As filed with the Securities and Exchange Commission on January 17, 1995
Registration No. 33-
================================================================================
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
_______________
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: {SYMBOL 120 \f "Wingdings"}
_______________
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================
Proposed
Proposed maximum
Title of each class maximum aggregate Amount of
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 649,523 Shares $21.3125 $13,842,959 $4,774.00
Rights to Purchase Series A
Junior Participating
Preferred Stock 649,523 Rights
======================================================================================
</TABLE>
(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 January 10, 1995.
_______________
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>
BERGEN BRUNSWIG CORPORATION
____________
649,523 Shares
Class A Common Stock
$1.50 Par Value
INTRODUCTION
This Prospectus relates to up to 649,523 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 the shareholders of Biddle & Crowther Company, a Washington
corporation ("B&C"), in exchange for their shares of B&C's Class A Common Stock,
no par value, and Class B Common Stock, no par value, in connection with the
merger of B&C into the Company on January 10, 1995. The shares offered hereby
will be sold by the shareholders of the Company, formerly shareholders of B&C
(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 January 10, 1995, the closing sales price
of the Common Stock on the New York Stock Exchange was $21-3/8 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. 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 _____________, 1995.
<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, Citicorp 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 September 30 1994;
and
(b) The description of the Company's Common Stock and the description
of the Company's Series A Junior Participating Preferred Stock set forth in the
Registration Statements on Form 8-A filed by the Company with the Commission on
October 20, 1993 and February 14, 1994, respectively, pursuant to Section 12 of
the Exchange Act, and any amendment or report filed for the purpose of updating
any such descriptions.
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
- 2 -
<PAGE>
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 therein). 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 November 16, 1994, the Company, B&C, and the principal shareholders
of B&C, Raymond L. Biddle and Berkley G. Biddle (the "Principal Shareholders"),
entered into an Agreement and Plan of Merger (the "Agreement"). Pursuant to the
terms of the Agreement, as amended, B&C was merged with and into the Company and
all shareholders of B&C, including the Principal Shareholders (collectively the
"Selling Shareholders"), received or will receive, in exchange for their shares
of B&C's Class A Common Stock, no par value, and B&C's Class B Common Stock, no
par value, shares of Common Stock issued by the Company having a market value
equal to the "Net Asset Value" of B&C on January 6, 1995 (the "Takeover Date")
plus $3,000,000. The Net Asset Value of B&C is defined in the Agreement to mean
B&C's assets as of the Takeover Date, valued in accordance with the terms and
provisions of the Agreement, less B&C's liabilities as of the Takeover Date,
valued in accordance with the terms and provisions of the Agreement. Upon
completion of the closing, the Company and B&C filed a Certificate of Merger
with the Secretary of State of New Jersey and Articles of Merger with the
Secretary of State of Washington and the merger became effective as of that
date, January 10, 1995 (the "Effective Date of the Merger"). Pursuant to the
Agreement:
(i) On the Effective Date of the Merger, the Company issued an
aggregate of 605,950 shares of Common Stock, 435,737 of which were issued in
the names of each of the Selling Shareholders free of escrow and in
- 3 -
<PAGE>
proportion to their respective ownership interests in B&C ("Pro-Rata Share")
and 170,213 of which were delivered to an escrow agent (the "Escrow Agent");
(ii) Accountants for the Company and the Principal Shareholders are
currently engaged in an audit of B&C as of the Takeover Date. If the Net
Asset Value as of the Takeover Date (the "Closing Net Asset Value") is
determined to be less than $7,679,861 (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 $17-5/8, the "Market
Value" as defined in the Agreement, which is 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 date of the closing of
the Agreement (the "Closing Date"). Of the refund shares, 28.09% will be
returned by the Escrow Agent and the 71.91% balance will be returned by the
Selling Shareholders in proportion to their Pro-Rata Share. 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. Of the additional number of
shares, 28.09% will be delivered to the Escrow Agent and the 71.91% balance
will be delivered to the Selling Shareholders in proportion to their
Pro-Rata Share; and
(iii) The Escrow Agent (and the Principal 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
Company assigns to the Principal Shareholders certain uncollected trade
accounts receivable, (b) the Company is subject to certain excess tax
liability for B&C's operations prior to the Takeover Date, (c) debit memos
of B&C are rejected or not honored after the Closing Date, or (d) certain
indemnification claims are made by the Company, all as described in the
Agreement.
The Company estimates that no more than 605,950 shares of Common Stock,
in the aggregate, will be issued in connection with the merger of B&C into the
Company. However, the number of shares offered hereby may be increased to a
maximum of 649,523 or reduced pursuant to the terms of the Agreement described
above.
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
of the Company, assuming that a total of 649,523 shares of Common Stock,
including all those shares initially delivered to the Escrow Agent, will be
delivered to the Selling Shareholders as described above.
- 4 -
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Owned
Selling Shareholder Before 0ffering
- -------------------------- ----------------------
<S> <C>
Berkley G. Biddle 296,118
Esther J. Biddle 31,112
Raymond Biddle 275,203
Diane A. Biddle 31,112
Kenna R. Biddle 6,755
R.L. Biddle, Trustee for
Raymond A. Biddle 4,871
Jeannine B. Stapleton 3,637
Janice R. Larson 715
TOTAL 649,523
</TABLE>
_______________________
* 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.
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.
EXPERTS
The consolidated financial statements and the related financial
statement schedules of the Company as of September 30, 1994 and August 31, 1993
and for each of the fiscal years ended September 30, 1994 and August 31, 1993
and 1992, incorporated in this Prospectus by reference to the Company's Annual
Report on Form 10-K for the year ended September 30, 1994, have been audited by
Deloitte & ToucheLLP, independent auditors, 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.
- 5 -
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Securities and Exchange Commission
registration fee.............................. $4,774
Legal fees and expenses............................ $5,000
Accounting fees and expenses....................... $2,500
Miscellaneous expenses............................. $2,726
Total $15,000
=======
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 $30 million.
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
II - 1
<PAGE>
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 Merger, dated as of November 16, 1994, among
Bergen Brunswig Corporation, Biddle & Crowther Company, Raymond L.
Biddle and Berkley G. Biddle (without Appendices or Exhibits).
2.2 Supplemental Agreement, dated as of November 16, 1994, among Bergen
Brunswig Corporation, Biddle & Crowther Company, Raymond L. Biddle and
Berkley G. Biddle (without Exhibits).
2.3 Amendment No. 1, dated January 6, 1995 to the Agreement and Plan of
Merger (without Appendices or Exhibits).
2.4 Amendment No. 1 to Supplemental Agreement, dated as of January 10, 1995
(without Exhibits).
4.1 Restated Certificate of Incorporation of Bergen Brunswig Corporation is
incorporated by reference to Exhibit 4.1 of the Registrant's
Registration Statement on Form S-3 (no. 33-53817) filed with the
Commission on May 26, 1994.
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
September 30, 1994.
5.1 Opinion of Lowenstein, Sandler, Kohl, Fisher & Boylan, a Professional
Corporation.
23.1 Consent of Deloitte & ToucheLLP.
23.2 Consent of Lowenstein, Sandler, Kohl, Fisher & Boylan, A Professional
Corporation, is included in Exhibit 5.1.
24.1 Power of Attorney is included on signature page.
II - 2
<PAGE>
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.
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
II - 3
<PAGE>
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 Los Angeles, State of California, on the 12th day of
January, 1995.
BERGEN BRUNSWIG CORPORATION
By:/s/ Robert E. Martini
-----------------------------------------
Robert E. Martini, Chairman
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 any
or all amendments to this 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.
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 January 12, 1995
- ------------------------ Board, Chief
Robert E. Martini Executive Officer
and Director
/s/ Rodney H. Brady Director January 12, 1995
- ------------------------
Rodney H. Brady
/s/ John Calasibetta Senior Vice January 12, 1995
- ------------------------ President and
John Calasibetta Director
II - 5
<PAGE>
/s/ Jose E. Blanco Director January 12, 1995
- ------------------------
Jose E. Blanco
/s/ Charles C. Edwards, M.D. Director January 12, 1995
- ---------------------------
Charles C. Edwards, M.D.
/s/ Charles J. Lee Director January 12, 1995
- ------------------------
Charles J. Lee
/s/ George R. Liddle Director January 12, 1995
- ------------------------
George R. Liddle
/s/ James R. Mellor Director January 12, 1995
- ------------------------
James R. Mellor
/s/ George E. Reinhardt, Jr. Director January 12, 1995
- ---------------------------
George E. Reinhardt, Jr.
/s/ Francis G. Rodgers Director January 12, 1995
- ------------------------
Francis G. Rodgers
/s/ Dwight A. Steffensen President, Chief January 12, 1995
- ------------------------ Operating Officer
Dwight A. Steffensen and Director
/s/ Neil F. Dimick Chief Financial January 12, 1995
- ------------------------ Officer and
Neil F. Dimick Principal Accounting
Officer
II - 6
Exhibit 2.1
AGREEMENT
AND
PLAN OF MERGER
AMONG
BERGEN BRUNSWIG CORPORATION,
BIDDLE & CROWTHER COMPANY,
RAYMOND L. BIDDLE
AND
BERKLEY G. BIDDLE
<PAGE>
TABLE OF CONTENTS
RECITALS................................................................ 1
ARTICLE I DEFINITIONS......................................... 1
ARTICLE II THE PLAN OF MERGER.................................. 5
2.1 The Merger.................................................... 5
2.2 Exchange of Shares............................................ 6
2.3 Further Assurances............................................ 9
2.4 Adjustment Upon Recapitalization.............................. 9
2.5 Securities Law Matters........................................ 9
ARTICLE III REPRESENTATIONS AND WARRANTIES...................... 10
ARTICLE IV ADDITIONAL COVENANTS AND
AGREEMENTS OF THE PARTIES........................... 11
4.1 Corporate Approval............................................ 11
4.2 Conduct of Business........................................... 11
4.3 Negative Covenants............................................ 11
4.4 Exclusive Dealing............................................. 12
4.5 Recent Certified Financial.................................... 12
4.6 Access........................................................ 13
4.7 Security...................................................... 13
4.8 Intentionally Omitted......................................... 13
4.9 Transitional Provisions....................................... 13
4.10 Best Efforts.................................................. 13
4.11 Brokers or Finders............................................ 14
4.12 Notice to Customers........................................... 14
4.13 Covenants Not to Compete...................................... 14
4.14 Employment Agreements......................................... 14
4.15 Payment of Special Dividends.................................. 14
4.16 Environmental Matters......................................... 14
4.17 Certain Real Estate Matters................................... 15
4.18 Indebtedness of Employees and Stockholders.................... 15
4.19 Trade Accounts Receivable Aging............................... 15
4.20 Debit Memos................................................... 15
4.21 Termination of Employment Contracts........................... 15
4.22 Press Release................................................. 15
4.23 Clauson Contract.............................................. 15
4.24 Commission Rate Freeze........................................ 15
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<PAGE>
ARTICLE V AUDIT............................................... 16
5.1 Accountant's Reports.......................................... 16
5.2 Asset Value................................................... 17
5.3 Liability Value............................................... 18
ARTICLE VI THE CLOSING......................................... 18
6.1 The Closing................................................... 18
6.2 Listed Shares................................................. 18
6.3 Termination................................................... 18
6.4 Liability on Termination...................................... 19
ARTICLE VII CONDITIONS TO OBLIGATION OF EACH PARTY.............. 19
7.1 No Prohibition of Transaction................................. 20
7.2 Compliance With Law........................................... 20
7.3 Proceedings, Documentation and Consents....................... 20
ARTICLE VIII CONDITIONS TO THE OBLIGATION OF
BBC TO CLOSE............................................. 20
8.1 Representations and Warranties True at the Closing
Date.......................................................... 20
8.2 No Material Adverse Change.................................... 21
8.3 Corporation's Performance..................................... 21
8.4 Necessary Corporate Approvals................................. 21
8.5 Corporate Authority........................................... 21
8.6 Opinion of Counsel............................................ 21
8.7 Investment Letters............................................ 22
8.8 Satisfactory Searches......................................... 22
8.9 Covenants Not To Compete...................................... 22
8.10 Employment Agreements......................................... 22
8.11 Environmental Review.......................................... 22
8.12 Consents to the Merger........................................ 22
8.13 Seattle Lease................................................. 23
8.14 Tax Waivers................................................... 23
8.15 Continuation Agreements with Major Customers.................. 23
8.16 Results of Investigation...................................... 23
ARTICLE IX CONDITIONS TO THE CORPORATION'S
AND STOCKHOLDERS' OBLIGATIONS TO CLOSE.............. 23
9.1 Representations and Warranties True at the
Closing....................................................... 23
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<PAGE>
9.2 BBC's Performance............................................. 23
9.3 No Material Adverse Change.................................... 24
9.4 Authority..................................................... 24
9.5 Opinion of BBC's Counsel...................................... 24
9.6 Employment Agreements......................................... 24
9.7 Seattle Lease................................................. 24
ARTICLE X SURVIVAL OF REPRESENTATIONS
AND INDEMNIFICATION...................................... 24
10.1 Survival of Representations and Warranties.................... 24
10.2 Indemnification by the Corporation and
Stockholders.................................................. 25
10.3 Indemnification by BBC........................................ 27
10.4 Enforcement of Indemnification Rights......................... 27
10.5 Remedies Cumulative........................................... 28
10.6 Liability for Deficiency...................................... 28
10.7 Access to Books and Records................................... 28
10.8 Taxes......................................................... 29
10.9 Insurance..................................................... 29
10.10 Environmental Cleanup.................................... 29
10.11 Trade Accounts Receivable Guarantee...................... 30
10.12 Debit Memos.............................................. 31
10.13 Intentionally omitted.................................... 31
10.14 Defined Benefit Pension Plan............................. 31
10.15 Clauson Contract......................................... 31
10.16 Power of Attorney........................................ 31
10.17 Direction to Escrow Agent................................ 32
ARTICLE XI MISCELLANEOUS....................................... 32
11.1 Notices....................................................... 32
11.2 Assignability and Parties in Interest......................... 33
11.3 Expenses...................................................... 33
11.4 Collections................................................... 33
11.5 Governing Law................................................. 34
11.6 Counterparts.................................................. 34
11.7 Headings...................................................... 34
11.8 Pronouns, etc................................................. 34
11.9 Complete Agreement............................................ 34
11.10 Modifications, Amendments and Waivers.................... 34
11.11 Severability............................................. 34
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APPENDICES
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SECTION DESCRIPTION REFERENCE
Appendix A Escrow Agreement..................................... 2.2(d)
Appendix B Private Placement Questionnaire...................... 2.5(a)
Appendix C Covenant Not to Compete.............................. 4.13
Appendix D Employment Agreement................................. 4.14
Appendix E Real Estate Lease.................................... 4.17
Appendix F Opinion of Corporation's Counsel..................... 8.6
Appendix G Opinion of BBC's Counsel............................. 9.5
Appendix H Joinder Agreement.................................... 8.5
Appendix I Business Terms of Clauson Contract................... 4.23
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AGREEMENT
AND
PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") has been made and entered
into as of this 16th day of November, 1994, by and among BERGEN BRUNSWIG
CORPORATION, a New Jersey corporation ("BBC"), BIDDLE & CROWTHER COMPANY, a
Washington corporation ("Corporation"), and RAYMOND L. BIDDLE and BERKLEY G.
BIDDLE ("Stockholders").
RECITALS:
1. The respective boards of directors of BBC and the Corporation have
determined that it is in the best interests of each corporation and its
stockholders to provide for a merger (the "Merger") pursuant to which (x) the
Corporation will be merged with and into BBC and (y) shareholders of the
Corporation will receive, in exchange for their shares of the Corporation's
Class A Common Stock, no par value and Class B Common Stock, no par value
(collectively, the "Corporation Stock"), shares of BBC's Class A Common Stock,
par value $1.50 per share (the "Stock"), all on the terms and conditions
hereinafter set forth.
2. The Stockholders are the principal stockholders of the Corporation and
are willing to enter into this Agreement in order to induce BBC to enter into
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties adopt this Agreement as and for a Plan of Merger (the "Plan") under
Section 368(a)(1)(A) 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:
ARTICLE I
DEFINITIONS
The terms defined in this Article (except as otherwise expressly provided in
this Agreement) for all purposes of this Agreement and the Supplemental
Agreement shall have the respective meanings specified in this Article.
1.1 Affiliate shall mean any entity controlling, controlled by, or under
common control with the Corporation.
1.2 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.
1.3 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.
<PAGE>
1.4 Closing Date shall mean January 10, 1995, or such other date thereafter
as agreed to by the parties as the date on which the Closing shall occur.
1.5 Closing Documents shall mean the papers, instruments and documents
required to be executed and delivered at the Closing pursuant to this Agreement.
1.6 CPA shall mean Deloitte & Touche.
1.7 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 such vendors, promotional allowances earned, chargebacks
or rebates, whether such items are classified by the Corporation as receivables
from vendors or reductions of payables to vendors.
1.8 Durr shall mean Durr Medical Corporation, an Alabama corporation which
is an indirect subsidiary of BBC.
1.9 ERISA shall mean the Employee Retirement Income Security Act.
1.10 Escrow Agent shall mean a fiduciary mutually acceptable to BBC and the
Corporation.
1.11 Estimated Net Asset Value shall mean the Net Asset Value calculated as
of November 30, 1994, and shall be based upon unaudited financial statements
prepared by the Corporation in accordance with GAAP (as reflected on the most
recent balance sheet of the Corporation which is annexed as part of Exhibit
2.25.1 to the Supplemental Agreement (the "Most Recent Balance Sheet")), as
modified in accordance with Sections 5.2 and 5.3 of this Agreement and adjusted
to give pro forma effect to the payment of the special dividends contemplated by
Section 4.15 (the "Preliminary Balance Sheet"). The Preliminary Balance Sheet
shall be delivered to BBC not later than two weeks prior to the Closing Date and
shall be accompanied by a certificate of the Stockholders to the effect that it
fairly presents their estimate of Net Asset Value as of that date.
1.12 Exchange Agent shall mean Lowenstein, Sandler, Kohl, Fisher & Boylan,
P.C. or such other firm or financial institution as shall be designated by BBC
prior to the Effective Time of the Merger.
1.13 FIFO Cost shall mean the cost of an item of inventory to the
Corporation, determined on a first-in, first-out basis.
1.14 GAAP shall mean generally accepted accounting principles applied by the
Corporation in a manner consistent with prior periods.
1.15 Initial Escrowed Shares shall mean that number of shares of Stock
having an aggregate Market Value of $3,000,000.
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1.16 Initial Non-Escrowed Shares of Stock shall mean the shares of Stock to
be issued by BBC pursuant to Section 2.2(c) other than the Initial Escrowed
Shares.
1.17 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 either of the Stockholders or John Clauson.
1.18 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 not be greater than $17
5/8 nor less than $14 5/8.
1.19 Merger Consideration shall mean Net Asset value plus three million
dollars $3,000,000.
1.20 Net Asset Value shall mean the Corporation's assets as of the Closing
Date, as valued pursuant to Section 5.2, less the Corporation's liabilities as
of the Closing Date, as valued pursuant to Section 5.3. Net Asset Value shall be
calculated after deducting the Special Dividends paid pursuant to Section 4.15.
1.21 Outstanding Share Number shall mean the number of shares of Corporation
Stock outstanding at the Effective Time of the Merger.
1.22 BBC Representative shall mean any one of the following persons: Robert
E. Martini, Dwight A. Steffensen, Neil F. Dimick or Milan A. Sawdei.
1.23 Per Share Merger Consideration shall mean a number of shares of Stock
determined by dividing the Merger Consideration by a number resulting from the
multiplication of Market Value by the Outstanding Share Number.
1.24 Premises shall mean all locations at which the Corporation or its
Affiliates do business and which are listed in Exhibit 2.7.1 to the Supplemental
Agreement.
1.25 Regulated Substances shall have the meaning ascribed to that term in
Section 2.24(a) of the Supplemental Agreement.
1.26 Representative shall mean Berkley G. Biddle or Raymond L. Biddle if
Berkley G. Biddle should be unable to act on any matter or matters.
1.27 SEC shall mean the Securities and Exchange Commission.
1.28 Supplemental Agreement shall mean an agreement, executed concurrently
with this Agreement by the parties to this Agreement, containing a series of
representations and warranties.
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<PAGE>
1.29 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.
1.30 Terms Defined in Other Sections. The following terms are defined
elsewhere in this Agreement in the following Sections:
Term Section
---- -------
Act 2.5(a)
Closing Value 5.2(a)
Code Lead-in
Corporation Heading
Corporation Stock Recital 1
Effective Time of the Merger 2.1(d)
ERISA 4.2(j)
Escrow Agreement 2.2(d)
Escrow Shares 2.2(d)
Escrow Percentage 2.2(d)
Final Accountant's Report 5.1(b)
HSR Act 4.9
Initial Accountant's Report 5.1(a)
Loss or Losses 10.2
Merger Recital 1
Merger Document 2.1(d)
Most Recent Balance Sheet 1.11
Obsolete Inventory 5.2(a)
Old Certificates 2.2(h)
Outside Date 6.1
BBC Heading
PBGC 4.2(j)
Permitted Transferees 2.5(b)
Plan Lead-in
Preliminary Balance Sheet 1.11
Proposed Statement 5.1(a)
Pro-Rata Share 2.2(c)
Reassigned Receivables 10.11(a)
Registration Statement 2.5(c)
Saleable Inventory 5.2(a)
Special Dividends 4.15
State Law 2.1
Stockholders Heading
Stock Recital
Surviving Corporation 2.1(a)
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ARTICLE II
THE PLAN OF MERGER
2.1 The Merger. Upon performance of all covenants and obligations of the
parties contained herein and upon fulfillment (or waiver) of all conditions to
the obligations of the parties contained herein, at the Effective Time of the
Merger and pursuant to the New Jersey Business Corporation Act and the Business
Corporation Act of the State of Washington (the "State Law"), BBC and the
Corporation shall cause the following to occur:
(a) The Surviving Corporation. The Corporation shall be merged with
and into BBC, the latter of which shall be the surviving corporation (the
"Surviving Corporation"). The separate existence and corporate organization of
the Corporation shall cease at the Effective Time of the Merger, and thereupon
BBC and the Corporation shall be a single corporation, the name of which shall
be Bergen Brunswig Corporation. BBC, as the Surviving Corporation, shall
succeed, insofar as permitted by law, to all rights, assets, liabilities and
obligations of the Corporation in accordance with the State Law.
(b) Articles of Incorporation. The Articles of Incorporation of BBC
shall be and remain the articles of incorporation of the Surviving Corporation
until amended as provided by law.
(c) By-Laws. The By-Laws of BBC shall be and remain the By-Laws of
the Surviving Corporation until amended as provided by law.
(d) Merger Document. Upon completion of the Closing, a Articles of
Merger, in form satisfactory to BBC and the Corporation, in substance consistent
in all respects with the terms of this Agreement, and properly executed in
accordance with the State Law (the "Merger Document"), shall be filed with the
Secretary of State of the State of New Jersey and with the Secretary of State of
the State of Washington. The Merger shall become effective when the Merger
Document is so filed. The date and time when the Merger shall become effective
is referred to in this Agreement as the "Effective Time of the Merger."
(e) Directors. From and after the Effective Time of the merger and
until their respective successors shall be duly elected and qualified, the Board
of Directors of the Surviving Corporation shall consist of each of the members
of the Board of Directors of BBC.
(f) Officers. From and after the Effective Time of the Merger, the
officers of BBC shall be the officers of the Surviving Corporation until their
respective successors shall be duly elected or appointed and qualified.
2.2 Exchange of Shares. The manner of converting the shares of Corporation
Stock, at the Effective Time of the Merger into shares of Stock having an
aggregate Market Value equal to the Merger Consideration shall be as follows:
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(a) Treasury Shares. Any shares of the Corporation's capital stock
held in the treasury of the Corporation as of the Effective Time of the Merger
shall be canceled and retired as of the Effective Time of the Merger. No cash,
securities or other consideration shall be paid or delivered in exchange for any
such treasury shares under this Agreement.
(b) Corporation Stock. Except as otherwise provided herein with
respect to fractional share interests, each share of Corporation Stock
outstanding immediately prior to the Effective Time of the Merger shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the Per Share Merger Consideration.
(c) Delivery Outright. At the Effective Time of the Merger, BBC will
deliver outright and free of escrow the Initial Non-Escrowed Shares to the
stockholders of the Corporation in proportion to their respective ownership
interests in the Corporation as reflected on Exhibit 2.12 to the Supplemental
Agreement ("Pro-Rata Share").
(d) Delivery in Escrow. At the Effective Time of the Merger, BBC will
withhold that proportion of the Merger Consideration represented by the Initial
Escrowed Shares ("Escrow Percentage") and will deliver those shares to the
Escrow Agent, to be held by the Escrow Agent as collateral for the
indemnification and other obligations of the Corporation's stockholders
hereunder and pursuant to the provisions of an escrow agreement (the "Escrow
Agreement") in substantially the form of Appendix A hereto. The Initial Escrow
Shares will be represented by a certificate or certificates issued in the name
of the Escrow Agent and will be held by the Escrow Agent from the Effective Time
of the Merger until distribution is authorized pursuant to the terms of this
Agreement and the Escrow Agreement. By virtue of the approval of this Agreement
by the stockholders of the Corporation, such stockholders shall, without any
further act of any such stockholders, be deemed to have consented to and
approved (i) the use of the Initial Escrow Shares as well as shares held in
escrow after certain shares are released (collectively "Escrow Shares") as
collateral for the above-mentioned obligations in the manner set forth in this
Agreement and the Escrow Agreement, (ii) the appointment of the Representative
as the Representative and as the attorney-in-fact and agent for each of the
Corporation's stockholders under the Escrow Agreement, (iii) the taking by the
Representative and the Representative's successors, if any, of any and all
actions and the making of any and all decisions required or permitted to be
taken by him under the Escrow Agreement (including, without limitation, the
exercise of the power to: authorize delivery to BBC of Escrow Shares in
accordance with the terms of this Agreement and satisfaction of claims by BBC;
negotiate and enter into settlements and compromises of and comply with orders
of courts with respect to such claims; resolve any claim made pursuant to
Section 10.2 and; take all actions necessary in the judgment of the
Representative for the accomplishment of the foregoing) and (iv) all of the
other terms, conditions and limitations in the Escrow Agreement.
(e) Post-Closing Adjustment. If the Net Asset Value as of the Closing
Date, as shown by the Final Accountant's Report prepared pursuant to Article V
hereof, should exceed the Estimated Net Asset Value, then BBC shall deliver to
the Escrow Agent that number of additional shares of Stock determined by
multiplying such excess by the Escrow Percentage, and shall issue and deliver
the balance of those additional shares to the stockholders of the Corporation in
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<PAGE>
proportion to their respective Pro-Rata Shares. In no event shall BBC be
required to issue more shares of Stock in connection with the Merger, including
shares to be issued at and shares to be issued after the Closing, than that
number of shares which have an aggregate value, calculated at Market Value,
equal to 110% of Estimated Net Asset Value. if the Estimated Net Asset Value
should exceed the Net Asset Value as of the Closing Date, as shown by the Final
Accountant's Report, BBC shall be entitled to a refund of that number of shares
determined by dividing that the total number of shares to be refunded by the
Market Value. The Stockholders shall cause the Escrow Agent to return to BBC
that number of shares determined by multiplying the shortfall by the Escrow
Percentage, and agree jointly and severally to cause the stockholders of the
Corporation to refund the balance of those shares to BBC.
(f) Fractional Shares. In lieu of the issuance, transfer or
recognition of fractional shares of Stock or interests or rights therein
pursuant to this Section 2.2, BBC shall pay or shall cause the Surviving
Corporation to pay to each holder of Corporation Stock to be converted into
Stock pursuant to this Section 2.2 an amount of cash equal to the fair market
value of any fraction of a share of Stock to which such holder would be entitled
but for this provision. For purposes of such payment, the fair market value of
a fraction of a share of Stock shall equal such fraction multiplied by the
Market Value.
(g) Records. For purposes of this Agreement, the stock transfer books
of the Corporation shall be closed as of the Effective Time of the Merger, and
no transfer of record of any shares of Corporation Stock shall take place
thereafter.
(h) Surrender of Corporation Stock Certificates. Immediately after
the Effective Time of the Merger, each holder of an outstanding certificate or
certificates which prior thereto represented Corporation Stock shall surrender
the same to the Exchange Agent appointed pursuant to Section 2.2(i) and shall be
entitled to receive in exchange therefor a certificate or certificates
representing the number of whole Initial Non-Escrowed Shares of Stock into which
such stockholder's Corporation Stock shall have been converted and exchanged.
When the Merger becomes effective, each such stockholder of the Corporation
shall thereupon cease to have any rights in respect of the Corporation Stock
other than (i) to receive stock certificates representing shares of Stock for
such whole number of Initial Non-Escrowed Shares of Stock, (ii) to receive stock
certificates representing shares of Stock covering the whole number of escrowed
shares of Stock which are ultimately distributable to such holder pursuant to
the Escrow Agreement and (iii) to receive cash in lieu of fractional shares
pursuant to Section 2.2(f) and the Escrow Agreement. Unless and until any
certificates which theretofore represented Corporation Stock ("Old
Certificates") shall be so surrendered and exchanged, (i) each holder of Old
Certificates shall not have any voting rights in respect of the Initial Escrowed
Shares and Initial Non-Escrowed Shares of Stock into which the shares of
Corporation Stock shall have been so converted and exchanged and (ii) dividends
or other distributions payable to holders of record of shares of Stock shall not
be paid to any holder of Old Certificates. Upon surrender of an Old
Certificate, there shall be delivered to the record holder of such Old
Certificate a certificate representing the whole number of Initial Non-Escrowed
Shares to which such holder is entitled and cash in lieu of any fractional share
interests relating to such Initial Non-Escrowed Shares, together with the amount
of any dividends or other distributions, if any, which shall have become payable
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<PAGE>
with respect to such holder's Initial Escrowed Shares and Initial Non-Escrowed
Shares, but in all cases without interest.
(i) Exchange Agent. The Exchange Agent shall act as the exchange
agent for the Corporation's stockholders to effect the conversion of Old
Certificates into certificates representing the Initial Non-Escrowed Shares of
Stock. Adoption of this Agreement by the Corporation's stockholders shall
constitute ratification of the appointment of the Exchange Agent.
2.3 Further Assurances. The Corporation and the Stockholders agree that
if, at any time before or after the Effective Time of the Merger, BBC determines
or is advised that any further deeds, assignments or assurances are reasonably
necessary or desirable to vest, perfect or confirm in BBC title to any property
or rights of the Corporation, then BBC and its proper officers may execute and
deliver all such proper deeds, assignments and assurances and do all other
things necessary or desirable to vest, perfect or confirm title to such property
or rights in BBC and otherwise to carry out the purposes of this Agreement, in
the name of the Corporation and the Stockholders or otherwise.
2.4 Adjustment Upon Recapitalization. The number of shares of Stock to be
issued by BBC at the Effective Time of the Merger and upon issuance of the Final
Accountant's Report, and the Market Value, shall be appropriately adjusted in
the event that prior to the Effective Time of the Merger 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.
2.5 Securities Law Matters.
(a) Private Offering. The Corporation and Stockholders understand
that the Stock to be issued and delivered by BBC 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 upon the truth and accuracy
of the representations set forth in a private placement certificate in the form
of Appendix B hereto delivered by each Stockholder concurrently with the
execution of this Agreement and by the other stockholders of the Corporation at
or before the Closing. Each certificate of Stock issued pursuant to this
Agreement shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR THE WASHINGTON SECURITIES
ACT, 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."
BBC shall give instructions to its transfer agent consistent with the
foregoing legend. Immediately after the SEC shall declare the Registration
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<PAGE>
Statement to be effective, BBC 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, a former
stockholder of the Corporation may transfer shares of Stock to one or more
members of a group (not in excess of four persons) consisting of (i) the spouse
or children of such stockholder, and (ii) one or more trusts for their benefit;
provided however, that the transferee in each case will furnish BBC with an
investment letter in form and substance satisfactory to counsel for BBC who
shall be satisfied with the competence of such persons to give an investment
letter ("Permitted Transferees").
(c) Agreement To Register Stock. As soon as practicable after the
Closing, but not more than sixty (60) days thereafter, BBC shall prepare and
file a registration statement (the "Registration Statement") on the appropriate
form with the SEC pursuant to which BBC shall register the Stock to be issued
pursuant to this Agreement for resale by the Corporation's stockholders. BBC
shall thereafter use its best efforts to have such Registration Statement
declared effective by the SEC and to keep that Registration Statement current.
BBC reserves the right to include other shares of Stock in that Registration
Statement.
(d) Costs. BBC shall bear all costs incurred in preparing and filing
the Registration Statement including, without limitation, all applicable legal
fees, accounting fees, printing fees, and SEC filing fees. BBC shall also bear
all costs of keeping that Registration Statement current.
(e) Information. The Stockholders will furnish BBC with all
information concerning the Corporation and the Stockholders required for
inclusion in that Registration Statement. The Stockholders represent and
warrant that no information to be furnished to BBC 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
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 stockholders of the Corporation
and may not be assigned except to Permitted Transferees.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Supplemental Agreement is incorporated herein and made a part hereof.
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ARTICLE IV
ADDITIONAL COVENANTS AND
AGREEMENTS OF THE PARTIES
4.1 Corporate Approval. The Stockholders agree to vote their shares of
Corporation Stock in favor of the Plan and the Merger and to take any action
necessary to obtain the approval of the Plan and the Merger by the other
stockholders of the Corporation.
4.2 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 BBC 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 (except as otherwise noted on
Exhibit 2.25.2 to the Supplemental Agreement); (c) maintain in full force and
effect the insurance policies heretofore maintained by the Corporation (or
policies providing substantially the same coverage); (d) use its best efforts to
preserve its property in good condition; (e) use its best efforts to preserve
its business organization intact and to preserve for BBC the good will 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 BBC
in writing of any material adverse change in the business, assets or prospects
of the Corporation; (h) furnish to BBC all monthly financial statements of the
Corporation when they become available to any officer of the Corporation; (i)
maintain its status as an S Corp. for federal and state income tax purposes; and
(j) terminate its Defined Benefit Pension Plan in full compliance with the
requirements of ERISA and the rules and regulations of the Pension Benefit
Guaranty Corporation ("PBGC").
4.3 Negative Covenants. Prior to the Closing Date, the Corporation will
not, except as otherwise permitted by this Agreement or consented to by BBC in
writing, (a) purchase 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 and then only to the extent that such
indebtedness is repaid in full prior to the Closing; (c) 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, partnership,
limited liability company, corporation or other business organization; (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 (except as required by Section
4.2(j)) create or modify any profit sharing plan, 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 decrease any
severance or termination pay benefit or any other fringe benefit; (h) make any
representation to anyone indicating any intention of BBC or Durr to retain,
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institute, or provide any employee benefit plan, or represent in any manner that
any officer or employee of the Corporation will be employed by BBC or Durr after
the Closing; provided, however, the Corporation and BBC (or its designee) 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
Durr 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 any such security; (j) declare or pay any dividend,
other than the Special Dividends, 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; (1) 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; or (m) enter into any contract to do any
of the foregoing.
4.4 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, 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 BBC with respect to any purchase of the Corporation Stock or any
purchase of substantial assets of or merger with the Corporation other than
disclosures consented to in writing by BBC. The Corporation and the
Stockholders shall promptly notify BBC of any solicitation or inquiry which any
of them receive with respect to any such matter.
4.5 Recent Certified Financial Statements. If requested by BBC, in order
to permit BBC to comply with the requirements of the SEC, the Corporation will
furnish BBC with a copy of the audited 1993 financial statements included as
part of Exhibit 2.25.1 to the Supplemental Agreement in form suitable for filing
with the SEC as part of BBC's form 8-K, including a consent manually signed by
the Corporation's accountants who certified the Corporation's financial
statements as at December 31, 1993 and for the year then ended.
4.6 Access. Between the date hereof and the Closing Date, the Corporation
shall give to BBC 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 Premises and of the assets, liabilities and business of the
Corporation. The Corporation will also cause its officers to furnish any and
all financial, technical and operating data and other information pertaining to
assets, liabilities and business of the Corporation and the Premises as is
reasonably available and as BBC shall from time to time reasonably request for
such purpose. BBC 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 Merger is not consummated as contemplated
herein, BBC 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 was
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previously known to BBC, or generally known to others engaged in the same trade
or business as the Corporation, or that is part of public knowledge.
4.7 Security. Commencing at the close of business on the day prior to the
Closing Date, BBC shall have the right, together with the Corporation, but not
the obligation, to control ingress to and egress from the Premises and to secure
the Corporation's property against loss.
4.8 Intentionally Omitted.
4.9 Transitional Provisions. In order to facilitate a smooth transfer of
operations from the Corporation to BBC, the Corporation will, promptly following
execution of this Agreement, furnish BBC with such data relevant to the
Corporation's customers, employees and products as BBC may reasonably require,
subject to the confidentiality provisions of Section 4.6. The Corporation will
also introduce BBC to as many of the Corporation's customers, employees and
suppliers as BBC may wish to visit.
4.10 Best Efforts. The Corporation, the Stockholders and BBC 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 consummate the Merger. 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 Merger, provided that any cost associated with such
assistance shall be borne by the party requesting the assistance.
4.11 Brokers or Finders. Each party agrees to hold the other harmless and
to indemnity 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 Merger. In particular, the Stockholders will indemnify and defend BBC,
its officers, directors and subsidiaries and their respective officers and
directors from and against any and all claims of Zachary Scott & Co. with
respect to the Merger.
4.12 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 Merger 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, BBC, at its expense, shall mail the Corporation's and
BBC's letters to the Corporation's former customers.
4.13 Covenants Not to Compete. At the Closing, the Corporation will deliver
to BBC covenants not to compete, substantially in the form and substance of
Appendix C hereto, signed by each of the persons listed on that Appendix.
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4.14 Employment Agreements. At the Closing, the Corporation will deliver to
BBC employment agreements, substantially in the form and substance of Appendix D
hereto, signed by each of the persons listed on that Appendix.
4.15 Payment of Special Dividends. At any time prior to the Effective Time
of the Merger, the Corporation may pay to its stockholders one or more dividends
(the "Special Dividends") consisting of cash, cash equivalents, life insurance,
marketable securities and other investment securities then held by the
Corporation, of which at least $3,500,000 shall be declared and distributed on
or before November 30, 1994.
4.16 Environmental Matters. BBC shall have the right, at its expense, to
make Phase I environmental studies of the Premises. If any such study or
studies should indicate the presence of Regulated Substances, the Corporation
shall conduct such Phase II studies as the Corporation and BBC shall agree upon,
including, but not limited to, tests of the air, subsoil, groundwater and
building materials, as it shall deem necessary to determine whether any
Regulated Substances are present and to estimate the potential clean-up costs,
if any. BBC and the Corporation shall each pay one half of the cost of the
Phase II studies, if any.
4.17 Certain Real Estate Matters. At the Closing, the Stockholders will
deliver to BBC a three year real estate lease covering the Corporation's Seattle
facility, such lease to be in the form and substance of Appendix E hereto.
4.18 Indebtedness of Employees and Stockholders. The Corporation will cause
any indebtedness owing to it by its employees (other than salesmen's normal
draws) 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.
4.19 Trade Accounts Receivable Aging. On or immediately prior to the
Closing Date, the Corporation shall furnish BBC with a list of its Trade
Accounts Receivable containing an aging of each customer's account.
4.20 Debit Memos. On or immediately prior to the Closing, Date, the
Corporation shall furnish BBC 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.
4.21 Termination of Employment Contracts. The Corporation will terminate
the employment contracts listed on Exhibit 2.17.2 to the Supplemental Agreement,
effective as of the Closing Date.
4.22 Press Release. The Corporation and BBC will issue a joint press
release promptly disclosing the execution of this Agreement. The Corporation
shall not issue any press release or communicate with its customers or suppliers
about this Agreement until the form of such release has been approved by the
Corporation and BBC.
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4.23 Clauson Contract. The Stockholders will cause the Corporation to enter
into a contract with John Clauson prior to Closing. The business terms of that
contract are annexed hereto as Appendix I.
4.24 Commission Rate Freeze. For a period of one year after the Closing,
Durr will not reduce the commission rate used as of the date of this Agreement
in calculating commissions payable to the Corporation's sales personnel. This
provision is not intended to guarantee employment or a specific amount of
commission income to any of such personnel.
ARTICLE V
AUDIT
5.1 Accountant's Reports.
(a) Proposed Statement. The Stockholders shall prepare, at their
expense, and furnish to BBC and CPA within sixty (60) days after the Effective
Time of the Merger, a proposed statement of the Net Asset Value ("Proposed
Statement"). CPA shall audit that Proposed Statement and shall render a special
accountant's report ("Initial Accountant's Report") to the Stockholders and BBC
with respect to the Net Asset Value. 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 Stockholders and BBC along with a
schedule of the adjustments proposed by CPA as well as adjustments passed by
CPA, and shall make its work papers with respect to that report available to the
Stockholders and their 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 Stockholders, if the Stockholders should
object to that report on the grounds that it has not been made in accordance
with this Agreement, they may give written notice of their objection to BBC
within twenty (20) days after their receipt of that report. If no such
assertion is made within such twenty (20) day period, or if BBC and the
Stockholders agree upon all matters in dispute, the 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 and shall be
referred to as the "Final Accountant's Report".
(c) Dispute Resolution. If BBC and the Stockholders are unable to
resolve all items in dispute within fifteen (15) days after BBC's receipt of the
Stockholders' written objection to the Initial Accountant's Report, then those
items shall be submitted for resolution to a third firm of independent certified
public accountants jointly selected by the Stockholders and BBC. The
determination of such third firm with respect to the items in dispute shall
become 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 Stockholders shall pay the fees of their
accountants, and BBC shall pay the fees of CPA, in connection with the
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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
shall be borne one-half by BBC and one-half by the Stockholders.
5.2 Asset Value. For purposes of determining Net Asset Value, the
Corporation's assets shall be valued in accordance with GAAP except as follows:
(a) Inventory. Prior to the Closing, the Corporation and BBC shall
inspect the inventory and attempt jointly to remove everything other than that
which is currently saleable in the ordinary course of the Corporation's business
("Saleable Inventory"). Inventory which is damaged 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
ninety-one (91) days or less, and other inventory for which the Corporation has
had no sales during the twelve (12) months prior to the Closing Date.
Commencing after the close of business on the Closing Date, the Stockholders and
BBC shall jointly make a physical count of Saleable Inventory owned by the
Corporation and located in the Premises. The Stockholders and BBC 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 BBC's account. A sale shall be deemed to occur when a shipment is
made. Saleable inventory shall be valued at the Corporation's replacement cost
on the Closing Date. For purposes of determining Net Asset 'Value, damaged
inventory shall be valued at zero and Obsolete Inventory shall be valued at
fifty percent (50%) of its FIFO Cost as of the Closing Date (the "Closing
Value"). BBC shall attempt, in the ordinary course of its business, to sell the
Corporation's Obsolete Inventory for a period of twelve (12) months after the
Closing Date. On the first anniversary of the Closing, the proceeds from the
sale of the Obsolete Inventory after the Closing shall be determined. If such
proceeds exceed the Closing Value, BBC shall issue and deliver shares of Stock
having an aggregate Market Value equal to such excess proceeds to the
stockholders of the Corporation in proportion to their respective Pro-Rata
Share. If the Closing Value exceeds such proceeds, the Stockholders shall
refund to BBC that number of shares of Stock having an aggregate Market Value
equal the amount of that shortfall.
(b) Trade Accounts Receivable. The Trade Accounts Receivable shall be
valued as of the Closing Date at face value less advance payments from
customers, subject to the guarantee provisions of Section 10.11.
(c) Supplies and Prepaid Expenses. Supplies and prepaid expenses
shall be valued as of the Closing Date at replacement cost.
(d) Computer Equipment. Computer equipment shall be valued as of the
Closing Date at fair market value.
(e) Intangible Assets. No value shall be attributed to any intangible
assets of the Corporation.
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5.3 Liability Value. For purposes of determining Net Asset 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, sick leave 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) Pension Plan. The projected benefit obligation under the
Corporation's defined benefit pension plan as of the Closing Date in excess of
the fair value of plan assets on hand as at that date shall be recorded as a
liability of the Corporation along with a reasonable estimate of the costs and
expenses necessary to terminate that plan.
(c) Clauson Contract. The Corporation shall accrue a liability of
$75,000 with respect to the Clauson contract as of the Closing Date; provided,
however, that if the Corporation should pay $50,000 to Clauson on or before the
Closing, the accrual provided for in this Section shall be reduced to $25,000.
ARTICLE VI
THE CLOSING
6.1 The Closing. The Closing shall take place at the offices of Riddell,
Williams, Bullitt & Walkinshaw on the Closing Date, commencing at 9:00 a.m.
local time, provided that all conditions precedent to the obligations of the
Corporation and BBC 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 January 31, 1995 (the "Outside Date"), this Agreement may be terminated
at the option of any party other than a party whose act or failure to act
prevented the Closing from occurring on or before the Outside Date.
6.2 Listed Shares. The Stock required to be delivered by BBC upon
consummation of the Merger shall be treasury shares which have previously been
listed for trading on the New York Stock Exchange.
6.3 Termination. This Agreement may be terminated at any time until the
Effective Time of the Merger as follows: (a) by mutual consent of BBC and the
Corporation; (b) by BBC 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 Merger shall not have been duly
satisfied or waived; (c) by BBC 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 6.3(c) if its own acts or failures to act
should delay the Closing beyond the Outside Date; or (d) by BBC or the
Corporation, 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 BBC, respectively, shall have defaulted in the
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performance of any obligation under this Agreement; provided, however, that in
order to terminate this Agreement under this Section 6.3(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.
6.4 Liability on Termination. Upon any termination of this Agreement
pursuant to Section 6.3(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 6.3(b) because the other party shall have failed to perform
any obligation under this Agreement, or pursuant to Section 6.3(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
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 6.3(c), 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.
ARTICLE VII
CONDITIONS TO OBLIGATION OF EACH PARTY
The obligation of each party to effect the Merger shall be subject to the
fulfillment, at or prior to the Closing, of the following conditions:
7.1 No Prohibition of Transaction.
(a) No third party shall have instituted any suit or proceeding to
restrain, enjoin or otherwise prevent the consummation of the merger, or to seek
damages from or impose obligations upon any party by reason of the Merger which,
in such party's reasonable judgment, would involve expense or lapse of time that
would be materially adverse to that party's interest.
(b) No order shall have been issued by any court or administrative
body to restrain, enjoin or otherwise prevent consummation of the Merger.
(c) No inquiry shall have been received about the Merger from the
United States Department of Justice, the Federal Trade Commission or the Office
of the Attorney General or any other office of any State, other than inquiries
which shall have been reasonably resolved to the satisfaction of the parties
hereto.
7.2 Compliance With Law. There shall have been obtained any and all
permits, approvals and consents of any governmental body or agency which counsel
for BBC or for the Corporation may reasonably deem necessary or appropriate so
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that (a) consummation of the Merger will be in compliance with State Law and
other laws applicable to the Corporation's business and (b) BBC will be able to
continue the Corporation's business at each of the Premises.
7.3 Proceedings, Documentation and Consents. All proceedings, Closing
Documents contemplated by this Agreement and consents to and approvals of the
Merger (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.
ARTICLE VIII
CONDITIONS TO THE OBLIGATION OF
BBC TO CLOSE
The obligations of BBC 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 BBC in
writing.
8.1 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 of the
Corporation, 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 Stockholders shall have delivered to BBC
a certificate to that effect signed by them or by the Representative on their
behalf and dated on and as of the Closing Date.
8.2 No Material Adverse Change. 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, whether or not
insured, which materially affects its ability to conduct its business; (b) none
of the events described in Section 2.28 of the Supplemental Agreement shall have
occurred; and (c) BBC 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 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. The delivery of such certificate shall in no way diminish the
warranties and representations made by the Stockholders in this Agreement and
the Supplemental Agreement.
8.3 Corporation's Performance. Each of the obligations of the Corporation
and the Stockholders 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 BBC a certificate
to that effect dated on and as of the Closing Date.
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8.4 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.
8.5 Corporate Authority. At the Closing, the Corporation will furnish to
BBC 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, together with joiner agreements in the form of Appendix
H hereto signed by the stockholders of the Corporation.
8.6 Opinion of Counsel. The Corporation shall have furnished BBC and
Subsidiary with a favorable opinion, dated on and as of the Closing Date, of
Riddell, Williams, Bullitt & Walkinshaw, counsel to the Corporation and the
Stockholders, in the form of Appendix F hereto.
8.7 Investment Letters. On or prior to the Closing Date, each of the
Corporation's stockholders shall have executed and delivered to BBC a private
placement certificate in the form of Appendix B hereto, it being understood that
BBC, in issuing the Stock, will be relying on the representations of said
persons as contained in the said certificate.
8.8 Satisfactory Searches. BBC 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 where, in the opinion of counsel to the
Corporation, it is required to be so qualified, 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.
8.9 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 BBC.
8.10 Employment Agreements. On or prior to the Closing, the employment
agreement in the form of Appendix D hereto shall have been executed by the
persons listed on that Appendix and delivered to BBC, and BBC shall have
satisfied itself that 85% of the other employees of the Corporation whose names
are listed in Exhibit 2.17.8 annexed to the Supplemental Agreement will accept
employment from Durr.
8.11 Environmental Review. BBC shall not have discovered Regulated
Substances requiring remediation under any federal or state law, rule or
regulation in the air, subsoil or groundwater of any of the Premises, nor any
improper installation of or leakage from any underground storage tanks on the
Premises, or any violation of environmental laws, rules or regulations that
shall not have been remediated prior to the Closing Date; provided, however,
that BBC will waive this condition if it is satisfied that the Stockholders have
provided BBC with indemnification undertakings which are adequate in light of
the nature and extent of the remediation task, disclosed in any Phase II study
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received pursuant to Section 4.16, which remains to be performed after the
Closing Date.
8.12 Consents to the Merger. On or prior to the Closing Date, the
Corporation shall furnish BBC with such consents to the merger as in the opinion
of BBC or its counsel are required to permit BBC to enjoy the benefits of the
Merger without any cost beyond that contemplated by this Agreement.
8.13 Seattle Lease. The Stockholders shall have executed and delivered the
real estate lease described in Section 4.17.
8.14 Tax Waivers. BBC shall have received tax waiver certificates from
applicable taxing authorities, if material and available.
8.15 Continuation Agreements with Major Customers. BBC shall have received
confirmation from each of the Corporation's major customers listed on Exhibit
2.15.1 to the Supplemental Agreement that it will continue to do business with
BBC following the Closing.
8.16 Results of Investigation. BBC 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 Most Recent Balance Sheet, or have
not been otherwise disclosed to BBC in an Exhibit to the Supplemental Agreement,
and which in the aggregate materially and adversely affect the business,
financial condition, properties, results of operations, forecasts or prospects
of the Corporation. If BBC should have discovered any such losses, liabilities,
commitments or contingencies which it has determined, in good faith, to be
material and adverse, it shall advise the Corporation and the Stockholders of
that determination even if BBC should decide to waive this condition and
consummate the Merger.
ARTICLE IX
CONDITIONS TO THE CORPORATION'S
AND STOCKHOLDERS' OBLIGATIONS TO CLOSE
The obligations of the Corporation and Stockholders 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 and the Stockholders.
9.1 Representations and Warranties True at the Closing. The
representations and warranties of BBC 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 BBC's
capital structure, BBC shall have delivered to the Corporation a certificate to
such effect, signed by any BBC Representative and dated on and as of the Closing
Date.
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9.2 BBC's Performance. Each of the obligations of BBC 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, BBC shall
have delivered to the Corporation a certificate to such effect signed by any BBC
Representative. There shall have been no change in BBC's consolidated financial
or business condition or commitments nor any litigation or proceeding, actual or
threatened, which is reasonably likely to prevent BBC from performing any
obligation undertaken by it under this Agreement which is to be performed after
the Closing.
9.3 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 BBC and its subsidiaries, taken as a whole, nor any material loss
or damage to its assets, whether or not insured, which materially affects BBC's
ability to conduct its business, and BBC shall have delivered to the Corporation
a certificate to that effect signed by any BBC Representative dated on and as of
the Closing Date.
9.4 Authority. All action required to be taken by or on the part of BBC to
authorize the execution, delivery and performance of this Agreement by BBC and
the consummation of the Merger shall have been duly and validly taken by the
Board of Directors of BBC, and BBC shall have delivered to the Corporation a
certificate to that effect, signed by any BBC Representative.
9.5 Opinion of BBC's Counsel. BBC shall have furnished the Stockholders
with an opinion of Lowenstein, Sandler, Kohl, Fisher & Boylan, P.C., counsel to
BBC, 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 of appropriate officers of BBC or appropriate governmental
officials. Copies of all those opinions and certificates shall be delivered to
the Corporation.
9.6 Employment Agreements. At or prior to the Closing, employment
agreements in the form and substance of Appendix D hereto shall have been
executed by BBC and delivered to the persons listed on that Appendix.
9.7 Seattle Lease. At or prior to the Closing, BBC shall have executed and
delivered to the Stockholders a real estate lease in the form and substance of
Appendix E hereto.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION
10.1 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 Merger, shall
be deemed representations and warranties hereunder. All such representations,
warranties, and agreements of the Stockholders and of BBC shall survive the
Closing and any audit or investigation made by or on behalf of the parties. All
such representations and warranties of the Corporation shall terminate at the
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Effective Time of the Merger. Consummation of the Merger 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.
10.2 Indemnification by the Corporation and Stockholders.
(a) Obligation to Indemnity. The Stockholders jointly and severally
agree to and do hereby indemnify, and agree to defend and hold harmless, BBC,
its subsidiaries, and their respective directors, officers, employees,
fiduciaries, agents and affiliates, and each other person, if any, who controls
such persons, against any claims, actions, suits, proceedings, investigations,
losses, expenses, damages, obligations, liabilities, judgments, 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,
county, and local income taxes, gross receipt taxes, excise 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 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) any liability for federal,
state or local income taxes resulting from the Merger, (vi) any underground
storage tank located at any of the Premises, (vii) the purchase or sale by the
Corporation of products which the Corporation purchased from sources other than
the manufacturer or a distributor authorized by the manufacturer to distribute
those products, (viii) any liability or costs arising out of the litigation and
claims disclosed in Section 2.27 of the Supplemental Agreement or on Exhibit
2.27 annexed to the Supplemental Agreement, and (ix) any claims or litigation
which may be asserted by former employees of the Corporation alleging wrongful
discharge, discrimination, harassment or violation of other laws relating to
employment. No liability shall attach under this Section 10.2, however, until
BBC has incurred a Loss or Losses in the aggregate totaling one hundred thousand
dollars ($100,000), and then only to the extent that all Losses in the aggregate
exceed one hundred thousand dollars ($100,000); provided, however, that this
sentence shall not apply with respect to adjustments made or indemnification
required pursuant to Sections 2.2(e), 5.2, 10.8, 10.10, 10.11, 10.12, 10.14 and
10.15.
(b) Means of Indemnification. The Stockholders shall cause the Escrow
Agent to return to BBC, on demand, Escrow Shares, valued at Market Value, having
an aggregate value equal to the amount of the Loss, calculated in accordance
with Section 10.4(d), in excess of any applicable deductible or cushion provided
for in Section 10.2(a). If a Stockholder should cause the Escrow Agent to sell
Escrow Shares in accordance with the Escrow Agreement, that Stockholder shall
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cause the Escrow Agent either to return Escrow Shares or to pay cash, or both,
as contemplated by the Escrow Agreement. To the extent that the number of
Escrow Shares plus the cash then held by the Escrow Agent are insufficient for
this purpose, the Stockholders jointly and severally agree to return, and to
cause the other stockholders of the Corporation to return, to BBC the balance of
the shares of Stock to which BBC is entitled, and shall be liable for any
deficiency as provided in Section 10.6.
(c) Set-Off. BBC shall have the right to set off any sum owed to BBC
by the Stockholders or any of them pursuant to the foregoing indemnity, against
any sum owed to any Stockholder by BBC. BBC may, at its option, exercise its
offset rights by reducing the number of shares of Stock issuable pursuant to
Section 2.2(e) by the Market Value of those shares equal to the amount of the
offset. Exercise of such right of offset shall not be a waiver of any other
rights or remedies which BBC or Subsidiary may have against the Stockholders or
any of them. Such right of setoff shall not limit the liability of the
Stockholders hereunder, and such right shall be in addition to, and not in lieu
of, any other rights and remedies that BBC may have against the Stockholders or
any of them pursuant to this Agreement.
(d) No Right of Contribution. If the Stockholders should be required
to indemnify BBC, they shall have no right to contribution by or indemnification
from the Corporation.
10.3 Indemnification by BBC. BBC agrees to and does hereby indemnify and
hold harmless the Corporation and Stockholders against any claims, losses,
damages, expenses or liabilities (including costs and reasonable attorney's
fees) resulting to the Stockholders from (a) any breach or failure of BBC to
perform any of its covenants or agreements set forth herein, or (b) the
inaccuracy of any representations or warranties made by BBC in Article 3 of the
supplemental Agreement.
10.4 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 twenty (20) days after receipt of a demand for
indemnification. If the dispute cannot be resolved amicably, either party may
institute suit against the other party in the United States District Court
located in Denver, Colorado, to resolve the matter. All parties hereby waive
the right to a jury trial in any such lawsuit.
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<PAGE>
(c) Time Limit. If there is no dispute as to the right to
indemnification with respect to any such demand within such twenty (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 BBC notifies the Representative of the
commencement of an action against BBC, the Representative will be entitled, at
his own expense, to (i) participate in and (ii) except in the case of a claim
that relates to tax matters, 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 BBC, and BBC 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 BBC of his
election to assume the defense of any such actions, the Stockholders will not be
liable to BBC under this Article X for any legal fees or other expense
subsequently incurred by BBC in connection with the defense thereof, except in
the event that BBC is required to retain additional counsel to avoid a conflict
of interest. Even if the Representative should assume the defense of any such
actions, BBC 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 without the prior
written consent of BBC which BBC shall not unreasonably withhold. If the
Representative should fail or refuse to assume the defense of any such action,
the Stockholders shall jointly and severally reimburse BBC for the fees and
expenses of counsel engaged by BBC to defend that action.
10.5 Remedies Cumulative. Persons or entities entitled to indemnification
hereunder shall be entitled to such indemnification from time to time and shall
be entitled to rely upon one or more provisions of this Agreement without
waiving their right to rely upon any other provisions at the same time or any
other time.
10.6 Liability for Deficiency. The Stockholders shall be jointly and
severally liable to, and shall promptly return to BBC on demand, shares of Stock
which BBC is entitled to receive under any Section of Article X which BBC does
not receive from the Escrow Agent. The Stockholders each understand and
acknowledge that their liability is not limited to the Escrow Fund held by the
Escrow Agent. BBC shall be jointly and severally liable to, and shall promptly
pay, the Stockholders on demand any amounts which any of the Stockholders are
entitled to receive under any Section of Article X.
10.7 Access to Books and Records. After the Closing, BBC will give the
Representative (i) access to the books, records and files of the Corporation,
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<PAGE>
which BBC will preserve in usable condition, for a period of three years; (ii)
access to such of the books, records and files as may thereafter be preserved in
BBC's discretion, and (iii) access to its accounting personnel and to the tax
and accounting records of the Corporation in order to enable the Stockholders to
prepare final tax reports required of the Stockholders; provided, however, BBC
may terminate its obligation under subsection (i) hereof at any time by
delivering all such books, records and files to the Representative.
10.8 Taxes.
(a) Tax Returns. The Stockholders shall prepare and file, at their
expense, all final federal, state, county, and local tax returns of the
Corporation with respect to its operations up to the Closing Date, and shall
submit all such returns to BBC not less than 30 days prior to the date on which
.such returns are required to be filed. Approval of such returns by BBC shall
not impose any liability for the accuracy of such returns on BBC.
(b) Payment of Corporation Taxes. BBC shall provide funds to pay the
taxes reflected on those tax returns. To the extent that those taxes should
exceed the tax liability accrued on the Final Accountant's Report, the
Stockholders shall direct the Escrow Agent to refund to BBC shares of Stock,
valued at Market Value, equal to such excess. To the extent that the tax
accrual on the Final Accountant's Report should be greater than the tax
reflected on the tax returns, the Stockholders shall be entitled to a credit,
such credit to be that number of shares of Stock, valued at Market value, equal
to such excess accrual.
(c) Payment of Personal Taxes. The Stockholders shall pay any
federal, state or local income or gross receipt taxes, or business license fees,
if any, which are imposed on the Stockholders or the Corporation as a result of
the Merger, or imposed on BBC or any of its affiliates as a result of any steps
taken by the Corporation or the Stockholders at any time prior to or after the
Effective Time of the Merger, and any federal, state or local taxes or fees upon
or related to the Corporation's assets, business or employees' compensation
accrued as of the Closing Date other than those set forth as liabilities on the
Final Accountant's Report.
(d) Tax Treatment of the Merger. The Stockholders hereby represent to
BBC that they have sought and received tax advice from, and relied upon, their
own tax advisors with respect to the tax treatment of the Merger and have not
received any such tax advice from BBC or its advisors.
10.9 Insurance. The Corporation will maintain in force through the Closing
the public liability insurance policies listed on Exhibit 2.19 annexed to the
Supplemental Agreement.
10.10 Environmental Cleanup. Representative shall direct the Escrow
Agent to reimburse BBC for any environmental cleanup costs incurred by BBC in
excess of the accrual for that purpose included in the Final Accountant's
Report. The Stockholders agree, jointly and severally, to indemnify, defend and
hold BBC harmless against any cleanup costs, expenses and fines, and all costs,
including attorneys fees, in defending against any action which may be
instituted by any federal or state agency, or by any present or former owner of
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<PAGE>
any of the Premises or of the property identified in Exhibit 2.6 annexed to the
Supplemental Agreement, or by any other person, for payment or reimbursement of
or contribution to the payment of any such cleanup costs and any cleanup or
other costs, expenses and fines resulting from the generation, manufacture,
refining, transporting, treatment, storage, handling, disposal, transfer or
processing of Regulated Substances by the Corporation or companies acquired by
it.
10.11 Trade Accounts Receivable Guarantee.
(a) General. BBC shall use its best efforts (but shall not be
obligated to threaten or to commence litigation) to collect all Trade Accounts
Receivable in the ordinary course of its business, provided that BBC shall have
the right, at any time up to the 210th day following the Closing, to assign to
the Representative (on behalf of the Stockholders) the uncollected portion of
any Trade Accounts Receivables included in the Final Accountant's Report which
have not been collected by BBC within 180 days after the Closing ("Reassigned
Receivables"). BBC shall deliver to the Representative all documents which
relate to the Reassigned Receivables and any similar documents generated by BBC
after the date hereof. BBC shall cooperate with the Representative in any
reasonable collection efforts relating to the Reassigned Receivables. The
Stockholders shall cause the Escrow Agent to return to BBC, or, if there are not
sufficient shares of Stock held in escrow by the Escrow Agent, to the extent of
any such deficiency, the Stockholders shall return to BBC, on demand, shares of
Stock, valued at Market Value, having an aggregate value equal to the face
amount of the Reassigned Receivables 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 BBC 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 BBC from those customers subsequent to such date shall be
applied against the oldest outstanding balances of such Trade Accounts
Receivable. Credits, if any, which BBC may issue to any account debtor with
respect to the return of merchandise sold by the Corporation to that account
debtor shall be credited against the oldest outstanding balances of such Trade
Accounts Receivable. Commencing sixty (60) days after the Closing, and monthly
thereafter, BBC will furnish the Representative with a monthly trial balance of
Trade Accounts Receivable acquired pursuant to the Merger.
10.12 Debit Memos. The Stockholders shall cause the Escrow Agent to return
to BBC, or, if there are not sufficient shares of Stock held in escrow by the
Escrow Agent, to the extent of any such deficiency, the Stockholders shall
return to BBC, 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 365 days after the Closing, reject
or refuse to honor Debit Memos issued by the Corporation on or before the
Closing Date.
10.13 Intentionally omitted.
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<PAGE>
10.14 Defined Benefit Pension Plan. The Stockholders agree jointly and
severally to indemnify BBC against (a) any liability arising under the
Corporation's Defined Benefit Pension Plan in excess of the amount, if any,
reflected as a liability with respect to that Plan on the Final Accountant's
Report, and (b) any liability, cost or expense resulting from the termination of
that Plan.
10.15 Clauson Contract. If John Clauson should not be employed by Durr for
any reason at 1/9/96, the Stockholders shall be entitled to receive shares of
Stock having an aggregate value of $50,000, calculated at Market Value. If John
Clauson should not be employed by Durr, for any reason, at 1/9/97, the
Stockholders shall be entitled to receive shares of Stock having an aggregate
value of $25,000 calculated at Market Value.
10.16 Power of Attorney. The Corporation and each of the Stockholders
hereby appoints the Representative designated in Section 1.26 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 and any other document or instruments which may, in said
attorney-in-fact's sole discretion, be necessary or appropriate to consummate
the Merger;
(b) To execute and deliver amendments of any nature of this Agreement,
the Supplemental 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 Corporation's rights hereunder and the
Stockholders' rights hereunder;
(d) To accept and give receipts for the shares of Stock to be
delivered hereunder;
(e) To indemnify BBC pursuant to the terms of this Agreement; and
(f) To take any and all other actions as said attorney-in-fact, in his
sole discretion, deems necessary or advisable to consummate the Merger.
Said attorney-in-fact shall not be liable to the Corporation or the
Stockholders for any action taken or omission made in good faith, and each of
the Stockholders hereby ratifies all that said attorney-in-fact may do or cause
to be done hereunder. 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.
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<PAGE>
10.17 Direction to Escrow Agent. Whenever BBC shall be entitled pursuant to
the provisions of this Agreement to receive a refund of shares of Stock from the
Escrow, the Stockholders shall promptly direct the Escrow Agent to return such
shares of Stock to BBC.
ARTICLE XI
MISCELLANEOUS
11.1 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 if mailed by certified or registered mail,
postage prepaid, addressed as follows:
If to BBC, Subsidiary or BBC Representative:
Bergen Brunswig Corporation
4000 Metropolitan Drive
Orange, CA 92668-3510
Attn: Milan A. Sawdei, Esq.
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:
Mr. Berkley G. Biddle
910 North 137th Street
Seattle, Washington 98133
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<PAGE>
with a copy to:
Douglass A. Raff, Esq.
Riddell, Williams, Bullitt & Walkinshaw Suite 4400
1001 Fourth Avenue Plaza
Seattle, Washington 98154
Fax No. (206) 389-1708
11.2 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 BBC may assign to any of its subsidiaries all of
its post-closing rights and obligations hereunder, but such assignment shall not
relieve BBC 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.
11.3 Expenses. The Stockholders shall pay all legal, accounting, broker and
any other fees and expenses incurred by the Corporation and the Stockholders in
negotiating, executing and consummating the Merger. No such expenses shall be
accrued as liabilities of the Corporation on the Final Accountant's Report.
11.4 Collections. From and after the Closing, BBC shall have the full right
and authority, at its expense, to collect for its account all Trade Accounts
Receivable and Notes Receivable which shall be acquired by 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.
11.5 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Washington, except that
New Jersey law shall govern the corporate actions to be taken by BBC, and the
Merger shall be governed both by New Jersey and Washington law.
11.6 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.
11.7 Headings. The headings and sub headings contained in this Agreement
and the table of contents are included solely for ease of reference, are not
intended to give a full description of the contents of any particular Section
and shall not be given any weight whatsoever in interpreting any provision of
this Agreement.
11.8 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.
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<PAGE>
11.9 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
among the parties with respect to the Merger and, except as provided herein,
supersede all previous negotiations, commitments and writings.
11.10 Modifications, Amendments and Waivers. This Agreement shall not be
modified or amended except by a writing signed by each of the parties. Prior to
the Closing, the Corporation may amend any of the exhibits to the Supplemental
Agreement by giving BBC notice of such amendments. If such amended disclosures
reveal materially adverse information about the Corporation's business or
assets, BBC may terminate this Agreement without liability to the Corporation or
the Stockholders, and the Corporation may terminate this Agreement without
liability to BBC (except as otherwise provided in Section 6.4) unless BBC shall
agree to consummate the Merger notwithstanding that disclosure and without any
reduction in the Merger Consideration resulting from that disclosure other than
from a reduction in the Corporation's Net Asset Value caused by the facts
underlying that disclosure.
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 Merger 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 Merger is
consummated to the maximum extent possible.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
BERGEN BRUNSWIG CORPORATION
By: /s/ Dwight A. Steffensen
--------------------------------------
Dwight A. Steffensen, President
BIDDLE AND CROWTHER COMPANY
By: /s/ Berkley G. Biddle
--------------------------------------
/s/ Raymond L. Biddle
--------------------------------------
Raymond L. Biddle
/s/ Berkley G. Biddle
--------------------------------------
Berkley G. Biddle
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Exhibit 2.2
SUPPLEMENTAL AGREEMENT
AMONG
BERGEN BRUNSWIG CORPORATION,
BIDDLE AND CROWTHER COMPANY,
RAYMOND L. BIDDLE
AND
BERKLEY G. BIDDLE
<PAGE>
TABLE OF CONTENTS
-----------------
SECTION Page
- ------- ----
1. INCORPORATION BY REFERENCE......................................... 1
2.0 REPRESENTATIONS AND WARRANTIES OF
CORPORATION AND STOCKHOLDERS..................................... 1
2.1 ORGANIZATION AND BUSINESS OF THE CORPORATION....................... 1
2.2 CAPITALIZATION; FUNDED DEBT........................................ 1
2.3 SUBSIDIARIES; ACQUISITIONS;
DISPOSITIONS; INVESTMENTS........................................ 2
2.4 FOREIGN QUALIFICATIONS............................................. 2
2.5 BUSINESS NAMES..................................................... 2
2.6 OWNED REAL ESTATE.................................................. 2
2.7 LEASED REAL ESTATE................................................. 3
2.8 TANGIBLE PERSONAL PROPERTY......................................... 3
2.9 CONDITION OF PERSONAL PROPERTY..................................... 3
2.10 INTANGIBLE PERSONAL PROPERTY; COMPUTER PROGRAMS.................... 3
2.11 TRADE ACCOUNTS RECEIVABLE; NOTES RECEIVABLE;
CUSTOMER LOAN GUARANTEES; INVENTORY................................ 4
2.12 STOCKHOLDERS; TITLE TO CORPORATION STOCK........................... 5
2.13 TITLE TO ASSETS.................................................... 5
2.14 MATERIAL CONTRACTS................................................. 6
2.15 CUSTOMERS AND SUPPLIERS............................................ 7
2.16 TRANSACTIONS WITH DIRECTORS, OFFICERS AND
AFFILIATES....................................................... 7
<PAGE>
2.17 LABOR MATTERS...................................................... 7
2.18 BENEFIT PLANS; ERISA............................................... 8
2.19 INSURANCE.......................................................... 10
2.20 LICENSES AND PERMITS............................................... 10
2.21 AUTHORITY RELATIVE TO AGREEMENT;
ENFORCEABILITY................................................... 10
2.22 COMPLIANCE WITH OTHER INSTRUMENTS; CONSENTS........................ 11
2.23 COMPLIANCE WITH APPLICABLE LAWS.................................... 11
2.24 ENVIRONMENTAL COMPLIANCE........................................... 12
2.25 FINANCIAL STATEMENTS............................................... 13
2.26 TAXES.............................................................. 15
2.27 LITIGATION......................................................... 17
2.28 ADVERSE BUSINESS CHANGES........................................... 17
2.29 BROKERAGE.......................................................... 18
2.30 BANKS.............................................................. 19
2.31 EXHIBITS........................................................... 19
2.32 FULL DISCLOSURE.................................................... 19
3.0 REPRESENTATIONS AND WARRANTIES OF BBC.............................. 19
3.1 ORGANIZATION....................................................... 19
3.2 AUTHORIZATION...................................................... 19
3.3 NO THIRD PARTY CONSENT REQUIRED; NO VIOLATION OF
OTHER INSTRUMENTS................................................ 19
3.4 FINANCIAL STATEMENTS............................................... 19
3.5 NO MATERIAL ADVERSE CHANGE......................................... 20
<PAGE>
3.6 FULL DISCLOSURE.................................................... 20
<PAGE>
Exhibit 2.2
SUPPLEMENTAL AGREEMENT
Whereas Bergen Brunswig Corporation, a New Jersey corporation ("BBC") has
this day entered into an agreement and plan of merger with Biddle & Crowther
Company, a Washington corporation ("Corporation") and two of its
stockholders--Berkley G. Biddle and Raymond L. Biddle (the
"Stockholders")--pursuant to which the Corporation will merge with and into BBC
(the "Merger Agreement").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. INCORPORATION BY REFERENCE. The representations and warranties set
forth in this Supplemental Agreement are hereby incorporated in and made a part
of the Merger Agreement. The terms defined in the Merger Agreement shall have
the same meaning in this Agreement.
2.0 REPRESENTATIONS AND WARRANTIES OF CORPORATION AND STOCKHOLDERS. The
Corporation and the Stockholders jointly and severally represent and warrant to
BBC 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 Washington, and has
all requisite corporate power, franchises and licenses to own its property and
conduct the business in which it is engaged.
2.1.2 Complete copies of the Corporation's certificate of
incorporation (with all amendments), by-laws (with all amendments), minutes,
stock transfer records and agreements, if any, among some or all of the
Corporation's stockholders have been delivered or made available to BBC.
2.1.3 The Corporation is engaged in the business of distributing
medical and surgical supplies and devices. It is not now and never was a
manufacturer of medical devices (as the term "manufacturer" is defined in FDA
Reg. 804.3(k)) or an importer of medical devices.
2.2 CAPITALIZATION; FUNDED DEBT.
2.2.1 The Corporation has an authorized capital stock consisting
solely of 313,000 shares of Common Stock, no par value, of which 267,900 are
issued and outstanding (the "Corporation Stock"). The authorized capital stock
consists of 300,000 shares classified as "Class A," of which 256, 000 shares are
issued and outstanding, and 13, 000 shares classified as "Class B," of which
11,990 shares are issued and outstanding. All of such outstanding shares of
Corporation Stock have been validly issued and fully paid, are nonassessable and
<PAGE>
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 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 The Corporation has no term or funded debt, or indebtedness
of any other type to banks or Affiliates.
2.3 SUBSIDIARIES; ACQUISITIONS; DISPOSITIONS; INVESTMENTS.
2.3.1 Except as disclosed on Exhibit 2.3.l annexed hereto, the
Corporation does not now, and did not subsequent to its organization, directly
or indirectly own or otherwise control, acquire or dispose of any corporation,
partnership, joint venture or other business entity.
2.3.2 The Corporation does not have an investment in any
partnership, limited liability company, joint venture or other business entity,
other than a passive limited partnership interest, which the Corporation will
distribute to its stockholders prior to the Closing.
2.4 FOREIGN QUALIFICATIONS.
2.4.1 The Corporation is, or at the Closing will be, qualified to
do business as a foreign corporation in Alaska, California, Idaho, Montana,
Oregon and Utah, and is not required to be so qualified in any other State, in
Canada or in any Province thereof.
2.4.2 The Corporation does not now own, and never has owned, assets
(including but not limited to order entry devices) located in any state other
than those states listed in Section 2.4. 1.
2.4.3 The Corporation does not deliver merchandise, other than by
common carrier, file tax returns or permit its salesmen routinely to call upon
customers, in any state other than those listed in Section 2.4. 1.
2.5 OTHER BUSINESS NAMES. Except as disclosed on Exhibit 2.5 annexed
hereto, the Corporation has not, during the sixty months ended October 31, 1994,
done business under any name other than its corporate name, and during that
period, did not use any trade name or fictitious name.
2.6 OWNED REAL ESTATE. Except as disclosed on Exhibit 2.6 annexed hereto,
the Corporation does not now, and never did, own any real estate.
2.7 LEASED REAL ESTATE.
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<PAGE>
2.7.1 Exhibit 2.7.1 annexed hereto contains the name and address of
the landlord of each building leased by the Corporation and the date and
expiration date of the lease for each of the Premises. A true and complete copy
of each such lease has been or will promptly be delivered to BBC.
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 Each leased building complies in all respects, to the best of
our knowledge, 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, the Americans with
Disabilities Act, and the Federal Food, Drug & Cosmetic Act , as amended (the
"FDA Act").
2.7.4 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; 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; and 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 contemplated by the Merger Agreement is not described in
any such lease as an event which requires the 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.
2.7.7 The Corporation, as tenant, has never assigned a lease to a
third party.
2.8 TANGIBLE PERSONAL PROPERTY. Exhibit 2.8 annexed hereto identifies all
items, initially valued at more than $5,000, of machinery, motor vehicles,
computer equipment, furniture, fixtures, leasehold improvements, and all other
tangible personal property owned by, in the possession of, or used by the
Corporation in connection with its business on the date hereof. The Corporation
is not a party to any equipment lease which involves monthly payments by the
Corporation of more than $5,000 on account of any such lease.
2.9 CONDITION OF PERSONAL PROPERTY. All personal property owned by the
Corporation or leased and used by the Corporation in its business is in good
condition, nominal wear and tear excepted, and is in good operating order.
2.10 INTANGIBLE PERSONAL PROPERTY; COMPUTER PROGRAMS.
2.10.1 Exhibit 2.10.1 annexed hereto contains an accurate and
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complete list of all intangible personal property owned or used by the
Corporation, including all distributorship, franchise and license agreements
(whether the Corporation is the grantor or grantee of such distributorship,
franchise or license), and all 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 BBC. Except as disclosed on Exhibit 2.10.1
annexed hereto, the Corporation is the sole and exclusive owner or licensee of
each of said items of intangible personal property; there are no 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. The Corporation has the
unrestricted right to use, free from any rights or claims of others, an trade
secrets and customer fists 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.
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 BBC.
That Exhibit also disclosed the uses which the Corporation makes of all such
computer programs and contains a list of all data processing reports which the
Corporation customarily generates. Except as indicated on that Exhibit, the
computer programs listed thereon generate the data processing reports listed
thereon in an error free manner.
2.11 TRADE ACCOUNTS RECEIVABLE; NOTES RECEIVABLE; CUSTOMER GUARANTEES;
INVENTORY.
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 and included as assets in the Most Recent Balance Sheet
annexed hereto as part of Exhibit 2.25.1. All such Notes Receivable arose in
the ordinary course of the Corporation's business, are valid and fully
collectible, 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 No Trade Account Receivable is collateralized.
2.11.4. No customer loan from a third party has been guaranteed by
the Corporation.
2.11.5 All inventory in the Corporation's possession is governed by
the Corporation and, except as otherwise noted on Exhibit 2.25.2 annexed hereto,
is recorded on its books and records in accordance with GAAP and applicable
provisions of the Internal Revenue Code ("Code"). All such inventory has been
valued at cost, calculated on a LIFO method. No inventory in the Corporation's
possession has been consigned to the Corporation.
2.11.6 A true and complete copy of the Corporation's return goods
policy is annexed hereto as Exhibit 2.11.6.
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 transactions contemplated by the Merger Agreement without the
consent of any other person. To the extent that any Stockholder has executed
the Merger Agreement and the Supplemental Agreement, and plans to vote the
Corporation Stock in favor of the transactions contemplated by the Merger
Agreement, on behalf of any other person, evidence of his authority to do so has
been delivered to BBC.
2.13 TITLE TO ASSET. The Corporation has good and marketable title in and
to all of its property reflected in the Most Recent Balance Sheet plus all
assets purchased by the Corporation since the date of that Balance Sheet, less
all assets which the Corporation has disposed of in the ordinary course since
that date, which property is free and clear of any security interests,
consignments, liens, judgments, encumbrances, 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
assets or assets owned or leased by the Corporation are those which either (a)
secure liabilities disclosed on the Most Recent Balance Sheet, which liabilities
shall be repaid prior to the Closing Date, (b) secure the ownership interests of
lessors of equipment used by the Corporation and disclosed on Exhibit 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,
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salesmen, distributors or sales representatives; (b) any currently effective
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
other than purchase orders in the ordinary course 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, limited liability company or limited partnership agreement; (m) any
other contract which could have a material impact on the Corporation's sales,
profitability or balance sheet; (n) guarantees by the Corporation of the
obligations of any other party except those resulting from the endorsement of
customer checks deposited by the Corporation for collection; (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 commitments to enter
into any such contracts, leases or obligations. Except as disclosed on Exhibit
2.14, the Corporation has in all respects performed all material obligations
required on its part to be performed to date under all 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 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.
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 The Corporation is not a party to or otherwise bound by any
contract, agreement, plan, lease, license, commitment or undertaking which is
materially adverse, materially onerous, or materially harmful to any aspect of
the Corporation's business.
2.14.5 Copies of the contracts listed or referred to on Exhibit 2.14
annexed hereto have been delivered to or made available for inspection by BBC.
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2.14.6 No employment contract, consulting agreement or covenant
against competition, separately or in the aggregate, has resulted or is likely,
as a result of the Merger, 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 the Corporation's ten
(10) largest customers, or groups of related customers, during the period
beginning January 1, 1993 and ending October 31, 1994, the total value of
business transacted with such customers annually during such period, and, if
applicable, the reasons such contracts were terminated. Exhibit 2.15.1 annexed
hereto also describes the Corporation's pricing policies currently in effect
with respect to the customers listed on that Exhibit.
2.15.2 Exhibit 2.15.2 annexed hereto lists the ten (10) largest
suppliers from whom the Corporation purchased goods and services during the
period beginning January 1, 1993 and ending October 31, 1994.
2.15.3 To the best knowledge of the Corporation and the
Stockholders, none of the customers listed on Exhibit 2.15.1 or the suppliers
listed on Exhibit 2.15.2 intends to terminate or change significantly its
relationship with 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, there have been no transactions during the last
three years between the Corporation and any director, officer, employee,
stockholder or Affiliate.
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, their
original dates of employment, job titles, annual rates of pay for salaried
employees, hourly rates of pay for hourly employees, rates of commission for
commissioned sales persons and commission amounts paid to each such salesperson
during each of 1993 and the portion of 1994 ended on the date of the Most Recent
Balance Sheet.
2.17.2 Except as listed on Exhibit 2.17.2 annexed hereto, all
employees of the Corporation are employees at will who may be terminated by the
Corporation at any time with no obligation to make any payment except wages to
the date of termination.
2.17.3 The Corporation is not indebted to nor a creditor of any
stockholder of the Corporation or of any relative of any such stockholder except
for accrued wages and salaries.
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2.17.4 The Corporation is in compliance with all federal and state
laws respecting employment, wages and hours. It is not engaged in any
discriminatory hiring or employment practices nor have any employment
discrimination or unfair labor practice complaints against the Corporation been
filed, or, to the knowledge of the Corporation and the Stockholders, 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 do the
Corporation or the Stockholders have knowledge of facts which might form a basis
for such a suit.
2.17.5 Exhibit 2.17.5 annexed hereto lists all persons who left the
employ of the Corporation voluntarily or were terminated after December 31,
1992, and, to the extent known to the Corporation or the Stockholders, the
reason(s) such persons left the employ of the Corporation.
2.17.6 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 such agent
or independent contractor, to comply with the employment verification and
record-keeping requirements of 8 U.S.C. Section 1324a and 8 C.F.R. Section 274a,
as amended.
2.17.7 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.
2.17.8 Attached hereto as Exhibit 2.17.8 is a list of the
Corporation's key sales personnel.
2.18 BENEFIT PLANS; ERISA.
2.18.1 Exhibit 2.18.1 annexed hereto contains a true and complete
list of all funded or unfunded, written or oral, employee benefit plans,
contracts, agreements, incentives, salary, wage or other compensation plans or
arrangements, including but not limited to all pension and profit sharing plans,
savings plans, bonus, deferred compensation, incentive compensation, stock
purchase, supplemental retirement, severance or termination pay, stock option,
hospitalization, medical, life insurance, dental, disability, salary
continuation, vacation, supplemental unemployment benefit, collective bargaining
agreements, employment contracts, consulting agreements, retiree benefits and
agreements, severance agreements and each other employee benefit program, plan,
policy or arrangement (each a "Benefit Plan") maintained, contributed to, or
required to be contributed to by the Corporation for the benefit of the
employees of the Corporation, former employees, directors, agents or consultants
of the Corporation, or for which the Corporation may be responsible or with
respect to which it may have any liability, whether or not subject to the
Employee Retirement Income Security Act of 1974 ("ERISA").
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2.18.2 The Corporation has delivered to BBC true and complete copies
of all documents embodying the Benefit Plans. Each of the Benefit Plans listed
in Exhibit 2.18.1 annexed hereto is and has at all times been in compliance in
all material respects with all applicable provisions of ERISA, the Code and
other laws.
2.18.3 Each of the Benefit Plans which is intended to meet the
requirements of Section 401(a) of the Code now meets, and since its inception
has met, the requirements for qualification under Section 401(a) of the Code and
nothing has occurred which would adversely affect the qualified status of any
such Benefit Plan. The Internal Revenue Service has issued a favorable
determination letter with respect to the qualification under the Code of each
Benefit Plan and the Internal Revenue Service has not taken any action to revoke
that letter.
2.18.4 Each fiduciary and every plan official of each Benefit Plan
is bonded to the extent required by Section 412 of ERISA. Exhibit 2.18.4
annexed hereto describes steps which have been taken to terminate the
Corporation's Defined Benefit Pension Plan. All such steps have been taken or
will be taken in full compliance with Title IV of ERISA and no liability under
such Title has been incurred by the Corporation that has not been satisfied in
full; no condition exists that could reasonably be expected to result in the
Corporation incurring a liability under such Title other than such liability as
may be incurred in connection with the termination of the Corporation's Defined
Benefit Pension Plan. Those sections of an annual reports heretofore filed with
the Internal Revenue Service, the Department of Labor or the Pension Benefit
Guarantee Corporation by or on behalf of every Benefit Plan which were required
to be certified were certified without qualification by the accountants or
actuaries of such Benefit Plan. By their terms, each of the Benefit Plans can
be amended, terminated or otherwise discontinued by the Corporation after the
Closing without liability.
2.18.5 Except as specifically set forth in Exhibit 2.18.5 annexed
hereto, the execution and performance of the Merger Agreement will not (either
alone or upon the occurrence of any additional or subsequent event) constitute
an event under any Benefit Plan or individual agreement that will or may result
in any payment (whether of severance pay or otherwise), acceleration, vesting or
increase in benefits with respect to any employee, former employee, consultant,
agent or director of the Corporation.
2.18.6 No Benefit Plan is a multi-employer plan as defined in
Section 3(37) of ERISA.
2.18.7 Each group health plan (within the meaning of Section
5000(b)(1) of the Code) maintained by the Corporation has been administered in
compliance with the coverage continuation requirements contained in the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and as provided
under Section 4980B of the Code and any regulations promulgated or proposed
under the Code. Except to the minimum extent required by COBRA, the Corporation
does not now and has never maintained, sponsored or contributed to any plan,
program or arrangement providing post-termination of employment health, dental,
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disability or life insurance benefits with respect to employees or former
employees and/or their spouses and dependents.
2.18.3 The Corporation or the plan "administrator" (as defined in
Section 3(16) of ERISA) of each Benefit Plan has timely filed all ERISA and Code
required reporting and disclosure forms, including, but not limited to, the Form
5500 series, with the appropriate governmental agencies, with respect to every
Benefit Plan required to file such forms.
2.19 INSURANCE. Exhibit 2.19 annexed hereto lists all insurance policies
(other than life insurance) which the Corporation currently has in effect and
which it had in effect during each of the six (6) years ended December 31, 1993.
That Exhibit lists, for each such policy, the name of the carrier, the policy
number, the policy period, the basic coverage afforded and the amount of
coverage. Except as otherwise noted on Exhibit 2.19, all such general public
liability insurance policies provide occurrence coverage. Complete copies of
said policies, including all endorsements, have been delivered to or made
available for inspection by BBC.
2.20 LICENSES AND PERMITS. 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 and
authorizations. 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 and the Stockholders,
no suspension or cancellation of any such licenses, permits, orders, approvals
or authorizations is contemplated or has been threatened.
2.21 AUTHORITY RELATIVE TO AGREEMENT; ENFORCEABILITY. The execution,
delivery and performance of the Merger Agreement and this Agreement are 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. The Merger 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
Merger Agreement and this Agreement on behalf of the Corporation have been duly
authorized to do so.
2.22 COMPLIANCE WITH OTHER INSTALLMENTS; CONSENTS. Neither the execution of
the Merger Agreement or this Agreement nor the consummation of the transactions
contemplated by the Merger Agreement 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
the Corporation's certificate of incorporation or by-laws or any indenture,
mortgage, lien, lease, agreement, contract or instrument, or any other
restriction of any kind or character to which the Corporation is subject or by
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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 The Corporation is in compliance with the FDA Act (including,
but not limited to, the Safe Medical Devices Act of 1990 and the Fair Packaging
and Labeling Act), the Americans with Disabilities Act, and all federal, state,
county, and municipal laws, ordinances, regulations, judgments, orders or
decrees applicable to the conduct of its business or to the assets owned, used,
or occupied by it, and the Corporation has received no notice or advice to the
contrary. 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 Drug Enforcement Agency ("DEA"), the United
States Environmental Protection Agency ("USEPA"), the Occupational Safety and
Health Administration ("OSHA"), the United States Department of Commerce ("DOC")
and state equivalents of such federal agencies issuing licenses or
qualifications to import, export, manufacture, assemble or sell various classes
and types of 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 Washington.
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 Neither the execution of the Merger Agreement nor
consummation of the Merger 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.
2.24 ENVIRONMENTAL COMPLIANCE.
2.24.1 For purposes of this Agreement,
(a) "Regulated Substance" includes any pollutant, chemical
substance, hazardous waste, hazardous substance 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.,) or any other federal, state or local environmental law or
regulation.
(b) "Enforcement Notice" means a summons, notice, notice of
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violation, citation, directive, order, claim, litigation, investigation,
judgment, letter or other communication, written or oral, actual or threatened,
from the 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 which might result in the Releasing of a Regulated
Substance into the air or the waters or onto the lands of the States of Alaska,
California, Idaho, Montana, Oregon, Utah or Washington, or into the air or
waters outside the jurisdiction of such States 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, any
of the states fisted above 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 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, correction, treatment, storage,
transportation, recovery, removal, discharge, or disposal of Regulated
Substances and all laws and regulations with regard to record-keeping,
notification and reporting requirements respecting Regulated Substances. 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 There are no facts or circumstances that the Corporation or
the Stockholders reasonably believe 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 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 or, to the knowledge of the Corporation or the Stockholders,
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.
2.24.6 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
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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 properly owned or leased by the Corporation.
2.24.7 Promptly upon teaming thereof, the Corporation and the
Stockholders will advise BBC of any facts or circumstances known to them that
they reasonably believe 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.
2.24.8 The Corporation does not own, lease or use underground
storage tanks at any of the Premises.
2.25 FINANCIAL STATEMENTS.
2.25.1 The Corporation has delivered to BBC the balance sheets of
the Corporation as of December 31, 1991, 1992 and 1993 and October 31, 1994 (the
"Most Recent Balance Sheet") and the related statements of net income, changes
in stockholders' equity and cash flows for each of the three years and ten
months then ended. A complete and accurate copy of those financial statements
is included in Exhibit 2.25.1 annexed hereto. The financial statements at
December 31, 1993 and for the year then ended have been audited by the
accounting firm of Clark, Nuber & Co. The financial statements of the
Corporation at December 31, 1991 and 1992 and for the two years ended December
31, 1992 have been reviewed but not audited by that accounting firm.
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 periods to which
they apply, and such statements have been prepared in conformity with GAAP
applied on a consistent basis throughout the periods involved.
2.25.3 No value has been or will be assigned in any of said balance
sheets to (a) any intangible items including but not limited to goodwill,
trademarks, trade names, contract rights, customer fists, books and records,
restrictive covenants, deferred charges, or prepaid expenses for any item other
than taxes, rent or insurance; (b) office supplies or advertising or promotional
material; (c) any asset previously charged to expense; or (d) any other asset
which it has been the Corporation's practice to write-off as an expense.
2.25.4 Except as disclosed in Note 11 to its financial statements
annexed hereto as Exhibit 2.25.1 (the "Most Recent Balance Sheet"), the
Corporation had no liabilities (whether absolute, accrued, contingent or
otherwise) as at the date of that Balance Sheet which are required to be
reflected in and disclosed on the aforesaid balance sheet 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
Most Recent Balance Sheet, except liabilities incurred in the ordinary course of
its business subsequent to the date of that balance sheet. Exhibit 2.25.4
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annexed hereto contains a schedule which lists separately all deferred
contractual obligations of the Corporation, whether or not such obligations are
required to be reflected on the Most Recent Balance Sheet.
2.25.5 Accounts payable disclosed on the Most Recent Balance Sheet
have been valued at gross invoice amounts without deducting any discounts
available to the Corporation.
2.25.6 A fist of all the Corporation's stock keeping units ("SKU's")
which have had no movement since July 31, 1994 has been made available to BBC.
2.25.7 "Other income" for the ten month period ended on the date of
the Most Recent Balance Sheet consisted only of items listed on Exhibit 2.25.7
annexed hereto.
2.25.8 Exhibit 2.25.8 annexed hereto lists all non-recurring
expenses and corporate charges in excess of $25,000 incurred by the Corporation
between December 31, 1991 and the date of this Agreement. Except as set forth
in such Exhibit, 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 No funds or assets of the Corporation have been used for
illegal purposes; no unrecorded funds or assets of the Corporation have been
established for any purpose; no accumulation or use of the Corporation's funds
has been made without being properly accounted for in the respective books and
records of the Corporation; all payments by or on behalf of the Corporation have
been duly and properly recorded and accounted for in its books and records; no
false or artificial entry has been made in the books and records of the
Corporation for any reason; no payment has been made by or on behalf of the
Corporation with the understanding that any part of such payment is to be used
for any purpose other than that described in the documents supporting such
payment; and the 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 or kickback, whether in cash,
property or services, to any individual corporation, partnership or other
entity, to secure business or to pay for business secured.
2.25.10 The Most Recent Balance Sheet reflects adequate accruals for
vested vacation and holiday benefits in accordance with GAAP.
2.25.11 The Corporation has delivered to BBC complete and accurate
copies of all responses from attorneys for the Corporation to inquiries from the
Corporation's auditors with respect to the year ended December 31,1993.
2.25.12 The Corporation has delivered to BBC a complete and accurate
aging of the Corporation's Trade Accounts Receivable and Notes Receivable as of
the date of the Most Recent Balance Sheet.
2.25.13 The Corporation has delivered to BBC a complete and accurate
listing, by vendor, of the Corporation's accounts payable and debit memos as of
the most recent available date.
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<PAGE>
2.25.14 The Corporation has delivered to BBC a complete and accurate
listing of Trade Accounts Receivable write-offs in each of the last three years,
net of recoveries, and the current balance in its Trade Accounts Receivable
Reserve.
2.25.15 The Corporation has delivered to BBC a complete and accurate
listing of rebates, chargebacks, and reserves as of the most recent available
date.
2.25.16 The Corporation has delivered to BBC an accurate schedule of
the current balance in the Corporation's LIFO Reserve and the changes made in
that reserve during fiscal year ended December 31, 1993. The LIFO Reserve as of
the date of the Most Recent Balance Sheet has been increased by $5,000 per month
during the ten months ended on the date of the Most Recent Balance Sheet. That
increase represents Management's estimate of the appropriate increase based on
increases accrued during the three years ended December 31, 1993.
2.26 TAXES.
2.26.1 All tax and information returns required to have been filed
by the Corporation 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, but
excluding taxes payable by the Corporation's stockholders by virtue of the fact
that the Corporation is an S corporation), 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 the books of
the Corporation. The returns were correct as filed. The Most Recent Balance
Sheet includes adequate provisions for tax liabilities incurred or accrued as of
the date of the Most Recent Balance Sheet. True and complete copies of the
federal, state and local tax returns of the Corporation for each of the five
years ended December 31, 1993 have been delivered or made available to BBC.
Exhibit 2.26.1 contains a list of tax returns which the Corporation is currently
obligated to file.
2.26.2 The federal tax returns of the Corporation have been audited
or examined by the IRS through the Corporation's tax periods listed on Exhibit
2.26.2 annexed hereto. State and local franchise and sales tax returns have
been audited through the tax periods listed on Exhibit 2.26.2 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 the Stockholders or are
being contested as indicated on Exhibit 2.26.2.
2.26.3 Except as indicated on Exhibit 2.26.3 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
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<PAGE>
or foreign tax liens upon any of the Corporation's assets. Exhibit 2.26.3
contains a complete and accurate description of the matter which Clark, Nuber &
Co. is handling, pursuant to a power of attorney, with respect to IRS Forms
1120S for 1991-1993.
2.26.4 Exhibit 2.26.4 annexed hereto lists any elections which the
Corporation has made with respect to the income tax treatment of any items which
cannot be revoked without the consent of the Commissioner of Internal Revenue.
2.26.5 The Corporation has, or by the Closing Date will have, valid
sales tax resale certificates from all its customers covering all periods since
which have not been barred by applicable statutes of limitations.
2.26.6 During all periods in which the Corporation has sought to be
treated as an S corporation, the Corporation has qualified for S corporation
status under the Code and has taken all steps required to be taken in order to
be treated as an S corporation under the Code. The Corporation has qualified
for S corporation treatment under the tax laws of the states listed in Exhibit
2.26.6.
2.26.7 The Stockholders hereby represent to BBC that they have
sought and received tax advice from, and relied upon, their own tax advisors
with respect to the tax free aspects of the transactions contemplated by the
Merger Agreement and have not received or relied upon any such tax advice from
BBC or its advisors.
2.26.8 The Corporation has delivered to BBC a tax depreciation
schedule as of the date of the Most Recent Balance Sheet which is complete and
accurate with respect to all matters except that acquisitions and dispositions
made since December 31, 1993 are not reflected in that schedule.
2.27 LITIGATION. Except as disclosed on Exhibit 2.27 annexed hereto, there
are no legal, administrative, arbitration or other proceedings or claims pending
or, to the knowledge of the Corporation and the Stockholders, 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 any agency of the
federal or of any state or local government about the transaction contemplated
by the Merger Agreement, or about any violation or possible violation of any
law, regulation or ordinance affecting its business or assets; nor has the
Corporation been subject to any products liability claims during the six years
ended on the date of this Agreement.
2.28 ADVERSE BUSINESS CHANGES. Except as noted on Exhibit 2.28 annexed
hereto, there has not been to the best knowledge of the Corporation and the
Stockholders:
2.28.1 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
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<PAGE>
with all other such changes), since the date of the Most Recent Balance Sheet;
2.28.2 Any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the Corporation's business since
the date of the Most Recent Balance Sheet;
2.28.3 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 otherwise
than in the ordinary course of business since the date of the Most Recent
Balance Sheet;
2.28.4 Any dividend or distribution declared, set aside or paid in
respect of the Corporation Stock or any repurchase by the Corporation of shares
of Corporation Stock since the date of the Most Recent Balance Sheet.
2.28.5 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 date of the
Most Recent Balance Sheet, other than general increases to personnel made in
accordance with past practices; or any declaration, payment, commitment, or
obligation of 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.
2.28.6 Any amendment, termination or threatened termination as of
the date of this Agreement, of any material contract, agreement, insurance
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;
2.28.7 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;
2.28.8 Any distribution or disposition of the Corporation's assets,
other than in the ordinary course of business, since the date of the Most Recent
Balance Sheet;
2.28.9 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 since
the date of the Most Recent Balance Sheet;
2.28.10 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 $500,000 of goods and services from the Corporation since
December 31,1993;
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<PAGE>
2.28.11 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 $250,000 of goods and services since
December 31,1993;
2.28.12 Any material increase in the quantity of any item of inventory
or material decrease in the service levels of inventory of the Corporation since
the date of the Most Recent Balance Sheet;
2.28.13 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 in 1993;
2.28.14 Any termination since December 31, 1993 of any permit or
license issued to the Corporation upon which a material portion of the
Corporation's business is dependent;
2.28.15 Any stature, order, judgment, writ, injunction, decree,
permit, rule or regulation of any court or any governmental or regulatory body
adopted or proposed to be adopted or entered, as of the date of this Agreement,
which may materially and adversely affect the property or business of the
Corporation; or
2.29 BROKERAGE. No broker or finder other than Zachary Scott & Co. ("ZS")
has rendered services to the Corporation or to any Stockholder in connection
with the transactions contemplated by the Merger Agreement.
2.30 BANKS. Exhibit 2.30 annexed hereto contains a complete list of the
names and addresses of each bank in which the Corporation maintains an account
and/or safe deposit box, the bank account numbers assigned to the Corporation,
and the persons authorized to sign checks on behalf of the Corporation and to
access any such safety deposit boxes.
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
and the Stockholders in this Agreement, and no certification furnished or to be
furnished to BBC pursuant to this Agreement or the Merger 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 BBC. BBC hereby represents and
warrants to the Corporation and the Stockholders that:
3.1 ORGANIZATION. BBC 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 and the Merger Agreement.
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<PAGE>
3.2 AUTHORIZATION. The execution and delivery of this Agreement and the
Merger Agreement and the consummation of the transactions contemplated by the
Merger Agreement have been duly authorized by the Board of Directors of BBC, or
a duly constituted committee of that Board of Directors. The Merger Agreement
and this Agreement each constitutes the legal, valid and binding obligation of
BBC, enforceable against BBC 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 Merger Agreement on behalf of
BBC 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 Merger
Agreement by BBC requires the consent of any third party, except for compliance
with the HSR Act, and the issuance by the SEC of an order declaring effective
the Registration Statement to be filed by BBC pursuant to the Merger Agreement,
nor will it violate or result in a breach or constitute a default under any
provision of any certificate of incorporation, by-law, indenture, mortgage,
lien, lease, agreement, contract, instrument, order, judgment, decree, statute,
ordinance, regulation or any other restriction of any kind or character to which
BBC is subject or by which it is bound.
3.4 FINANCIAL STATEMENTS. BBC has delivered to the Corporation BBC'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 three years then ended, and its quarterly report to the SEC on Form 10-Q for
the three month periods ended December 31, 1993, March 31, 1994 and June 30,
1994. Those statements fairly present the consolidated financial position of
BBC 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 June 30, 1994, there have been no
changes in the consolidated financial condition, assets, liabilities or business
of BBC and its subsidiaries which in the aggregate would be materially adverse
to the consolidated financial condition of BBC and its subsidiaries.
3.6 FULL DISCLOSURE. No representation or warranty made by BBC 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 Merger
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 Merger Agreement, as of November 16, 1994.
BERGEN BRUNSWIG CORPORATION BIDDLE & CROWTHER COMPANY
By:/s/ Dwight A. Steffensen By:/s/ Berkley G. Biddle
----------------------------- -----------------------------------
Dwight A. Steffensen, President
/s/ Berkley G. Biddle
-----------------------------------
Berkley G. Biddle
/s/ Raymond L. Biddle
-----------------------------------
Raymond L. Biddle
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EXHIBIT 2.3
AMENDMENT NO. 1
THIS AMENDMENT, made this 6th day of January, 1995 by and among Bergen
Brunswig Corporation, a New Jersey corporation ("BBC"), Biddle & Crowther
Company, a Washington corporation (the "Corporation"), Raymond L. Biddle and
Berkley G. Biddle (the "Stockholders")
RECITALS
--------
A. BBC, the Corporation and the Stockholders entered into an Agreement and
Plan of Merger as of November 16, 1994 providing for the merger of the
Corporation with and into BBC (the "Plan);
B. The parties entered into a Supplemental as of the same date (the
"Supplemental Agreement");
C. The parties desire to amend the Plan and the Supplemental Agreement;
D. In consideration of the foregoing factors and the mutual covenants
contained herein, the parties have amended the Supplemental Agreement by a
separate agreement and agree hereby to amend the Plan as follows:
1. Section 1.11 is hereby amended to read as follows:
"1.11 Estimated Net Asset Value is agreed to be $7,679,861."
2. Section 1.16 is hereby amended to read as follows:
"1.16 Initial Non-Escrowed Shares of Stock shall mean that number
of shares of Stock having an aggregate value, calculated at
Market Value, equal to the Estimated Merger Consideration,
less the number of Initial Escrowed Shares."
<PAGE>
3. Section 1.18 is hereby amended to read as follows:
"1.18 Market Value is agreed to be $17 5/8."
4. Section 1.19 is hereby amended to read as follows:
"1.19 Merger Consideration shall mean Net Asset Value plus
$3,000,000. Estimated Merger Consideration is agreed to be
$10,679,861, representing Estimated Net Asset Value plus
$3,000,000."
5. Section 1.20 is hereby amended in its entirety to read as follows:
"1.20 Net Asset Value shall mean the Corporation's assets as of the
Takeover Date, as valued pursuant to Section 5.2, less the
Corporation's liabilities as of the Takeover Date, as valued
pursuant to Section 5.3. Net Asset Value shall be calculated
after deducting the Special Dividends paid pursuant to
Section 4.15."
6. Section 1.30 is hereby amended to add the following cross references:
"Environmental Defect -------------------------------10.10"
"Previously Owned Properties ------------------------10.10"
"Takeover Date -------------------------------------5.2(a)"
7. The revised form of Escrow Agreement to be executed and delivered
pursuant to Section 2.2(d) is annexed hereto as Appendix A.
8. Section 2.2(e) is hereby amended in its entirety to read as follows:
"(e) Post-Closing Adjustment. If the Net Asset Value, as shown by
the Final Accountant's Report prepared pursuant to Article V
hereof, should exceed the Estimated Net Asset Value, then
BBC shall deliver to the Escrow Agent that number of
additional shares of Stock determined by multiplying such
excess by the Escrow Percentage, and shall issue and deliver
the balance of those additional shares to the stockholders of
the Corporation in proportion to their respective Pro-Rata
Shares. In no event shall BBC be required to issue more
shares of Stock in connection with the Merger, including
shares to be issued at and shares to be issued after the
Closing, than that number of shares which have an aggregate
value, calculated at Market Value, equal to 110% of Estimated
Net Asset Value plus $3,000,000. If the Estimated Net Asset
Value should exceed the Net Asset Value as of the Takeover
Date, as shown by the Final Accountant's Report, BBC shall be
entitled to a refund of that number of shares determined by
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<PAGE>
dividing that shortfall by the Market Value. The
Stockholders shall cause the Escrow Agent to return to BBC
that number of shares determined by multiplying that
shortfall by the Escrow Percentage, and agree jointly and
severally to cause the stockholders of the Corporation to
refund the balance of those shares to BBC."
9. Sections 4.7, 4.8 and 4.16 are hereby amended in their entirety to
read as follows:
"4.7 Security. Commencing at the close of business on the day
prior to the Takeover Date, BBC shall have the right,
together with the Corporation, but not the obligation, to
control ingress and egress from the Premises and to secure
the Corporation's property against loss.
"4.8 Risk of Loss. The risk of loss to the assets and business of
the Corporation shall remain with the Corporation until the
Effective Time of the Merger notwithstanding the fact that
BBC may take possession and control of the Corporation's
assets and the Premises as of the Takeover Date.
"4.16 Environmental Matters. In view of the fact that each of the
leased Premises (other than the Seattle Premises) is part of
a multi-tenant facility, BBC and the Corporation have agreed
that it does not make economic sense to conduct Phase I
Environmental studies at those locations. Based on that
agreement and upon the modifications to the indemnification
obligations of the Stockholders set forth in Sections 10.2
and 10.10 hereof, BBC hereby waives its right to conduct
Phase I studies as a condition of its obligation to close the
Merger."
10. Sections 5.2 and 5.3 are amended in their entirety to read as follows"
"5.2 Asset Value. For purposes of determining Net Asset Value,
the Corporation's assets shall be valued in accordance with
GAAP except as follows:
(a) inventory. Prior to the close of business on January 6,
1995 (the "Takeover Date"), the Corporation and BBC shall
inspect the inventory and attempt jointly to remove
everything other than that which is currently saleable in the
ordinary course of the Corporation's business ("Saleable
Inventory"). Inventory which is damaged 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 Takeover Date, of ninety-one (91)
days or less, and other inventory for which the Corporation
has had no sales during the twelve (12) months prior to the
Takeover Date. Commencing after the close of business on the
Takeover Date, the Stockholders and BBC shall jointly make a
physical count of Saleable Inventory owned by the Corporation
and located in the Premises. The Stockholders and BBC shall
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<PAGE>
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 Takeover Date shall be for
the Corporation's account. Any sales made after the Takeover
Date shall be for BBC's account. A sale shall be deemed to
occur when a shipment is made. Saleable Inventory shall be
valued at the Corporation's replacement cost on the Takeover
Date. For purposes of determining Net Asset Value, damaged
inventory shall be valued at zero and Obsolete Inventory
shall be valued at fifty percent (50%) of its FIFO Cost as of
the Takeover Date (the "Closing Value"). BBC shall attempt,
in the ordinary course of its business, to sell the
Corporation's Obsolete Inventory for a period of twelve (12)
months after the Closing Date. On the first anniversary of
the Closing, the proceeds from the sale of the Obsolete
Inventory after the Closing shall be determined. If such
proceeds exceed the Closing Value, BBC shall issue and
deliver shares of Stock having a Market Value equal to such
excess proceeds to the stockholders of the Corporation in
proportion to their respective Pro-Rata Shares. If the
Closing Value exceeds such proceeds, the Stockholders shall
refund to BBC that number of shares of Stock having an
aggregate Market Value equal to the amount of that shortfall.
(b) trade accounts receivable. The Trade Accounts
Receivable shall be valued as of the Takeover Date at face
value less advance payments from customers, subject to the
guarantee provisions of Section 10.11.
(c) supplies and prepaid expenses. Supplies and prepaid
expenses shall be valued as of the Takeover Date at
replacement cost.
(d) computer equipment. Computer equipment shall be valued
as of the Takeover Date at fair market value.
(e) intangible assets. No value shall be attributed to any
intangible assets of the Corporation.
"5.3 Liability Value. For purposes of determining Net Asset
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
Takeover Date. Accounts payable shall be valued at the gross
amount thereof less discounts available to the Corporation on
the Takeover Date. Debit Memos which have not been rejected
by vendors as of the Takeover Date shall also be deducted
from accounts payable.
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<PAGE>
(b) pension plan. The projected benefit obligation under the
Corporation's defined benefit pension plan as of the
Takeover Date in excess of the fair value of plan assets on
hand as at that date shall be recorded as a liability of the
Corporation along with a reasonable estimate of the costs and
expenses necessary to terminate that plan.
(c) clauson contract. The Corporation shall accrue a
liability of $75,000 with respect to the Clauson contract as
of the Takeover Date; provided, however, that if the
Corporation should pay $50,000 to Clauson on or before the
Closing Date, the accrual provided for in this Section shall
be reduced to $25,000.
(d) sick leave. For the purpose of arriving at Estimated
Net Asset Value, the parties have agreed that the Corporation
shall accrue $50,000 with respect to sick leave benefits for
its employees, but this agreement is not intended to override
the party's agreement that the Corporation's sick leave
benefits are to be accrued in the Final Accountant's Report
in accordance with GAAP."
11. Clause (iii) of Section 10.2 (a) is hereby amended to read as follows:
"(iii) any fixed or contingent liability of the Corporation
(including but not limited to liabilities, if any, to Norwest
Financial Leasing, Inc. under its general dealer agreement
with the Corporation, and any other liabilities arising in
torts, contracts, guarantees and indemnities) which existed
as of the Takeover Date in excess of any provision for such
obligation or liability in the Final Accountant's Report,"
12. Clause (vi) of Section 10.2 (a) is hereby amended to read as follows:
"(vi) any underground storage tank located at any of the Premises,
and any Environmental Defect existing at any of the Premises
or on the US West Property before the Closing Date;"
13. Section 10.4 (b) is hereby amended in its entirety to read as follows:
"(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 not
later than twenty (20) days after receipt of a demand for
indemnification. If the dispute cannot be resolve amicably
within ten (10) days thereafter, either party shall have the
right to submit the dispute to binding arbitration. Any such
arbitration proceeding shall be conducted in Portland, Oregon
in accordance with the terms of the Escrow Agent's
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<PAGE>
Arbitration Program which is annexed as Schedule 4 to
Appendix A annexed hereto."
14. Section 10.10 is hereby amended in its entirety to read as follows:
"10.10 Environmental Cleanup. The Representative shall direct the
Escrow Agent to reimburse BBC for any environmental cleanup
costs incurred by BBC in excess of the accrual for that
purpose included in the Final Accountant's Report. The
Stockholders agree, jointly and severally, to indemnify,
defend and hold BBC harmless against any cleanup costs,
expenses and fines, and all costs, including attorneys fees,
in defending against any action which may be instituted by
any federal or state agency, or by any present or former
owner of any of the Premises or of the properties identified
in Exhibit 2.6 annexed to the Supplemental Agreement,as
amended (the "Previously Owned Properties"), or by any other
person, for payment or reimbursement of or contribution to
the payment of any such cleanup costs and any cleanup or
other costs, expenses and fines resulting from the
generation, manufacture, refining, transporting, treatment,
storage, handling, disposal, transfer or processing of
Regulated Substances by the Corporation or companies acquired
by it, or in defending any action or claim under the leases
listed on Exhibit 2.7.1 to the Supplemental Agreement, the
lease to the Seattle Premises to be executed pursuant to
Section 4.17, or the Previously Owned Properties, alleging
that the presence on any such Premises or the Previously
Owned Properties of Regulated Substances, which came to be
located on the Premises or the Previously Owned Properties
prior to the Closing, is a defect in the Premises or the
Previously Owned Properties for which BBC is liable
("Environmental Defect").
15. The following sentence is hereby added to section 10.17:
"When the Initial Accountant's Report shall have become final
and the post-closing adjustments, if any, required by Section
2.2(e) shall have been made, BBC and the Representative shall
promptly give the Escrow Agent notice of those facts."
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment the day and
year first written above.
BERGEN BRUNSWIG CORPORATION
By:/s/ Milan A. Sawdei
------------------------------------------
Milan A. Sawdei, Executive Vice President,
Chief Legal Officer and Secretary
BIDDLE & CROWTHER COMPANY
By:/s/ Berkley G. Biddle
------------------------------------------
Berkley G. Biddle, President
/s/ Raymond L. Biddle
------------------------------------------
Raymond L. Biddle
/s/ Berkley G. Biddle
------------------------------------------
Berkley G. Biddle, individually and as
Representative and Attorney-in-Fact for the
persons listed on Schedule 1 to Appendix A
annexed hereto
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EXHIBIT 2.4
AMENDMENT NO. 1 TO SUPPLEMENTAL AGREEMENT
-----------------------------------------
THIS AMENDMENT, made this 10th day of January, 1995 by and among Bergen
Brunswig Corporation, a New Jersey corporation ("BBC"), Biddle & Crowther
Company, a Washington corporation (the "Corporation"), Raymond L. Biddle and
Berkley G. Biddle (the "Stockholders").
RECITALS
--------
A. BBC, the Corporation and the Stockholders entered into an Agreement
and Plan of Merger as of November 16, 1994 providing for the merger of the
Corporation with and into BBC (the "Plan");
B. The parties entered into a Supplemental Agreement as of the same date
(the "Supplemental Agreement");
C. The parties desire to amend the Plan and the Supplemental Agreement;
D. In consideration of the foregoing factors and the mutual covenants
contained herein, the parties have amended the Plan by a separate agreement and
agree hereby to amend the Supplemental Agreement as follows:
1. The following exhibits to the Supplemental Agreement are
hereby amended and restated in their entirety as set forth in the
revised exhibits attached hereto: Exhibits 2.6, 2.7.1, 2.7.5, 2.8,
2.11.2, 2.12, 2.13, 2.14, 2.17.1, 2.17.2, 2.17.5, 2.17.8, 2.18.5,
2.19, 2.25.1, 2.25.2, and 2.26.2.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment the day and
year first written above.
BERGEN BRUNSWIG CORPORATION
By/s/ Dwight A. Steffensen
-------------------------------------------
Dwight A. Steffensen, President
BIDDLE & CROWTHER COMPANY
By/s/ Berkley G. Biddle
-------------------------------------------
Berkley G. Biddle, President
/s/ Raymond L. Biddle
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Raymond L. Biddle
/s/ Berkley G. Biddle
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Berkley G. Biddle, individually and as
Representative and Attorney-in-Fact for the
persons listed on Schedule 1 to Appendix A
annexed hereto
- 2 -
Exhibit 5.1
January 12, 1995
Bergen Brunswig Corporation
4000 Metropolitan Drive
Orange, CA 92668
Re: Registration Statement on Form S-3
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 649,523 shares of Class A
Common Stock (the "Common Stock") of Bergen Brunswig Corporation (the "Company")
to be offered by the former stockholders of Biddle & Crowther Company (the
"Stockholders"). The Common Stock is to be offered pursuant to a registration
statement on Form S-3 (the "Registration Statement").
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 use as
certified or photostated copies.
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 to be offered by the Stockholders and covered by the
Registration Statement have been legally issued by the Company and are 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 all references to this
firm contained in the Registration Statement.
Very truly yours,
LOWENSTEIN, SANDLER, KOHL,
FISHER & BOYLAN, P.C.
By: /s/ Richard M. Sandler
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Richard M. Sandler
Exhibit 23.1
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 31, 1994,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
Bergen Brunswig Corporation for the year ended September 30, 1994, and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & ToucheLLP
Deloitte & ToucheLLP
Costa Mesa, California
January 12, 1995
