net
Asset Value over Estimated Net Asset Value by Market Value. Seventy percent
(70%) of the additional number of shares shall be delivered to the Corporation
and the balance to the Escrow Agent.
(b) decreased consideration. If the Net Asset Value as of the Closing
Date, as shown by the Final Accountant's Report should be less than the
Estimated Net Asset Value, the Parent shall be entitled to a refund of that
number of shares of Stock determined by dividing the excess of the Estimated Net
Asset Value over Net Asset Value by Market Value. Seventy percent (70%) of the
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refunded shares shall be returned by the Corporation, or the Stockholders, and
the balance by the Escrow Agent.
2.06 Adjustment Upon Recapitalization. The number of shares of Stock to be
issued to the Corporation at the Closing and upon issuance of the Final
Accountant's Report, and Market Value, shall be appropriately adjusted in the
event that prior to the Closing Date or the issuance of the Final Accountant's
Report, the Stock should be split, combined, or otherwise recapitalized or if
any stock dividend should be paid on the Stock or the record date for the
payment of any such stock dividend should occur.
2.07 Securities Law Matters.
(a) private offering. The Corporation and Stockholders understand that
the Stock to be issued and delivered to the Corporation hereunder will not be
registered under the Securities Act of 1933, as amended (the "Act"), but will be
issued in reliance upon the exemption afforded by Section 4(2) of the Act and
Regulation D promulgated by the SEC thereunder, and that the Parent is relying
upon the truth and accuracy of the representations set forth in the answers to
the questionnaire in the form of Appendix B hereto delivered concurrently with
the execution of this Agreement. Each certificate of Stock issued pursuant to
this Agreement shall bear the following legend:
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<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE NORTH CAROLINA SECURITIES LAW, AS AMENDED,
AND MAY NOT BE TRANSFERRED UNLESS THEY ARE SO REGISTERED OR,
IN THE OPINION OF COUNSEL ACCEPTABLE TO THIS CORPORATION,
SUCH TRANSFER IS EXEMPT FROM REGISTRATION.
The Parent shall give instructions to its transfer agent consistent with the
foregoing legend. Immediately after the SEC shall declare the Registration
Statement to be effective, the Parent shall direct its transfer agent to issue
new certificates of Stock, free of any restrictive legend, to replace the
certificates of Stock bearing the foregoing legend.
(b) limited transfer rights. Notwithstanding the foregoing, the
Corporation may liquidate and transfer the Stock to its Stockholders after the
issuance of the Final Accountant's Report. Thereafter, a Stockholder may
transfer shares of Stock to one or more members of a group consisting of (i) the
spouse or children of any Stockholder, and (ii) one or more trusts for their
benefit; provided however, that the transferee in each case will furnish the
Parent with an investment letter in form and substance satisfactory to counsel
for the Parent who shall be satisfied with the competence of such persons to
give an investment letter.
(c) agreement to register Stock. As soon as practicable after the
Closing, but not more than thirty (30) days thereafter, the Parent shall prepare
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<PAGE>
and file a registration statement (the "Registration Statement") on the
appropriate form with the SEC pursuant to which the Parent shall register the
Stock to be issued pursuant to this Agreement for resale by the Corporation and
the Stockholders. The Parent shall thereafter use its best efforts to have such
Registration Statement declared effective by the SEC and to keep that
Registration Statement current. Parent reserves the right to include other
shares of Stock in that Registration Statement.
(d) costs. The Parent shall bear all costs incurred in preparing and
filing the Registration Statement including, without limitation, all applicable
legal fees, accounting fees, printing fees, NASD fees and SEC filing fees.
Parent shall also bear all costs of keeping that Registration Statement current.
(e) information. The Corporation will furnish the Parent with all
information concerning the Corporation reasonably required for inclusion in that
Registration Statement. The Corporation and Stockholders represent and warrant
that no information to he furnished to the Parent for such statement or
application will contain any statement which, at the time and in the light of
the circumstances under which it is made, is false or misleading with respect to
any material fact, or which omits to state any material fact necessary in order
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to make the statements therein not false or misleading or necessary to correct
any statement in any earlier information furnished hereunder which has become
false or misleading.
(f) registration rights not assignable. The registration rights set forth
in paragraph (c) above are personal to the Corporation and the Stockholders and
may not be assigned.
(g) stock distributions. For purposes of this Section 2.07, any shares of
Stock which are issued and delivered in accordance with this Agreement shall be
deemed to include any securities which may be distributed to each of the
Stockholders with respect to or in exchange for such shares.
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<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Supplemental Agreement is incorporated herein and
made a part hereof.
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<PAGE>
ARTICLE IV
ADDITIONAL COVENANTS AND AGREEMENTS OF
THE PARTIES
4.01 Corporate Approval. Promptly following the date hereof, the
Corporation will call a special meeting of its stockholders for the purpose of
considering and approving this Agreement, the Transaction and the Plan unless it
is able to obtain written waivers of notice and written consents to this
Agreement, the Transaction and the Plan from all of its stockholders. If a
meeting is required, the Corporation shall promptly call that meeting by giving
written notice to all its stockholders in accordance with its by-laws and the
applicable corporation law. That notice, as well as any notice or waiver of
notice and any consent, shall be in form acceptable to the Parent. Stockholders
shall use their best efforts to insure that all corporate action by the
Corporation necessary to the execution, delivery, and full performance of this
Agreement by the Corporation will be duly, promptly, and favorably taken.
4.02 Stockholders' Agreement to Vote. The undersigned Stockholders who
collectively own 100% of the issued and outstanding capital stock of the
Corporation hereby agree to vote all that stock in favor of the Transaction.
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4.03 Conduct of Business. Prior to the Closing Date, the Corporation shall
conduct its business only in the ordinary course, except as otherwise permitted
by this Agreement or consented to by Parent in writing. Without limiting the
generality of the foregoing covenant, the Corporation shall (a) maintain its
certificate of incorporation and by-laws in their respective forms on the date
of this Agreement; (b) at all times keep full and complete books and records
both consistently and in accordance with GAAP; (c) maintain in full force and
effect the insurance policies heretofore maintained by the Corporation (or
policies providing substantially the same coverage); (d) preserve its property
in good condition; (e) preserve its business organization intact and to preserve
for Subsidiary the goodwill of customers, suppliers and others having business
relationships with the Corporation; (f) conduct its business in substantial
compliance with all laws, regulations and ordinances applicable to its business;
(g) promptly advise Parent in writing of any material adverse change in the
business, assets or prospects of the Corporation; (h) furnish to Parent all
interim financial statements of the Corporation when they become available to
any officer of the Corporation.
4.04 Negative covenants. Prior to the Closing Date, the Corporation will
not, except as otherwise permitted by this Agreement or consented to by Parent
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in writing, (a) incur any trade accounts payable or make any commitment to
purchase quantities of any item of Saleable Inventory in excess of quantities
normally purchased in the ordinary course of its business; (b) increase its
indebtedness for borrowed money except in the ordinary course of business; (c)
except for agreements disclosed on Exhibit 2.13 to the Supplemental Agreement,
pledge or hypothecate any of the Corporation's assets to secure indebtedness of
the Corporation or any other person; (d) guarantee the obligations of any other
person; (e) merge or consolidate with, purchase substantially all of the assets
of, or otherwise acquire any business or any proprietorship, firm, association,
corporation or other business organization or corporation; (f) increase or
decrease the rate of compensation of or pay any unusual compensation to any
officer or employee, or enter into any agreement to increase or decrease the
rate of compensation of or to pay any unusual compensation to any officer or
employee (other than annual bonuses consistent with prior practice); (g) enter
into any collective bargaining agreement, or create or modify any pension or
profit sharing plan (except as contemplated by this Agreement), bonus, deferred
compensation, death benefit, or retirement plan, or any other employee benefit
plan, or increase the level of benefits under any such plan, or increase or
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decrease any severance or termination pay benefit or any other fringe benefit;
(h) make any representation to any one indicating any intention of the
Subsidiary to retain, institute, or provide any employee benefit plans, or
represent in any manner that any officer or employee of the Corporation will be
employed by the Subsidiary after the Closing, provided, however, the Corporation
and the Subsidiary shall jointly meet with the Corporation's employees as soon
as practicable following execution of this Agreement to explain employment and
benefits to be offered by the Subsidiary upon Closing; (i) issue any shares of
its capital stock, any security convertible into or exchangeable for such stock,
or any warrant, option or other right to purchase or acquire such security,
except to persons who are legally bound to vote in favor of the Transaction; (j)
declare or pay any dividend or make any distribution with respect to, or
purchase or redeem, shares of its capital stock; (k) sell or dispose of any of
its assets otherwise than in the ordinary course of its business; or (l) enter
into any contract or commitment of a type required to be disclosed on any
exhibit to the Supplemental Agreement other than contracts entered into in the
ordinary course of the Corporation's business.
4.05 Change Of Name. Among the assets being acquired by Subsidiary is the
corporate name of the Corporation. Accordingly, the Corporation will
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immediately prior to the Closing amend its articles of incorporation and take
such other steps as may reasonably be required to change its corporate name to a
name, acceptable to Parent, which will not conflict with or be similar to its
present name. The Corporation further agrees to take any and all action
reasonably requested by the Parent, at Parent's expense, to enable the Parent or
Subsidiary to use the present corporate name of the Corporation in the State of
Virginia and South Carolina and in other jurisdictions in connection with any
business activity which may be conducted by the Subsidiary.
4.06 Recent Certified Financial Statements. In order to permit the Parent
to comply with the requirements of the NYSE, the Corporation will promptly
furnish the Parent with a copy of Exhibit 2.25 to the Supplemental Agreement or
other financial statements required by the NYSE certified by the Corporation's
chief accounting officer.
4.07 Access. Between the date hereof and the Closing Date, the Corporation
shall give to Parent Representatives and their designees full access, during
normal business hours and upon reasonable notice, in such a manner as not to
disrupt normal business activities, to the Premises, property, material
contracts and books of accounts and records of the Corporation reasonably
relevant to an evaluation of the assets, liabilities and business of the
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Corporation. The Corporation will also cause its officers to furnish any and
all material financial, technical and operating data and other information
pertaining to assets, liabilities and business of the Corporation as is
reasonably available and as the Parent shall from time to time reasonably
request for such purpose. The Parent will hold, and will cause all of its
directors, officers, employees and representatives to hold in complete
confidence, all information so obtained and will use such information only for
the purpose of evaluating the accuracy of the representations made by the
Corporation and the Stockholders in the Supplemental Agreement. If the
Transaction is not consummated as contemplated herein, Parent will return all
returnable information and data to the Corporation and will not disclose any
such data or information to any other person. Such obligation of
confidentiality shall not extend to any information which is shown to have been
generally known to others engaged in the same trade or business as the
Corporation, or that is part of public knowledge.
4.08 Security. Commencing at the close of business on the day prior to the
Closing Date, Subsidiary shall have the right, together with the Corporation,
but not the obligation., to control ingress and egress from the Premises and to
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secure the Corporation's property against loss.
4.09 Hart-Scott-Rodino Filings. The Corporation and the Parent agree to
make their respective filings promptly pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), and to use their best
efforts, and to cooperate with each other in their efforts, to effect compliance
with the HSR Act.
4.10 Bulk Sales Compliance. The Corporation shall prepare and deliver to
Subsidiary, at least 20 days prior to the Closing Date and in accordance with
the applicable bulk sales law, an affidavit accompanied by a list of the names,
addresses (imprinted on mailing labels) and amounts claimed to be due to the
existing creditors of the Corporation. The Corporation shall use its best
efforts to purge from that list duplicate names and names of entities which are
not creditors of the Corporation as of the date of that affidavit. The
Corporation and Subsidiary shall also take such additional action as may be
required in order to comply with the provisions of such bulk sales laws which
are applicable to it.
4.11 Best Efforts. The Corporation, the Stockholders and the Parent shall
use their best efforts, and shall cooperate with and assist each other in their
efforts, to obtain such consents and approvals of third parties as may be
necessary to transfer the Corporation's property to Subsidiary and to consummate
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the Transaction. The parties shall also cooperate with and assist each other to
cure any deficiency which any one of them is required to cure in order to close
the Transaction, provided that any cost associated with such assistance shall be
borne by the party requesting the assistance. If the assignment of such
contract or commitment should constitute a breach thereof, and consent to such
transfer cannot be obtained, this Agreement shall not constitute an agreement to
assign the same, but the Corporation will cooperate with the Parent in any
reasonable arrangement designed to provide for Subsidiary the benefits of that
contract or commitment, including enforcement for the benefit of Subsidiary of
any and all rights of the Corporation against any other party thereto arising
but of the breach or cancellation of that contract or commitment by any other
party thereto.
4.12 Brokers or Finders. Each party agrees to hold the other harmless and
to indemnify it against the claims of any persons or entities claiming to be
entitled to any brokerage commission, finder's fee, advisory fee or like payment
from such other party based upon actions of the indemnifying party in connection
with the Transaction. In particular, the Parent will indemnify and defend the
Corporation and the Stockholders from and against any and all claims of R.J.
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Wareham & Co., Incorporated with respect to the Transaction.
4.13 Notice to Customers. On or before the Closing Date, each party shall
prepare and submit to the other party for approval (which approval shall not be
unreasonably withheld) a form letter for mailing to each of the Corporation's
customers. These letters will generally explain as many of the salient aspects
of the Transaction as the parties feel are necessary to provide the
Corporation's customers with the information they need to understand and plan
their business relationships with the parties after the Closing. No later than
ten (10) days after the Closing Date, Subsidiary, at its expense, shall mail the
Corporation's and Subsidiary's letters to the Corporation's former customers.
4.14 Covenants Not to Compete. The Corporation further agrees that it will
deliver to the Parent at the Closing covenants not to compete, substantially in
the form of Appendix C hereto, signed by each of the persons listed on that
Appendix.
4.15 Employment Agreements. At the Closing, the Corporation will deliver
to Subsidiary employment agreements in the form of Appendix D hereto signed by
each of the persons listed on that Appendix.
4.16 Reserved.
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4.17 Environmental Matters.
testing. Parent shall have the right, at its expense, to make such
environmental studies of the Premises, including tests of the air, subsoil,
groundwater and building materials at each of the Premises as it shall deem
necessary to determine whether any Regulated Substances, as defined in section
2.24 of the Supplemental Agreement, are present.
4.18 Certain Real Estate Matters.
(a) When the Subsidiary consolidates the operations presently
conducted in one or more Fayetteville Premises into a different facility in the
Fayetteville area, the Corporation and the Stockholders will release the
Subsidiary from all obligations under the leases covering the Premises vacated
by the Subsidiary in connection with the consolidation. Those releases will
apply only to obligations which may arise after the Subsidiary vacates any such
Premises.
(b) The Stockholders hereby consent to the assignment by the
Corporation to the Subsidiary of all leases which are to be assigned to the
Subsidiary pursuant to this Agreement in which any or all of the Stockholders
has a direct or indirect interest as landlord.
(c) The Stockholders agree to grant the Subsidiary an option,
substantially in the form of Appendix E hereto, to buy the Premises located in
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Greenville, North Carolina.
(d) Not later than 180 days after the closing, Eleanor B. Manning
will, at her expense, install a new roof on the premises located at 205 Forsythe
Street, Fayetteville.
4.19 Indebtedness of Employees and Stockholders. The Corporation will cause
any indebtedness owing to it by its employees (other than salesmen's normal
draw) or Stockholders to be paid in full at or before the Closing. The
Corporation will not make any loans to employees or Stockholders prior to the
Closing.
4.20 Trade Accounts Receivable Aging. On or promptly following the Closing
Date, the Corporation shall furnish the Subsidiary with a list of its Trade
Accounts Receivable containing an aging of each customer's account.
4.21 Debit Memos. On or promptly following the Closing, the Corporation
shall furnish the Subsidiary with a list of its Debit Memos which, as of the
date of that list, have not resulted in the issuance of credit memos by the
Corporation's vendors but have not been rejected by vendors.
4.22 Assets Which May Be Purchased. Ray Manning, Jr. and Sammy Short will
each have the option to purchase (a) the Corporation's automobile which he
presently uses by paying the Subsidiary the depreciated value of that automobile
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as reflected on the Subsidiary's books at the date of such purchase, provided
that option is exercised and that purchase completed within 60 days after the
Closing Date; and (b) any transferable policy of life or health insurance
covering him and his family which is now owned by the Corporation, by paying the
Subsidiary the cash surrender value thereof at the date of that purchase,
provided that option is exercised and that purchase completed within 60 days
after the Closing Date.
4.23 Transitional Provisions. In order to facilitate a smooth transfer of
operations from the Corporation to Subsidiary, the Corporation will, promptly
following execution of this Agreement, furnish Subsidiary with such data
relevant to the Corporation's customers, employees and products as Subsidiary
may reasonably require subject to the confidentiality provisions of Section
4.07. The Corporation will also introduce Subsidiary to as many of the
Corporation's customers, employees and suppliers as Subsidiary may wish to
visit.
4.24 Press Release. The Corporation and the Parent will issue a press
release promptly disclosing the execution of this Agreement. The Corporation
shall not issue any press release about this Agreement until the form of such
release has been approved by the Corporation and Parent.
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4.25 Exclusive Dealing. Until this Agreement shall be consummated or
terminated in accordance with its terms, neither the Corporation nor any
Stockholder shall take, or Permit any other person acting on its or his behalf,
to take or refrain from taking any action, directly or indirectly, to encourage,
initiate or engage in discussions or negotiations with, or provide information
to, any person or group other than the Parent with respect to any purchase of
the stock of the Corporation or any purchase of substantial assets of or merger
with the Corporation other than disclosures consented to in writing by the
Parent. The Corporation and Stockholders shall promptly notify Parent of any
solicitation or inquiry which any of them receive with respect to any such
matter.
4.26 Insurance Policies. The Corporation will use its best efforts, prior
to Closing, to obtain and deliver to Parent copies of all insurance policies
purchased by the Corporation covering all periods from January 1, 1988 to the
Closing Date.
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ARTICLE V
AUDIT
5.01 Accountant's Reports.
(a) proposed statement. The Corporation shall prepare, at its
expense, and furnish to the Parent and CPA within thirty (30) days after the
Closing Date, a proposed statement of the Net Asset Value as of the Closing Date
("Proposed Statement"). CPA shall audit that Proposed Statement and shall
render a special accountant's report ("Initial Accountant's Report") to the
Corporation and the Parent with respect to the Net Asset Value as of the Closing
Date. As soon as practicable but, in any event, not more than sixty (60) days
after receipt of the Proposed Statement, CPA shall furnish that report
concurrently to the Corporation and the Parent along with a schedule of the
adjustments made by CPA as well as adjustments passed by CPA, and shall make its
work papers with respect to that report available to the Corporation and its
accountants no later than the time the Initial Accountant's Report is completed.
(b) time for objections. After CPA shall have furnished copies of
the Initial Accountant's Report to the Corporation, if the Corporation should
object to that report on the grounds that it has not been made in accordance
with this Agreement, it may give written notice of its objection to the Parent
within thirty (30) days after its receipt of that report. If no such assertion
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is made within such thirty (30) day period, or if the Parent and the Corporation
agree upon all matters in dispute, that Initial Accountant's Report, as adjusted
to reflect any such agreements, shall be final and binding on all parties hereto
for the purpose of determining the Net Asset Value as of the Closing Date and
shall be referred to as the "Final Accountant's Report".
(c) dispute resolution. If the Parent and the Corporation are unable
to resolve all items in dispute within thirty (30) days after the Parent's
receipt of the Corporation's written objection to the Initial Accountant's
Report, then those items shall be submitted for resolutions to a third firm of
independent certified public accountants jointly selected by the Corporation and
by the Parent. The determination of such third firm with respect to those items
shall become a part of the Final Accountant's Report and shall be final and
binding upon all parties hereto. Both parties will use their best efforts to
resolve these matters as rapidly as possible.
(d) payment of fees. The Corporation shall pay the fees of its
accountants, and the Parent shall pay the fees of CPA, in connection with the
preparation and review of the Initial Accountant's Report. The fees of any
third firm employed pursuant to the provisions of paragraph (c) of this Section
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shall be borne one-half by the Parent and one-half by the Corporation.
5.02 Asset Value. The Corporation's assets to be transferred to Subsidiary
pursuant to the Plan shall be valued in accordance with GAAP except as follows:
(a) inventory. Prior to the Closing, the Corporation and the Parent
shall inspect the inventory and attempt jointly to remove everything which is
currently saleable in the ordinary course of the Corporation's business
("Saleable Inventory"). Inventory which is damaged, dirty or obsolete shall be
removed and placed in the Corporation's morgue. "Obsolete Inventory" shall mean
disposable inventory which has an expiration date, as of the Closing Date, of
three (3) months or less, and medical equipment, medical devices and disposable
medical products for which the Corporation has had no sales during the nine (9)
months prior to the Closing Date. Commencing after the close of business on the
Closing Date, the Corporation and the Parent shall jointly make a physical count
of Saleable Inventory owned by the Corporation and located in the Premises. The
Corporation and the Parent shall each be represented at its own expense by such
employees and other representatives as each of them may deem necessary. Any
sales made on or before the Closing Date shall be for the Corporation's account.
Any sales made after the Closing Date shall be for the Subsidiary's account. A
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sale shall be deemed to occur when a shipment is made. Saleable Inventory shall
be valued at replacement cost on the Closing Date. Obsolete inventory which is
disposable inventory with an expiration date of three (3) months or less as of
the Closing Date, damaged inventory and inventory in the Corporation's morgue
shall be valued at the amount, if any, realized by the Subsidiary from the sale
of that inventory within eighty (80) days after the Closing, less all related
sale expenses. The Subsidiary shall attempt, in the ordinary course of its
business to sell the Corporation's other obsolete inventory for a period of six
(6) months after the Closing Date. Provided that there are not sufficient
shares then held by the Escrow Agent, the Corporation shall return to Parent, on
demand, shares of Stock valued at Market Value, having an aggregate value equal
to the value of such other obsolete inventory which is included in the
Accountant's Final Report but not sold by the Subsidiary within one hundred
eighty (180) days after the Closing.
(b) trade accounts receivable. The Trade Accounts Receivable shall
he valued as of the Closing Date at face value less advance payments from
customers.
(c) supplies and prepaid expenses. Supplies and prepaid expenses as
of the Closing Date shall be valued at cost.
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5.03 Liability Value. The Corporation's liabilities shall be valued in
accordance with GAAP except as follows:
(a) accounts payable, accrued vacation and other current liabilities.
Accrued vacation and other Current Liabilities shall be valued at the gross
amount thereof as of the Closing Date. Accounts Payable shall be valued at the
gross amount thereof less discounts available to the Corporation on the Closing
Date. Debit Memos which have not been rejected by vendors as of the Closing
Date shall also be deducted from Accounts Payable.
(b) prepayment penalties. Prepayment penalties, if any, on the
Corporation's long term debt that Parent elects to pay off will be booked as a
liability of the Corporation as of the Closing Date. Deferred debt issuance
costs, if any, which relate to any such debt which the Parent elects to pay off
shall also be booked as a liability as of the Closing Date.
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ARTICLE VI
THE CLOSING
6.01 The Closing. The Closing shall take place at the offices of
Singleton, Murray, Craven & Inman, 9517 Raeford Road, Fayetteville, North
Carolina, commencing at 9:00 a.m. local time, provided that all conditions
precedent to the obligations of the Corporation and the Parent to close have
then been met or waived. Either party may postpone the Closing for a reasonable
period if necessary to enable it to perform any obligations hereunder. If the
Closing shall not take place on or before the 90th day following the date hereof
(the "Outside Date"), this Agreement may be terminated at the option of either
party other than a party whose act or failure to act prevented the Closing from
occurring on or before the Outside Date.
6.02 Transfer Of Title. On the Closing Date, the Corporation will transfer
all its assets (other than those to be excluded pursuant to Section 2.02) to
Subsidiary by bulk or individual assignments which, in the reasonable opinion of
the Parent, shall be sufficient to vest in Subsidiary good and marketable title
to said assets, subject only to the security interests, liens, encumbrances, and
claims reflected in Exhibit 2.13 annexed to the Supplemental Agreement to the
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extent that such security interests secure indebtedness of the Corporation to be
assumed by Subsidiary pursuant to Section 2.03.
6.03 Risk Of Loss. All risk of loss to the Corporation's assets shall
remain in the Corporation until 12:01 A.M. on the date after the Closing Date.
In the event of any casualty or loss to such assets, the Parent may require the
Corporation at the Closing to assign by specific assignment to Subsidiary all of
the Corporation's claims under any and all insurance policies relating to that
casualty or loss. At the Closing, the Corporation will assign to Subsidiary, if
requested by Subsidiary, the insurance policies which relate to the assets and
business to be transferred to Subsidiary on the Closing Date, including without
limitation, all group major medical and other employee benefit insurance, but
excluding products liability insurance which the Corporation shall continue in
effect for the applicable period of limitations.
6.04 Other Aspects Of Closing.
(a) share certificates; fractional shares. At the Closing, the
Parent will deliver share certificates covering the number of shares of Stock to
be delivered at the Closing pursuant to Section 2.04(a). All those shares shall
be fully paid and nonassessable. The Parent shall in no event at any time be
required to deliver fractional shares of Stock. The Plan shall contain
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appropriate provisions, or suitable arrangements shall be made, so as to
eliminate the requirement for the issuance of any such fractional share.
(b) listing. The Stock required to be delivered at the Closing shall
be listed for trading on the New York Stock Exchange, subject to official notice
of issuance. The Parent shall exert its best efforts to obtain such listing and
knows of no reason why such listing should be refused. In the event of the
failure to obtain the same for any reason not attributable to the Parent, this
Agreement may be cancelled and terminated at the option of either party, subject
to no claim for damages.
6.05 Termination. This Agreement may be terminated at any time until
completion of the Closing as follows: (ii) by mutual consent of Parent and the
Corporation; (b) by Parent or the Corporation, respectively, if, at or before
the completion of the Closing, any material condition set forth herein upon the
obligations of such party, to consummate the Transaction shall not have been
duly satisfied or waived; (c) by Parent or the Corporation if the Closing shall
not have occurred on or before the Outside Date, but no party shall be entitled
to terminate pursuant to this Section if its own acts or failures to act should
delay the Closing beyond the Outside Date; or (d) by Parent or the Corporation,
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respectively, if it shall have discovered that any representation or warranty
made herein for its benefit, or in any certificate, schedule or document
furnished to it, pursuant to this Agreement is untrue in any material respect,
or the Corporation or Parent, respectively, shall have materially defaulted in
the performance of any obligation under this Agreement; provided, however, that
in order to terminate this Agreement under Section 6.05 (b) or (d), the party
seeking to terminate this Agreement shall, upon discovery of such a breach or
default, give written notice thereof to the other party and the other party
shall fail to cure the breach or default by the later of ten (10) days after
receipt of such notice or the Closing Date.
6.06 Liability on Termination. Upon any termination of this Agreement
pursuant to Section 6.05(a) no party shall have any liability or obligation
hereunder (except to observe the confidentiality provisions hereof), and each
party shall bear the expenses incurred by it. If a party should terminate
pursuant to Section 6.05(b) because the other party shall have failed to perform
any obligation under this Agreement, or pursuant to Section 6.05(d) because it
shall have discovered a material misrepresentation or breach of warranty by the
other party, the terminating party shall have no liability but the defaulting
party shall not be excused from liability to the other party unless it can
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clearly demonstrate that the failure to perform was caused by persons or acts
beyond its control. If the termination is the result of an event described in
Section 6.05(c) above, the terminating party shall have no liability to the
other party provided that the terminating party did not delay the closing beyond
the Outside Date, but the party causing that delay shall not be excused from
liability to the other party unless he or it can clearly demonstrate that such
delay was caused by persons or acts beyond his or its control.
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ARTICLE VII
CONDITIONS TO OBLIGATION OF EACH PARTY
The obligation of each party to effect the Transaction shall be subject to
the fulfillment, at or prior to the Closing Date, of the following conditions:
7.01 No Prohibition of Transaction.
(a) The waiting period required by 7(b)(1) of the HSR Act and the
regulations promulgated thereunder shall have expired without any administrative
or judicial proceeding having been instituted by the Federal Trade Commission or
the Department of Justice with respect to the Transaction.
(b) No third party shall have instituted any suit or proceeding to
restrain, enjoin or otherwise prevent the consummation of the Transaction, or to
seek damages from or impose obligations upon either party by reason of the
Transaction which, in such party's reasonable judgment, would involve expense or
lapse of time that would be materially adverse to that party's interest.
(c) No order shall have been issued by any court or administrative
body to restrain, enjoin or otherwise prevent consummation of the Transaction.
(d) No inquiry shall have been received about the Transaction from
the United States Department of Justice, the Federal Trade Commission, the
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Office of the Attorney General or any other office of any State; provided,
however, that Parent may elect to close the Transaction notwithstanding the
receipt of any such inquiry if it is willing to assume the risk of doing so.
7.02 Compliance with Law. There shall have been obtained any and all
permits, approvals and consents of any governmental body or agency which counsel
for Parent or for the Corporation may reasonably deem necessary or appropriate
so that consummation of the Transaction will be in compliance with laws
applicable to the Transaction or to the assets or business of either party.
7.03 Proceedings, Documentation and Consents. All proceedings and Closing
Documents contemplated by this Agreement together with all consents to and
approvals of the Transaction (the form and substance of all of which shall be
reasonably, satisfactory to the parties) as are necessary to effect the Merger,
shall have been obtained.
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ARTICLE VIII
CONDITIONS TO THE OBLIGATION OF
PARENT AND SUBSIDIARY TO CLOSE
The obligations of the Parent and Subsidiary hereunder are subject to the
satisfaction, on or prior to the Closing Date, of all the following conditions,
compliance with which or the occurrence of which may be waived in whole or in
part by the Parent in writing.
8.01 Representations and Warranties True at the Closing Date. Except for
changes contemplated by this Agreement and changes which do not individually or
in the aggregate have an adverse effect upon the assets or business acquired,
taken as a whole, the representations and warranties of the Corporation and the
Stockholders contained in Article 2 of the Supplemental Agreement shall be
deemed to have been made again at and as of the Closing Date and shall then be
true and correct. At the Closing, the Corporation and the Stockholders shall
have delivered to the Parent a certificate to that effect signed by them or by
the Representative on their behalf and dated on and as of the Closing Date.
8.02 No Material Adverse Change: Officers' Certificates. During the
period from December 31, 1993 to the Closing Date, (a) there shall not have been
any material adverse change in the financial condition, results of operations or
prospects of the Corporation, nor any material loss or damage to its assets,
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whether or not insured, which materially affects its ability to conduct its
business; (b) none of the events described in Section 2.29 of the Supplemental
Agreement shall have occurred; and (c) Parent shall have received a certificate
dated the Closing Date to the foregoing effect and to the further effect that
any liabilities of the Corporation at the Closing Date which were not reflected
on the most recent balance sheet set forth on Exhibit 2.25 annexed to the
Supplemental Agreement are only liabilities incurred in the ordinary course of
business subsequent to the date of that balance sheet or as otherwise
contemplated by this Agreement or the Exhibits to the Supplemental Agreement.
That certificate shall be signed by the Stockholders, individually or by the
Representative on their behalf, and on behalf of the Corporation. The delivery
of those certificates shall in no way diminish the warranties and
representations of the Corporation and Stockholders made in this Agreement and
the Supplemental Agreement.
8.03 Corporation's Performance. Each of the obligations of the Corporation
to be performed on or before the Closing Date pursuant to the terms of this
Agreement shall have been duly performed at the Closing Date, and, at the
Closing Date, the Corporation and the Stockholders or the Representative acting
on their behalf, shall have delivered to Parent a certificate to that effect
dated on and as of the Closing Date.
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8.04 Necessary Corporate Approvals. The board of directors and
stockholders of the Corporation shall have duly authorized and approved the
execution and delivery of this Agreement and the Supplemental Agreement, and all
corporate action necessary or proper to authorize the execution, delivery and
performance of this Agreement and the Plan, shall have been taken on or prior to
the Closing Date.
8.05 Resolutions Authorizing The Execution Of This Agreement. At the
Closing, the Corporation will furnish to the Parent copies of the resolutions or
consents of the Corporation's board of directors and its stockholders,
appropriately certified by the Corporation's secretary, authorizing the
execution, delivery, and performance of this Agreement and the Plan.
8.06 Opinion Of Counsel. The Corporation shall have furnished the Parent
and Subsidiary with a favorable opinion dated on and as of the Closing Date, of
Singleton, Murray, Craven & Inman, counsel to the Corporation and the
Stockholders, in form of Appendix E hereto.
8.07 Investment Letters. On or prior to the Closing Date, each Stockholder
shall have executed and delivered to the Parent a letter agreement and
questionnaire in the form of Appendix B hereto, it being understood that the
Parent, in issuing the Stock will be relying on the representations of said
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persons as contained in the said letter agreements and questionnaire.
8.08 Satisfactory Searches. The Parent shall have received evidence,
satisfactory to it, that (a) the Corporation is duly organized, validly existing
and in good standing in its state of incorporation, (b) the Corporation is
qualified to do business as a foreign Corporation in Virginia and South
Carolina, and (c) the Corporation has good title to all assets listed on the
Preliminary Balance Sheet free and clear of all liens, security interests,
claims and encumbrances other than those listed in Exhibits 2.8 or 2.13 to the
Supplemental Agreement ("Permitted Encumbrances").
8.09 Covenants Not To Compete. On or prior to, the Closing, covenants not
to compete in the form of Appendix C hereto shall have been executed by the
persons listed on that Appendix and delivered to the Parent.
8.10 Employment Agreements. On or prior to the Closing, the employment
agreement in the form of Appendix E, hereto shall have been executed by the
persons listed on that Appendix and delivered to the Parent.
8.11 Environmental Review. The Parent shall not have discovered Regulated
Substances requiring remediation under any federal or state law, rule or
regulation in the air, subsoil and groundwater of any of the Premises, nor any
improper installation of or leakage from any underground storage tanks on the
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Premises, or any violation of environmental laws, rules or regulations with
regard to such tanks on the Premises that shall not have been remediated prior
to the Closing Date.
8.12 Listing On New York Stock Exchange. The Parent shall have secured
approval from the NYSE for the listing of the Stock issuable pursuant to this
Agreement, subject to official notice of issuance thereof.
8.13 Consents To Transaction. On or prior to the Closing Date, the
Corporation shall furnish the Parent with consents to the Transaction from the
persons listed on Exhibit 2.22 to the Supplemental Agreement.
8.14 Prepayment Of Indebtedness. On or before the Closing Date, any and
all indebtedness owing to the Corporation by its Stockholders and employees
shall have been paid in full.
8.15 Greenville Option and Non-disturbance Agreement. On or prior to the
Closing, the Subsidiary shall have received the purchase option contemplated by
Section 4.18(c) and an agreement from the holder of the mortgage of the
Greenville Premises not to disturb the Surviving Corporation's use and
occupation of the Premises which is subject to that mortgage. If the Mortgagee
should be unwilling to execute and deliver such a non-disturbance agreement, the
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Corporation may deliver to Parent (in lieu thereof) indemnities from
Stockholders in form and amount satisfactory to Parent.
8.16 Bulk Sales Compliance. The Parent shall have received evidence,
satisfactory to it, that the applicable bulk sales statutes have been complied
with.
8.17 Tax Waivers. The Parent shall have received tax waiver certificates
from applicable taxing authorities.
8.18 Results of Investigation. The Parent shall have determined in good
faith that the results of its investigation do not show any losses, liabilities,
commitments, contingencies or other conditions of or relating to the Corporation
which are not set forth or reflected on the financial statements of the
Corporation previously delivered to the Parent or have not been otherwise
disclosed to the Parent and which in the aggregate materially and adversely
affect the business, financial condition, properties, results of operations,
forecasts or prospects of the Corporation.
8.19 Consents To Assignments. On or prior to the Closing Date, the
Corporation shall furnish the Parent with consents to the assignment or
subletting of such leases, agreements, material contracts, bids, or proposals
made by the Corporation as in the opinion of the Parent or its counsel are
required to permit Subsidiary to enjoy the benefits thereof.
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ARTICLE IX
CONDITIONS TO THE CORPORATION's OBLIGATION TO CLOSE
The obligations of the Corporation hereunder are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions,
compliance with which, or the occurrence of which may be waived in whole or in
part in writing by the Corporation.
9.01 Representations and Warranties True at the Closing. The
representations and warranties of Parent contained in Section 3 of the
Supplemental Agreement shall be deemed to have been made again at and as of the
Closing Date and shall then be true and correct in all material respects and, at
the Closing Date, except for changes in the ordinary course of business and
changes to the Parent's capital structure, Parent shall have delivered to the
Corporation a certificate to such effect, signed by any Parent Representatives
and dated on and as of the Closing Date.
9.02 Parent's Performance. Each of the obligations of Parent to be
performed on or before the Closing Date, pursuant to the terms of this
Agreement, shall have been duly performed at the Closing Date, and, at the
Closing Date, Parent shall have delivered to the Corporation a certificate to
such effect signed by any Parent Representative. There shall have been no
change in Parent's consolidated financial or business condition or commitments
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nor any litigation or proceeding, actual or threatened, which is reasonably
likely to prevent Parent or the Subsidiary from performing any obligation
undertaken by it under this Agreement which is to be performed after the
Closing.
9.03 No Material Adverse Change. During the period from the date of this
Agreement to the Closing Date, there shall not have been any material adverse
change in the consolidated financial condition, results of operations or
prospects of the Parent and its subsidiaries, taken as a whole, nor any material
loss or damage to its assets, whether or not insured, which materially affects
the Parent's ability to conduct its business, and Parent shall have delivered to
the Corporation a certificate to that effect signed by any Parent Representative
dated on and as of the Closing Date.
9.04 Authority. All actions required to be taken by or on the part of
Parent and the Subsidiary to authorize the execution, delivery and performance
of this Agreement by Parent and the Subsidiary and the consummation of the
Transaction shall have been duly and validly taken by the respective Boards of
Directors of Parent and Subsidiary, and Parent shall have delivered to the
Corporation a certificate to that effect, signed by any Parent Representative.
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9.05 Opinion of Parent's Counsel. Parent shall have furnished the
Corporation with an opinion of Lowenstein, Sandler, Kohl, Fisher & Boylan, P.C.,
counsel to Parent, dated the Closing Date, in the form of Appendix F hereto. As
to any matter contained in that opinion which involves other than federal or New
Jersey law, such counsel may rely upon the opinion of local counsel satisfactory
to the Corporation. All those opinions may expressly rely as to matters of fact
upon certificates or appropriate officers of Parent or appropriate governmental
officials. Copies of all those opinions and certificates shall be delivered to
the Corporation.
9.06 Listing on New York Stock Exchange. The Stock issuable pursuant to
this Agreement will have been approved for listing on the NYSE, subject to
official notice of issuance.
9.07 Employment Agreements. On or prior to the Closing, employment
agreements in the form of Appendix D hereto shall have been executed by the
Subsidiary and delivered to the persons listed on that Appendix.
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ARTICLE X
SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION
10.01 Survival Of Representations And Warranties. All statements contained
in any exhibit or certificate or other instrument delivered or to be delivered
by or on behalf of the parties hereto, or in connection with the Transaction,
shall be deemed representations and warranties hereunder. All such
representations, warranties, and agreements shall survive the Closing and any
audit or investigation made by or on behalf of the parties. Consummation of the
Transaction shall not be deemed or construed to be a waiver of any right or
remedy possessed by any party hereto, notwithstanding that such party knew or
should have known at the time of Closing that such right or remedy existed.
10.02 Indemnification By The Corporation and Stockholders.
(a) obligation to indemnify. The Corporation and Stockholders
jointly and severally agree to and do hereby indemnify, and agree to defend and
hold Parent and Subsidiary and their respective directors, officers, employees,
fiduciaries, agents and affiliates, and each other person, if any, who controls
such persons harmless against any claims, actions, suits, proceedings,
investigations, losses, expenses, damages, obligations, liabilities, judgments,
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fines, fees, costs and expenses (including costs and reasonable attorneys' fees)
and amounts paid in settlement of any pending, threatened or completed claim,
action, suit, proceeding or investigation (collectively "Loss" or "Losses")
which arise or result from or are related to (i) any breach or failure of the
Corporation and Stockholders to perform any of their covenants or agreements set
forth herein, (ii) the inaccuracy of any representation or warranty made by the
Corporation and Stockholders herein or in the Supplemental Agreement without
regard to any knowledge qualification, (iii) any fixed or contingent obligation
or liability of the Corporation (including but not limited to liabilities
arising in torts, contracts, guarantees and indemnities) which existed as of the
Closing Date in excess of any provisions for such obligation or liability in the
Final Accountant's Report, (iv) any liability for taxes, including federal,
state and local income taxes, franchise, business license fees, personal
property, real property, sales, use and any other tax relating to the assets of
the Corporation or the business of the Corporation for all periods up to and
including the Closing Date other than those which Subsidiary has agreed,
pursuant to Section 2.03, to assume and which are accrued as liabilities of the
Corporation or reserved on the Final Accountant's Report, together with interest
and penalties and additions to tax, if any, arising out of tax assessments, (v)
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any liability for federal, state or local income taxes resulting from the
Transaction, (vi) any underground storage tank located at any of the Premises,
(vii) the purchase or sale by the Corporation of prescription drug products
which the Corporation purchased from sources other than the manufacturer or a
distributor authorized by manufacturer to distribute those products, (viii) any
liability or costs arising out of the litigation and claims disclosed in Section
2.28 of the Supplemental Agreement or on Exhibit 2.28 annexed to the
Supplemental Agreement. No liability shall attach under this Section 10.02,
however, until the Parent or Subsidiary has incurred a Loss or Losses in the
aggregate totalling Fifty Thousand dollars ($50,000).
(b) reimbursement on demand. The Stockholders will reimburse the
Parent and Subsidiary from time to time on demand, after compliance with Section
10.04, for (i) any payment made by the Parent or Subsidiary at any time in
respect of any liability, obligation or claim, and (ii) any Loss which the
Parent or Subsidiary may sustain or incur, to which the foregoing indemnity
relates.
(c) set-off. The Parent and Subsidiary shall have the right, after
compliance with Section 10.04, to set off any sum owed to the Parent or
Subsidiary by the Corporation or by Stockholders or any of them pursuant to the
foregoing indemnity, against any sum owed to the Corporation or any Stockholder
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by the Parent or Subsidiary. The Parent may, at its option, exercise its offset
rights by reducing the number of shares of Stock issuable pursuant to Sections
2.04 and 2.05 by the Market Value of those shares equal to the amount of the
offset. Exercise of such right of setoff shall not be a waiver of any other
rights or remedies which the Parent or Subsidiary may have against the
Corporation or Stockholders or any of them. Such right of setoff shall not
limit the liability of the Corporation and Stockholders hereunder, and such
right shall be in addition to, and not in lieu of, any other rights and remedies
that the Parent or Subsidiary may have against the Corporation or Stockholders
or any of them pursuant to this Agreement.
(d) return of stock. The Corporation shall return to the Parent, on
demand, after compliance with Section 10.04, shares of Stock, valued at Market
Value having an aggregate value equal to the amount of the Loss, calculated in
accordance with Section 10.04(d) in excess of any deductible or cushion provided
for in Section 10.02(a). Parent shall first make demand upon the Escrow Agent
for the return of shares held in Escrow.
10.03 Indemnification by Parent. Parent agrees to and does hereby indemnify
and hold the Corporation and the Stockholders harmless against any claims,
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losses, damages, expenses or liabilities (including costs and reasonable
attorney's fees) resulting to the Corporation and the Stockholders from (a) any
breach or failure of Parent to perform any of its covenants or agreements set
forth herein, or (b) the inaccuracy of any representations or warranties made by
Parent and the Subsidiary herein.
10.04 Enforcement of Indemnification Rights.
(a) notification. Any person or entity seeking enforcement of
indemnification rights hereunder shall notify each potentially liable person or
entity of (i) any payment made in respect of any liability, obligation or claim
to which the foregoing indemnity applies, (ii) any Loss which such person or
entity may sustain or incur, to which the foregoing indemnity relates, and (iii)
any claim made or suit filed against such person or entity with respect to the
Corporation, its assets or this Agreement. Such notification shall include a
specific demand for indemnification and defense if such person or entity wishes
to assert his or its indemnification rights hereunder.
(b) disputes. If there is any dispute as to the right of
indemnification and defense hereunder, the disputing party shall give the other
party written notice of such dispute, specifying in detail the basis of the
dispute, not later than 20 days after receipt of demand for indemnification. If
the dispute cannot be resolved amicably, either party may institute suit against
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the other party in the United States District Court for the Eastern District of
North Carolina, to resolve the matter. All parties hereby waive the right to a
jury trial in any such law suit.
(c) time limit. If there is no dispute as to the right to
indemnification with respect to any such demand, within such 20 day period, time
being of the essence, or upon resolution of any such dispute by the parties or
by a court, the person or entity entitled to indemnification shall be promptly
paid the amount of such demand, the amount agreed to by the parties or the
amount ordered by a court.
(d) calculation of Loss. In determining the amount of any Loss, net
after tax proceeds of insurance received shall reduce the Loss. Tax benefits,
if any, derived from such Loss by the party seeking indemnification shall not
reduce the loss, unless the amount paid to indemnify it for such Loss shall not
be treated by it as income subject to federal or state income tax, in which
event the amount of the Loss shall be reduced by the tax benefits derived
therefrom.
(e) Litigation Procedure. If Parent notifies the Representative of
the commencement of an action against Parent and/or the Subsidiary,
Representative will be entitled, at his own expense, to (i) participate in and
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(ii) assume the defense of the action. If the Representative wishes to assume
the defense of that action, counsel selected by the Representative shall be
reasonably satisfactory to the Parent, and the Parent shall cooperate in all
reasonable respects, at its cost and expense, with the Representative and such
counsel in the investigation and defense of that action and any appeal arising
therefrom. After Representative shall notify the Parent of his election to
assume the defense of any such actions, the Stockholders will not be liable to
the Parent under this Article X for any legal fees or other expense subsequently
incurred by Parent in connection with the defense thereof. Even if the
Representative should assume the defense of any such actions, the Parent shall
have the right at its expense to participate in the defense thereof. If the
Representative assumes the defense of any such actions, he shall not settle or
otherwise compromise any such action which could materially affect the
continuing business of the Subsidiary without the prior written consent of the
Parent. If the Representative should fail or refuse to assume the defense of
any such action, the Stockholders shall jointly and severally reimburse the
Parent for the fees and expenses of counsel engaged by it to defend that action.
10.05 Remedies Cumulative. Persons or entities entitled to indemnification
hereunder shall be entitled to such indemnification from time to time and shall
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be entitled to rely upon one or more provisions of this Agreement without
waiving its right to rely upon any other provisions at the same time or any
other time.
10.06 Liability for Deficiency. The Corporation, and Stockholders shall be
jointly and severally liable to, and shall promptly pay, Parent on demand for
any amounts which Parent or Subsidiary is entitled to receive under any Section
of Article X which Parent does not receive from the Escrow Agent. The
Corporation and Stockholders each understand and acknowledge that their
liability is not limited to the assets held by the Escrow Agent. The Parent and
Subsidiary shall be jointly and severally liable to, and shall promptly pay,
Corporation and Stockholders on demand any amounts which any of the Corporation,
and Stockholders are entitled to receive under any section of Article X.
10.07 Access to Books and Records. After the Closing, the Subsidiary will
give the Corporation and the Representative (i) access to the books, records and
files acquired from the Corporation, which it will preserve in usable condition,
for a period of five years; (ii) access to such of the books, records and files
as may then be preserved in the Parent's discretion, and (iii) access to its
accounting personnel and to the tax and accounting records of the Corporation in
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order to enable the Corporation to prepare final tax and personnel reports
required of the Corporation as a result of the Transaction; provided, however,
Subsidiary may terminate its obligation under subsection (i) hereof at any time
by delivering all such books, records and files to the Corporation or the
Representative.
10.08 Taxes.
(a) tax returns. The Corporation shall prepare and file all final
federal, state and local tax returns with respect to its operations up to the
Closing Date, and shall submit all such returns to the Parent not less than 30
days prior to the date on which such returns are required to be filed. The
Corporation shall make any adjustments in such returns as may reasonably be
required by the Parent to conform with the tax accrual set forth in the Final
Accountant's Report as finally determined under Section 5.01. Approval of such
returns by the Parent shall not impose any liability for the accuracy of such
returns on the Parent.
(b) payment of taxes. The Corporation and Stockholders shall pay any
federal, state or local income, or gross receipt taxes, or business license
fees, if any, which are imposed on the Corporation or the Stockholders as a
result of the Transaction or imposed on the Corporation, the Stockholders, the
Parent or any of its affiliates as a result of any steps taken by the
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Corporation, any Associate, or Stockholders, at any time prior to the
Transaction, and all federal, state, or local taxes upon or related to the
Corporation's assets, business or employees' compensation, accrued as of the
Closing Date. The Corporation reserves the right to contest any and all taxes
which may be assessed or proposed against it, provided that it shall indemnify
and hold the Parent, the Subsidiary and their affiliates harmless from any
claim, loss or liability resulting from such tax or alleged tax liability.
After the liquidation of the Corporation, the Representative shall have the
right to contest taxes against the Corporation and the Stockholder; provided
that the Stockholders shall then agree jointly and severally to indemnify and
hold the Parent, the Subsidiary and their affiliates harmless against any such
claim, loss or liability.
10.09 Insurance. The Corporation will maintain in force, for the applicable
time periods of limitations upon the commencement of litigation, the public
liability insurance policies listed on Exhibit 2.19 annexed to the Supplemental
Agreement with respect to all acts which shall have occurred prior to the time
that risk of loss passes to Subsidiary pursuant to this Agreement.
10.10 Termination of Employment. The Corporation will, immediately prior to
the Closing Date, issue appropriate notices cancelling each and every employment
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agreement, retainer, consulting agreement, and shall terminate all employees of
the Corporation as of the Closing Date. Subsidiary shall simultaneously offer
employment to all employees of the Corporation effective on the Closing Date.
The Corporation and Subsidiary shall adjust the payroll for such employees as of
the close of business on the Closing Date. For a period of not less than one
(1) year following the Closing, the Subsidiary will not reduce the commission
rates from those reflected on the Sales Representative Commission Schedule
annexed as part of Exhibit 2.17.1 to the Supplemental Agreement.
10.11 Environmental Cleanup. Representative shall direct the Escrow Agent
to reimburse the Parent for any environmental cleanup costs incurred by the
Corporation in excess of the accrual for that purpose included in the Final
Accountants Report.
10.12 Trade Accounts Receivable Guarantee.
(a) general. Subsidiary shall use its best efforts (but shall not be
obligated to threaten or to commence litigation) to collect all Trade Accounts
Receivable assigned hereunder in the ordinary course of its business, provided
that Subsidiary shall have the right, at any time after the 180th day and before
the 210th day following the Closing, to assign to the Corporation the
uncollected portion of any Trade Accounts Receivables included in the Final
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Accountant's Report which have not been collected by the Subsidiary within 180
days after the Closing ("Reassigned Receivables"). The Subsidiary shall deliver
to the Corporation all documents which relate to the Reassigned Receivables and
any similar documents generated by the Subsidiary after the date hereof. The
Subsidiary shall cooperate with the Corporation in any reasonable collection
efforts relating to the Reassigned Receivables. Provided that there are not
sufficient shares then held by the Escrow Agent, the Corporation shall return to
Parent, on demand, shares of Stock valued at the Market Value, having an
aggregate value, equal to the face amount of the Reassigned Receivable less any
credits and amounts prepaid by the account debtor and not previously applied
against that debtor's account.
(b) application of collections. To the extent that the Subsidiary
shall continue to do business with the Corporation's customers who owe the
Corporation money as of the Closing Date, the parties agree that, in the absence
of specific customer instructions to apply, or not to apply, payments to
specific invoices, the payments received by the Subsidiary from those customers
subsequent to such date shall be applied against the oldest outstanding balances
of such Reassigned Receivables. Credits, if any, which Subsidiary may issue to
any account debtor with respect to the return of merchandise sold by the
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Corporation to that account debtor shall be credited against the oldest
outstanding balances of such Reassigned Receivables. Commencing sixty (60) days
after the Closing, and monthly thereafter, Subsidiary will furnish the
Representative with a monthly trial balance of Trade Accounts Receivable
acquired from the Corporation.
10.13 Debit Memos. Provided that there are not sufficient shares then held
by the Escrow Agent, the Corporation shall return to Parent, on demand, shares
of Stock valued at Market Value, having an aggregate value equal to the
aggregate amount of Debit Memos included in the Final Accountant's Report as a
reduction of trade payables of the Corporation, to the extent that any vendors
should, within 180 days after the Closing, reject or refuse to honor Debit Memos
issued by the Corporation on or before the Closing Date.
10.14 Notes Receivable. If any Note Receivable assigned to Subsidiary at
the Closing should then be or thereafter go into default, provided that there
are not sufficient shares then held by the Escrow Agent, the Corporation shall
return to Parent, on demand, shares of Stock valued at Market Value, having an
aggregate value equal to the unpaid principal amount of any accrued and unpaid
interest on such note.
10.15 Linen Business. Among the assets and liabilities of the Corporation
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to be transferred to the Subsidiary pursuant to this Agreement are inventory,
Trade Accounts Receivable and Accounts Payable relating to the Corporation's
linen business (the "Linen Business"). The Corporation and the Stockholders
understand that the Subsidiary has agreed to acquire the Linen Business subject
to the following:
(a) The Subsidiary will only acquire linen finished goods in the
Corporation's inventory on the Closing Date and will not purchase any linen
finished goods produced by the Corporation after the Closing.
(b) For six (6) months following the Closing, the Subsidiary will
offer to sell the linen finished goods at Subsidiary's Linen Cost plus ten
percent (10%) or at any other price specified from time to time by the
Representative. Subsidiary's Linen Cost shall mean the value of the assets of
the Linen Business transferred to the Subsidiary and the liabilities of the
Linen Business assumed by the Subsidiary and reflected in the Final Accountant's
Report.
(c) The Corporation and the Stockholders jointly and severally agree
to return shares of Stock to the Parent, on demand made at any time more than
one hundred eighty (180) days after the Closing, which have an aggregate Market
Value equal to the "Linen Loss", if any, which the Subsidiary shall have
incurred with respect to the Linen Business. "Linen Loss" shall mean the
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difference between the Linen Cost plus ten percent (10%) and the proceeds
realized by the Subsidiary from the sale of linen finished goods. For the
purpose of this subsection, "proceeds" shall be deemed to include Trade Accounts
Receivable arising from the sale by the Subsidiary of linen finished goods after
the Closing ("Linen Receivables").
(d) The Corporation and the Stockholders jointly and severally agree
to return shares of Stock to the Parent, on demand made at any time after the
210th day following the Closing which have an aggregate Market Value equal to
the uncollected portion of any Linen Receivables. The Subsidiary shall deliver
to the Corporation all documents which relate to the reassigned Linen
Receivables. Trade Accounts Receivable which arose out of the sale by the
Corporation of linen finished goods prior to the Closing are the subject of a
separate guarantee set forth in Section 10.12.
(e) The Corporation and the Stockholders understand and agree that
all shares of Stock which become returnable to the Parent pursuant to this
Section 10.15 will be returnable by them and will not be deducted from any
shares of Stock held in escrow pursuant to Section 2.04(d).
10.16 Power of Attorney. The Corporation and each of the Stockholders
hereby appoints the Representative designated in Section 1.19, and any successor
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named therein, to act as his or her attorney-in-fact, in his or her name to take
any and all actions that may, on the part of the Stockholders or the
Corporation, be necessary or appropriate pursuant to the terms of this
Agreement, including but not limited to the following:
(a) To execute and deliver the Escrow Agreement, the closing
certificates required by Section 8.01, 8.02 and 8.03 and any other document or
instruments which may, in said attorney-in-fact's sole discretion, be necessary
or appropriate to consummate the Transaction;
(b) To execute and deliver amendments of any nature of this
Agreement, the Supplementary Agreement, the Escrow Agreement and any other
agreement or document to be executed and delivered pursuant to this Agreement;
(c) To grant waivers of the Corporations, and the Stockholders'
rights hereunder;
(d) To accept and give receipts for the Stock;
(e) To indemnify the Parent pursuant to the terms of this Agreement;
and
(f) To take any and all other action as said attorney-in-fact, in his
sole discretion, deems necessary or advisable to consummate the Transaction.
Said attorney-in-fact shall not be liable to the Corporation or the Stockholders
for any action taken or omission made, and each of the undersigned hereby
ratifies all that said attorney-in-fact may do or cause to be done hereunder.
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Said attorney-in-fact shall be entitled to appoint a substitute attorney-in-fact
should he be unable to perform hereunder. The authority conferred by this
Section is irrevocable and, as said attorney-in-fact is a substantial
stockholder of the Corporation, this power-of- attorney is deemed coupled with
an interest and shall survive any eventuality affecting the Corporation and any
Stockholder granting this power of attorney.
10.17 Further Assurances. The Corporation and Stockholders shall take such
action and deliver such documents as Subsidiary may reasonably request from time
to time to perfect Subsidiary's title and ability to use and dispose of the
assets to be acquired from the Corporation pursuant to this Agreement. The
Corporation further agrees, at the request of Subsidiary, to prosecute or
otherwise enforce in its own name for the benefit of Subsidiary any and all
claims in the name of the Corporation and at Subsidiary's expense (unless such
prosecution or enforcement is necessitated by default of the Corporation
hereunder) including any claims or rights in the name of the Corporation which,
or the benefits of which, are transferred to Subsidiary pursuant to this
Agreement and which are required to be prosecuted or otherwise enforced in the
Corporation's name.
10.18 Direction to Escrow Agent. Whenever the Parent shall be entitled,
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pursuant to the provisions of this Agreement, to receive a refund of Shares of
Stock from the Escrow, the Corporation and the Stockholders shall promptly
direct the Escrow Agent to return these Shares of Stock to the Parent.
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ARTICLE XI
MISCELLANEOUS
11-01 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed delivered if delivered by
hand, by telecopier, by carrier or mailed by certified or registered mail,
postage prepaid, addressed as follows:
If to Parent, Subsidiary or Parent Representative:
Bergen Brunswig Corporation
4000 Metropolitan Drive
Orange, CA 92668-3510
Attn: Milan A. Sawdei
Executive Vice President
Chief Legal Officer
Fax No. (714) 978-7415
with a copy to:
Richard M. Sandler, Esq.
Lowenstein, Sandler, Kohl, Fisher & Boylan
65 Livingston Avenue
Roseland, NJ 07068
Fax No. (201) 992-5820
If to the Corporation, Stockholders or the Representative:
Southeastern Hospital Supply Corporation
205 Forsythe Street
Fayetteville, NC 28305
with copy to:
Ocie F. Murray, Jr., Esq.
Singleton, Murray, Craven & Truman
2517 Raeford Road
Fayetteville, NC 28305
Fax No. 910-483-6822
11-1
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11.02 Assignability and Parties in Interest. This Agreement shall not be
assignable by any of the parties hereto without the consent of all other parties
hereto; provided, however, that Parent may assign to any subsidiary all of its
rights and obligations hereunder, but such assignment shall not relieve Parent
of direct and primary responsibility for its obligations hereunder. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors. Nothing in this Agreement is intended to
confer, expressly or by implication, upon any other person any rights or
remedies under or by reason of this Agreement.
11.03 Expenses. Each party shall, except as otherwise specifically
provided, bear its own expenses and costs, including the fees of any attorney
retained by it, incurred in connection with the preparation of this Agreement
and consummation of the Transaction.
11.04 Collections. From and after the Closing, the Subsidiary shall have
the full right and authority, at its expense, to collect for its account all
Trade Accounts Receivable and Notes Receivable which have been assigned to it as
provided in this Agreement and to endorse with the name of the Corporation any
checks or drafts received on account of such Trade Accounts Receivable and Notes
Receivable.
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11.05 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of North Carolina except that
New Jersey law shall govern the corporate actions to be taken by the Parent.
11.06 Counterparts. This Agreement may be executed as of the same effective
date in one or more counterparts, each of which shall be deemed an original.
11.07 Headings. The headings and subheadings contained in this Agreement
are included solely for ease of reference, and are not intended to give a full
description of the contents of any particular Section, shall not be given any
weight whatever in interpreting any provision of this Agreement.
11.08 Pronouns, etc. Use of male, female and neuter pronouns in the
singular or plural shall be understood to include each of the other pronouns as
the context requires. The word "and" includes the word "or". The word "or" is
disjunctive but not necessarily exclusive.
11.09 Complete Agreement. This Agreement, the Appendices hereto, the
Supplemental Agreement, the Exhibits thereto, and the documents delivered
pursuant hereto or referred to herein or therein contain the entire agreement
between the parties with respect to the Transaction and, except as provided
herein, supersede all previous negotiations, commitments and writings.
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11.10 Modifications, Amendments and Waivers. This Agreement shall not be
modified or amended except by a writing signed by both parties. Prior to the
Closing, the Corporation may amend any of the exhibits to the Supplemental
Agreement by giving the Parent notice of such amendments. If such amended
disclosures reveal materially adverse information about the Corporation's
business or assets, Parent may terminate this Agreement without liability to the
Corporation or the Stockholders.
11.11 Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the Transaction is not affected in any manner adverse to any party hereto. Upon
any such determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto will negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in any acceptable manner to the end that the Transaction are
consummated to the extent possible.
11.12 Consent to Option. Daphne Manning and Sammy Short have executed this
Agreement solely for the purpose of acknowledging their agreement to enter into
the Option Agreement referred to in Section 4.18(c).
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Stockholders BERGEN BRUNSWIG CORPORATION
/s/ Eleanor B. Manning By:/s/ Milan A. Sawdei
- --------------------------- ------------------------------
Eleanor B. Manning Milan A. Sawdei,
Executive Vice President
/s/ Ray Manning, Jr.
- ---------------------------
Ray Manning, Jr.
/s/ Betty Rouse
- ---------------------------
Betty Rouse DMC ACQUISITION CORP.
/s/ Carol Short By:/s/ Cullen F. Smith
- --------------------------- ------------------------------
Carol Short Cullen F. Smith, President
SOUTHEASTERN HOSPITAL SUPPLY
CORPORATION
By:/s/ Ray Manning, Jr.
------------------------------
Ray Manning, Jr., President
The O.R. Manning Trust
By:/s/ Ray Manning, Jr.
- ---------------------------
Ray Manning, Jr., Trustee
By:/s/ Carol Short
- ---------------------------
Carol Short, Trustee
/s/ Daphne Manning
- ---------------------------
Daphne Manning
/s/ Sammy Short
- ---------------------------
Sammy Short
11-5
SUPPLEMENTAL AGREEMENT
Whereas BERGEN BRUNSWIG CORPORATION, a New Jersey corporation ("Parent")
and its subsidiary, DMC Acquisition Corp., a North Carolina corporation
("Subsidiary") have this day entered into an agreement and plan of
reorganization with SOUTHEASTERN HOSPITAL SUPPLY CORPORATION, a North Carolina
corporation (the "Corporation") and its Stockholders to transfer certain assets
of the Corporation to the Subsidiary ("Acquisition Agreement").
1. INCORPORATION BY REFERENCE. The representations and warranties set
forth in this Supplemental Agreement are hereby incorporated in and made a part
of the Acquisition Agreement. The terms defined in the Acquisition Agreement
shall have the same meaning in this Agreement.
2.0 REPRESENTATIONS AND WARRANTIES OF CORPORATION AND STOCKHOLDERS. The
Corporation and ELEANOR B. MANNING, RAY MANNING, JR., BETTY ROUSE, THE O.R.
MANNING TRUST, and CAROL SHORT ("Stockholders") jointly and severally represent
and warrant to Parent and Subsidiary as follows:
2.1 ORGANIZATION AND BUSINESS OF THE CORPORATION.
2.1.1 The Corporation is a corporation, duly organized, validly
existing, and in good standing under the laws of the State of North
Carolina, and has all requisite corporate power, franchises, and licenses
to own its property and conduct the business in which it is engaged.
<PAGE>
2.1.2 Complete copies of the Corporation's certificate of
incorporation, by-laws, as amended, minutes, stock transfer records and
agreements, if any, among some or all of the Stockholders have been
delivered to Parent.
2.1.3 The Corporation is engaged in the business of distributing
medical supplies and devices and drugs other than controlled substances.
It is not now and never was a manufacturer of medical devices as the term
"manufacturer" is defined in FDA Reg. 804.3(k). It is not now and never was
an importer of medical devices, but is a minority stockholder of ABCO
Dealers, Inc., a corporation which does import medical supplies and
devices.
2.2 CAPITALIZATION; FUNDED DEBT.
2.2.1 The Corporation has an authorized capital stock consisting of
the following: 100,000 shares of common stock, par value $100 per share
("Corporation Stock") of which 78 shares are issued and outstanding. All
of such shares of Corporation Stock have been validly issued, fully paid,
are nonassessable, and were issued in compliance with applicable federal
and state securities laws. The Corporation does not have outstanding any
subscriptions, options, rights, warrants, convertible securities or other
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agreements or commitments to issue, or contracts or any other agreements
obligating the Corporation to issue, or to transfer from treasury, any
shares of its capital stock of any class or kind, or securities convertible
thereinto, or any agreements restricting transfer of the Corporation Stock.
No persons who are now holders of the Corporation Stock, and no persons who
previously were holders of the Corporation Stock, are or ever were entitled
to preemptive rights other than persons who either exercised or waived
those rights.
2.2.2 Except as set forth on Exhibit 2.2.2 annexed hereto, the
Corporation has no term or funded debt, or debt of any sort to banks or
Affiliates. No event has occurred which (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute a default by the Corporation which has not been cured or waived
under any agreement or other instrument relating to such funded debt or
bank loans, and no such funded debt or bank loans are now due or in
default.
2.3 SUBSIDIARIES; ACQUISITIONS; DISPOSITIONS; INVESTMENTS.
2.3.1 The Corporation does not now, and did not subsequent to December
31, 1983, directly or indirectly own or otherwise control, acquire or
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dispose of any corporation, partnership, joint venture or other business
entity.
2.3.2 Exhibit 2.3.2 annexed hereto lists each partnership, joint
venture or other business entity in which the Corporation has an investment
and describes the nature and extent of that investment.
2.4 FOREIGN QUALIFICATIONS.
2.4.1 The Corporation is qualified to do business as a foreign
corporation in Virginia and South Carolina.
2.4.2 The Corporation does not now own, and never has owned, assets
(including but not limited to order entry devices) which are presently
located in any state other than Virginia, North Carolina or South Carolina.
2.4.3 Exhibit 2.4.3 lists each state into which the Corporation
delivers merchandise other than by common carrier, in which its salesmen
routinely call upon customers, or in which it files tax returns.
2.5 OTHER BUSINESS NAMES. Exhibit 2.5 annexed hereto lists each business
name used by the Corporation and its predecessors, if any, subsequent to
December 31, 1983, and each state and county in which any such trade name is
registered.
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2.6 OWNED REAL ESTATE. The Corporation does not now, and never did, own
any real estate.
2.7 LEASED REAL ESTATE.
2.7.1 Exhibit 2.7.1 annexed hereto contains the name and address of
the landlord of each building leased by the Corporation, the date and
expiration date of the lease for each of the Premises. A true copy of each
such lease has been delivered to Parent.
2.7.2 The Corporation is not in default under any such lease and is
not aware of any facts which, with notice and/or the passage of time, would
constitute such a default.
2.7.3 Except as listed on Exhibit 2.7.3 annexed hereto, to the best
knowledge of the Corporation and the Stockholders, each leased building
complies in all respects with municipal, state and federal statutes,
ordinances, rules and regulations applicable to the construction of the
building and its use as a distribution facility, including but not limited
to zoning, building, environmental and Occupational Safety and Health
regulations, and the Americans with Disabilities Act.
2.7.4 Except as noted on Exhibit 2.7.4 annexed hereto, the roof,
exterior walls, and all other structural components of each such building
are in good condition; the Corporation is not in default with respect to
requirements under applicable lease provisions to make any repairs thereto;
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the Corporation has done all periodic maintenance which it has been
required to do under applicable lease provisions, and has not deferred any
such maintenance; the heating, air conditioning, plumbing and electrical
systems of each leased building are in good operating order, ordinary wear
and tear excepted.
2.7.5 Except as otherwise indicated on Exhibit 2.7.5 annexed hereto,
the Transaction is not described in any such lease as an event which
requires landlord's consent, or such consent has been obtained.
2.7.6 The Corporation has not sublet any portion of any of the
Premises to a third party.
2.8 TANGIBLE PERSONAL PROPERTY. To the best knowledge of the Corporation
and the Stockholders, Exhibit 2.8 annexed hereto identifies all items with a
cost of more than $1,000 of machinery, motor vehicles, computer equipment,
furniture, fixtures, leasehold improvements, and a11 other tangible personal
property owned or leased by, in the possession of, or used by the Corporation in
connection with its business on the date hereof. Exhibit 2.8 also contains an
accurate and complete list of all such equipment leased by the Corporation which
involve monthly payments of more than $500 on account of any such lease. That
Exhibit also includes the name and address of the lessor, the expiration date of
the lease, and the monthly rent and any additional rent payable under each such
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lease. Copies of all such equipment leases have been or will promptly be
furnished to Parent. The Corporation is not in default under any of such
equipment leases and is not aware of any fact which, with notice and/or passage
of time, would constitute such a default.
2.9 CONDITION OF PERSONAL PROPERTY. All personal property owned and
presently used by the Corporation or leased and used by the Corporation in its
business is in good condition, normal wear and tear excepted, and is in good
operating order.
2.10 INTANGIBLE PERSONAL PROPERTY; COMPUTER PROGRAMS.
2.10.1 To the best knowledge of the Corporation and the Stockholders,
Exhibit 2.10.1 annexed hereto contains an accurate and complete list of all
intangible personal property owned and used by the Corporation including
all distributorship, franchise, or license agreements, (whether the
Corporation is the grantor or grantee of such distributorship, franchise or
license), and of patents, patent applications, inventions, trademarks,
trademark applications, copyrights, trade names, and securities. Copies of
all written instruments which evidence such intangible personal property
have been delivered to Parent. The Corporation is the sole and exclusive
owner of each of said items of intangible personal property; there are no
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claims or demands against the Corporation with respect to any of such items
of intangible personal property, and no proceedings have been instituted,
are pending, or to the knowledge of the Corporation have been threatened to
terminate or cancel any such agreements or which challenge the right of the
Corporation with respect to any of such assets; and there are no facts
known to the Corporation which make it likely that any such agreements will
not be renewed at its next expiration date or which might reasonably serve
as the basis, in whole or in part, of any claim that any part of the
business carried on by the Corporation infringes the patent, trademark,
trade name, copyright, or other rights of any other person. Said Exhibit
also indicates the name and address of any person (other than the
Corporation) who owns any patent, patent application, trademark, trademark
application, trade name, or copyright used by the Corporation and specifies
the date of the agreement authorizing such use. To the best knowledge of
the Corporation and the Stockholders, the Corporation has the unrestricted
right to use, free from any rights or claims of others, all trade secrets
and customer lists which it has used or which it is now using in connection
with the sale of any and all products or services which have been or are
being sold by it.
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2.10.2 Exhibit 2.10.2 annexed hereto contains a list of computer
programs used by the Corporation, indicating which are owned by the
Corporation and which are used by the Corporation pursuant to a license
from others, in each case identifying the licensor and the date of the
license agreement. A complete and accurate copy of each such license
agreement has been delivered to Parent.
2.11 TRADE ACCOUNTS RECEIVABLE; NOTES RECEIVABLE; CUSTOMER LOAN
GUARANTEES; INVENTORY.
2.11.1 Except as indicated on Exhibit 2.11.1, all Trade Accounts
Receivable of the Corporation have originated in the ordinary course of its
business, are valid and fully collectible and not subject to any defense,
counterclaim or setoff. No Trade Accounts Receivable of the Corporation
have been factored and payment for all sales is due within 30 days or less
after the date of shipment.
2.11.2 Exhibit 2.11.2 annexed hereto lists all Notes Receivable owned
by the Corporation. All such Notes Receivable arose in the ordinary course
of the Corporation's business, are valid and fully collectible and are not
subject to any default, counterclaim or setoff, and are enforceable in
accordance with their respective terms. Except as indicated on Exhibit
2.11.2, each such Note Receivable is in good standing.
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2.11.3 Exhibit 2.11.3 annexed hereto lists each Trade Account
Receivable and Note Receivable which is collateralized, the nature and
amount of that collateral and the priority of the Corporation's security
interest in that collateral. Each such security interest has been duly
perfected in accordance with applicable law.
2.11.4 Exhibit 2.11.4 annexed hereto lists for each loan from a third
party which has been guaranteed by the Corporation: the name and address of
the customer; the name and address of the lender; the amount and terms of
the loan guaranteed; the amount and nature of the collateral, if any,
securing that loan; and whether the loan is in good standing or in default.
2.11.5 Exhibit 2.11.5 annexed hereto contains a detailed list of Trade
Accounts Receivable and Notes Receivable which the Corporation wrote off in
each of the three fiscal years ended June 30, 1993 and in the period from
June 30, 1993 to the date this Agreement.
2.11.6 The Corporation has delivered to the Subsidiary a complete and
accurate aging of the Corporation's Trade Accounts Receivable and Notes
Receivable as of January 31, 1994.
2.11.7 All inventory in the Corporation's possession is owned by the
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Corporation and recorded on its books and records. All such inventory has
been valued at replacement cost. No inventory in the Corporation's
possession has been consigned to the Corporation.
2.11.8 A true and complete copy of the Corporation's return goods
policy is annexed hereto as Exhibit 2.11.8.
2.12 STOCKHOLDERS; TITLE TO CORPORATION STOCK. Exhibit 2.12 annexed hereto
contains a complete list of the names, addresses and tax identification numbers
of all the stockholders of the Corporation and the number of shares of
Corporation Stock owned by each of them. Each such person is the record and
beneficial owner of the shares of Corporation Stock listed on that Exhibit, owns
those shares of Corporation Stock free and clear of any security interests,
liens, encumbrances or claims, and has the right to vote the Corporation Stock
in favor of the Transaction without the consent of any other person.
2.13 TITLE TO ASSETS. The Corporation has good and marketable title in and
to all of its property reflected in the most recent financial statement listed
on Exhibit 2.25.1 annexed hereto plus all assets purchased by the Corporation
since the date of that financial statement, less all assets which the
Corporation has disposed of in the ordinary course, which property is free and
clear of any security interests, consignments, liens, judgments, encumbrances,
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restrictions, or claims of any kind except as otherwise disclosed on Exhibit
2.13 annexed hereto. The only liens or security interests which exist and, at
the Closing will exist, on the Corporation's assets are those which either (a)
secure liabilities disclosed on Exhibit 2.25.1 annexed hereto, (b) secure the
ownership interests of lessors of equipment used by the Corporation and
disclosed on Exhibits 2.8 or 2.13 annexed hereto, or (c) are liens for current
taxes or assessments not yet due.
2.14 MATERIAL CONTRACTS.
2.14.1 Exhibit 2.14 annexed hereto identifies the following contracts,
leases and other obligations to which the Corporation is a party or by
which it is bound and which are not identified elsewhere on any other
Exhibit to this Agreement: (a) contracts with or loans to any of the
Corporation's stockholders, officers, directors, employees, agents,
consultants, advisors, salesmen, distributors or sales representatives; (b)
any employment or consulting contracts with, or covenants against
competition by, any present or former employees of the Corporation; (c) any
collective bargaining agreement; (d) contracts with suppliers other than
purchase orders in the ordinary course of the Corporation's business; (e)
contracts with customers, including but not limited to Stockless
Distribution Agreements, other than purchase orders in the ordinary course
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of the Corporation's business; (f) leases as lessor or lessee of real
estate or equipment; (g) deeds of trust, mortgages, conditional sales
contracts, security agreements, pledge agreements, trust receipts, or any
other agreements or arrangements whereby any of the assets of the
Corporation are subject to a lien, encumbrance, charge or other
restriction; (h) unsecured loans and lines of credit; (i) contracts
restricting the Corporation from doing business in any areas or in any way
limiting competition; (j) contracts calling for aggregate payments by the
Corporation in excess of $50,000 and which are not terminable without cost
or liability on notice of 60 days or less; (k) contracts providing for the
installation or maintenance of equipment purchased or leased by the
Corporation and requiring payment by the Corporation of more than $500 per
month; (1) any joint venture, partnership or limited partnership agreement;
(m) any other contract which could have a material impact on the
Corporation's sales, profitability or balance sheet; (n) contracts
requiring the Corporation to perform services for others over a period in
excess of ninety (90) days from the date of such contract; (o) contracts
affecting the transfer or voting of the Corporation Stock; and (p) all
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commitments to enter into any such contracts, leases or obligations. To
the best knowledge of the Corporation and the Stockholders, except as
disclosed on Exhibit 2.1.4, the Corporation has in all respects performed
all material obligations required on its part to be performed to date under
any of such contracts, obligations or commitments to which it is a party or
otherwise bound and no default has occurred thereunder, whether waived or
not, which could have an adverse effect upon the business or financial
condition of, or impose a liability upon, the Corporation. All parties to
such contracts, obligations or commitments with the Corporation are in
substantial compliance therewith and no event has occurred which, through
the giving of notice or the passage of time or both, would cause or
constitute a material default under any such contracts, obligations or
commitments or would cause the acceleration of any obligation of any party
thereto.
2.14.2 No purchase commitment is substantially in excess of the
normal, ordinary, and usual requirements of the Corporation's business or,
to the best knowledge of the Corporation and the Stockholders, was made at
any price in excess of the then-current market price, or contains terms and
conditions significantly more onerous than those which are usual and
customary in the Corporation's industry.
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2.14.3 The Corporation has no outstanding bids, sale proposals,
contracts, or unfilled orders quoting prices which do not include a mark-up
over estimated cost consistent with past mark-ups on similar business.
2.14.4 Copies of the contracts listed or referred to on Exhibit 2.14
annexed hereto have been delivered to Parent.
2.14.5 No employment contract, consulting agreement or covenant
against competition, separately or in the aggregate, has resulted or is
likely, as a result of the Transaction, to result in the payment of "Excess
Parachute Payments" within the meaning of Section 280G of the Code, or in
payments in excess of the limitations set forth in Section 162(m) of the
Code.
2.15 CUSTOMERS AND SUPPLIERS.
2.15.1 Exhibit 2.15.1 annexed hereto lists all customers, or groups of
related customers, which purchased $1,250,000 or more of goods and services
from the Corporation during either of the two (2) fiscal years ended June
30, 1992 or 1993, the total value of business transacted with such
customers annually, and, if applicable, the reasons such contracts were
terminated. Exhibit 2.15.1 annexed hereto also describes the Corporation's
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pricing policies currently in effect with respect to the customers listed
on that Exhibit.
2.15.2 Exhibit 2.15.2 annexed hereto lists all suppliers from whom the
Corporation purchased $1,450,000 or more of goods and services during the
twelve (12) month period ended June 30, 1993.
2.15.3 To the best of knowledge of the Corporation, none of the
customers listed as Exhibit 2.15.1 or the suppliers listed on Exhibits
2.15.2 intends to terminate or change its relationship with the Corporation
in a manner adverse to the Corporation on and after the Closing Date,
except as disclosed on either or both of those Exhibits.
2.16 TRANSACTIONS WITH DIRECTORS, OFFICERS AND AFFILIATES. Except as
listed on Exhibit 2.16 annexed hereto, or referred to in Note 3 of the Notes to
the Financial Statements annexed hereto as Exhibit 2.25.1, there have been no
material transactions during the last three years between the Corporation and
any director, officer, employee, stockholder or Affiliate, and each such
transaction has been on terms no less favorable to the Corporation than those
which could have been obtained at the time from bona fide third parties.
2.17 LABOR MATTERS.
2.17.1 Annexed hereto as Exhibit 2.17.1 is a list, as of the date of
this Agreement, showing the names of all employees of the Corporation,
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their original dates of employment, job titles and annual rate of pay for
salaried employees and hourly rates for hourly employees, rates of
commission for commissioned sales persons and amounts to each such sales
person during 1993.
2.17.2 Except as listed on Exhibit 2.17.3 annexed hereto, the
Corporation is not indebted to nor a creditor of any Stockholder or of any
relative of any of such Stockholder except for accrued wages and salaries.
2.17.3 No employment discrimination or unfair labor practice
complaints against the Corporation have been filed, or to the knowledge of
the Corporation, threatened to be filed, with any federal or state agency
having jurisdiction over the Corporation's labor matters. The Corporation
has not been threatened by any former employee with any suit alleging
wrongful termination nor does the Corporation have knowledge of facts which
might form a basis for such a suit.
2.17.4 The Corporation has not, directly or through agents and
independent contractors, employed any unauthorized aliens, as defined in 8
U.S.C. Section 1324a(h)(3). The Corporation has complied, or caused any
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such agent or independent contractor, to comply with the employment
verification and recordkeeping requirements of 8 U.S.C. Section 1324a and 8
C.F.R. Section 274a, as amended.
2.17.5 The Corporation is not a party to any collective bargaining
agreement, and has not experienced any strike, slowdown, picketing, work
stoppage, labor dispute or threat of a labor dispute or any attempt or
threat of an attempt by a labor union to organize the Corporation's
employees; nor has any application or complaint about the Corporation been
filed by an employee of the Corporation or by any union with the National
Labor Relations Board or any comparable state or local agency, during the
36 months ended on the date of this Agreement.
2.18 BENEFIT PLANS; ERISA.
2.18.1 The Corporation has delivered to the Parent a true and complete
copy of the Corporation's 401(k) Plan and the letter dated March 26, 1990
from Internal Revenue Service qualifying the Jefferson Pilot Plan which the
Corporation adopted on May 26, 1992 (the "401(k) Plan").
2.18.2 The Corporation adopted and administered the 401(k) Plan in
strict compliance with, and filed all reports required by, the Employee
Retirement Income Security Act of 1974 ("ERISA").
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2.18.3 Without identifying individuals by name, Exhibit 2.18.3
annexed hereto lists the number of employees or their family members who
are currently receiving reimbursement for medical expenses or for whom the
Corporation is making direct medical payments, and the aggregate monthly
amount of those payments.
2.19 INSURANCE. The Corporation has delivered to Parent copies of binders
for insurance coverage which the Corporation currently has in effect.
2.20 LICENSES AND PERMITS. To the best knowledge of the Corporation and
the Stockholders, the Corporation has all material licenses, permits, orders,
approvals and authorizations required by the Corporation for the conduct of its
business as presently conducted. The Corporation is acting within the terms of
such licenses, permits, orders, approvals. To the best knowledge of the
Corporation and the Stockholders, the Corporation has not received any notice of
investigation, evaluation or suspension of any such permits, licenses, orders,
approvals or authorizations. To the best knowledge of the Corporation, no
suspension or cancellation of any such licenses, permits, orders, approvals and
authorizations is contemplated or has been threatened.
2.21 AUTHORITY RELATIVE TO AGREEMENT: ENFORCEABILITY. The execution,
delivery and performance of the Acquisition Agreement and this Agreement are
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within the legal capacity and power of the Corporation and the Stockholders;
have been duly authorized by all requisite corporate action on the part of the
Corporation subject only to compliance with the HSR Act and receipt of the
consents listed on Exhibit 2.22 annexed hereto. The Acquisition Agreement and
this Agreement each is a legal, valid and binding obligation of the Corporation
and the Stockholders enforceable against the Corporation and the Stockholders in
accordance with its terms, except insofar as its enforcement may be limited by
(a) bankruptcy, insolvency, moratorium or similar laws affecting the enforcement
of creditors, rights generally and (b) equitable principles limiting the
availability of equitable remedies. All persons who executed the Acquisition
Agreement and this Agreement on behalf of the Corporation have been duly
authorized to do so.
2.22 COMPLIANCE WITH OTHER INSTRUMENTS; CONSENTS. To the best knowledge of
the Corporation and the Stockholders, except as noted on Exhibit 2.22 annexed
hereto, neither the execution of the Acquisition Agreement or this Agreement nor
the consummation of the Transaction will conflict with, violate or result in a
breach or constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default), or result in the termination of, or
accelerate the performance required by, or result in the creation of any lien or
encumbrance upon any of the assets of the Corporation under, any provision of
any certificate of incorporation, by-law, indenture, mortgage, lien, lease,
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agreement, contract, instrument, or any other restriction of any kind or
character to which the Corporation is subject or by which the Corporation is
bound, or require the consent of any third party or governmental agency, except
for compliance with the HSR Act.
2.23 COMPLIANCE WITH APPLICABLE LAWS.
2.23.1 To the best knowledge of the Corporation and the Stockholders,
except as noted on Exhibit 2.23.1 annexed hereto, the Corporation is in
compliance with the Federal Food and Drug Act, as amended (including, but
not limited to, the Safe Medical Devices Act of 1990 and the Fair Packaging
and Labelling Act), the Americans with Disabilities Act, and all federal,
state, county, and municipal laws, ordinances, regulations, judgments,
orders or decrees applicable to the assets owned, used, or occupied by it,
and the Corporation has received no notice or advices to the contrary.
Except as noted on Exhibit 2.23.1 annexed hereto, all registrations,
renewals and reports required by federal, state and local governments,
including, but not limited to reports to the Food and Drug Administration
("FDA"), the Occupational Safety and Health Administration ("OSHA"), state
equivalents of such federal agencies issuing licenses or qualifications to
import, export, manufacture, assemble or sell various classes and types of
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products sold by the Corporation, if such licenses or qualifications are
necessary, and other reports to similar agencies, board groups or
administrations, have been timely filed and all information contained
therein is true and correct. Specifically, but without limitation, the
Corporation has maintained the records required pursuant to rules
promulgated by the Board of Pharmacy of the State of North Carolina.
2.23.2 The Corporation does not distribute, and has not previously
distributed, controlled substances listed in Schedules I and II of the
regulations promulgated by the DEA.
2.23.3 Except as described on Exhibit 2.23.3, the Corporation does not
now and never has repackaged or relabelled any of the products which it
distributes.
2.23.4 To the best knowledge of the Corporation and the Stockholders,
neither the execution of the Acquisition Agreement nor consummation of the
Transaction will (a) violate any order, writ, injunction, statute, rule or
regulation applicable to the Corporation or (b) require the consent,
approval, authorization or permission of, or the filing with or the
notification of any federal, state or local government agency except for
compliance with the HSR Act.
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2.23.5 The Corporation's affiliate, Hospital Consultants, Inc. has
complied with all Medicare and Medicaid rules and regulations applicable to
the conduct of its business.
2.24 ENVIRONMENTAL COMPLIANCE.
2.24.1 For purposes of this Agreement,
(a) "Regulated Substance" includes any pollutant, chemical
substance, hazardous wastes, hazardous substances or contaminant regulated
under, or defined in or pursuant to the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. 9601 et seq.) ("CERCLA"), the Toxic
Substance Control Act as amended (15 U.S.C. 2601, et seq.) the Clean Air Act as
amended (42 U.S.C. 7401 et seq., the Clean Water Act as amended (33 U.S.C. 1251,
et seq.,) and any other federal, state or local environmental law or regulation.
(b) "Enforcement Notice" means a summons, notice, notice of
violation, citation, directive, order, claim, litigation, investigation,
judgment, letter or other communications, written or oral, actual or threatened,
from the United States Environmental Protection Agency ("USEPA"), any other
federal, state or local agency or authority, any other entity or any individual,
concerning any intentional or unintentional action or omission resulting or
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which might result in the Releasing of a Regulated Substance into the air or the
waters or onto the lands of the State of North Carolina, or into the air or
waters outside the jurisdiction of the State of North Carolina where damage may
have resulted or might result to the lands, waters, drinking water supplies,
fish, shellfish, wildlife, biota, air or other resources owned, managed, held in
trust or otherwise controlled by, or within the jurisdiction of, the United
States, the State of North Carolina or any local government, or into the
"environment", as such term is defined in 42 U.S.C. 9601(8).
(c) "Releasing" means releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping.
2.24.2 To the best knowledge of the Corporation and the Stockholders,
the Corporation is in compliance with all applicable federal, state and
local laws and regulations relating to pollution control and environmental
contamination including, but not limited to, all laws and regulations
governing the generation, use, collection, treatment, storage,
transportation, recovery, removal, discharge, or disposal of Regulated
Substances and all laws and regulations with regard to recordkeeping,
notification and reporting requirements respecting Regulated Substances.
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Except as set forth in Schedule 2.24.2 annexed hereto, the Corporation has
not been alleged to be in violation of, nor has it been subject to any
administrative or judicial proceeding pursuant to, such laws or regulations
either now or any time during the past three years.
2.24.3 Except those set forth on Exhibit 2.24.3 annexed hereto, there
are no facts or circumstances that the Corporation reasonably believes
could form the basis for the assertion of any claim against the Corporation
relating to environmental matters including, but not limited to, any claim
arising from past or present environmental practices asserted under any of
the statutes listed in Section 2.24.1(a), the regulations promulgated
thereunder or any other federal, state or local environmental law or
regulation.
2.24.4 The Corporation has all permits, approvals and consents under
all applicable environmental statutes and regulations to operate lawfully
the business which it currently conducts and currently expects to conduct.
2.24.5 To the best knowledge of the Corporation and the Stockholders,
none of the real property used and/or occupied by the Corporation has ever
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been used by previous or current owners, users and/or operators to
generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer or process Regulated Substances, except as listed in Exhibit
2.24.5 annexed hereto.
2.24.6 There have been no Regulated Substances generated, transported
or disposed of by the Corporation during the past three years except as an
integral part of products sold by the Corporation in the ordinary course of
its business. No Regulated Substances have been either disposed of or
found by the Corporation, to the Corporation's knowledge, by any other
party, at any site or facility operated by the Corporation presently or at
any previous time or by any predecessor of the Corporation or by any
company whose business or assets have been acquired by the Corporation.
2.24.7 There are no Enforcement Notices in effect, and the Corporation
does not know of and has no reason to know of any facts which might result
in the issuance of any Enforcement Notice, with respect to the Corporation
or any predecessor in use, occupancy, interest or title to the real or
personal property owned or leased by the Corporation.
2.24.8 Promptly upon learning thereof, the Corporation will advise
Parent of any facts or circumstances known to the Corporation that it
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reasonably believes could form the basis for the assertion of any claim
against the Corporation relating to environmental matters including, but
not limited to, any claim arising from past or present environmental
practices asserted under CERCLA, SWDA, or any other federal, state or local
environmental statute. There has been no written communication during the
past three years between the Corporation and any federal or state
environmental agency.
2.24.9 The Corporation does not own or use underground storage tanks
at any of the Premises.
2.25 FINANCIAL STATEMENTS.
2.25.1 The Corporation has delivered to Parent the balance sheets of
the Corporation as of June 30, 1993 and 1992, and related statements of net
income, changes in stockholders' equity and cash flows for each of the two
years and then ended. A complete and accurate copy of those financial
statements is annexed hereto as Exhibit 2.25.1. Those financial statements
have been reviewed but not audited by the accounting firm of Pittman Price
Co.
2.25.2 Except as indicated on Exhibit 2.25.2 annexed hereto, those
financial statements fairly present the financial position of the
Corporation and the results of its operations as at the dates and for the
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periods to which they apply, and such statements have been prepared in
accordance with historical procedures adopted by the Corporation which are
inconsistent with GAAP to the extent set forth on Exhibit 2.25.2 annexed
hereto.
2.25.3 Except as listed in Exhibit 2.25.3 annexed hereto, no value has
been or will be assigned in any of said balance sheets to (a) any
intangible items including but not limited to good will, trademarks, trade
names, contract rights, customer lists, books and records, restrictive
covenants, deferred charges, or prepaid expenses for any item other than
taxes, rent or insurance; (b) advertising or promotional material; (c) any
asset previously charged to expense; or (d) any other asset which the
Corporation has previously written off as an expense.
2.25.4 Except as disclosed on Exhibit 2.25.4, the Corporation had no
liabilities (whether absolute, accrued, contingent or otherwise) as at June
30, 1993 which are required to be reflected in and disclosed on the
aforesaid balance sheet as at that date in accordance with GAAP but are not
so reflected. The Corporation has incurred no liabilities whatsoever in
addition to those reflected in or disclosed on the balance sheet, except
liabilities incurred in the ordinary course of its business subsequent to
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the date of that balance sheet. Exhibit 2.25.4 also includes a schedule
which lists separately all deferred contractual obligations of the
Corporation, whether or not such obligations are required to be reflected
on the aforesaid balance sheet.
2.25.5 Accounts payable disclosed on the aforesaid balance sheet have
been valued at gross invoice amounts without deducting any discounts
available to the Corporation.
2.25.6 The Corporation has delivered to the Parent a printout showing
all the Corporation's SKU's which have had no movement since July 31, 1993.
2.25.7 "Other income" consisted only of items listed on Exhibit 2.25.7
annexed hereto.
2.25.8 Exhibit 2.25.8 annexed hereto lists all nonrecurring expenses
and corporate charges in excess of $50,000 incurred by the Corporation
between December 31, 1991 and the date of this Agreement. Except as set
forth therein, there have been no other such expenses or charges, nor will
any such expenses or charges be made by the Corporation prior to Closing.
2.25.9 The Corporation has not made, directly or indirectly, any
illegal contributions to any political party or candidate, either domestic
or foreign, or any bribe, rebate, payoff, influence payment, kickback,
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<PAGE>
whether in cash, property or services, to any individual corporation,
partnership or other entity, to secure business or to pay for business
secured.
2.26 RESERVED
2.27 TAXES
2.27.1 All tax and information returns required to have been filed by
the Corporation are listed on Exhibit 2.27.1 annexed hereto and have been
filed with the appropriate authority; and all federal, state and local
taxes, (including income, franchise, property, sales, use, value-added,
withholding, excise, capital or other tax liabilities) charges,
assessments, penalties and interest ("Tax Liabilities") of the Corporation
have been paid to the extent such payments are required prior to the date
hereof or accrued on books of the Corporation. The returns were correct as
filed. The Corporation's financial statements annexed hereto as Exhibit
2.25.1 include adequate provision for Tax Liabilities incurred or accrued
as of the date of the most recent balance sheet included in that Exhibit.
True and complete copies of the most recent federal, state and local tax
returns of the Corporation have been delivered to the Parent.
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<PAGE>
2.27.2 The federal tax returns of the Corporation have been audited or
examined by IRS through the Corporation's tax periods listed on Exhibit
2.27.2 annexed hereto. State and local franchise and sales tax returns
have been audited through the tax periods listed on Exhibit 2.27.2 annexed
hereto. No assessments or additional Tax Liabilities have been proposed or
threatened against the Corporation or any of its assets, and the
Corporation has not executed any waiver of the statute of limitations on
the assessment or collection of any Tax Liabilities. No issue has been
raised in any such examination which can reasonably be expected to result
in a deficiency in any years not covered by that examination. Adjustments,
if any, to all such returns have been agreed upon and paid by the
Corporation or are being contested as indicated on Exhibit 2.27.2.
2.27.3 Except as indicated on Exhibit 2.27.3 annexed hereto, there are
no pending investigations of the Corporation or its tax returns by any
federal, state or local taxing authority, and there are no federal, state,
local or foreign tax liens upon any of the Corporation's assets.
2.27.4 Exhibit 2.27.4 annexed hereto lists any elections which the
Corporation has made with respect to the income tax treatment of any items
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which cannot be revoked without the consent of the Commissioner of Internal
Revenue.
2.27.5 The Corporation has valid sales tax resale certificates from
all its customers (other than those from whom it collects sales taxes)
covering all periods which have not been barred by applicable statutes of
limitations.
2.27.6 The Stockholders hereby represent to the Parent that they have
sought and received tax advice from, and relied upon, their own tax
advisors with respect to the tax free nature of the Transaction and have
not received or relied upon any such tax advice from the Parent, the
Subsidiary or their respective advisors.
2.28 LITIGATION. Except as disclosed on Exhibit 2.28 annexed hereto, there
are no legal, administrative, arbitration or other proceedings or claims pending
or to the knowledge of the Corporation, threatened, against the Corporation, nor
is the Corporation subject to any existing judgment which might affect the
financial condition, business, property or prospects of the Corporation; nor has
the Corporation received any inquiry from an agency of the federal or of any
state or local government about the Transaction, or about any violation or
possible violation of any law, regulation or ordinance affecting its business or
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assets; nor has the Corporation been subject to any products liability claims
during the three years ended on the date of this Agreement.
2.29 ADVERSE BUSINESS CHANGES. Except as noted on Exhibit 2.29 annexed
hereto or on any other Exhibit annexed hereto, there has not been to the best
knowledge of the Corporation and the Stockholders:
2.29.1 Any adverse change in the working capital, financial condition,
assets, liabilities (whether absolute, accrued, contingent or otherwise),
reserves, operating profits, business, or prospects of the Corporation
other than changes in the ordinary course of its business, none of which
has been materially adverse (either when taken by itself or in conjunction
with all other such changes) since the date of the Corporation's most
recent financial statements annexed hereto as Exhibit 2.25.1 ("Statement
Date");
2.29.2 Any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the Corporation's business
since the Statement Date;
2.29.3 Any disposition, mortgage, pledge, or subjection to any lien,
claim, charge, option, or encumbrance of any property or asset of the
Corporation, any commitment made or liability incurred by the Corporation,
or any cancellation or compromise of any debt or claim of the Corporation
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<PAGE>
otherwise than in the ordinary course of business since the Statement Date;
2.29.4 Any dividend or distribution declared, set aside or paid in
respect of the Corporation Stock or any repurchase by the Corporation of
shares of such Corporation Stock since the Statement Date.
2.29.5 Any employment contract entered into during the 12 month
period ended on the date of this Agreement; or any increase or decrease in
the rates of compensation payable, as of the date of this Agreement, to or
to become payable by the Corporation to any of its officers, directors
employees or agents over or under the rates in effect during the 12 months
ended on the Statement Date, other than general increases to personnel made
in accordance with past practices; or any declaration, payment, commitment,
or obligation or any kind, as of the date of this Agreement, for the
payment by the Corporation of any bonus, additional salary or compensation,
or retirement, termination or severance benefits to officers, directors,
employees or agents.
2.29.6 Any amendment, termination or threatened termination as of the
date of this Agreement, of any material contract, agreement, insurance
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policy, plan, lease, or license to which the Corporation is a party or by
which it may be bound, otherwise than in the ordinary course of business
during the 12 months ended on the date of this Agreement;
2.29.7 Any material change in this Corporation's sources of supply or
method of doing business during the 12 months ended on the date of this
Agreement;
2.29.8 Any distribution or disposition of the Corporation's assets
other than in the ordinary course of business during the 12 months ended on
the date of this Agreement;
2.29.9 Any catastrophic event affecting the Corporation's business or
assets such as but not limited to fire, explosion, earthquake, accident,
flood, condemnation, act of God or public enemy, riot or civil disturbance
during the 12 months ended on the date of this Agreement;
2.29.10 Any loss or threatened loss, as of the date of this Agreement,
of a customer or group of customers which purchased individually or in the
aggregate more than $1,000,000 of goods and services from the Corporation
during the 12 months ended on the Statement Date;
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<PAGE>
2.29.11 Any loss or threatened loss, as of the date of this Agreement,
of a supplier or group of suppliers from whom the Corporation purchased
individually or in the aggregate more than $1,000,000 of goods during the
12 months ended on the Statement Date;
2.29.12 Any material increase in the quantity of any item of inventory
or material decrease in the service levels of inventory of the Corporation
during the 12 months ended on the date of this Agreement;
2.29.13 Any decrease in the aggregate gross profit margins realized by
the Corporation on all the products which it sold during the three (3)
month period ended on the date of this Agreement as compared with the same
three (3) month period of the preceding year;
2.29.14 Any termination during the 12 months ended on the date of this
Agreement of any permit or license issued to the Corporation upon which a
material portion of the Corporation's business is dependent; or
2.29.15 Any purchase of pharmaceuticals other than purchases directly
from the manufacturer of those pharmaceuticals during the 12 months ended
on the date of this Agreement.
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<PAGE>
2.30 BROKERAGE. No broker or finder has rendered services to the
Corporation or to any Stockholder in connection with the Transaction.
2.31 EXHIBITS. All the facts recited in Exhibits annexed hereto shall be
deemed to be representations of fact as though recited in this Article 2.
2.32 FULL DISCLOSURE. No representation or warranty made by the
Corporation in this Agreement, and no certification furnished or to be furnished
to Parent pursuant to this Agreement or the Acquisition Agreement contains or
will contain any untrue statement of a material fact or omits, or will omit, to
state a material fact necessary to make the statements contained herein or
therein not misleading.
3.0 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY. The Parent
and the Subsidiary hereby represent and warrant to the Corporation and
Stockholders that:
3.1 ORGANIZATION. The Parent and the Subsidiary each is duly organized,
validly existing, and in good standing under the laws of the state of its
incorporation and has the corporate power to execute, deliver, and perform this
Agreement.
3.2 AUTHORIZATION. The execution and delivery of this Agreement, the
Acquisition Agreement and the consummation of the Transaction have been duly
authorized by the Board of Directors of the Parent and the Subsidiary, or a duly
constituted committee of each such Board of Directors. The Acquisition
Agreement and this Agreement each constitutes the legal, valid and binding
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obligation of the Parent and the Subsidiary, enforceable against each of them in
accordance with its terms, except insofar as the enforcement thereof may be
limited by bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally and subject to equitable principles limiting the
availability of equitable remedies. All persons who have executed this
Agreement and the Acquisition Agreement on behalf of the Parent and the
Subsidiary have been duly authorized to do so.
3.3 NO THIRD PARTY CONSENT REQUIRED; NO VIOLATION OF OTHER INSTRUMENTS.
Neither the execution nor the performance of this Agreement or the Acquisition
Agreement by the Parent and the Subsidiary requires the consent of any third
party, except for compliance with the HSR Act, approval of the New York Stock
Exchange to list the shares of Stock issuable pursuant to the Acquisition
Agreement, and the issuance by the SEC of an order declaring effective the
Registration Statement to be filed by the Parent pursuant to the Acquisition
Agreement, nor will it violate or result in a breach or constitute a default
under any provision of any certificate of incorporation, bylaw, indenture,
mortgage, lien, lease, agreement, contract, instrument, order, judgment, decree,
statute, ordinance, regulation or any other restriction of any kind or character
to which the Parent or the Subsidiary is subject or by which it is bound.
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<PAGE>
3.4 FINANCIAL STATEMENTS. The Parent has delivered to the Corporation the
Parent's Annual Report to the SEC on Form 10-K and its Annual Report to
Stockholders as of August 31, 1993 which includes its financial statements as of
that date and for two years then ended, and its quarterly report to the SEC on
Form 10Q for the three month periods ended December 31, 1993 and November 30,
1992. Those statements fairly present the consolidated financial position of
the Parent and its subsidiaries as at the dates and for the periods to which
they apply and have been prepared in conformity with GAAP.
3.5 NO MATERIAL ADVERSE CHANGE. Since December 31, 1993, there have been
no changes in the consolidated financial condition, assets, liabilities or
business of the Parent and its subsidiaries which in the aggregate would be
materially adverse to the consolidated condition of the Parent and its
subsidiaries.
3.6 FULL DISCLOSURE. No representation or warranty made by the Parent or
the Subsidiary in this Agreement, and no certification furnished or to be
furnished to the Corporation and the Stockholders pursuant to this Agreement or
the Acquisition Agreement contains or will contain any untrue statement of a
material fact or omits, or will omit, to state a material fact necessary to make
the statements contained herein or therein not misleading.
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<PAGE>
IN WITNESS WHEREOF, this Supplemental Agreement has been executed and
delivered, concurrently with the Acquisition Agreement, as of March 30, 1994.
SOUTHEASTERN HOSPITAL
SUPPLY CORPORATION
/s/ Betty Rouse By/s/ Ray Manning, Jr.
- ----------------------------- ---------------------------------
Betty Rouse Ray Manning, Jr., President
/s/ Carol Short /s/ Eleanor B. Manning
- ----------------------------- -----------------------------------
Carol Short Eleanor B. Manning
O.R. MANNING TRUST /s/ Ray Manning, Jr.
-----------------------------------
Ray Manning, Jr.
By /s/ Ray Manning, Jr.
--------------------------
Ray Manning, Jr., Trustee BERGEN BRUNSWIG CORPORATION
By /s/ Carol Short By/s/ Milan A. Sawdei
-------------------------- -----------------------------------
Carol Short, Trustee Milan A. Sawdei
Executive Vice President
DMC Acquisition Corp.
By/s/ Cullen F. Smith
-----------------------------------
Cullen F. Smith, President
-40-
AMENDMENT NO. 1
---------------
THIS AMENDMENT, made and entered into on April 29, 1994 by and among
BERGEN BRUNSWIG CORPORATION, a New Jersey corporation ("Parent"), DMC
ACQUISITION CORP., a North Carolina corporation ("Subsidiary"), SOUTHEASTERN
HOSPITAL SUPPLY CORPORATION, in North Carolina corporation ("Corporation") and
RAY MANNING, JR., as representative of the stockholders of the Corporation
("Representative")
RECITALS
--------
A. Parent, Subsidiary, Corporation and the stockholders of the
Corporation entered into an Agreement and Plan of Reorganization on March 30,
1994 for the acquisition by the Subsidiary of substantially all the assets,
subject to disclosed liabilities, of the Corporation (the "Plan");
B. The parties entered into a Supplemental Agreement on March 30, 1994
("Supplemental Agreement");
C. The parties desire to amend certain provisions of the Plan and of the
Supplemental Agreement;
D. In consideration of these factors and for the mutual promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Section 2.03 of the Plan is hereby amended to conform to the terms and
conditions of an Assumption Agreement annexed hereto in the form of Appendix H.
2. Section 2.04(d) is hereby amended to conform to the terms of a revised
Escrow Agreement annexed hereto in the "form of Appendix A.
<PAGE>
3. Section 4.10 is hereby amended to read as follows:
"4.10 Bulk Sales Waiver. The parties hereby waive compliance with
applicable bulk sales laws."
4. Section 4.22(a) is hereby amended inasmuch as Ray Manning, Jr. and
Sammy Short do not use automobiles owned by the Corporation. Eleanor B. Manning
shall be entitled to purchase the 1992 Cadillac previously used by Ray Manning,
Jr., and Terri O'Shaunessy will be entitled to purchase the 1992 Buick which he
presently uses. Both such purchases shall be made in accordance with Section
4.22(a).
5. Section 6.04(b) is hereby amended to read as follows:
"(b) Listing. The Stock required to be delivered at the Closing shall be
Treasury Stock which has previously been listed for trading on the New York
Stock Exchange."
6. Section 8.16 is hereby deleted in its entirety.
7. The following Section 2.25.10 is hereby added to the Supplemental
Agreement:
"2.25.10 The Corporation has delivered to the Parent the unaudited balance
sheet of the Corporation as of March 31, 1994 which has been prepared in a
manner consistent with the balance sheet of the Corporation as at June 30,
1993. A complete and accurate copy of that balance sheet is annexed hereto
as Exhibit 2.25.10. All the representations contained in Sections 2.25.2
through and including 2.25.5 apply to the March 31, 1994 balance sheet
subject to the same exceptions as are set forth in Exhibits 2.25.2, 2.25.3,
2.25.4 and 2.25.5 to the Supplemental Agreement."
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<PAGE>
8. The following shall be added to Section 10.10.
"The Corporation shall accrue its matching contribution to the
Corporation's 401(K) Plan as a liability as of the Closing Date, and shall
cause all employees who are eligible to participate in that Plan to be
fully vested, if required by law or the provisions of the Plan to do so.
The Corporation will request Jefferson-Pilot Life Insurance Company to
advise the Corporation and Parent as to whether the Plan remains qualified
under the applicable provision of the Internal Revenue Code. Upon receipt
of advice that the Plan is so qualified, the Parent will permit the
Corporation's employees who wish to do so to roll their 401(K) account into
the Parent's 401(K) Plan. In that event, the Corporation will cooperate
with the Parent in the transfer of the assets of the Corporation's 401(K)
Plan to the Parent's 401(K) Plan."
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first written above.
BERGEN BRUNSWIG CORPORATION
By:/s/ Dwight A. Steffensen
--------------------------------
Dwight A. Steffensen,
President
DMC ACQUISITION CORP.
By:/s/ Cullen F. Smith
--------------------------------
Cullen F. Smith, President
SOUTHEASTERN HOSPITAL SUPPLY
CORPORATION
By:/s/ Ray Manning, Jr.
--------------------------------
Ray Manning, Jr., President
/s/ Ray Manning, Jr.
-----------------------------------
Ray Manning, Jr., individually
and as Representative and as
Attorney-in fact for
Eleanor B. Manning, Betty Rouse
Carol M. Short and
The O.R. Manning Trust
-3-
RESTATED CERTIFICATE OF INCORPORATION
OF
BERGEN BRUNSWIG CORPORATION
Pursuant to the provisions of Section 14A:9-5(2) of the New Jersey Business
Corporation Act, the undersigned Corporation adopts the following Restated
Certificate of Incorporation:
ARTICLE I
The name of the Corporation is Bergen Brunswig Corporation.
ARTICLE II
The address of the current registered office in this State is 28 West State
Street, in the City of Trenton, County of Mercer.
ARTICLE III
The name of the current registered agent therein and in charge thereof upon
whom process against this Corporation may be served is Corporation Trust
Company.
ARTICLE IV
The number of directors constituting the current board of directors is 11.
The names and addresses of the current directors are as follows:
Jose E. Blanco, Sr. George R. Liddle
J.M. Blanco, Inc. 595 Oakfield Lane
Lot 21 D Street Menlo Park, CA 94025
Amelia Industrial Park
Guaynabo, PR 00965 Robert E. Martini
Bergen Brunswig Corporation
Dr. Rodney H. Brady 4000 Metropolitan Drive
Bonneville Orange, CA 92668-3510
International Corporation
Broadcast House James R. Mellor
Salt Lake City, UT 84180 General Dynamics Corporation
3190 Fairview Park Drive
John Calasibetta Falls Church, VA 22042
13 Main Street
Stillwater, NJ 07875 George E. Reinhardt, Jr.
1709 Dalton Road
Charles C. Edwards, M.D. Palos Verdes Estates
Scripps Clinic & Palos Verdes, CA 90274
Research Foundation
10666 No. Torrey Pines Road
La Jolla, CA 92037
<PAGE>
Charles J. Lee Francis G. Rodgers
Smith Barney Shearson Inc. 159 Pear Tree Point Road
350 California St., Darien, CT 06820
20th Floor
San Francisco, CA 94104 Dwight A. Steffensen
Bergen Brunswig Corporation
4000 Metropolitan Drive
Orange, CA 92668-3510
ARTICLE V
The objects for which this Corporation is formed are to engage in any
activity for which corporations may be organized under the New Jersey Business
Corporation Act.
ARTICLE VI
The total authorized capital stock of the Corporation shall be 103,000,000
shares consisting of
1. 3,000,000 shares of Preferred Stock without nominal or par value; and
2. 100,000,000 shares of Class A Common Stock, par value $1.50 per share.
Shares of authorized capital stock of each class may be issued for such
consideration (not less than the par value thereof in the case of stock with par
value) as may be determined from time to time by the Board of Directors.
The voting powers and designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
restrictions, or limitations thereof are as follows:
A. Preferred Stock. The Board of Directors is hereby authorized to divide
the preferred stock into one or more series, to determine the designation of and
the number of shares of any series, to determine the relative rights,
preferences and limitations of the shares of any class or of any series. All
those determinations may be made by an amendment to this Certificate of
Incorporation adopted by the Board of Directors. That amendment may fix the
designations, preferences and relative participating, optional and other special
rights and the qualifications, limitations and restrictions of such series,
including the following:
1. The number of shares constituting that series;
2. The rate and times at which, and the terms and conditions on which,
dividends on preferred stock of that series will be paid;
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3. Provisions making dividends payable with respect to preferred stock of
that series cumulative, non-cumulative or partially cumulative;
4. Provisions making dividends payable with respect to the preferred stock
of that series fully participating, partially participating, or
non-participating, and payable on a parity with, subordinate or in preference to
the dividends payable on any other class or series;
5. The right, if any, of the holders of the preferred stock of that series
to convert the same into, or exchange the same for, shares of other classes or
series of stock of the Corporation and the terms and conditions of that
conversion or exchange, including provision for adjustment of the conversion
price or rate in such events as the Board of Directors shall determine;
6. The redemption price or prices, if any, and the time or times at which,
and the terms and conditions on which, preferred stock of that series may be
redeemed;
7. The rights of the holders of preferred stock of that series upon the
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation;
8. The terms or amounts of any sinking fund provided for the purchase or
redemption of the preferred stock of that series; and
9. Provisions giving the preferred stock of that series special, limited,
multiple or no voting rights and specifying those voting rights, if any.
B. Common Stock.
1. Dividends. Subject to the preferences and other rights of the
preferred stock as may be fixed in the amendment to this Certificate of
Incorporation, dividends (payable in cash, stock or otherwise) may be declared
and paid out of funds legally available therefor upon any class of common stock
from time to time as may be determined by the Board of Directors.
Notwithstanding anything in this Certificate of Incorporation to the contrary,
however, those dividends may be declared and paid whether or not the net assets
of the Corporation remaining after such dividend payment are less than the
aggregate amount of the preferences of outstanding shares in the assets of the
Corporation upon liquidation.
2. Rights Upon Liquidation, Dissolution, or Winding Up. In the event of
any liquidation, dissolution, or winding up of the affairs of the Corporation,
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after payment to the holders of preferred stock of the full amounts to which
they have a liquidation preference, the holders of all classes of common stock
shall be entitled to share ratably per share without regard to class in all
assets then remaining subject to distribution to the stockholders.
C. Voting Rights. At every meeting of the stockholders of the
Corporation, every holder of Class A Common Stock shall be entitled to one (1)
vote per share.
1. Election and Removal of Directors. The Board of Directors of the
Corporation shall consist of not more than 15 directors nor less than 9
directors, the exact number of directors within such limits to be fixed by the
Board of Directors as provided in the By-Laws. All directors shall serve until
their successors shall have been duly elected and shall have qualified.
Elections of directors need not be by ballot unless the By-Laws shall so
provide.
(a) Persons holding Class A Common Stock shall be entitled to elect
the directors. Those directors shall be divided into three classes, each
class to be as nearly equal to the other in number as possible and the
number of directors in each class to be specified in the By-Laws. At each
annual meeting of the stockholders of the Corporation, the number of
directors equal to the number of the class whose term expires at the
meeting shall be elected to hold office until the third succeeding annual
meeting.
(b) Any director may be removed at any time, either for or without
cause, by, and only by, the holders of record of Class A Common Stock
voting at a meeting of such stockholders called for the purpose; any
vacancy thus created may be filled at such meeting; and any vacancy caused
by the death or resignation of a director elected by holders of Class A
Common Stock may be filled only by holders of Class A Common Stock at a
meeting called for that purpose, or by a majority of the remaining
directors elected by those holders.
2. General Matters. Any resolution, motion or corporate action which
shall require the vote of the stockholders, other than one relating to the
election of directors, may be validly adopted, authorized or approved by the
affirmative vote of a majority of the votes cast by the holders of the Class A
Common Stock voting at that meeting.
D. Fractional Shares. The Corporation shall not be required to issue any
fractions of shares of Class A Common Stock. If any interest in a fractional
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share of Class A Common Stock would otherwise be deliverable upon payment of any
stock dividend or in connection with any stock split or combination, or upon
conversion of any share or shares of preferred stock or other convertible
security, the Corporation shall make adjustment for that fractional share
interest by payment of an amount in cash equal to the same fraction of the
market value of a full share of Class A Common Stock of the Corporation. For
that purpose, the market value of a share of Class A Common Stock shall be the
last recorded sale price regular way of a share of that stock on the principal
national securities exchange on which the Class A Common Stock is listed or
admitted to trading on the record date for that stock dividend or the last
trading day before that stock split or combination shall become effective or the
last trading day before shares of preferred stock or other convertible security
are surrendered for conversion, or if there be no recorded sale price regular
way on such day, the last quoted bid price per share of the Class A Common Stock
on that exchange at the close of trading on that date. If the Class A Common
Stock shall not at such time be traded on a national securities exchange, the
market value of the Class A Common Stock shall be the then prevailing market
price of that stock on any other securities exchange or in the over-the-counter
market, as determined by the Corporation, which determination shall be
conclusive.
E. Preemptive Rights. No holder of stock of any class of the Corporation
shall have any preemptive right, as such stockholder, to purchase or subscribe
for, or to receive rights or warrants to purchase or subscribe for, any shares
of any class of stock of the Corporation, whether now or hereafter authorized,
which the Corporation may issue or sell, or any obligations which the
Corporation may issue or sell that shall be convertible into, or exchangeable
for, any shares of any class of stock of the Corporation.
F. Series A Junior Participating Preferred Stock. Pursuant to the
authority set forth in Article VI, Section A, the Board of Directors created a
series of Preferred Stock by resolution adopted on February 8, 1994. The
designation and amount thereof and the voting powers, preferences and relative
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the number of
shares constituting such series shall be 400,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any shares
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of any series of Preferred Stock ranking prior and superior to the shares of
Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock in preference
to the holders of Class A Common Stock, par value $1.50 per share (the "Class A
Common Stock") shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1.00 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Class A Common Stock or a subdivision of the outstanding
shares of Class A Common Shock (by reclassification or otherwise), declared on
the Class A Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. In the event the Corporation shall at any time
after February 18, 1994 (the "Rights Declaration Date") (i) declare any dividend
on the Common Stock payable in shares of Class A Common Stock, (ii) subdivide
the outstanding Class A Common Stock, or (iii) combine the outstanding Class A
Common Stock into a smaller number of shares, then in each such case the amount
to which holders of shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Class A Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of A Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Junior Participating Preferred Stock as provided in Paragraph (A) above
immediately after it declares a dividend or distribution on the Class A Common
Stock (other than a dividend payable in shares of Class A Common Stock);
provided that, in the event no dividend or distribution shall have been declared
on the Class A Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend
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of $1.00 per share on the Series A Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on the Common Stock payable in
shares of Class A Common Stock, (ii) subdivide the outstanding Class A Common
Stock, or (iii) combine the outstanding Class A Common Stock into a smaller
number of shares, then in each such case the number of votes per share to which
holders of shares of Series A Junior Participating Preferred Stock were
entitled, immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of Class A
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Class A Common Stock that were outstanding
immediately prior to such event.
-7-
<PAGE>
(B) Except as otherwise provided herein or by law, the holders of shares
of Series A Junior Participating Preferred Stock and the holders of shares of
Class A Common Stock and any other capital stock of the Corporation having
general rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six (6) quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning
of a period (herein called a "default period") which shall extend until such
time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A
Junior Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each default period, all holders of
Preferred Stock (including holders of the Series A Junior Participating
Preferred Stock) with dividends in arrears in an amount equal to six (6)
quarterly dividends thereon, voting as a class, irrespective of series, shall
have the right to elect two (2) Directors.
(ii) During any default period, such voting right of the holders of
Series A Junior Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the holders
of ten percent (10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors or, if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting does
not amount to the required number, the holders of the Preferred Stock shall have
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<PAGE>
the right to make such increase in the number of Directors as shall be necessary
to permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Junior
Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, or any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the calling of
a special meeting of the holders of Preferred Stock, which meeting shall
thereupon be called by the President, a Vice- President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which holders
of Preferred Stock are entitled to vote pursuant to this Paragraph (C)(iii)
shall be given to each holder of record of Preferred Stock by mailing a copy of
such notice to him at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than 20 days
and not later than 60 days after such order or request or in default of the
calling of such meeting within 60 days after such order or request, such meeting
may be called on similar notice by any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding the provisions of this Paragraph
(C)(iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the holders of Class A Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Preferred
Stock shall have exercised their right to elect two (2) Directors voting as a
class, after the exercise of which right (x) the Directors so elected by the
holders of Preferred Stock shall continue in office until their successors shall
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<PAGE>
have been elected by such holders or until the expiration of the default period,
and (y) any vacancy in the Board of Directors may (except as provided in
Paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the class of stock
which elected the Director whose office shall have become vacant. References in
this Paragraph (C) to Directors elected by the holders of a particular class of
stock shall include Directors elected by such Directors to fill vacancies as
provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Preferred Stock
as a class shall terminate, and (z) the number of Directors shall be such number
as may be provided for in the certificate of incorporation or by-laws
irrespective of any increase made pursuant to the provisions of Paragraph
(C)(ii) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the certificate of incorporation
or by-laws). Any vacancies in the Board of Directors effected by the provisions
of clauses (y) and (z) in the preceding sentence may be filled by a majority of
the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Class A Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock;
-10-
<PAGE>
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating
Preferred Stock, except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Junior Participating
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any Shares of stock ranking on
a parity with the Series A Junior Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under Paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
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<PAGE>
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Class A Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph (C) below to reflect such events as stock splits, stock dividends
and recapitalizations with respect to the Class A Common Stock) (such number in
clause (ii), the "Adjustment Number"). Following the payment of the full amount
of the Series A Liquidation Preference and the Common Adjustment in respect of
all outstanding shares of Series A Junior Participating Preferred Stock and
Class A Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Class A Common Stock shall receive
their ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock
and Class A Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Series A Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Class A Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Class A Common Stock payable in
shares of Class A Common Stock, (ii) subdivide the outstanding Class A Common
Stock, or (iii) combine the outstanding Class A Common Stock into a smaller
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<PAGE>
number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction the numerator of which is the number of shares of Class A
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Class A Common Stock that were outstanding
immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Class A Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Class A Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Class A Common Stock payable in
shares of Class A Common Stock, (ii) subdivide the outstanding Class A Common
Stock, or (iii) combine the outstanding Class A Common Stock into a smaller
number of shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A Junior
Participating Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Class A Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Class A Common Stock that were outstanding immediately prior
to such event.
Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock as to
the payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. The Restated Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding shares
of Series A Junior Participating Preferred Stock, voting separately as a class.
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<PAGE>
Section 11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holders fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Junior Participating Preferred Stock.
ARTICLE VII
Every person who is or was a director, officer, employee, or agent of the
Corporation, or of any corporation which he served as such at the request of the
Corporation, shall be indemnified by the Corporation to the fullest extent
permitted by law against all expenses and liabilities reasonably incurred by or
imposed upon him, in connection with any proceeding to which he may be made, or
threatened to be made, a party, or in which he may become involved by reason of
his being or having been a director, officer, employee or agent of the
Corporation, or of such other corporation, whether or not he is a director,
officer, employee or agent of the Corporation, or such other corporation, at the
time the expenses or liabilities are incurred.
ARTICLE VIII
So long as permitted by law, no director of the Corporation shall be
personally liable to the Corporation or its shareowners for damages for breach
of any duty owed by such person to the Corporation or its shareowners; provided,
however, that this Article VIII shall not relieve any person from liability to
the extent provided by applicable law for any breach of duty based upon an act
or omission (a) in breach of such person's duty of loyalty to the Corporation or
its shareowners, (b) not in good faith or involving a knowing violation of law
or (c) resulting in receipt by such person of an improper personal benefit. No
amendment to or repeal of this Article VIII and no amendment, repeal or
termination of effectiveness of any law authorizing this Article VIII shall
apply to or have any effect on the liability or alleged liability of any
director for or with respect to any acts or omissions of such director occurring
prior to such amendment, repeal or termination of effectiveness.
ARTICLE IX
So long as permitted by law, no officer of the Corporation shall be
personally liable to the Corporation or its shareowners for damages for breach
of any duty owed by such person to the Corporation or its shareowners; provided,
however, that this Article IX shall not relieve any person from liability to the
extent provided by applicable law for any breach of duty based upon an act or
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<PAGE>
omission (a) in breach of such person's duty of loyalty to the Corporation or
its shareowners, (b) not in good faith or involving a knowing violation of law
or (c) resulting in receipt by such person of an improper personal benefit. No
amendment to or repeal of this Article IX and no amendment, repeal or
termination of effectiveness of any law authorizing this Article IX shall apply
to or have any effect on the liability or alleged liability of any officer for
or with respect to any acts or omissions of such officer occurring prior to such
amendment, repeal or termination of effectiveness.
The foregoing Restated Certificate of Incorporation has been executed on
behalf of Bergen Brunswig Corporation this 23rd day of May, 1994.
BERGEN BRUNSWIG CORPORATION
By:/s/ Robert E. Martini, Chairman
--------------------------------
Robert E. Martini, Chairman
ATTEST:
/s/ Milan A. Sawdei
- -------------------------------
Milan A. Sawdei, Secretary
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May 25, 1994
Bergen Brunswig Corporation
4000 Metropolitan Drive
Orange, CA 92668-3510
Gentlemen:
You have requested our opinion, as your securities counsel, in
connection with the registration with the Securities and Exchange Commission
under the Securities Act of 1933, as amended of 870,000 shares of the Class A
Common Stock, par value $1.50 per share ("Common Stock"), of Bergen Brunswig
Corporation ("Company") on a registration statement on Form S-3 ("Registration
Statement"). The shares of Common Stock to which the Registration Statement
relates will be resold by the shareholders of Southeastern Hospital Supply
Corporation.
We have examined and relied upon originals or copies, authenticated or
certified to our satisfaction, of all such corporate records of the Company,
communications or certifications of public officials, certificates of officers,
directors and representatives of the Company, and such other documents as we
have deemed relevant and necessary as the basis of the opinions expressed
herein. In making such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents tendered to us as originals, and
the conformity to original documents of all documents submitted to us as
certified or photostatic copies.
<PAGE>
Bergen Brunswig Corporation May 25, 1994
Page 2
Based upon the foregoing and relying upon statements of fact contained
in the documents which we have examined, we are of the opinion that the shares
of Common Stock covered by the Registration Statement will be, when sold,
legally issued, fully paid, and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and any amendment thereto and to any references to this
firm in the Registration Statement.
Very truly yours,
LOWENSTEIN, SANDLER, KOHL,
FISHER & BOYLAN, P.C.
By: /s/ Richard M. Sandler
--------------------------------
Richard M. Sandler
RMS:cw
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Bergen Brunswig Corporation on Form S-3 of our report
dated October 1, 1993, appearing in and incorporated by reference in
the Annual Report on Form 10-K of Bergen Brunswig Corporation for the
year ended August 31, 1993, and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Deloitte & Touche
Deloitte & Touche
Costa Mesa, California
May 25, 1994
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Robert E. Martini, Dwight A. Steffensen, Neil F.
Dimick and Milan A. Sawdei, and each of them singly, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign a
Registration Statement on Form S-3 relating to the registration of 870,000
shares of Bergen Brunswig Corporation Class A Common Stock, $1.50 par value,
issued in connection with the acquisition of the net assets of Southeastern
Hospital Supply Corporation, to sign any or all amendments to that Registration
Statement (including supplements thereto and post-effective amendments), and to
file the same with all exhibits thereto and other documents in connection
therewith with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying the confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 20th day of April, 1994.
/s/ Robert E. Martini Chairman of the
- ----------------------------------- Board, Chief
Robert E. Martini Executive Officer
and Director
/s/ Rodney H. Brady Director
- -----------------------------------
Rodney H. Brady
/s/ John Calasibetta Senior Vice
- ----------------------------------- President and
John Calasibetta Director
/s/ Jose E. Blanco Director
- -----------------------------------
Jose E. Blanco
/s/ Charles C. Edwards Director
- -----------------------------------
Charles C. Edwards, M.D.
<PAGE>
/s/ Charles J. Lee Director
- -----------------------------------
Charles J. Lee
/s/ George R. Liddle Director
- -----------------------------------
George R. Liddle
/s/ James R. Mellor Director
- -----------------------------------
James R. Mellor
/s/ George E. Reinhardt, Jr. Director
- -----------------------------------
George E. Reinhardt, Jr.
/s/ Francis G. Rodgers Director
- -----------------------------------
Francis G. Rodgers
/s/ Dwight A. Steffensen President and
- ----------------------------------- Director
Dwight A. Steffensen
/s/ Neil F. Dimick Chief Financial
- ----------------------------------- Officer and
Neil F. Dimick Principal Accounting
Officer
-2-
