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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): August 19, 1996
FOXMEYER HEALTH CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8549 25-1425889
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(Commission File Number) (I.R.S. Employer
Identification No.)
1220 Senlac Drive, Carrollton, Texas 75006
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(Address of Principal Executive Offices) (Zip Code)
(214) 446-4800
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
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FoxMeyer Corporation, a wholly-owned subsidiary of FoxMeyer
Health Corporation, entered into a Stock Sale Agreement, dated as of
August 19, 1996 (the "Stock Sale Agreement"), with FM Acquisition
Corp., an affiliate of York Management Services, Inc. Pursuant to the
terms of the Stock Sale Agreement, FoxMeyer Corporation has agreed to
sell its shares of capital stock of FoxMeyer Drug Company, FoxMeyer
Software Company, Healthcare Transportation Systems, Inc. and
Merchandise Coordination Services Corporation to FM Acquisition Corp.
As a result, FM Acquisition Corp. will acquire the pharmaceutical
products and health and beauty aids distribution business of FoxMeyer
Health Corporation. Reference is hereby made to the Stock Sale
Agreement and the Press Release, dated August 20, 1996, issued by
FoxMeyer Health Corporation, which are attached hereto as Exhibits 2
and 99, respectively, and are incorporated herein by reference.
Item 7. Financial Statements and Exhibits
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(c) Exhibits.
2 Stock Sale Agreement, dated as of August
19, 1996, by and between FoxMeyer
Corporation and FM Acquisition Corp.
99 Press Release, dated August 20, 1996,
issued by FoxMeyer Health Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
FOXMEYER HEALTH CORPORATION
(Registrant)
DATE: AUGUST 21, 1996 By: /s/ Edward L. Massman
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Edward L. Massman
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description Page No.
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2 Stock Sale Agreement, dated as of August 19, 1996, by
and between FoxMeyer Corporation and FM Acquisition
Corp.
99 Press Release, dated August 20, 1996, issued by
FoxMeyer Health Corporation.
NYFS11...:\93\64935\0001\2505\FRM3155K.56B
EXHIBIT 2
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STOCK SALE AGREEMENT
By and Between
FOXMEYER CORPORATION
and
FM ACQUISITION CORP.
Dated as of August 19, 1996
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STOCK SALE AGREEMENT
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STOCK SALE AGREEMENT (this "Agreement"), dated as of August
19, 1996, by and between FoxMeyer Corporation, a Delaware corporation
("Fox Corp" or "Seller"), and FM Acquisition Corp., a Delaware
corporation and an Affiliate of York Management Services, Inc.
("Purchaser").
W I T N E S S E T H :
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WHEREAS, Seller and the Subsidiaries (as defined below) are
engaged, in part, in the business of distributing a broad line of
prescription and over-the-counter pharmaceutical products, health and
beauty aids and general merchandise (the "Business");
WHEREAS, Seller is the owner of (i) 1,000 shares of Common
Stock (the "Fox Drug Shares") of FoxMeyer Drug Company, a Delaware
corporation ("Fox Drug"), which shares constitute all of the issued
and outstanding shares of capital stock of Fox Drug, (ii) 800 shares
of Common Stock (the "Fox Software Shares") of FoxMeyer Software
Company, a Delaware corporation ("Fox Software"), which shares
constitute 80% of the issued and outstanding shares of capital stock
of Fox Software, (iii) 1,000 shares of Common Stock (the "Healthcare
Shares") of Healthcare Transportation Systems, Inc., a Delaware
corporation ("Healthcare"), which shares constitute all of the issued
and outstanding shares of capital stock of Healthcare, and (iv) 100
shares of Common Stock (the "MCSC Shares") of Merchandise Coordinator
Services Corporation, a Delaware corporation d/b/a FoxMeyer Trading
Company ("MCSC"), which shares constitute all of the issued and
outstanding shares of capital stock of MCSC;
WHEREAS, Purchaser desires to purchase, and Seller desires
to sell, the Fox Drug Shares, the Fox Software Shares, the Healthcare
Shares and the MCSC Shares (collectively, the "Shares"), subject, in
each case, to the terms and conditions set forth herein; and
WHEREAS, certain capitalized terms used herein are defined
in Section 12.1 hereof.
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements
hereinafter set forth, and upon the terms and subject to the
conditions hereinafter set forth, Purchaser and Seller hereby agree as
follows:
NYFS05...:\35\64935\0001\2505\AGR8166P.41C
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ARTICLE I
SALE AND PURCHASE OF SHARES
1.1. Acquisition of Shares. Upon the terms and subject to
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the conditions hereinafter set forth, Seller agrees to sell, assign,
transfer and deliver to Purchaser, and Purchaser agrees to purchase
from Seller, the Shares free and clear of any and all Liens.
1.2. Transferred Interests. Notwithstanding anything to
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the contrary in this Agreement, Seller and Purchaser expressly
understand and agree that the items set forth on Schedule 1.2 hereto
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and any liabilities associated therewith (the "Transferred Interests")
are not part of the Business being acquired by Purchaser as a result
of the consummation of the transactions contemplated by this
Agreement.
ARTICLE II
PURCHASE CONSIDERATION
2.1. Purchase Consideration. The aggregate consideration
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to be paid by Purchaser to Seller for the purchase of the Shares shall
be (a) an amount equal to $10,000,000 (the "Cash Consideration") and
(b) a Subordinated Convertible Note in the principal amount of
$15,000,000 to be issued to Seller by Purchaser, substantially in the
form of Exhibit A hereto (the "Note," and together with the Cash
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Consideration, the "Total Consideration"). Payment of the Cash
Consideration shall be made no later than 9:00 a.m. (New York City
time) on the Closing Date by wire transfer of immediately available
funds to the account designated by Seller in writing not later than
two (2) Business Days prior to the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as
follows; it is expressly understood that the following representations
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and warranties are made by Seller assuming the transactions
contemplated by Section 5.2 hereof had been consummated as of the date
hereof:
3.1. Organization and Good Standing. Seller and each
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Subsidiary is a corporation validly existing and in good standing
under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its
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respective properties and to carry on the Business as now conducted.
Seller and each Subsidiary is duly qualified or authorized to do
business as a foreign corporation and in good standing under the laws
of each jurisdiction in which the conduct of its respective businesses
or the ownership of its respective properties requires such
qualification or authorization, except where the failure to so qualify
would not have a Material Adverse Effect.
3.2. Authorization of Agreement; No Conflicts.
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(a) Seller has all requisite corporate power and authority
to execute and deliver this Agreement and each Seller Document, and to
perform its obligations hereunder and thereunder. The execution,
delivery and performance by Seller of this Agreement and each of the
Seller Documents has been duly authorized by all necessary corporate
action on the part of Seller. This Agreement has been, and each
Seller Document will be, at or prior to the Closing Date, duly and
validly executed and delivered by Seller and (assuming the due
authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and each Seller Document when so
executed and delivered will constitute, legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(b) Except with respect to the Debt and except as set forth
on Schedule 3.2(b) hereto, the execution, delivery and performance by
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Seller of this Agreement and each of the Seller Documents, and the
consummation of the transactions contemplated hereby and thereby, does
not and will not (i) violate any provision of the certificate of
incorporation or by-laws (or comparable organizational documents) of
Seller or any Subsidiary; (ii) subject to obtaining the consents
referred to in Section 3.8 hereof, conflict with, or result in the
breach of, or constitute a default under, or result in the
termination, cancellation or acceleration of any right or obligation
of Seller or any Subsidiary under, any Contract; (iii) assuming
compliance with the matters set forth in Sections 3.8 and 4.3 hereof,
violate, or result in a breach of or constitute a default under, any
Law applicable to Seller or any Subsidiary; or (iv) result in the
creation of any Lien upon the Shares or the properties or assets
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of any Subsidiary, other than in the cases of clauses (ii), (iii) and
(iv), but only in the case of clause (iv), with respect to the
properties or assets of any Subsidiary, any violation, conflict,
breach, termination, default, cancellation, acceleration or Lien
which, individually or in the aggregate, would not have a Material
Adverse Effect or materially impair or delay the ability of Seller to
perform its obligations hereunder.
3.3. Corporate Records.The copies of the certificate of
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incorporation and by-laws (or comparable organizational documents) of
Seller and each of the Subsidiaries that have been made available to
Purchaser are complete and correct as of the date of this Agreement.
3.4. Capitalization.
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(a) The authorized, issued and outstanding capital stock,
and record owners of such shares of capital stock, of each of the
Subsidiaries is set forth on Schedule 3.4(a) hereto. All of the
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Shares were duly authorized for issuance and are validly issued, fully
paid and non-assessable, were not issued in violation of any
preemptive or other rights and, at the Closing, will be freely
transferable.
(b) Except as set forth on Schedule 3.4(b) hereto, there
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are no outstanding agreements, options or rights of any kind to
acquire from Seller or any Subsidiary any shares of any class of
securities or any securities convertible into any shares of any class
of securities of any of the Subsidiaries, nor are there any
obligations to issue any such options, rights or securities.
(c) Schedule 3.4 hereto sets forth the name of each
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subsidiary of a Subsidiary and, with respect to each such subsidiary,
the jurisdiction in which it is incorporated, each class and number of
shares of its authorized capital stock, the number of shares of each
class issued and outstanding and the record owner(s) of such shares.
Except as set forth on Schedule 3.4 hereto, none of the Subsidiaries
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(i) owns beneficially or of record any shares of capital stock or any
other security of any other Person or (ii) has any other equity
investment in any other Person.
3.5. Ownership and Transfer of Shares. Seller is the record
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and beneficial owner of the Shares free and clear of all Liens except
those set forth on Schedule 3.5 hereto. At the Closing, subject to
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the Seller obtaining the release of the Liens set forth on Schedule
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3.5 hereto, including those relating to the
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Debt and upon the payment of the Purchase Consideration, Purchaser
will receive valid title to all the Shares free and clear of any Lien.
3.6. Tangible Personal Property. Except as set forth on
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Schedule 3.6 hereto and other than the Real Property, Seller or a
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Subsidiary owns and has good and valid title to or, in the case of
leased properties, a valid leasehold interest in, all of the tangible
personal property (i) used in the Business or (ii) reflected in the
June 1996 Balance Sheet, except tangible personal property disposed of
in the ordinary course of business after June 30, 1996. Seller or a
Subsidiary holds title to the tangible personal property used in the
Business free and clear of all Liens other than as set forth on
Schedule 3.6 hereto and other than Permitted Exceptions. The tangible
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personal property that is owned or leased by Seller or a Subsidiary
constitutes all of the tangible personal property necessary to conduct
the Business as presently conducted.
3.7. Real Property.
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(a) Schedule 3.7(a) hereto sets forth a complete list of
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all Real Property. Such Real Property includes all Real Property (i)
used in the Business or (ii) reflected in the June 1996 Balance Sheet
and constitutes all Real Property necessary to conduct the Business as
presently conducted.
(b) Seller or a Subsidiary has (i) good and valid fee title
to each of the Owned Real Property and (ii) good and valid leasehold
title to each of the Leased Real Property, in each case free and clear
of all Liens except as set forth on Schedule 3.7(b) hereto and except
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for Permitted Exceptions.
(c) To the Knowledge of Seller, no damage or destruction
has occurred with respect to any of the Real Property that would
individually or in the aggregate materially impair the continued use
or operation of the Real Property.
(d) Except as set forth on Schedule 3.7(d) hereto and
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except for Permitted Exceptions, neither Seller nor any Subsidiary is
obligated under or is a party to any option, right of first refusal or
other contractual right to purchase, acquire, sell or dispose of any
of the Owned Real Property or any portion thereof.
(e) Seller and each Subsidiary enjoys peaceful and
undisturbed possession of all of their respective Leased Real
Property. Each lease of Leased Real Property is in full force
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and effect. Neither Seller nor any Subsidiary has received written
notice of any default under any lease of any Leased Real Property.
(f) All buildings, structures, improvements and
appurtenances situated on the Real Property are adequate and suitable
for the purposes for which they are currently being used and Seller
and each Subsidiary has adequate rights of ingress and of egress with
respect to the Real Property for the operation of the Business in the
ordinary course.
(g) No portion of the Owned Real Property has been taken or
expropriated, nor has the use of any Owned Real Property been
impaired, by any Governmental Body nor has any notice or proceeding in
respect thereof been given or commenced.
3.8. Consents. No consent, waiver, approval
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or authorization of, or declaration or filing with, or notification
to, any Governmental Body or other Person which has not been
previously made, obtained or filed is required on the part of Seller
or any Subsidiary in connection with the execution, delivery and
performance of this Agreement or the Seller Documents, except (a) for
compliance with the applicable requirements of the HSR Act; (b) as set
forth on Schedule 3.8 hereto; (c) with respect to the Debt; and (d)
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where the failure to obtain such consent, waiver, approval or
authorization would not have a Material Adverse Effect or delay the
ability of Seller to effect the Closing.
3.9. Financial Statements.
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(a) Seller has delivered to Purchaser an audited
consolidated balance sheet of Seller at March 31, 1996 (together with
the notes thereto, the "March 1996 Balance Sheet") and the related
audited statement of operations for the fiscal year ended March 31,
1996 (together with the notes thereto, the "March 1996 Statement of
Operations," and together with the March 1996 Balance Sheet, the
"March 1996 Financial Statements"), copies of which are attached
hereto as Schedule 3.9(a). The March 1996 Financial Statements have
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been prepared in accordance with GAAP, applied consistently with past
practice (except as set forth in the notes thereto), and present
fairly, in all material respects, the consolidated financial position
and results of operations of Seller as at March 31, 1996 and for the
fiscal year ended March 31, 1996. The "pro forma" financial
information included as Note R to the March 1996 Financial Statements
presents fairly, in all material respects, the information purported
to be shown therein at March 31, 1996 and for the fiscal year ended
March 31, 1996.
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(b) The unaudited consolidated balance sheet of Seller at
June 30, 1996 (together with the notes thereto, the "June 1996 Balance
Sheet") and the unaudited consolidated statement of operations of
Seller for the three months ended June 30, 1996, (together with the
notes thereto, the "June 1996 Statement of Operations," and together
with the June 1996 Balance Sheet, the "June 1996 Financial
Statements") delivered to the Purchaser and attached hereto as
Schedule 3.9(b), have been prepared in accordance with GAAP, applied
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consistently with past practice (except as set forth in the notes
thereto), and present fairly, in all material respects, the
consolidated financial position and results of operations of Seller at
the date and for the period indicated, subject to normal year-end
audit adjustments.
(c) Except (i) as set forth on any schedule hereto, (ii) to
the extent specifically reserved against on the June 1996 Balance
Sheet or (iii) to the extent incurred in the ordinary course of
business since June 30, 1996 or specifically described as to nature
and amount on Schedule 3.9(c) hereto, neither Seller nor any
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Subsidiary has any material liabilities or obligations.
(d) Except as set forth on Schedule 3.9(d) hereto, each of
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the accounts receivable of Seller and the Subsidiaries shown on the
June 1996 Balance Sheet or arising after the date thereof have arisen
or will arise, as the case may be, from bona fide transactions in the
ordinary course of the Business.
3.10. Absence of Certain Developments. Since June 30,
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1996, Seller and the Subsidiaries have operated the Business in the
ordinary course and, except as set forth on Schedule 3.10 hereto or as
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reflected in the June 1996 Financial Statements, there has not been:
(a) any grant of any severance or termination pay to any
executive officer or director of Seller or any Subsidiary or any
increase in compensation or benefits payable by Seller or any
Subsidiary under existing employment agreements or severance or
termination pay policies to any of its employees other than (i) normal
merit increases for salaried employees, (ii) increases or grants
required by contracts disclosed on Schedule 3.10 hereto or by
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applicable Law or (iii) options, increases, agreements and bonuses
disclosed in Schedule 3.10 hereto;
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(b) any declaration, setting aside or payment of any
dividend or other distribution in respect of any shares of capital
stock of Seller or any Subsidiary or any repurchase, redemption or
other acquisition by Seller or any Subsidiary of
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any outstanding shares of capital stock or other securities of, or
other ownership interest in, Seller or any Subsidiary;
(c) any material change in the accounting methods or
principles of Seller or any Subsidiary not disclosed in the June 1996
Financial Statements or the March 1996 Financial Statements;
(d) any damage, destruction or loss of Real Property
(whether or not covered by insurance) which could have a Material
Adverse Effect; or
(e) any issuance, sale or other disposition of, or
agreement to issue, sell or otherwise dispose of, any capital stock or
any other security of Seller or any Subsidiary.
3.11. Material Contracts. Schedule 3.11 hereto sets forth
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a list, as of the date hereof, of each Contract that is material to
the Business (other than (a) purchase orders and sales contracts in
the ordinary and usual course of business or (b) any Contract
involving the payment of less than $5,000,000 in the aggregate) (the
"Material Contracts"). Except as set forth on Schedule 3.11 hereto,
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each Material Contract is a valid and binding agreement of Seller or
the Subsidiary that is a party thereto and, to the Knowledge of
Seller, is in full force and effect. Except as set forth on Schedule
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3.11 hereto, Seller has no Knowledge of any default under any Material
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Contract which default has not been cured or waived and which default
would have a Material Adverse Effect and, to the Knowledge of Seller,
no other party to any Material Contract is in material default under
any Material Contract.
3.12. Intangible Property. Schedule 3.12 hereto contains a
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complete and correct list of all of the Intellectual Property used by
Seller and the Subsidiaries in connection with, or necessary for the
present conduct of, the Business. The Intellectual Property is owned
by the party shown on Schedule 3.12 hereto as owning the same, free
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and clear of all Liens other than as set forth on Schedule 3.12 hereto
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and other than Permitted Exceptions. There have been no claims
asserted in writing, which are pending, that any of the foregoing is
invalid or conflicts with the asserted rights of others, which would
have a Material Adverse Effect. The Subsidiaries possess all the
Intellectual Property necessary for the conduct of the Business as
conducted on the date hereof, except for those the absence of which
would not have a Material Adverse Effect. Seller notes that FoxMeyer
Canada, Inc., an Ontario, Canada corporation, has and after the
Closing will have, the right to use the "FoxMeyer"
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name and logo in connection with its computer software business.
FoxMeyer Canada, Inc.'s computer software business does not have any
application in or with respect to the Business or any business that
competes with the Business.
3.13. Taxes.
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(a) Except as set forth on Schedule 3.13 hereto, (i) all
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federal and all material state, local and foreign Tax Returns required
to be filed by or on behalf of any of the Subsidiaries or any
Affiliated Group of which any of the Subsidiaries is or was a member
have been filed with the appropriate taxing authorities in all
jurisdictions in which such Tax Returns are required to be filed, and
all amounts payable by any of the Subsidiaries either directly, as
part of a Consolidated Tax Return, or otherwise (whether or not shown
on such Tax Returns), have been fully and timely paid or are
adequately provided for as a specific reserve in the June 1996
Financial Statements (as opposed to any reserve for deferred taxes
established to reflect the difference between book and Tax income);
(ii) all such Tax Returns, insofar as they relate to any of the
Subsidiaries, are true and correct in all material respects; and (iii)
no waivers of statutes of limitation have been given by or requested
of any of the Subsidiaries in connection with any Tax Returns covering
any of the Subsidiaries (including any Consolidated Tax Return).
(b) Except as set forth on Schedule 3.13 hereto, all
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deficiencies asserted or assessments made as a result of any
examinations by the Internal Revenue Service or any other taxing
authority of the Tax Returns of or covering any of the Subsidiaries
have been fully paid, and there are no unpaid deficiencies asserted or
assessments made by any taxing authority against any of the
Subsidiaries or any Affiliated Group of which any of the Subsidiaries
is or was a member and there are no audits currently pending by any
taxing authority in connection with Tax Returns of any of the
Subsidiaries.
(c) Except as set forth on Schedule 3.13 hereto, none of
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the Subsidiaries or any other Person on their behalf has filed a
consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by any of the Subsidiaries.
(d) Seller is not a foreign person within the meaning of
Section 1445 of the Code.
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(e) Except as set forth on Schedule 3.13 hereto, no
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property owned by Seller or the Subsidiaries (i) is property required
to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954,
as amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986; (ii) constitutes "tax-exempt use property" within
the meaning of Section 168(h)(1) of the Code; or (iii) is tax-exempt
bond financed property within the meaning of Section 168(g) of the
Code.
(f) Except as set forth in Schedule 3.13 hereto, no
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Subsidiary or any Affiliated Group of which any Subsidiary is or was a
member is a party to any agreement extending the time within which to
file any Tax Return due on or before the Closing Date that has not
been filed. No written claim has ever been made by any taxing
authority in a jurisdiction in which any Subsidiary does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction.
(g) Each Subsidiary has withheld and paid all Taxes
required by applicable law to have been withheld and paid on or before
the Closing Date in connection with amounts paid or owing to any
employee, former employee, creditor, shareholder, affiliate, customer
or supplier.
(h) Other than an agreement or arrangement described in,
and to be terminated pursuant to, Section 11.8 of this Agreement, no
Subsidiary is a party to any Tax allocation or sharing agreement.
(i) Seller is eligible to join in a Section 338(h)(10)
election with respect to the acquisition of each Subsidiary.
3.14. Employees and Employee Benefits.
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(a) Schedule 3.14(a) hereto sets forth all material
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"employee benefit plans", as defined in Section 3(3) of ERISA,
maintained by Seller or any Subsidiary or to which Seller or any
Subsidiary contributed or is obligated to contribute thereunder for
current or former employees of Seller or any Subsidiary (the "Employee
Benefit Plans"). Schedule 3.14(a) hereto lists each employment or
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severance contract or arrangement, each plan or arrangement providing
for insurance coverage, severance, termination or similar coverage,
and all written compensation policies and practices maintained by
Seller and the Subsidiaries, in each case, covering any Employee or
former employee of Seller and the Subsidiaries that is not an Employee
Benefit Plan (a "Benefit Arrangement"). Schedule 3.14(a) sets forth
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each Employee Benefit
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Plan which is a multiemployer plan, as defined in Section 3(37) of
ERISA ("Multiemployer Plan").
(b) True, correct and complete copies of the following
documents, with respect to each of the Employee Benefit Plans (other
than the Multiemployer Plans), have been made available or delivered
to Purchaser by Seller: (i) any plans and related trust documents, and
amendments thereto; (ii) the most recent Forms 5500; (iii) the last
Internal Revenue Service determination letter, if applicable; (iv)
summary plan descriptions; and (v) the last actuarial valuation if the
plan is a "defined benefit plan," as defined in Section 3(35) of
ERISA. True and complete copies of each of the Benefit Arrangements
have been made available or delivered to Purchaser by Seller,
including trust instruments and insurance contracts relating thereto.
(c) The Employee Benefit Plans intended to qualify under
Section 401 of the Code and the trusts maintained pursuant thereto are
exempt from federal income taxation under Section 501 of the Code, and
nothing has occurred with respect to the operation of the Employee
Benefit Plans which could cause the loss of such qualification or
exemption or the imposition of any liability, penalty or tax under
ERISA or the Code which is reasonably likely to result in a Material
Adverse Effect.
(d) The Employee Benefit Plans have been maintained, in all
material respects, in accordance with their terms and with all
provisions of the Code and ERISA (including rules and regulations
thereunder) and other applicable federal and state laws and
regulations.
(f) Except as set forth on Schedule 3.14(f) hereto, Seller
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and the Subsidiaries have not incurred and do not expect to incur any
withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA.
(g) Except as set forth on Schedule 3.14(g) hereto, no
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benefit under any Employee Benefit Plan or Benefit Arrangement,
including, without limitation, any severance or parachute payment plan
or agreement, will become accelerated, vested or payable by reason of
the consummation of the transactions contemplated by this Agreement.
Except as set forth on Schedule 3.14(g), no "parachute payments"
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within the meaning of Section 280G of the Code will be triggered by
reason of the transactions contemplated by this Agreement.
(h) With respect to each Employee Benefit Plan that is
subject to Title IV of ERISA (other than a Multiemployer Plan),
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the fair market value of assets thereof exceeds the "projected benefit
obligation" (within the meaning of Financial Accounting Statement 87)
thereof.
3.15. Labor.
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(a) Except as set forth on Schedule 3.15 hereto, neither
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Seller nor any Subsidiary is party to any labor or collective
bargaining agreement and there are no labor or collective bargaining
agreements which pertain to Employees. Seller has delivered or
otherwise made available to Purchaser true, correct and complete
copies of each of the labor or collective bargaining agreements listed
on Schedule 3.15 hereto.
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(b) Except as set forth on Schedule 3.15 hereto, to the
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Knowledge of Seller, there is no organizing activity (including any
demand for recognition or certification proceeding pending with the
National Labor Relations Board) involving Employees of Seller or any
Subsidiary by any labor organization or group of Employees.
(c) Except as set forth on Schedule 3.15 hereto or Schedule
------------- --------
3.16 hereto, there are no (i) strikes, work stoppages or lockouts or
----
(ii) grievances or other labor disputes pending or, to the Knowledge
of Seller, threatened against or involving Seller or any Subsidiary
which, individually or in the aggregate, could result in a Material
Adverse Change.
3.16. Legal Proceedings.
-----------------
(a) There are no Legal Proceedings pending or, to the
Knowledge of Seller, threatened that question the validity of this
Agreement or any Seller Document or any action taken or to be taken by
Seller or any Subsidiary in connection with the consummation of the
transactions contemplated hereby or thereby. Schedule 3.16 hereto
-------------
sets forth a true and correct list of all Legal Proceedings pending
or, to the Knowledge of Seller, threatened against or affecting
Seller, any Subsidiary, the Business, the Shares or any properties or
assets of Seller or any Subsidiary, at law or in equity, which, with
respect to such Legal Proceedings, if adversely determined, commenced
or threatened would have a Material Adverse Effect.
(b) Schedule 3.16 hereto sets forth a true and correct list
-------------
of all material Legal Proceedings relating to the Business pending or,
as of the date of this Agreement, contemplated in which Seller or any
Subsidiary is or would be the plaintiff,
<PAGE>
<PAGE>
except those Legal Proceedings that are included among the Transferred
Interests.
3.17. Compliance with Law.Except as set forth on Schedule
------------------- --------
3.17 hereto, the Subsidiaries are and the Business is being conducted
----
in compliance with all Laws, except where the failure so to comply,
individually or in the aggregate, would not have a Material Adverse
Effect, and the Subsidiaries have all Permits necessary for the
conduct of the Business as currently conducted, other than those the
absence of which would not have a Material Adverse Effect; it being
-- -----
understood that nothing in this representation is intended to address
----------
any compliance issue that is the subject of any other representation
or warranty set forth herein.
3.18. Environmental Matters. Except as set forth on
---------------------
Schedule 3.18 hereto, to the Knowledge of Seller, (a) the operations
-------------
of Seller and the Subsidiaries are now and since March 31, 1995 have
been in compliance with applicable Environmental Laws, except for such
noncompliance which is not reasonably likely to result in a Material
Adverse Effect; (b) neither Seller nor any Subsidiary is subject to
any pending or threatened Legal Proceeding alleging the violation of
any Environmental Law or alleging damages arising from the release of
a Hazardous Material, which such Legal Proceeding is reasonably likely
to result in a Material Adverse Effect; (c) neither Seller nor any
Subsidiary has received any written notice from any Governmental Body
that it is a potentially responsible party at any Superfund site or at
any site at which a Governmental Body has demanded or, to the
Knowledge of Seller, threatened investigation or cleanup under Law;
and (d) since March 31, 1995, no Subsidiary has disposed of or
released any Hazardous Materials in or at any Real Property in any
quantity which would have a Material Adverse Effect.
3.19. Related Party Transactions. Except as set forth on
--------------------------
Schedule 3.19 hereto, neither Seller nor any Subsidiary is engaged in
-------------
any transaction with Seller or any other Affiliate of Seller. Except
as set forth on Schedule 3.19 hereto and except for the Transferred
-------------
Interests, no Affiliate of Seller or any Subsidiary holds,
beneficially owns or controls, directly or indirectly, any assets that
are material to the conduct of the Business as presently conducted.
There are no intercompany receivables or payables between any
Affiliate of Seller or any Subsidiary, on the one hand, and Seller or
any Subsidiary, on the other hand, except as set forth on Schedule
--------
3.19 hereto, as reflected in the June 1996 Financial Statements or in
----
the ordinary course of business since June 30, 1996.
<PAGE>
<PAGE>
3.20. Investment Representation. Seller is acquiring the
-------------------------
Note for its own account, for investment purposes only and not with a
view to the distribution (as such term is used in Section 2(11) of the
Securities Act) thereof. Seller understands that the Note and the
shares of common stock of Purchaser issuable upon conversion of the
Note cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
Seller possesses such Knowledge and experience in financial and
business matters so that it is capable of evaluating the merits and
risks of its acquiring the Note hereunder.
3.21. Insurance. Schedule 3.21 hereto lists all insurance
--------- -------------
policies, including the name of the insurer, the amount of the
coverage, the type of insurance and the policy number maintained by
Seller or a Subsidiary with respect to the Business as of the date
hereof.
3.22. No Other Representations or Warranties. Except for
--------------------------------------
the representations and warranties contained in this Article III,
neither Seller nor any other Person makes any other express or implied
representation or warranty on behalf of Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that:
4.1. Organization and Good Standing. Purchaser is a
------------------------------
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has all requisite
corporate power and authority to carry on its business as it is now
being conducted.
4.2. Authorization of Agreement; No Conflicts.
----------------------------------------
(a) Purchaser has full corporate power and authority to
execute and deliver this Agreement and each Purchaser Document and to
perform fully its obligations hereunder and thereunder. The
execution, delivery and performance by Purchaser of this Agreement and
each Purchaser Document has been duly authorized by all necessary
action on the part of Purchaser. This Agreement has been, and the
Purchaser Documents will be, at or prior to the Closing Date, duly
executed and delivered by Purchaser and (assuming the due
authorization, execution and delivery by the
<PAGE>
<PAGE>
other parties hereto and thereto) this Agreement constitutes, and
Purchaser Documents when so executed and delivered will constitute,
legal, valid and binding obligations of Purchaser, enforceable against
Purchaser in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).
(b) Except as set forth in Schedule 4.2(b) hereto, the
---------------
execution, delivery and performance by Purchaser of this Agreement and
each of the Purchaser Documents, and the consummation of the
transactions contemplated hereby and thereby, does not and will not
(i) violate any provision of the certificate of incorporation or by-
laws of Purchaser; (ii) subject to obtaining the consents referred to
in Section 4.3, conflict with, or result in the breach of, or
constitute a default under, or result in the termination, cancellation
or acceleration of any right or obligation of Purchaser under, any
material lease, agreement, commitment or other instrument to which
Purchaser is a party or by which Purchaser or any of its properties is
bound; or (iii) assuming compliance with the matters set forth in
Section 4.3 and 3.8 hereof, violate, or result in a breach of or
constitute a default under, any Law applicable to Purchaser, other
than in the cases of clauses (ii) and (iii) any violation, conflict,
breach, termination, default, cancellation or acceleration, which,
individually or in the aggregate, would not materially impair or delay
the ability of Purchaser to perform its obligations hereunder.
4.3. Consents. No consent, waiver, approval
--------
or authorization of, or declaration or filing with, or notification
to, any Governmental Body or other Person, which has not been
previously made, obtained or filed, is required on the part of
Purchaser in connection with the execution, delivery and performance
of this Agreement or the Purchaser Documents, except (a) for
compliance with the applicable requirements of the HSR Act; (b) as set
forth on Schedule 4.3 hereto; and (c) where the failure to obtain such
------------
consent, waiver, approval or authorization would not delay the ability
of Purchaser to effect the Closing.
4.4. Legal Proceedings. There are no Legal Proceedings
-----------------
pending or, to the Knowledge of Purchaser, threatened that question
the validity of this Agreement or any Purchaser Document or any action
taken or to be taken by Purchaser in
<PAGE>
<PAGE>
connection with the consummation of the transactions contemplated
hereby or thereby. Schedule 4.4 hereto sets forth a true and correct
------------
list of all Legal Proceedings pending or, to the Knowledge of
Purchaser, threatened against or affecting Purchaser or the business,
properties or assets of Purchaser, at law or in equity, which, with
respect to such Legal Proceedings, if adversely determined, commenced
or threatened would have a material adverse effect on the business,
financial condition or results of operations of Purchaser.
4.5. Capitalization. The authorized capital stock of
--------------
Purchaser consists of 1,000 shares of Common Stock, par value $.01 per
share (the "Purchaser Common Stock"). As of the date hereof, 100
shares of Purchaser Common Stock are issued and outstanding. Except
as set forth on Schedule 4.5 hereto, there are no outstanding options,
------------
securities, warrants, commitments, arrangements or rights of any kind
to acquire any shares of Purchaser Common Stock or other voting
securities of Purchaser or any securities convertible into any shares
of Purchaser Common Stock or other voting securities of Purchaser, nor
are there any obligations to issue any such options, securities,
warrants, commitments, arrangements or rights. There are no
outstanding contractual obligations of Purchaser or its Affiliates to
repurchase, redeem or otherwise acquire shares of Purchaser Common
Stock.
4.6. Financing. Purchaser believes that it will be able to
---------
obtain the funds necessary to effect the Closing and all other
transactions contemplated by this Agreement.
4.7. Seller's Representations and Warranties. Purchaser
---------------------------------------
acknowledges that Seller has not made any representation or warranty
as to the condition or prospects, financial or otherwise, of the
Business except as expressly set forth herein.
4.8. Compliance with Law. Except as set forth on Schedule
------------------- --------
4.8 hereto, Purchaser is and the business of Purchaser is being
---
conducted in compliance with all Laws, except where the failure so to
comply, individually or in the aggregate, would not have a material
adverse effect on the business, financial condition or results of
operations of Purchaser, and Purchaser has all Permits necessary for
the conduct of the businesses of Purchaser as currently conducted,
other than those the absence of which would not have a material
adverse effect on the business, financial condition or results of
operations of Purchaser; it being understood that nothing in this
-- ----- ----------
representation is intended
<PAGE>
<PAGE>
to address any compliance issue that is the subject of any other
representation or warranty set forth herein.
4.9. Investment Representation.
-------------------------
(a) Purchaser is acquiring the Shares for its own account,
for investment purposes only and not with a view to the distribution
(as such term is used in Section 2(11) of the Securities Act) thereof.
Purchaser understands that the Shares have not been registered under
the Securities Act and cannot be sold unless subsequently registered
under the Securities Act or an exemption from such registration is
available.
(b) Purchaser possesses such Knowledge and experience in
financial and business matters so that it is capable of evaluating the
merits and risks of its investment hereunder. Purchaser acknowledges
that it has conducted its own investigation of the business and
affairs of Seller, the Subsidiaries and the Business and it has
received all the information that it requested from Seller concerning
it, the Subsidiaries and the Business.
4.10. No Other Representations or Warranties. Except for
--------------------------------------
the representations and warranties contained in this Article IV,
neither Purchaser nor any other Person makes any other express or
implied representations or warranty on behalf of Purchaser.
ARTICLE V
COVENANTS
5.1. Access to Information; Confidentiality.
--------------------------------------
(a) Seller agrees that, prior to the Closing Date,
Purchaser shall be entitled, through its authorized officers,
employees and representatives (including, without limitation, its
legal counsel and accountants) (collectively, "Purchaser
Representatives"), to make such reasonable investigation (including
any environmental investigation) of the properties, businesses and
operations of Seller and the Subsidiaries relating to the Business and
such examination of the books, records, financial condition and
operations of Seller and the Subsidiaries relating to the Business or
the Subsidiaries as it reasonably requests and to make extracts and
copies to the extent necessary of such books and records; provided,
--------
however, Seller shall not be obligated to provide Purchaser or the
-------
Purchaser Representatives with any information the provision of which
may be prohibited by
<PAGE>
<PAGE>
Law or contractual obligation. Any such investigation and examination
shall be conducted during regular business hours, under reasonable
circumstances and upon reasonable prior notice to Seller. No
disclosure by Seller whatsoever during any investigation by Purchaser
or the Purchaser Representatives shall constitute an enlargement or
limitation of or additional warranty or representation of Seller
beyond those expressly set forth in this Agreement.
(b) Information obtained by Purchaser and the Purchaser
Representatives pursuant to this Agreement, or otherwise in connection
with the execution of this Agreement and the consummation of the
transactions contemplated hereby, shall be subject to the provisions
of the confidentiality letter, dated July 19, 1996, from Fox Drug to
York Management Services, Inc. (the "Confidentiality Letter").
5.2. Transfer and Assignment of Certain Assets and
---------------------------------------------
Liabilities to Fox Drug. Prior to the Closing, (a) Seller shall
-----------------------
assign, transfer, convey and deliver to Fox Drug, and Fox Drug shall
acquire and accept from Seller, all of Seller's right, title and
interest in and to any and all assets, properties, rights, contracts
and claims related in any way to the Business (except for the Shares,
the Transferred Interests and any amounts due and owing to Seller from
(i) Fox Health or (ii) any Affiliate of Fox Health that is not a
Subsidiary, wherever located, whether tangible or intangible, as the
same shall exist immediately prior to the Closing) (such rights,
titles and interests in and to such assets, properties, rights,
contracts and claims, being collectively referred to herein as the
"Other Fox Corp Assets"); and (b) Fox Drug shall assume, perform and
discharge all debts, claims, liabilities, obligations, damages and
expenses of Seller with respect to the Business of every kind and
nature, whether known, unknown, contingent, absolute, determined,
indeterminable or otherwise on the Closing Date and whether incurred
or accruing prior to, on or after the Closing Date, except with
respect to the Merger Litigation, the Transferred Interests and each
of the employment agreements between Seller and Abbey Butler and
Melvyn Estrin (collectively, the "Other Assumed Liabilities"). It is
expressly understood that Fox Drug is not assuming and will not
perform or discharge any debt, claim, liability, obligation, damage or
expense with respect to the Merger Litigation, the Transferred
Interests and each of the employment agreements between Abbey Butler
and Melvyn Estrin.
-------------------------------------------
5.3. Conduct of the Business Pending the Closing.
-------------------------------------------
Except as otherwise expressly contemplated by this Agreement, as set
forth on Schedule 5.3 hereto or with the prior
------------
<PAGE>
<PAGE>
written consent of Purchaser, which consent shall not be unreasonably
withheld, from the date hereof until the Closing Date, Seller shall
and shall cause the Subsidiaries to:
(a) not declare, set aside, make or pay any dividend or
other distribution (whether in cash, stock or property) in respect of
the capital stock of any Subsidiary or repurchase, redeem or otherwise
acquire any outstanding shares of the capital stock or other
securities of, or other ownership interests in, any Subsidiary or
effect any recapitalization, split or other change in the
capitalization of any Subsidiary;
(b) not transfer, issue, sell or dispose of any shares of
capital stock or other securities of any Subsidiary or grant options,
warrants, calls or other rights to purchase or otherwise acquire
shares of any of the Subsidiaries' capital stock or other securities;
(c) not amend the certificate of incorporation or by-laws
of any Subsidiary;
(d) use reasonable efforts to (i) preserve the present
business operations, organization (including, without limitation,
management and the sales force) and goodwill of the Business and (ii)
preserve the present relationships with Persons (other than Affiliates
of Seller) having business dealings with Seller and the Subsidiaries
relating to the Business; and
(e) maintain each Subsidiary at all times as a corporation
duly organized, validly existing and in good standing under the laws
of the jurisdiction under which it is incorporated;
(f) consult with Purchaser regarding all significant
developments, transactions and proposals relating to the Business or
any Subsidiary; and
(g) not agree to do anything prohibited by this Section
5.3.
5.4. Best Efforts. Seller and Purchaser will cooperate and
------------
use their respective best efforts to fulfill the conditions precedent
to the other party's obligations hereunder, including, but not limited
to, securing as promptly as practicable all consents, approvals,
waivers and authorizations required in connection with the
transactions contemplated hereby. Each of Seller and Purchaser will
promptly file documentary materials required by the HSR Act and
promptly file any
<PAGE>
<PAGE>
additional information requested as soon as practicable after receipt
of request therefor. Without limiting the generality of the
foregoing, Purchaser and Seller shall take or cause to be taken all
actions, if any, required by the relevant Governmental Bodies for the
consummation of the transactions contemplated by this Agreement.
Seller agrees to reasonably cooperate with Purchaser, to the extent
consistent with the terms of this Agreement, in connection with
Purchaser securing financing necessary to consummate the transactions
contemplated hereby and Purchaser shall use its best efforts to obtain
such financing.
5.5. Certain Releases. Seller and Purchaser shall use
----------------
their respective best efforts so that immediately upon the
consummation of the transactions contemplated hereby Seller will be
released from any guarantees under the Debt.
ARTICLE VI
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the purchase of
the Shares on the Closing Date is, at the option of Purchaser, subject
to the satisfaction of the following conditions (any or all of which
may be waived by Purchaser at or prior to the Closing):
6.1. Representations, Warranties and Covenants.
-----------------------------------------
(a) All representations and warranties of Seller to
Purchaser contained herein shall be true and correct in all material
respects at and as of the Closing Date with the same effect as though
those representations and warranties had been made again at and as of
the Closing Date, except (i) to the extent that certain of such
representations and warranties have been made as of or through a
specified date (which representations and warranties shall continue on
the Closing Date to have been true and correct in all material
respects as of or through the specified date); and (ii) for changes in
representations and warranties contemplated by this Agreement;
provided, however, that for the purposes of this Section 6.1 only,
-------- -------
such representations and warranties shall be deemed to be true and
correct unless the failure or failures of such representations and
warranties to be so true and correct (without regard to materiality
qualifiers contained therein), individually or in the aggregate,
results or would reasonably be expected to result in a Material
Adverse Effect.
<PAGE>
<PAGE>
(b) Seller shall have performed and complied, in all
material respects, with all obligations and covenants required by this
Agreement to be performed or complied with by Seller on or prior to
the Closing Date.
(c) Purchaser shall have been furnished a certificate
(dated the Closing Date and in form and substance reasonably
satisfactory to Purchaser) executed, on behalf of Seller, by the Chief
Executive Officers of Seller certifying as to the fulfillment of the
conditions set forth in this Section 6.1.
6.2. HSR Act. All applicable waiting periods in respect of
-------
the transactions contemplated by this Agreement under the HSR Act
shall have expired or been earlier terminated.
6.3. No Prohibition. There shall not be in effect any
--------------
Order restraining, enjoining or otherwise prohibiting the consummation
of the transactions contemplated hereby.
6.4. Delivery of Seller Documents and Additional Matters.
---------------------------------------------------
Seller shall have executed and delivered to Purchaser at the Closing
all of the Seller Documents. All corporate and other proceedings, and
all documents, instruments and other legal matters in connection with
the transactions contemplated by this Agreement or by the other
agreements referred to herein shall be reasonably satisfactory in form
and substance to Purchaser and its counsel.
6.5. Resignations. Purchaser shall have received the
------------
resignations, effective the Closing Date, of such directors of the
Subsidiaries as the Purchaser shall designate in writing to Seller at
least three (3) Business Days prior to the Closing Date.
6.6. Purchaser Financing. Purchaser shall have received
-------------------
$10,000,000 from Persons who have agreed to purchase common equity or
debt securities from Purchaser, and Fox Drug shall have received
$50,000,000, or $50,000,000 shall be available to Fox Drug, from
Persons who have agreed to provide working capital to Fox Drug, in
each case, pursuant to the commitments described in Section 9.2(b)
hereof.
6.7. Purchaser Acquisition. Purchaser shall have acquired
---------------------
by merger or otherwise the business and operations of a competitor to
the Business on terms and conditions satisfactory to Seller and
Purchaser.
<PAGE>
<PAGE>
6.8. Opinion of Seller's Counsel. Purchaser shall have
---------------------------
received an opinion of counsel for Seller, dated the Closing Date, to
the effect (a) that this Agreement and each of the Seller Documents
has been duly authorized, executed and delivered by Seller and (b)
that this Agreement and each of the Seller Documents are valid,
binding and enforceable in accordance with their terms.
6.9. Other Fox Corp Assets Assignment and Other Assumed
--------------------------------------------------
Liabilities Assumption. The assignment of the Other Fox Corp Assets
----------------------
by Seller to Fox Drug and the assumption of the Other Assumed
Liabilities by Fox Drug shall have been consummated in accordance with
Section 5.2 hereof.
ARTICLE VII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the sale and
transfer to Purchaser of the Shares on the Closing Date is, at the
option of Seller, subject to the satisfaction of the following condi-
tions (any or all of which may be waived by Seller at or prior to the
Closing):
7.1. Representations, Warranties and Covenants.
-----------------------------------------
(a) All representations and warranties of Purchaser to
Seller contained herein shall be true and correct in all material
respects at and as of the Closing Date with the same effect as though
those representations and warranties had been made again and as of the
Closing Date, except (i) to the extent that certain of such repre-
sentations and warranties have been made as of or through a specified
date (which representations and warranties shall continue on the
Closing Date to have been true and correct in all material respects as
of or through the specified date); and (ii) for changes in
representations and warranties contemplated by this Agreement.
(b) Purchaser shall have performed and complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Purchaser on or prior to
the Closing Date.
(c) Seller shall have been furnished a certificate (dated
the Closing Date and in form and substance reasonably satisfactory to
Seller) executed, on behalf of Purchaser, by the Chief Executive
Officer of Purchaser certifying as to the fulfillment of the
conditions set forth in this Section 7.1.
<PAGE>
<PAGE>
7.2. HSR Act. All applicable waiting periods in respect of
-------
the transactions contemplated by this Agreement under the HSR Act
shall have expired or been earlier terminated.
7.3. No Prohibition. There shall not be in effect any
--------------
Order restraining, enjoining or otherwise prohibiting the consummation
of the transactions contemplated hereby.
7.4. Delivery of Purchaser Documents and Additional
----------------------------------------------
Matters. Purchaser shall have executed and delivered to Seller at the
-------
Closing all of the Purchaser Documents. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement or by
the other agreements referred to herein shall be reasonably
satisfactory in form and substance to Seller and its counsel.
7.5. Purchaser Financing. Purchaser shall have received
-------------------
$10,000,000 from Persons who have agreed to purchase common equity or
debt securities from Purchaser, and Fox Drug shall have received
$50,000,000, or $50,000,000 shall be available to Fox Drug, from
Persons who have agreed to provide working capital to Fox Drug, in
each case, pursuant to the commitments described in Section 9.2(b)
hereof.
7.6. Purchaser Acquisition. Purchaser shall have acquired
---------------------
by merger or otherwise the business and operations of a competitor to
the Business on terms and conditions satisfactory to Seller and
Purchaser.
7.7. Certain Releases. Seller and Purchaser shall have
----------------
secured the releases of Seller from all guarantees of the Debt.
7.8. Opinion of Purchaser's Counsel. Seller shall have
------------------------------
received an opinion of counsel for Purchaser, dated the Closing Date,
to the effect (a) that this Agreement and each of the Purchaser
Documents has been duly authorized, executed and delivered and (b)
that this Agreement and each of the Seller Documents are valid,
binding and enforceable in accordance with their terms.
ARTICLE VIII
DOCUMENTS TO BE DELIVERED AT THE CLOSING
<PAGE>
<PAGE>
8.1. Deliveries by Seller to Purchaser. At the Closing,
---------------------------------
Seller shall deliver, or shall cause to be delivered, to Purchaser the
following:
(a) duly executed stock certificates representing the
Shares (the "Subsidiaries' Stock Certificates"), in each case duly
endorsed in blank or with an executed blank stock power attached
thereto;
(b) resignations of each of the directors of the
Subsidiaries as required by Section 6.5 hereof;
(c) the certificate of Seller referred to in Section 6.1
hereof;
(d) a receipt for the Total Consideration paid to Seller at
the Closing;
(e) an affidavit, in a form reasonably satisfactory to
Purchaser, from Seller stating under penalties of perjury Seller's
United States taxpayer identification number and that Seller is not a
foreign person within the meaning of Section 1445(b)(2) of the Code
(the "FIRPTA Affidavit");
(f) the opinion of counsel for Seller referred to in
Section 6.8 hereof;
(g) a copy of the Stockholders' Agreement, substantially in
the form of Exhibit B hereto (the "Stockholders' Agreement"), duly
---------
executed by Seller; and
(h) an assignment and assumption agreement, dated a date
prior to the Closing Date, transferring to Fox Drug all of the Other
Fox Corp Assets and pursuant to which Fox Drug assumes all of the
Other Assumed Liabilities and any other agreements or instruments
required to be executed in order for Seller to assign the Other Fox
Corp Assets to Fox Drug and for Fox Drug to assume the Other Assumed
Liabilities in accordance with Section 5.2 hereof (the "Assignment and
Assumption Agreements").
8.2. Deliveries by Purchaser to Seller. At the Closing,
---------------------------------
Purchaser shall deliver, or cause to be delivered, to Seller the
following:
(a) a duly executed Note;
<PAGE>
<PAGE>
(b) immediately available funds in the amount of the Cash
Consideration, by wire transfer as provided in Section 2.1 hereof;
(c) the certificate of Purchaser referred to in Section 7.1
hereof;
(d) a copy of the Stockholders' Agreement, duly executed by
Purchaser and its stockholders; and
(e) the opinion of the counsel for Purchaser referred to in
Section 7.8 hereof.
ARTICLE IX
CLOSING; TERMINATION
9.1. Closing Date. The Closing shall take place at the
------------
offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New
York at 9:00 a.m. (New York City time) on the fifth Business Day after
the conditions set forth in Articles VII and VIII hereof have been
satisfied or waived by the party entitled to do so, or at such other
place and at such other time and date as may be mutually agreed upon
by Purchaser and Seller. The date on which the Closing occurs is
referred to in this Agreement as the "Closing Date."
9.2. Termination. This Agreement may be terminated prior
-----------
to the Closing as follows:
(a) by the written agreement of Purchaser and Seller;
(b) by either Purchaser or Seller (i) if within 25 calendar
days from the date of this Agreement, Purchaser has not secured
commitments from responsible Persons to purchase on or before the
Closing common equity or debt securities from Purchaser in the amount
of $10,000,000; (ii) if within 30 calendar days from the date of this
Agreement, Purchaser has not secured commitments from financial
institutions to provide on or before the Closing working capital
financing to Fox Drug in the amount of $50,000,000; or (iii) if, after
the expiration of the applicable time period described in clause (i)
or (ii), any of the commitments described in clause (i) or (ii),
respectively, that have been so secured are terminated or expire
without Purchaser securing an adequate replacement therefor.
(c) by either Purchaser or Seller (i) if the Closing shall
have not occurred prior to October 18, 1996; provided that
--------
<PAGE>
<PAGE>
the terminating party is not in material breach of its obligations
under this Agreement; or (ii) if there shall be in effect a final
nonappealable Order restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby; it being
--------
agreed that the parties hereto shall promptly appeal, and shall
------
diligently pursue, any adverse determination which is appealable; and
(d) by Seller, if the Board of Directors of Seller
determines, in the exercise of its fiduciary duties and other legal
obligations under applicable Law after consultation with its outside
legal counsel, to accept, and recommend that its sole stockholder
accept, any Acquisition Proposal (other than the sale of the Shares
pursuant to this Agreement).
Upon the occurrence of any of the events specified in this
Section 9.2 (other than Section 9.2(a) hereof), written notice of such
event shall promptly be given to the other party to this Agreement,
whereupon this Agreement shall terminate.
9.3. Effect of Termination. If this Agreement is
---------------------
terminated in accordance with Section 9.2 hereof and the transactions
contemplated hereby are not consummated, this Agreement shall become
null and void and of no further force and effect, except (a) for this
Section 9.3, (b) for the provisions of Sections 5.1(b), 12.6 and
12.8 hereof; provided, however, that any termination of this Agreement
-------- -------
pursuant to Section 9.2 hereof shall not affect any of Purchaser's
rights under the Expense Reimbursement and Breakup Fee Agreement, and
(c) that the termination of this Agreement for any cause shall not
relieve any party hereto from any liability which at the time of
termination had already accrued to any other party hereto or which
thereafter may accrue in respect of any act or omission of such party
prior to such termination.
ARTICLE X
ADDITIONAL POST-CLOSING COVENANTS
10.1. Further Assurances. From time to time after the
------------------
Closing Date, Seller and Purchaser shall, at its sole cost and expense
and at the reasonable request of Purchaser or Seller, as the case may
be, execute and deliver any other assurances or documents necessary
for it to satisfy its respective obligations hereunder or obtain the
benefits contemplated hereby, including such other and further
instruments of assignment, assumption, transfer and conveyance and
take such other and further action as may be reasonably requested in
order to vest in Fox Drug and put
<PAGE>
<PAGE>
Fox Drug in possession of the Other Fox Corp Assets, and, at the
reasonable request of Seller, to give effect to Fox Drug's assumption
of the Other Assumed Liabilities
10.2. Books and Records; Personnel. For a period of seven
----------------------------
(7) years after the Closing Date (or such longer period as may be
required by any Governmental Body or ongoing Legal Proceeding):
(a) Purchaser shall not dispose of or destroy any of the
business records and files of the Business. If Purchaser wishes to
dispose of or destroy such records and files after that time, it shall
first give 60 days' prior written notice to Seller and Seller shall
have the right, at its option and expense, upon prior written notice
to Purchaser within such 60-day period, to take possession of the
records and files within 90 days after the date of Seller notice.
(b) Purchaser shall allow Seller and any of its directors,
officers, employees, counsel, representatives, accountants and
auditors (collectively, the "Seller Representatives") access to all
business records and files of the Subsidiaries or the Business which
are transferred to it in connection herewith, which are reasonably
required by such party in anticipation of, or preparation for, any
existing or future Legal Proceeding (including any Legal Proceeding
brought by or assigned to Seller or any Affiliate of Seller against
C.D. Smith Inc. or Medicine Shoppe International Inc.) or Tax Return
preparation, during regular business hours and upon reasonable notice
at Purchaser's principal place of business or at any location where
such records are stored, and Seller shall have the right, at its own
expense, to make copies of any such records and files; provided, how
-------- ---
ever, that any such access or copying shall be had or done in such a
----
manner so as not to interfere with the normal conduct of Purchaser's
business or operations.
(c) Purchaser shall make available to Seller or the Seller
Representatives, upon written request and at Seller's expense (i)
personnel to assist Seller in locating and obtaining records and files
maintained by Purchaser and (ii) any of the personnel previously in
any Seller's employ whose assistance or participation is reasonably
required by Seller in anticipation of, or preparation for, existing or
future Legal Proceeding (including any Legal Proceeding brought by or
assigned to Seller or any Affiliate of Seller against C.D. Smith Inc.
or Medicine Shoppe International Inc.), Tax Return preparation or
other matters in which Seller or any of its Affiliates is involved and
which is related to the Business; provided, however, that any
-------- -------
<PAGE>
<PAGE>
such access to personnel shall be had in such a manner so as not to
interfere with the normal conduct of Purchaser's business or
operations.
ARTICLE XI
INDEMNIFICATION AND TAX MATTERS
11.1. Indemnification by Seller. Subject to the provisions
-------------------------
of this Article XI and if (but only if) the Closing is consummated,
Seller agrees to indemnify and hold Purchaser and its officers,
directors and Affiliates (collectively, the "Purchaser Indemnified
Parties") harmless from and against all Damages, including, without
limitation, those arising from third-party claims, resulting from or
arising out of:
(a) the failure of Seller to comply in all material
respects after the Closing Date with any of the covenants contained in
this Agreement that are required to be performed by Seller;
(b) the Transferred Interests;
(c) the Merger Litigation;
(d) any claims by any Person purporting to have acted as a
broker, finder or financial advisor for Seller or any Affiliate of
Seller for any fees, commissions or like payment based in any way on
any agreement or arrangement made by or on behalf of Seller or any
Affiliate of Seller;
(e) the failure of any representation or warranty made by
Seller in the first sentence of Section 3.1 or Section 3.2(a),
3.2(b)(i), 3.4(a), 3.4(b) or 3.5 hereof to be true and correct in all
material respects as of the date of this Agreement and as of the
Closing Date; and
(f) any debts, liabilities or obligations of Seller or any
Affiliate of Seller (other than a Subsidiary) that are not Other
Assumed Liabilities, including, without limitation, any debts,
liabilities and obligations of Seller or any Affiliate of Seller
(other than a Subsidiary) under any employment contract with Abbey
Butler or Melvyn Estrin.
11.2. Indemnification by Purchaser. Subject to the
----------------------------
provisions of this Article XI and if (but only if) the Closing is
consummated, Purchaser agrees to indemnify and hold Seller and its
officers, directors and Affiliates (collectively, the "Seller
<PAGE>
<PAGE>
Indemnified Parties") harmless from and against all Damages,
including, without limitation, those arising from third-party claims,
resulting from or arising out of:
(a) the failure of Purchaser to comply in all material
respects after the Closing Date with any of the covenants contained in
this Agreement that are required to be performed by Purchaser;
(b) the operation of the Business or ownership of the
Shares on or after the Closing Date, including, without limitation,
relating to Taxes, the Debt and the Other Fox Corp Assets;
(c) the Employee Benefit Plans and Benefit Arrangements,
the Employees and the employment or termination of employment,
including a constructive termination or the failure to employ an
individual, by Purchaser or the Subsidiaries attributable to any
actions or inactions by Purchaser or the Subsidiaries;
(d) any Legal Proceeding set forth on Schedule 3.16 hereto
-------------
after the Closing Date;
(e) any claims by any Person purporting to have acted as a
broker, finder or financial advisor for Purchaser or any Affiliate of
Purchaser for any fees, commissions or like payment based in any way
on any arrangement or agreement made by or on behalf of Purchaser or
any Affiliate of Purchaser;
(f) the failure of any representation or warranty made by
Purchaser in Section 4.5 hereof to be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date;
and
(g) the Other Assumed Liabilities.
11.3. Determination of Damages and Related Matters. In
--------------------------------------------
calculating any amounts payable pursuant to Section 11.1 or 11.2
hereof, Seller or Purchaser, as the case may be, shall receive credit
for (a) any tax benefit allowable as a result of the facts giving rise
to the claim for indemnification, and (b) any insurance recoveries,
and no amount shall be included for Purchaser's or Seller's, as the
case may be, special, consequential or punitive damages. Seller and
Purchaser agree that, except as specifically set forth in this
Agreement (including the Schedules and Exhibits hereto), neither party
(including its respective representatives) has made or shall have
<PAGE>
<PAGE>
liability for any representation or warranty, express or implied, in
connection with the transactions contemplated by this Agreement,
including, in the case of Seller and its representatives, any
representation or warranty, express or implied (written or oral), as
to the accuracy or completeness of any information regarding the
Business. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT PURCHASER
-- -- --------- ---------- --- ------
ACCEPTS THE CONDITION OF THE BUSINESS "AS IS, WHERE IS" WITHOUT ANY
REPRESENTATION, WARRANTY OR GUARANTEE, EXPRESS OR IMPLIED (WRITTEN OR
ORAL), AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
OTHERWISE AS TO THE CONDITION, SIZE, EXTENT, QUANTITY, TYPE OR VALUE
OF ANY OF THE ASSETS AND PROPERTIES OF THE BUSINESS.
11.4. Survival of Representations, Warranties
---------------------------------------
and Covenants. The parties hereto agree that the representations and
-------------
warranties made in this Agreement shall terminate immediately upon
consummation of the Closing or upon the earlier termination of this
Agreement pursuant to Section 9.2 hereof, as the case may be; provided
--------
that the representations and warranties made in the first sentence of
Section 3.1 and Sections 3.2(a), 3.2(b)(i), 3.4(a), 3.4(b), 3.5 and
4.5 hereof shall survive until expiration of the applicable statutes
of limitations.
11.5. Notice of Indemnification. In the event any Legal
-------------------------
Proceeding shall be threatened or instituted or any claim or demand
shall be asserted by any Purchaser Indemnified Party or Seller
Indemnified Party in respect of which payment may be sought under the
provisions of this Article XI or for breach of any of the
representations and warranties set forth herein, the Purchaser
Indemnified Party or Seller Indemnified Party seeking indemnification
(the "Indemnitee") shall promptly cause written notice of the
assertion of any such claim of which it has knowledge which it
reasonably believes to be covered by this indemnity to be forwarded to
Sellers or Purchaser, as the case may be (the "Indemnitor"); provided,
--------
however, that the failure to give such notice shall not affect the
-------
indemnification provided hereunder except to the extent the Indemnitor
has actually been prejudiced as a result of such failure. Any notice
of a claim by reason of any of the representations, warranties or
covenants contained in this Agreement shall state specifically the
representation, warranty or covenant with respect to which the claim
is made, the facts giving rise to an alleged basis for the claim, and
the amount of the liability asserted against the Indemnitor by reason
of the claim.
11.6. Indemnification Procedure for Third-Party Claims.
------------------------------------------------
Except as otherwise provided herein, in the event of the initiation of
any Legal Proceeding against an Indemnitee by a
<PAGE>
<PAGE>
third party, the Indemnitor shall have the absolute right after the
receipt of notice, at its option and at its own expense, to be
represented by counsel (which counsel shall be reasonably satisfactory
to the Indemnitee) and to defend against, negotiate, settle or
otherwise deal with any proceeding, claim, or demand which relates to
any Damage indemnified against hereunder; provided, however, (i) that
-------- -------
the Indemnitor exercises such option in writing within 30 days of
receipt of notice; and (ii) that the Indemnitee may participate in any
such proceeding with counsel of its choice and at its expense. The
parties hereto agree to cooperate fully with each other in connection
with the defense, negotiation or settlement of any such legal
proceeding, claim or demand. To the extent the Indemnitor elects not
to defend such proceeding, claim or demand, and the Indemnitee defends
against or otherwise deals with any such proceeding, claim or demand,
the Indemnitee may retain counsel (reasonably satisfactory to
Indemnitor), at the expense of the Indemnitor, the Indemnitor shall
nevertheless indemnify the Indemnitee for the full amount of the
Damages relating to such proceeding, claim or demand and control the
defense of and settle such proceeding; provided that the Indemnitee
--------
shall give the Indemnitor twenty (20) days written notice prior to
entering into any such settlement and shall not settle any such claim
without the consent of the Indemnitor, which consent shall not be
unreasonably withheld. If the Indemnitee shall settle any such
proceeding without the consent of the Indemnitor, the Indemnitee shall
thereafter have no claim against the Indemnitor under this Article XI
with respect to any Damages occasioned by such settlement.
11.7. Exclusive Remedy. The exclusive remedy available to
----------------
a party hereto in respect of the matters covered by Section 11.1 or
11.2 hereof shall be to proceed in the manner and subject to the
limitations contained in this Article XI.
11.8. Tax Indemnification; Tax Sharing; Other Tax Matters.
---------------------------------------------------
(a) Tax Indemnification.
-------------------
(i) Fox Corp shall be liable for, shall pay
or cause to be paid and shall indemnify and hold any Purchaser
Indemnified Party harmless from and against any and all Damages, if
any, arising out of or based upon or for or in respect of (A) any and
all federal income Taxes with respect to the Subsidiaries for any
taxable period ending on or before the Closing Date, including as
transferee, successor by operation of Law or by contract, (B) any and
all Taxes resulting solely from the Subsidiaries having been included
in any consolidated federal
<PAGE>
<PAGE>
income Tax Return that included the Subsidiaries for any taxable
period (or portion thereof) ending on or before the Closing Date
pursuant to Treasury Regulation Section 1.1502-6(a) (other than any
liability arising under such Treasury Regulation or analogous law by
reason of the Subsidiaries becoming a member of the consolidated group
of which the Purchaser is a member), (C) any Tax imposed upon or
relating to any Seller Party for any period and (D) any income or
franchise Tax arising as a result of the Section 338(h)(10) Election.
Any amount due from Fox Corp shall be paid in immediately available
funds at least five (5) Business Days before the payment date of the
Taxes to which such payment relates.
(ii) Purchaser shall be liable for, shall pay or cause
to be paid and shall indemnify and hold the Seller Indemnified Parties
harmless from and against any and all Damages arising out of or based
upon or for or in respect of (A) any Transfer Taxes and (B) except as
provided in Section 11.8(a)(i) hereof, all other Taxes.
(b) Preparation of Tax Returns.
--------------------------
(i) Fox Corp (A) shall include, or cause to be
included, the Subsidiaries in, and shall file, (1) the United States
consolidated federal income Tax Returns of Fox Corp or its Affiliated
Group for the taxable periods of the Subsidiaries ending on or prior
to the Closing Date (including any deferred amounts restored into
income under Section 1.1502-13 or Section 1.1502-14 of the Treasury
regulations and any excess loss account taken into income under
Section 1.1502-19 of the Treasury regulations) and (2) all other
consolidated, combined or unitary Tax Returns of Fox Corp or its
Affiliated Group for the taxable periods of the Subsidiaries ending on
or prior to the Closing Date and (B) also shall or shall cause the
Subsidiaries to file all other Tax Returns of or which include the
Subsidiaries required to be filed (taking into account any extensions)
on or prior to the Closing Date.
(ii) For federal income Tax purposes, the taxable year
of the Subsidiaries shall end as of the close of the Closing Date and,
with respect to all other Taxes, Fox Corp and Purchaser will, unless
prohibited by applicable Law, close the taxable period of the
Subsidiaries as of the close of the Closing Date. Neither Fox Corp
nor Purchaser shall take any position inconsistent with the preceding
sentence on any Tax Return. To the extent permitted by Law, the
principles of this Subsection also shall be applied to all state,
local and foreign Tax Returns.
<PAGE>
<PAGE>
(iii) Purchaser shall file all Tax Returns of, or that
include, any Subsidiary for all taxable periods ending after the
Closing Date.
(c) Cooperation with Respect to Tax Returns. Purchaser and
---------------------------------------
Fox Corp agree to furnish or cause to be furnished to each other, upon
written request, and each at their own expense, as promptly as
practicable, such information (including access to books and records)
and assistance relating to the Subsidiaries as is reasonably necessary
for the filing of any Tax Return, for the preparation for any audit,
and for the prosecution or defense of any claim, suit or proceeding
relating to any adjustment or proposed adjustment with respect to
Taxes, including making employees available on a mutually convenient
basis to provide additional information and explanations of any
material provided hereunder. Fox Corp shall retain in its possession
and shall provide Purchaser reasonable access to (including the right
to make copies of) all Tax Returns and tax records or the relevant
portions thereof relating to the Subsidiaries that might be relevant
to computations or payments required after the Closing Date with
respect to Tax matters relating to any taxable period ending on or
prior the Closing Date until the relevant statute of limitations has
expired. After such time, Fox Corp may dispose of such materials,
provided that prior to such disposition Fox Corp shall give 90 days
prior written notice to Purchaser and Purchaser shall have the right
at its option and expense, upon prior written notice to Fox Corp
within that 90-day period, to take possession of such materials within
180 days after the date of Fox Corp's notice. Purchaser or the
Subsidiaries shall retain in their possession, and shall provide Fox
Corp reasonable access to (including the right to make copies of),
such supporting books and records and any other materials that Fox
Corp may specify with respect to Tax matters relating to any taxable
period ending on or prior to the Closing Date until the relevant
statute of limitations has expired. After such time, Purchaser may
dispose of such materials, provided that prior to such disposition
Purchaser shall give 90 days prior written notice to Fox Corp and Fox
Corp shall have the right at its option and expense, upon prior
written notice to Purchaser within that 90-day period, to take
possession of such materials within 180 days after the date of
Purchaser's notice.
(d) Tax Audits.
----------
(i) Whenever any taxing authority asserts a claim,
makes an assessment or otherwise disputes or affects the Tax reporting
position of the Subsidiaries for taxable periods ending on or prior to
or including the Closing Date ("Tax
<PAGE>
<PAGE>
Claims"), Purchaser, promptly upon receipt by Purchaser or the
Subsidiaries of notice thereof, shall inform Fox Corp thereof in
writing.
(ii) Fox Corp shall have the sole right to represent
the interests of the Subsidiaries in any Tax Claims for which Fox Corp
indemnifies Purchaser Indemnified Parties under this Agreement at its
sole expense, cost and risk, provided, however, that (x) if a
-------- -------
Subsidiary is requested by Seller to pay or cause to be paid the Tax
claimed and to sue for a refund, then Seller shall advance to the
Subsidiary, on an interest-free basis and on a Grossed-Up Basis, the
amount of Tax claimed and (y) Seller shall inform Purchaser of all
developments and events relating to such Tax Claim (including, without
limitation providing to Purchaser copies of all written materials
relating to such Tax Claim).
(iii) Purchaser shall have the sole right to represent
the interests of the Subsidiaries in all other Tax Claims.
(e) Refund Claims. To the extent any determination of Tax
-------------
liability of the Subsidiaries, whether as the result of an audit or
examination, a claim for refund, the filing of an amended return or
otherwise, results in any refund of federal income Taxes paid
attributable to (i) any period which ends on or before the Closing
Date or (ii) any sale, exchange or other disposition of property which
occurred on or prior to the Closing Date, any such refund shall belong
to Fox Corp. Any and all other refunds shall belong to Purchaser.
Any payments made under this Section 11.8(e) shall be net of any Taxes
payable with respect to such refund, credit or interest thereon
(taking into account any reduction in tax liability actually realized
upon the payment pursuant to this Section 11.8(e).
(f) Tax Sharing Agreements. All tax sharing and similar
----------------------
agreements (other than the provisions of this Agreement) between (i)
Fox Corp or the Subsidiaries, on the one hand, and (ii) Fox Health or
any other corporation or corporations, on the other hand, shall be
terminated as to the Subsidiaries as of the Closing Date, and none of
Fox Health, Fox Corp or the Subsidiaries shall have any liability from
and after the Closing Date under any such agreement.
(g) Transfer Taxes. Except with respect to the Transferred
--------------
Interests, Purchaser shall be liable for and shall pay all excise,
sales, use, transfer (including real property transfer taxes and state
or local transfer gains taxes), stamp,
<PAGE>
<PAGE>
documentary, filing, recordation and other similar taxes which may be
imposed in connection with the transactions contemplated by this
Agreement, together with any interest, additions or penalties with
respect thereto (the "Transfer Taxes"). Each party hereto hereby
agrees to file all necessary documentation (including, but not limited
to, all Tax Returns) with respect to all such amounts in a timely
manner.
(h) Timing of Tax Indemnity Claim. Any claim for indemnity
-----------------------------
hereunder may be made at any time prior to 60 days after the
expiration of the applicable Tax statute of limitations with respect
to the relevant taxable period (including all periods of extension,
whether automatic or permissive).
11.9. Tax Elections.
-------------
(a) Fox Corp and the Subsidiaries shall, if permitted under
applicable Treasury regulations, make an election under Treasury
regulations Section 1.1502-20(g) to reattribute net operating losses to
Seller in an amount such that $22.5 million of the most recent net
operating loss shall remain in the Subsidiaries, provided that no such
election shall be required to be made unless the amount reattributed
to Fox Corp is at least equal to the lesser of $125 million or the
amount of the losses of the Subsidiaries. Fox Corp, Purchaser and the
Subsidiaries shall cooperate in making such election. In the event
that the election is not made pursuant to the preceding sentence, Fox
Corp shall so notify Purchaser in writing and state the reasons that
such election cannot be made. If Fox Corp so notifies Purchaser,
Purchaser will join with Fox Corp in making an election under Sections
338(g) and 338(h)(10) of the Code and the Treasury regulations
promulgated under the Code and any corresponding or similar elections
under state, local or foreign Tax law (collectively, a "Section
338(h)(10) Election") with respect to the purchase and sale of the
Shares hereunder. In such event, Fox Corp and Purchaser shall report,
in connection with the determination of income, franchise or other
Taxes measured by net income, the transactions being undertaken
pursuant to this Agreement in a manner consistent with the Section
338(h)(10) Election. In the event that a Section 338(h)(10) Election
is made, the provisions of subsections (b), (c) and (d) hereunder
shall be applicable; otherwise such subsections shall not be
applicable.
(b) Fox Corp shall be responsible for the preparation and
filing of all forms and documents required in connection with the
Section 338(h)(10) Election. To the extent properly prepared by Fox
Corp, and timely delivered to Purchaser, Purchaser shall
<PAGE>
<PAGE>
execute and return to Fox Corp such documents or forms as are
reasonably requested and are required by any Tax laws to complete
properly the Section 338(h)(10) Election on a timely basis. For the
purpose of making the Section 338(h)(10) Election, on or prior to the
Closing Date, Fox Corp and Purchaser each shall execute two copies of
Internal Revenue Service Form 8023-A.
(c) Purchaser, no later than 120 days after the Closing
Date, shall provide Fox Corp with a valuation statement reflecting, as
of the Closing Date, the fair market values of all of the assets and
the liabilities and obligations of the Subsidiaries. Subject to the
next sentence, Purchaser and Fox Corp shall file, and shall cause
members of their respective Affiliated Groups to file, all Tax Returns
and statements, forms and schedules in connection therewith in a
manner consistent with such valuations and shall take no position
contrary thereto unless required to do so by applicable Tax laws and
after thirty (30) days' prior notice to the other party. Fox Corp
shall have the right to review and approve (which approval shall not
be unreasonably withheld) any appraisal upon which such valuations are
based and any such forms and schedules relating to such valuations,
prior to the filing thereof. Any disputes regarding the valuation
statement or the preparation, execution or filing of the forms and
documents required in connection with making the Section 338(h)(10)
Election shall be resolved in an arbitration to be conducted by a "Big
Six" accounting firm mutually selected by Purchaser and Fox Corp (the
"Selected Accounting Firm"), whose fees shall be borne equally by the
parties. Each of the parties to this Agreement shall be bound by the
decision of the Selected Accounting Firm rendered in such arbitration.
(d) To the extent permitted by state, local or foreign Tax
laws, the principles and procedures of this Section 11.8 shall also
apply with respect to an agreed valuation and a Section 338(h)(10)
Election under state, local or foreign law. Fox Corp and Purchaser
shall make any election similar to a Section 338(h)(10) Election which
is optional under any state, local or foreign law, and shall cooperate
and join in any election made by the Subsidiaries or members of their
Affiliated Group to effect such an election so as to treat the
transactions contemplated herein as a sale of assets for state, local
and foreign income Tax purposes.
<PAGE>
<PAGE>
ARTICLE XII
MISCELLANEOUS
12.1. Certain Definitions. As used in this Agreement, the
-------------------
following terms have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
"Acquisition Proposal" means any inquiries or the making of
--------------------
any proposal with respect to, or which may be reasonably expected to
lead to, a merger, consolidation, share exchange or similar
transaction involving Seller or the Subsidiaries, or any purchase of
all or substantially all of the Shares or the Business, or any equity
interest in excess of 50% of the outstanding voting stock of Seller or
Fox Drug.
"Affiliate" means, with respect to any Person, any other
---------
Person controlling, controlled by or under common control with such
Person.
"Affiliated Group" means any group of corporations with
----------------
respect to which a Consolidated Tax Return was, or was required to
have been, filed.
"Assignment and Assumption Agreements" has the meaning set
------------------------------------
forth in Section 8.1(f) hereof.
"Benefit Arrangement" has the meaning set forth in Section
-------------------
3.14(a) hereof.
"BTM Capital Debt" means any amount, indemnity or other
----------------
obligation payable by Seller or any Subsidiary under (i) the
Acknowledgement Agreement, dated as of June 19, 1996, by and among BTM
Capital Corporation, TBC Realty II Corporation, Fox Drug and Fox Corp,
as amended from time to time to the Closing Date, relating to (x) a
certain Loan Agreement, dated as of December 28, 1993, by and between
TBC Realty II Corporation and Citicorp Leasing, Inc., and (y) a
certain Master Lease, dated as of December 28, 1993, by and between
TBC Realty II Corporation and Fox Drug with respect to certain
property in Carrollton, Texas, and (ii) the Acknowledgement Agreement,
dated as of June 19, 1996, by and among BTM Capital Corporation, TBC
Realty II Corporation, Fox Drug and Fox Corp, as amended from time to
time to the Closing Date, relating to (x) a certain Loan Agreement,
dated as of June 29, 1994, by and between TBC Realty II Corporation
and Citicorp Leasing, Inc., and (y) a certain Master Lease, dated as
of July 29, 1994, between TBC Realty II
<PAGE>
<PAGE>
Corporation and Fox Drug with respect to certain property in
Washington, Ohio.
"Business" has the meaning set forth in the recitals hereof.
--------
"Business Day" means any weekday on which nationally
------------
chartered banks in the City of New York are open for business.
"Cash Consideration" has the meaning set forth in Section
------------------
2.1 hereof.
"Closing" means the consummation of the transactions
-------
contemplated by this Agreement.
"Closing Date" has the meaning set forth in Section 9.1
------------
hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Confidentiality Letter" has the meaning set forth in
----------------------
Section 5.1(b) hereof.
"Consolidated Tax Return" means any Tax Return that was, or
-----------------------
should have been, filed on a consolidated, combined or unitary basis
for the purpose of any type of Tax.
"Contract" means any written contract, agreement, indenture,
--------
note, bond, loan, instrument, lease, mortgage, license, franchise,
obligation, commitment or other arrangement or agreement to which any
Subsidiary is a party or by which any of the properties or assets
employed in the Business is bound.
"Damages" means all claims, actions, losses, damages, costs
-------
(including, without limitation, costs of investigation) expenses and
liabilities (including reasonable attorneys' fees incident to the
foregoing), whether or not arising out of third-party claims.
"Debt" means any amount, indemnity or other obligation
----
payable by Seller or any Subsidiary under the GECC Credit Agreement,
the GECC Receivables Purchase and Servicing Agreement, the BTM Capital
Debt and the industrial revenue bonds, mortgages and notes set forth
on Schedule 12.1(a) hereto, including, without limitation, the
----------------
aggregate principal amount of and accrued but unpaid interest on any
outstanding borrowings thereunder, and
<PAGE>
<PAGE>
any penalties, fees and expenses (including reasonable attorneys' fees
and expenses) arising thereunder.
"Employee Benefit Plan" has the meaning set forth in Section
---------------------
3.14(a) hereof.
"Employees" means all persons employed by any Subsidiary in
---------
the Business on the day immediately prior to the Closing Date,
including, without limitation, any persons on disability, sick leave,
layoff or leave of absence from any Subsidiary.
"Environmental Law" means any Law pertaining to the
-----------------
environment, natural resources or public health or safety as in effect
on the date of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of
-----
1974, as amended.
"Expense Reimbursement and Breakup Fee Agreement" means that
-----------------------------------------------
certain Expense Reimbursement and Breakup Fee Agreement, dated as of
August 9, 1996, between Fox Health and York Management Services, Inc.,
as amended as of the date hereof.
"FIRPTA Affidavit" has the meaning set forth in Section
----------------
8.1(e) hereof.
"Fox Corp" has the meaning set forth in the introductory
--------
paragraph hereof.
"Fox Drug" has the meaning set forth in the recitals hereof.
--------
"Fox Drug Shares" has the meaning set forth in the recitals
---------------
hereof.
"Fox Health" means FoxMeyer Health Corporation, a Delaware
----------
corporation and beneficial owner of all of the issued and outstanding
shares of capital stock of Fox Corp.
"Fox Software" has the meaning set forth in the recitals
------------
hereof.
"Fox Software Shares" has the meaning set forth in the
-------------------
recitals hereof.
"GAAP" means generally accepted accounting principles in the
----
United States as in effect on the date of this Agreement.
<PAGE>
<PAGE>
"GECC Credit Agreement" means the Credit Agreement, dated as
---------------------
of June 19, 1996, among Fox Drug, as Borrower, Fox Corp, Health Mart,
Inc., Healthcare and MCSC, as Loan Parties, and the Lenders party
thereto, and The CIT Group/Business Credit, Inc., as Co-Agent, and
General Electric Capital Corporation, as Administrative Agent, as
amended from time to time to the Closing Date.
"GECC Receivables Purchase and Servicing Agreement" means
-------------------------------------------------
the Receivables Purchase and Servicing Agreement, dated as of June 19,
1996, by and among FoxMeyer Funding, Inc., as Seller, Redwood
Receivables Corporation, as Purchaser, Fox Drug, as Servicer, and
General Electric Capital Corporation, as Operating Agent and
Collateral Agent, as amended from time to time to the Closing Date.
"Governmental Body" means any government or governmental or
-----------------
regulatory body thereof, or political subdivision thereof, whether
federal, state, local or foreign, or any agency, department or
instrumentality thereof, or any court (public or private).
"Grossed-Up Basis" means, when used to describe the basis on
----------------
which the payment of a specified sum is to be made, a basis such that
the amount of such payment, after being reduced by the amount of all
Taxes imposed on the recipient of such payment as a result of the
receipt or accrual of such payment, will equal the specified sum.
"Hazardous Material" means any substance, material or waste
------------------
which is regulated by any applicable local, state or federal
Governmental Body, including, without limitation, any material or
substance which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or
"restricted hazardous waste," "subject waste," "contaminant," "toxic
waste" or "toxic substance" under any provision of Environmental Law
applicable to the operations of the Business.
"Healthcare" has the meaning set forth in the recitals
----------
hereof.
"Healthcare Shares" has the meaning set forth in the
-----------------
recitals hereof.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
-------
Act of 1976, as amended, and the rules and regulations thereunder.
<PAGE>
<PAGE>
"Indemnitee" has the meaning set forth in Section 11.5
----------
hereof.
"Indemnitor" has the meaning set forth in Section 11.5
----------
hereof.
"Intellectual Property" means all (a) patents and patent
---------------------
applications (including reissues, divisions, continuations-in-part and
extensions thereof), invention disclosures, inventions, and
improvements thereto, (b) trademarks, trade names, service marks,
trade dress and logos and registrations and applications for
registration thereof, (c) copyrights and registrations thereof and (d)
licenses of any of the foregoing.
"June 1996 Balance Sheet" has the meaning set forth in
-----------------------
Section 3.9(b) hereof.
"June 1996 Financial Statements" has the meaning set forth
------------------------------
in Section 3.9(b) hereof.
"June 1996 Income Statement" has the meaning set forth in
--------------------------
Section 3.9(b) hereof.
"Knowledge of Seller or Purchaser," "Known to Seller or
-------------------------------- ------------------
Purchaser" or "Known by Seller or Purchaser" or, insofar as it refers
--------- ----------------------------
to Seller or Purchaser, "Knowledge" means only matters as to which
---------
Abbey Butler, Melvyn Estrin, Edward Massman, William Estes, Douglas
Schwinn and Kevin Rogan, in the case of Seller, or any executive
officer of Purchaser, in the case of Purchaser, has actual knowledge,
and shall not include matters which are not actually known but should
have been known by any such person.
"Law" means any federal, state or local law, statute, code,
---
ordinance, rule or regulation, or any Order.
"Leased Real Property" means any real property leased by any
--------------------
Subsidiary.
"Legal Proceeding" means any judicial, administrative,
----------------
regulatory or arbitral proceeding, investigation or inquiry or
administrative charge or complaint pending at law or in equity before
any Governmental Body.
"Lien" means any lien, encumbrance, pledge, mortgage, deed
----
of trust, security interest, claim, option, easement, transfer
restriction or any other restriction or third-party right.
<PAGE>
<PAGE>
"MCSC" has the meaning set forth in the recitals hereof.
----
"MCSC Shares" has the meaning set forth in the recitals
-----------
hereof.
"March 1996 Balance Sheet" has the meaning set forth in
------------------------
Section 3.9(a) hereof.
"March 1996 Financial Statements" has the meaning set forth
-------------------------------
in Section 3.9(a) hereof.
"March 1996 Statement of Operations" has the meaning set
----------------------------------
forth in Section 3.9(a) hereof.
"Material Adverse Change" or "Material Adverse Effect" means
----------------------- -----------------------
any material adverse change in, or effect on, the business,
operations, financial condition or results of operations of the
Business taken as a whole.
"Material Contract" has the meaning set forth in Section
-----------------
3.11 hereof.
"Merger Litigation" means the pending class action lawsuits
-----------------
filed against Fox Health and Fox Corp and certain of their respective
officers and directors in connection with the merger of Fox Corp into
a wholly-owned subsidiary of Fox Health, which merger was consummated
on October 12, 1994.
"Multiemployer Plan" has the meaning set forth in Section
------------------
3.14(a) hereof.
"Note" has the meaning set forth in Section 2.1 hereof.
----
"Order" means any order, injunction, judgment, decree,
-----
ruling, writ, assessment or arbitration award by a Governmental Body
of competent jurisdiction.
"Other Assumed Liabilities" has the meaning set forth in
-------------------------
Section 5.2 hereof.
"Other Fox Corp Assets" has the meaning set forth in Section
---------------------
5.2 hereof.
"Owned Real Property" means real property owned in fee by
-------------------
any Subsidiary.
<PAGE>
<PAGE>
"Permit" means any written approval, consent, exemption,
------
franchise, license, permit, waiver, certificate or other authorization
required to carry on the Business, in the case of Seller and the
Subsidiaries, or the business and operations of Purchaser, in the case
of Purchaser, in each case, as currently conducted under applicable
Law.
"Permitted Exceptions" means (i) Liens relating to the Debt;
--------------------
(ii) all defects, exceptions, restrictions, easements, rights of way
and encumbrances disclosed in policies of title insurance which have
been made available to Purchaser or otherwise disclosed to Purchaser
in writing; (iii) statutory Liens for current taxes, assessments or
other governmental charges not yet delinquent or the amount or
validity of which is being contested in good faith by appropriate
proceedings, provided an appropriate reserve is established therefor;
(iv) mechanics', carriers', workers', repairers', landlord's and
similar Liens arising or incurred in the ordinary course of business
that are not material to the business, operations and financial
condition of the Business taken as a whole; (v) zoning, entitlement
and other land use and environmental regulations by Governmental
Bodies; and (vi) such other imperfections in title, charges,
easements, restrictions and encumbrances which do not materially
interfere with the present operation of the Business.
"Person" means any individual, corporation, partnership,
------
firm, joint venture, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"Purchaser" has the meaning set forth in the introductory
---------
paragraph hereof.
"Purchaser Common Stock" has the meaning set forth in
----------------------
Section 4.5 hereof.
"Purchaser Documents" means, collectively, the Stockholders'
-------------------
Agreement and any other agreement, document, instrument or certificate
required to be executed by Purchaser and delivered to Seller
hereunder.
"Purchaser Indemnified Parties" has the meaning set forth in
-----------------------------
Section 11.1 hereof.
"Purchaser Representatives" has the meaning set forth in
-------------------------
Section 5.1(a) hereof.
"Real Property" means, collectively, the Owned Real Property
-------------
and the Leased Real Property.
<PAGE>
<PAGE>
"Section 338(h)(10) Election" has the meaning set forth in
---------------------------
Section 11.9(a) hereof.
"Securities Act" means the Securities Act of 1933, as
--------------
amended.
"Seller" has the meaning set forth in the introductory
------
paragraph hereof.
"Seller Documents" means, collectively, the Stockholders'
----------------
Agreement, the Subsidiaries' Stock Certificates, the FIRPTA Affidavit
and the Assignment and Assumption Agreements, and any other document,
instrument or certificate required to be executed by Seller and
delivered to Purchaser hereunder.
"Seller Indemnified Parties" has the meaning set forth in
--------------------------
Section 11.2 hereof.
"Seller Party" means Seller and any subsidiary or Affiliate
------------
of Seller, other than a Subsidiary.
"Seller Representatives" has the meaning set forth in
----------------------
Section 10.2(b) hereof.
"Shares" has the meaning set forth in the recitals hereof.
------
"Stockholders' Agreement" has the meaning set forth in
-----------------------
Section 8.1(g) hereof.
"Subsidiaries" means Fox Drug, Fox Software, Healthcare,
------------
MCSC, FoxMeyer Funding, Inc., a Delaware corporation and a wholly-
owned subsidiary of Fox Drug, and Health Mart, Inc. a Colorado
corporation and wholly-owned subsidiary of Fox Drug.
"Subsidiaries' Stock Certificates" has the meaning set forth
--------------------------------
in Section 8.1(a) hereof.
"Tax" or "Taxes" means all federal, state, local or foreign
--- -----
net or gross income, gross receipts, net
roceeds, sales, use, ad valorem, value added, franchise, bank shares,
-- -------
withholding, payroll, employment, excise, sales use, property, deed,
stamp, alternative or add-on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges of any
nature whatever, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect
thereto.
<PAGE>
<PAGE>
"Tax Claim" has the meaning ascribed to such term in Section
---------
11.8(f) hereof.
"Tax Return" means all returns, declarations, reports,
----------
estimates, information returns and statements required to be filed in
respect of any Taxes.
"Total Consideration" has the meaning set forth in Section
-------------------
2.1 hereof.
"Transfer Taxes" has the meaning set forth in Section
--------------
11.8(g) hereof.
"Transferred Interests" has the meaning set forth in Section
---------------------
1.2 hereof.
12.2. Entire Agreement; Exhibits/Schedules.
------------------------------------
(a) This Agreement (including the Schedules and Exhibits
hereto) represents, and is intended to be, a complete statement of all
of the terms and the arrangements between the parties hereto with
respect to the matters provided for herein and, except with respect to
the Confidentiality Letter, the Expense Reimbursement and Breakup Fee
Agreement, the Note and the Stockholders' Agreement, supersedes any
and all previous and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, between the
parties hereto with respect to those matters.
(b) The Exhibits and Schedules to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this
Agreement.
12.3. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
-------------
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS.
12.4. SUBMISSION TO JURISDICTION; CONSENT TO SERVICE OF
-------------------------------------------------
PROCESS.
-------
(A) THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK OR THE SUPREME COURT OF THE STATE OF NEW
YORK FOR THE COUNTY OF NEW YORK OVER ANY DISPUTE ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY AND EACH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH DISPUTE OR ANY SUIT, ACTION OR PROCEEDING RELATED
THERETO MAY BE HEARD AND
<PAGE>
<PAGE>
DETERMINED IN SUCH COURTS. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH
THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
DISPUTE BROUGHT IN SUCH COURT OR ANY DEFENSE OF INCONVENIENT FORUM FOR
THE MAINTENANCE OF SUCH DISPUTE. EACH OF THE PARTIES HERETO AGREES
THAT A JUDGMENT IN ANY SUCH DISPUTE MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED
BY LAW.
(B) EACH OF THE PARTIES HERETO HEREBY CONSENTS TO PROCESS
BEING SERVED BY ANY PARTY TO THIS AGREEMENT IN ANY SUIT, ACTION OR
PROCEEDING BY THE MAILING BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
OF A COPY THEREOF IN ACCORDANCE WITH THE PROVISIONS OF SECTION 12.8
HEREOF.
12.5. Specific Performance. Purchaser and Seller
--------------------
acknowledge and agree that the breach of this Agreement would cause
irreparable damage to the other party and that the other party will
not have an adequate remedy at Law. Therefore, the obligations of
Purchaser and Seller under this Agreement shall be enforceable by a
decree of specific performance issued by any court of competent juris-
diction, and appropriate injunctive relief may be applied for and
granted in connection therewith. Such remedies shall, however, be
cumulative and not exclusive and shall be in addition to any other
remedies which any party may have under this Agreement or otherwise.
12.6. Expenses. Except as otherwise expressly provided in
--------
this Agreement or in the Expense Reimbursement and Breakup Fee
Agreement and regardless of whether the transactions contemplated in
this Agreement are consummated, each of the parties hereto shall bear
its own expenses (including, without limitation, fees and
disbursements of its counsel, accountants, financial advisors and
other experts), incurred by it in connection with the preparation,
negotiation, execution, delivery and performance of this Agreement,
each of the other documents and instruments executed in connection
with or contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby.
12.7. Table of Contents and Headings. The table of
------------------------------
contents and article and section headings of this Agreement are for
reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement.
12.8. Notices. All notices and other communications under
-------
this Agreement shall be in writing and shall be deemed given (a) when
delivered personally, (b) on the fifth Business
<PAGE>
<PAGE>
Day after being mailed by certified mail, return receipt requested,
(c) the next Business Day after delivery to a recognized overnight
courier, or (d) upon transmission and confirmation of receipt by a
facsimile operator if sent by facsimile (and shall also be transmitted
by facsimile to the Persons receiving copies thereof), to the parties
at the following addresses or facsimile numbers (or to such other
address as such party may have specified by notice given to the other
party pursuant to this provision):
If to Seller, to:
FoxMeyer Corporation
1220 Senlac Drive
Carrollton, Texas 75006
Telephone: (214) 446-4800
Facsimile: (214) 446-4898
Attention: Mr. Abbey J. Butler
Mr. Melvyn J. Estrin
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Attention: Stephen E. Jacobs, Esq.
<PAGE>
<PAGE>
If to Purchaser, to:
FM Acquisition Corp.
c/o York Management Services, Inc.
37 Northfield Avenue
Edison, NJ 08837
Telephone: (908) 225-6900
Facsimile: (908) 225-4554
Attention: William F. Taggert
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Telephone: (212) 309-6000
Facsimile: (212) 309-6273
Attention: Samuel B. Fortenbaugh III, Esq.
12.9. Severability. The invalidity or unenforceability of
------------
any provision of this Agreement shall not affect the validly or
enforceability of any other provision of this Agreement, each of which
shall remain in full force and effect.
12.10. Binding Effect; No Assignment. This Agreement shall
-----------------------------
be binding upon and inure to the benefit of the parties and their
respective successors and assigns. Except as provided in Section
10.3, with respect to Fox Health, nothing in this Agreement shall
create or be deemed to create any third-party beneficiary rights in
any Person not party to this Agreement. No assignment of this
Agreement or of any rights or obligations hereunder may be made by any
party (by operation of Law or otherwise) without the prior written
consent of each of the other parties hereto and any attempted
assignment without such required consents shall be void.
12.11. Amendments. This Agreement can be amended,
----------
supplemented or modified, and any provision hereof may be waived, only
by written instrument making specific reference to this Agreement
signed by each of the parties hereto. Except as otherwise expressly
provided herein, no action (other than a waiver), taken pursuant to
this Agreement, including, without limitation, any investigation by or
on behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any
party hereto of a breach of any provision of this Agreement shall not
operate or be
<PAGE>
<PAGE>
construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach. Except as otherwise
expressly provided herein, no failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude
any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by Law.
12.12. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
instrument as of the date and year first above written.
FOXMEYER CORPORATION
By: /s/ Edward L. Massman
--------------------------------
Name: Edward L. Massman
Title: Senior Vice President and
Chief Financial Officer
FM ACQUISITION CORP.
By: /s/ Gary Nacht
--------------------------------
Name: Gary Nacht
Title: Executive Vice President
<PAGE>
<PAGE>
ANNEX A
-------
EXHIBIT A
---------
THIS SUBORDINATED CONVERTIBLE NOTE AND THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE
RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS
SUBORDINATED CONVERTIBLE NOTE.
SUBORDINATED CONVERTIBLE NOTE
$15,000,000 , 1996
-------------
FOR VALUE RECEIVED, FM Acquisition Corp., a Delaware
corporation ("MAKER"), hereby promises to pay to the order of FoxMeyer
-----
Corporation, a Delaware corporation ("PAYEE"), at its office at
----- ------
, , , or such other place as Payee may specify in
- ------- -------
writing, the principal sum of FIFTEEN MILLION AND NO/100 DOLLARS
($15,000,000.00), together with interest, as hereinafter described.
1. DEFINITIONS. As used in this Note, the following terms
-----------
shall have the respective meanings indicated.
"Additional Shares of Common Stock" means any shares of
---------------------------------
Common Stock issued by Maker after the date hereof.
"Applicable Law" means the applicable laws of the
--------------
State of New York or applicable laws of the United States, whichever
laws allow the greater rate of interest, as such laws now exist or may
be changed or amended or come into effect in the future.
"Appraised Value" means, in respect of any share of
---------------
Common Stock on any date herein specified, the fair saleable value of
such share of Common Stock based on (a) the value of Maker (determined
without giving effect to the discount for (i) a minority interest or
(ii) any lack of liquidity of the Common Stock or to the fact that
Maker may have no class of equity registered under the Exchange Act)
as of the last day of the most recent fiscal quarter and prior to such
date specified, as determined by an investment banking firm selected
in accordance with the terms of Section 18, divided by (b) the number
----------
of Fully Diluted Outstanding shares of Common Stock.
<PAGE>
<PAGE>
"Business Day" means any day that is not a Saturday or
------------
Sunday or a day on which banks are required or permitted to be closed
in the States of New York or Texas.
"Call Notice" has the meaning set forth in Section 8.e.
----------- -----------
"Call Option" has the meaning set forth in Section 8.e.
----------- -----------
"Call Period" has the meaning set forth in Section 8.c.
----------- -----------
"Common Stock" means (except where the context
------------
otherwise indicates) the Common Stock, $.01 par value, of Maker and
any capital stock into which such Common Stock may thereafter be
changed, and shall also include (i) capital stock of Maker of any
other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof which is also
not preferred as to dividends or assets over any other class of stock
of Maker and which is not subject to redemption, and (ii) shares of
common stock of any successor or acquiring corporation (as described
in Section 10) received by or distributed to the holders of Common
----------
Stock of Maker in the circumstances contemplated by Section 10.
----------
"Conversion Date" means the date of receipt of the
---------------
Conversion Notice.
"Conversion Notice" has the meaning set forth in
-----------------
Section 8.b.
------------
"Conversion Right" has the meaning set forth in Section
---------------- -------
8.a.
----
"Conversion Stock" means the shares of Common Stock
----------------
purchased by the holders of the Conversion Right upon the exercise
thereof.
"Convertible Securities" means evidences of
----------------------
indebtedness, shares of stock, options or other securities which are
convertible into, or exchangeable or exercisable for, with or without
payment of additional consideration in cash or property, Additional
Shares of Common Stock, either immediately or upon the occurrence of a
specified date or a specified event.
"Current Market Price" means, in respect of any share
--------------------
of Common Stock on any date herein specified, if there shall not then
be a public market for the Common Stock, the Appraised Value per share
of Common Stock as at such date, or if there shall then be a public
market for the Common Stock, the average of the daily market prices
for 30 consecutive Business Days commencing 45 days before such date;
provided, however, that in the event that the Current Market Price per
share of Common Stock is determined during a period following the
announcement by
<PAGE>
<PAGE>
Maker of (x) a dividend or other distribution on such shares of Common
Stock payable in such shares or Convertible Securities or (y) any
subdivision, combination or reclassification of such shares, and prior
to the expiration of such 30 Business Day period the ex-dividend date
for such dividend or distribution, or the record date for such
subdivision, combination or reclassification shall occur, then, in
each such case, the Current Market Price shall be properly adjusted to
take into account such event. The daily market price for each such
Business Day shall be (i) the last sale price on such day on the
principal stock exchange on which such Common Stock is then listed or
admitted to trading, (ii) if no sale takes place on such day on any
such exchange, the average of the last reported closing bid and asked
prices on such day as officially quoted on any such exchange, (iii) if
the Common Stock is not then listed or admitted to trading on any
stock exchange, the average of the last reported closing bid and asked
priced on such day in the over-the counter market, as furnished by the
National Association of Securities Dealer Automatic Quotation System
or the National Quotation Bureau, Inc., (iv) if neither such
corporation at the time is engaged in the business of reporting such
prices, as furnished by any similar firm then engaged in such
business, or (v) if there is not any such firm, as furnished by any
member of the NASD selected by the Maker.
"Default" means any event which with notice or lapse of
-------
time, or both, would constitute an Event of Default.
"Event of Default" has the meaning set forth in Section
---------------- -------
7.
-
"Exchange Act" means the Securities Exchange Act of
------------
1934, as amended, or any similar federal statute, and the rules and
regulations of the Securities Exchange Commission thereunder, all as
the same shall be in effect from time to time.
"Fully Diluted Outstanding" means, when used with
-------------------------
reference to Common Stock, at any date as of which the number of
shares thereof is to be determined, all shares of Common Stock
outstanding at such date and all shares of Common Stock issuable in
respect to this Note and all other Convertible Securities outstanding
on such date.
<PAGE>
<PAGE>
"Maker" means FM Acquisition Corp. or any successor or
-----
assignee of FM Acquisition Corp. pursuant to Section 6.
---------
"Maturity Date" means the maturity of this Note, which
-------------
is the date that is five (5) calendar years after the date hereof, as
the same may be hereafter accelerated pursuant to the provisions of
this Note.
"Maximum Lawful Rate" means the maximum rate of
-------------------
interest permitted under Applicable Law.
"NASD" means the National Association of Securities
----
Dealers, Inc., or any successor corporation thereto.
"Note" means this Convertible Note and all Convertible
----
Notes issued upon transfer, division or combination of, or in
substitution for, this Convertible Note. All Notes shall at all times
be identical as to terms and conditions and date, except as to
principal amount and the percent of Fully Diluted Outstanding Common
Stock for which such principal amount may be exercised.
"Payee" means FoxMeyer Corporation and/or any assignee
-----
of all or any portion of this Note pursuant to Section 9 or Section
--------- -------
15.
--
"Person" means any individual, sole proprietorship,
------
partnership, joint venture, trust, incorporated organization,
association, corporation, limited liability company, institution,
public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department
thereof).
"Representative" has the meaning set forth in Section
-------------- -------
3.b.(ii).
--------
"Senior Indebtedness" has the meaning set forth in
-------------------
Section 3.a.
-----------
"Stockholders Agreement" means that certain
----------------------
Stockholders Agreement of even date herewith among Maker, Payee and
the other stockholders party thereto.
"Subsidiary" means, with respect to any Person, any
----------
other Person of which more than 50% of the total voting power of
shares of capital stock entitled to vote (without regard to any
contingency) in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by
such Person or a combination thereof.
<PAGE>
<PAGE>
"Transfer" shall mean any disposition of this Note or
--------
any Conversion Stock or of any interest in either thereof, which would
constitute any sale, transfer, encumbrance, gift, donation,
assignment, pledge, hypothecation or other disposition of any
securities or any interest therein, whether voluntary or involuntary,
and whether during an individual's lifetime or upon his death,
including, without limitation, any Transfer by operation of law, by
court order, by judicial process, or by foreclosure, levy or
attachment.
2. PAYMENTS/INTEREST RATES/ETC.
----------------------------
a. INTEREST PAYMENTS. Maker shall pay interest on
-----------------
this Note quarterly on the last day of each March, June, September and
December, commencing with , 1996. Interest will accrue on
----------
the unpaid principal balance hereof outstanding at the lesser of (i)
the Maximum Lawful Rate or (ii) a rate per annum equal to three
percent (3%) during the period commencing on the date hereof and up to
and including the date which is the first anniversary of the date
hereof and a rate per annum equal to five percent (5%) during the
period commencing on the day after the first anniversary of the date
hereof and ending on the Maturity Date.
b. PRINCIPAL PAYMENTS. All principal and accrued but
------------------
unpaid interest shall be due and payable, in full, on the Maturity
Date.
c. OVERDUE AMOUNTS. Maker shall pay interest on the
---------------
overdue principal and, to the extent permitted by applicable law,
overdue interest, at a rate per annum equal to the lesser of (i) the
Maximum Lawful Rate or (ii) four percent (4%) in excess of the rate
borne by this Note.
d. COMPUTATIONS. Interest will be computed on the
------------
basis of a 360-day year of twelve 30-day months.
e. PREPAYMENTS. This Note may not be prepaid in
-----------
whole or in part prior to the Maturity Date.
<PAGE>
<PAGE>
3. TERMS OF SUBORDINATION.
----------------------
a. SUBORDINATION OF LIABILITIES. Maker, for itself,
----------------------------
its successors and assigns, covenants and agrees, and Payee by its
acceptance of this Note likewise covenants and agrees, that the
payment of the principal of, and interest on, and all other amounts
owing in respect of, this Note are hereby expressly subordinated, to
the extent and in the manner hereinafter set forth, to the prior
payment in full of all Senior Indebtedness. "Senior Indebtedness"
-------------------
at any date shall mean, whether outstanding on the date hereof
or hereafter created, incurred or assumed, all indebtedness and
payment obligations of Maker for borrowed money. Notwithstanding
anything to the contrary, "Senior Indebtedness" shall not include
any indebtedness of the types referred to in the preceding sentence
if the terms of the instrument creating or evidencing
such indebtedness provide that such indebtedness is not
superior in right of payment to the payment of or principal of, and
interest on, this Note, or that such indebtedness is pari passu with,
---- -----
or subordinate in right of payment to, the indebtedness of Maker
evidenced by this Note.
b. NONPAYMENT. (i) Upon the maturity of any Senior
----------
Indebtedness (including interest thereon or fees or any other amounts
owing in respect thereof), whether at stated maturity, by acceleration
or otherwise, all principal thereof and premium, if any, and interest
thereon and fees and any other amounts owing in respect thereof
(including interest payable in respect of any of the foregoing
subsequent to the commencement of any proceeding against or with
respect to Maker under the Bankruptcy Code, 11 U.S.C. Section
101 et. seq.),
--------
in each case to the extent due and owing, shall first be paid in full,
or such payment duly provided for in cash or in a manner satisfactory
to the holder or holders of such Senior Indebtedness, before any
further payment is made on account of the principal of (including
installments thereof), or interest on, or any amount otherwise owing
in respect of, this Note.
(ii) In the event that notwithstanding the
provisions of the preceding clause (i), Maker shall make any payment
on account of the principal of, or interest on, or amounts otherwise
owing in respect of, this Note, any amounts received in respect
thereof shall not be applied by Payee to this Note but shall be held
by Payee in trust for the benefit of, and shall be paid forthwith over
and delivered to, the holders of Senior Indebtedness or their agent,
representative or the trustee under the indenture or other agreement
pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued (each, a "Representative"), as their respective
--------------
interests may appear, for application pro rata to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay
all Senior Indebtedness in full in accordance with the terms of such
Senior Indebtedness, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of Senior
Indebtedness; provided that, any such payment of Maker shall be
--------
applied solely to Senior Indebtedness of Maker.
<PAGE>
<PAGE>
c. DISSOLUTION, LIQUIDATION OR REORGANIZATION. Upon
------------------------------------------
any payment or distribution of assets of Maker upon any dissolution,
winding up, liquidation or reorganization of Maker (whether in
bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or otherwise):
(i) the holders of all Senior Indebtedness shall
first be entitled to receive payment in full (or have such payment
duly provided for in cash or in a manner satisfactory to the holder or
holders of such Senior Indebtedness) of the principal thereof,
premium, if any, and interest (including post-petition interest) due
thereon and fees and any other amounts owing in respect thereof before
Payee is entitled to receive any payment on account of the principal
of, or interest on, or any other amount owing in respect of, this
Note;
(ii) any payment or distribution of assets of
Maker of any kind or character, whether in cash, property or
securities to which Payee would be entitled except for the provisions
of this Section 3, shall be paid by the liquidating trustee or agent
---------
or other Person making such payment or distribution, whether a trustee
in bankruptcy, a receiver or liquidating trustee or other trustee or
agent, directly to the holders of Senior Indebtedness, or their
Representative, to the extent necessary to make payment in full of all
Senior Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(iii) in the event that, notwithstanding the
foregoing provisions of this Section 3.c., any payment or distribution
------------
of assets of Maker, of any kind or character, whether in cash,
property or securities, shall be received by Payee on account of
principal or interest on this Note before all Senior Indebtedness is
paid in full, or provision made for its payment in full satisfactory
to the holder or holders of such Senior Indebtedness, such payment or
distribution shall be received and held in trust for and shall be paid
over to the holders of the Senior Indebtedness, as the case may be,
remaining unpaid or unprovided for or their Representatives, for
application to the payment of such Senior Indebtedness until all such
Senior Indebtedness shall have been paid in full, after giving effect
to any concurrent payment or distribution to the holders of such
Senior Indebtedness.
<PAGE>
<PAGE>
d. OBLIGATION UNCONDITIONAL. Nothing contained in
------------------------
this Section 3 or in this Note is intended to or shall impair, as
between Maker and Payee, the obligation of Maker, which is
absolute and unconditional, to pay to Payee the principal of, and
interest on, this Note as and when the same shall become due and
payable in accordance with its terms. In the event that by virtue of
this Section 3, any amounts paid or payable to Payee in respect of
---------
this Note shall instead be paid to the holders of the Senior
Indebtedness, Payee shall be subrogated to the rights of the holders
of such Senior Indebtedness.
4. LEGAL TENDER. Maker will pay principal and interest in
------------
money of the United States that at the time of payment is legal tender
for payment of public and private debts, in immediately available
funds, to Payee by wire transfer to [INSERT WIRE TRANSFER
INSTRUCTIONS] or by certified or cashier's check at Payee's address
set forth in Section 19.d., or to such other address as Payee may
-------------
designate in writing.
5. AFFIRMATIVE COVENANTS OF THE MAKER. Maker hereby
----------------------------------
covenants and agrees that from and after the date hereof and until
this Note (including, without limitation, the principal of or interest
hereon) is paid in full:
a. EXISTENCE. Maker shall do or cause to be done all
---------
things reasonably necessary to preserve and keep in full force and
effect its existence, rights (charter and statutory) and franchises;
provided, however, that Maker shall not be required to preserve any
-------- -------
such right or franchise if the Board of Directors shall determine that
the loss thereof is not disadvantageous in any material respect to
Payee.
b. MAINTENANCE OF PROPERTIES. Maker shall cause all
-------------------------
material properties operated by Maker or any Subsidiary and used or
useful in the conduct of the business of Maker or such Subsidiary to
be maintained and kept in good condition, repair and working order
(reasonable wear and tear excepted) and will cause to be made all
necessary repairs and replacements thereof, all as in the judgment of
Maker may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 5.b. shall prevent
-------- ------- ------------
Maker from discontinuing the use, operation or maintenance of any of
such properties, or disposing of any of them, if such discontinuance
or disposal, in the judgment of Maker, would not have a material
adverse effect on Maker and its Subsidiaries taken as a whole.
<PAGE>
<PAGE>
c. PAYMENT OF TAXES AND OTHER CLAIMS. Maker shall
---------------------------------
pay or discharge or cause to be paid or discharged, before the same
shall become delinquent, (a) all taxes, assessments and governmental
charges levied or imposed upon Maker or any
Subsidiary or upon the income, profits or property of Maker or any
Subsidiary and (b) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of
Maker or any Subsidiary; provided, however, that Maker shall not be
-------- -------
required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim, the amount, applicability or
validity of which is being contested in good faith.
d. WAIVER OF STAY, EXTENSION OR USURY LAWS. Maker
---------------------------------------
covenants (to the extent it may lawfully do so) that it will not at
any time insist upon, plead, or in any manner whatsoever claim, and
will resist and oppose any all efforts to be compelled to take the
benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive Maker from paying all or any
portion of the principal of or interest on this Note as contemplated
herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Note; and
(to the extent that it may lawfully do so) Maker hereby waives all
benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any such power herein granted
to Payee, but will suffer and permit the execution of every such power
as though no such law had been enacted.
e. FINANCIAL STATEMENTS. Maker will deliver to
--------------------
Payee: (i) as soon as practicable after the end of each of the first
three quarterly fiscal periods in each fiscal year, and in any event
within 45 days thereafter, a consolidated balance sheet of Maker and
its Subsidiaries as at the end of such period, and consolidated
statements of income, changes in stockholders' equity and cash flows
of Maker and its Subsidiaries for such period (and, in the case of the
second and third quarterly periods, for the period from the beginning
of the then current fiscal year to the end of such quarterly period),
setting forth in each case in comparative form the figures for the
corresponding period of the previous fiscal year, all in reasonable
detail and certified as complete and correct, subject to changes
resulting from normal year-end adjustments consistent with prior
periods; and
<PAGE>
<PAGE>
(ii) as soon as practicable after the end of each
fiscal year, and in any event within 90 days thereafter, a
consolidated balance sheet of Maker and its Subsidiaries as at the end
of such fiscal year, and consolidated statements of income, changes in
stockholders' equity and cash flows of Maker and its Subsidiaries for
such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail
and accompanied by a report and opinion of independent public
accountants of recognized national standing selected by Maker,
which report and opinion shall be prepared in accordance with
general accepted accounting principles, consistently applied.
6. NEGATIVE COVENANTS OF THE MAKER. Maker hereby
-------------------------------
covenants and agrees that from and after the date hereof and until
this Note (including, without limitation, the principal of or interest
hereon) is paid in full, Maker shall not, without the prior written
consent of Payee:
a. Consolidate with, merge with or into, or transfer
sell, assign, lease, convey or otherwise dispose (collectively,
"transfer") of all or substantially all of its assets (whether as an
entirety or substantially as an entirety in one transaction or a
series of related transactions) to any Person unless: (i) Maker shall
be the continuing Person, or the Person (if other than Maker) formed
by such consolidation or into which Maker is merged or to which
properties and assets of Maker are transferred shall be a solvent
business entity organized and existing under the laws of the United
States or any State thereof or the District of Columbia and shall
expressly assume all the obligations of Maker under this Note in a
form reasonably satisfactory to Payee, and (ii) immediately prior to
and after giving effect to such transaction no Default or Event of
Default shall have occurred and be continuing. Notwithstanding the
foregoing, this Section 6.a. shall not prohibit a transaction, the
------------
principal purpose of which is (as determined in good faith by the
Board of Directors of Maker and evidenced by the resolution thereof)
to change the state of incorporation of Maker, and such transaction
does not have as one of its purposes the evasion of the limitations
imposed by this Section 6.a. In case of any such consolidation,
-----------
merger, sale or conveyance, and following such an assumption by the
successor corporation, such successor corporation shall succeed to and
be substituted for Maker, with the same effect as if it had been named
herein.
7. REMEDIES OF PAYEE/EVENTS OF DEFAULT. The occurrence of
-----------------------------------
any of the following events shall constitute an "EVENT OF DEFAULT":
----------------
<PAGE>
<PAGE>
(i) default in the payment of any installment of
interest upon the Note for a period of 10 days after the same shall
become due and payable or in the principal of this Note, as and when
the same shall be due and payable, whether upon acceleration or
otherwise;
(ii) failure of Maker to observe or perform any
covenant or agreement in Section 6 or the failure of Maker to observe
---------
or perform any other covenant or agreement on the part of Maker in
this Note for a period of 30 days after the date on which written
notice specifying the nature of such default has been sent to Maker by
Payee;
(iii) default with respect to any indebtedness of
Maker or any Subsidiary, the principal amount of which exceeds $10
million in the aggregate and such indebtedness is accelerated by the
lender;
(iv) any final non-appealable judgement is
rendered against Maker and/or any Subsidiary in excess of $10 million;
(v) the filing of a petition commencing an
involuntary case against Maker or any Subsidiary under any applicable
bankruptcy, insolvency or other similar law now or hereafter in
effect, or seeking the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of
Maker or any Subsidiary or for any substantial part of the property of
Maker or any Subsidiary or ordering the winding up or liquidation of
its affairs, and such petition shall not be dismissed or stayed
pending appeal with 30 days; or
(vi) Maker or any Subsidiary shall commence a
voluntary case under applicable bankruptcy, insolvency or similar law
now or hereafter in effect, or consent to the entry of an order for
relief in an involuntary case under any such law, or consent to the
appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of Maker of any
Subsidiary or for any substantial part of the property of Maker or any
Subsidiary, or Maker or any Subsidiary shall make a general assignment
for the benefit of creditors,
then, and in each and every such case (other than as specified in (v)
or (vi) above), Payee, by notice to Maker, may declare the entire
principal amount, together with interest accrued and unpaid on this
Note, to be due and payable immediately, and the same shall become
immediately due and payable. If an Event of Default with respect to
Maker specified in (v) or (vi) above occurs, the principal amount,
together with interest accrued and unpaid on this Note, shall become
immediately due and payable without any declaration or other act on
the part of Payee.
<PAGE>
<PAGE>
8. CONVERSION OF THE NOTE; CALL OPTION.
-----------------------------------
a. CONVERSION RIGHT. Payee shall have the right (the
----------------
"CONVERSION RIGHT"), at any time on or prior to the Maturity Date (or
----------------
within five (5) Business Days thereafter in the case of an
acceleration), at its option, to convert, subject to the provisions of
this Section 8, the principal of this Note (or any portion of the
---------
principal of this Note that is an integral multiple of $1 million)
into fully paid and nonassessable shares of Common Stock of Maker
equal to 15% of the Fully Diluted Outstanding Common Stock of Maker
(or 1% for each $1 million integral multiple of the principal of this
Note which is converted), in each case rounded up to the nearest whole
share, which number of shares shall be determined and fixed on the
Conversion Date.
b. MANNER OF EXERCISE. Payee may exercise the
------------------
Conversion Right, on any Business Day until 5:00 p.m., Dallas, Texas
time, on or prior to the Maturity Date (or within five (5) Business
Days thereafter in the case of an acceleration), for all or part of
the number of shares of Common Stock convertible hereunder. In order
to exercise the Conversion Right, Payee shall deliver to Maker at its
notice office, as designated in Section 19.d. written notice of
-------------
Payee's election to exercise the Conversion Right together with the
surrender of this Note. Such notice shall be substantially in the
form of Exhibit A, duly executed by Payee or its agent or attorney (a
---------
"CONVERSION NOTICE"). Upon receipt thereof, Maker shall, as promptly
-----------------
as practicable, and in any event within three (3) Business Days
thereafter, execute or cause to be executed and deliver or cause to be
delivered to Payee a certificate or certificates representing the
aggregate number of full shares of Common Stock issuable upon such
conversion, together with cash in lieu of any fraction of a share, as
hereinafter provided and, if the Conversion Right was exercised in
part, a new Note identical as to terms and conditions and date to this
Note, except as to reflect the new reduced principal amount and the
percent of Fully Diluted Outstanding Common Stock for which such
principal amount may be exercised (i.e., 1% for each $1 million in
principal amount). The stock certificate or certificates so delivered
shall be, to the extent possible, in such denomination or
denominations as Payee shall request in the Conversion Notice and
shall be registered in the name of Payee or, subject to Section 15,
----------
such other name as shall be designated in the Conversion Notice.
Subject to Section 15, this Note (or such portion thereof for which
----------
the Conversion Right was exercised) shall be deemed to have been
converted and such certificate or certificates shall be deemed to have
been issued, and Payee or
any other Person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of
the date the Conversion Notice and this Note is received by Maker as
described above and all taxes required to be paid by Payee, if any,
pursuant to Section 8.c. prior to the issuance of such shares have
------------
been paid.
<PAGE>
<PAGE>
c. TAXES. All shares of Common Stock issuable upon
-----
the exercise of the Conversion Right shall be validly issued, fully
paid and nonassessable and without any preemptive rights. Maker shall
pay all expenses in connection with, and all taxes and other
governmental charges that may be imposed with respect to the issue or
delivery of the shares, unless such tax or charge is imposed by law
upon Payee, in which case such taxes or charges shall be paid by
Payee.
d. FRACTIONAL SHARES. Maker shall not be required to
-----------------
issue a fractional share of Common Stock upon exercise of the
Conversion Right. As to any fraction of a share which Payee, the
rights under which are exercised in the same transaction, would
otherwise be entitled to purchase upon such exercise, Maker shall pay
a cash adjustment in respect of such final fraction in an amount equal
to the same fraction of the Current Market Price per share of Common
Stock on the date of exercise.
e. CALL OPTION. Maker shall have the option (the
-----------
"CALL OPTION"), exercisable at any time on or prior to the Maturity
-----------
Date, to call this Note for redemption by delivery of five (5)
Business Days' (the "CALL PERIOD") written notice to Payee (the "CALL
----------- ----
NOTICE") at its notice office, as designated in Section 19.d. Upon
------ ------------
receipt of the Call Notice, Payee shall as promptly as possible
deliver this Note to Maker for payment in full of all principal of and
interest accrued on this Note to the date of payment. Notwithstanding
the foregoing, Payee shall have the option, exercisable on or before
5:00 p.m. of the last day of the Call Period, to elect to exercise the
Conversion Right, in whole or in part, in accordance with the
provisions of Section 8.b. In the event that Payee does not elect to
------------
exercise the Conversion Right, payment in full of the principal of and
interest accrued on this Note shall be made by Maker within three (3)
Business Days' of receipt of this Note (with interest paid to the date
of payment of this Note in full). In the event that Payee elects to
exercise the Conversion Right, in whole or in part, Maker shall,
within three (3) Business Days, execute or cause to be executed and
deliver or cause to be delivered to Payee a certificate or
certificates representing the aggregate number of full shares of
Common Stock issuable upon such
<PAGE>
<PAGE>
conversion, together with cash in lieu of any fraction of a share, all
in the manner and pursuant to the terms set forth in Section 8.b., and
------------
if Payee elects to exercise the Conversion Right only in part, payment
in full of all principal in respect of which the Conversion Right is
not exercised and all interest accrued on this Note (with interest
accrued to the date of such payment). In the event that Payee shall
not timely deliver written notice to Maker of its election to exercise
the Conversion Right, Payee shall be deemed to have elected not to
exercise such right.
9. TRANSFER, DIVISION AND COMBINATION.
----------------------------------
a. TRANSFER. Subject to compliance with Section 15,
-------- ----------
transfer of this Note and all rights hereunder, in whole or in part,
shall be registered on the books of Maker to be maintained for such
purpose, upon surrender of this Note at the principal office of Maker
referred to in Section 19.d. or the office or agency designated by
-------------
Maker pursuant to Section 19.c., together with a written assignment of
-------------
this Note substantially in the form of Exhibit B hereto duly executed
---------
by Payee or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, Maker shall, subject to
Section 15, execute and deliver a new Note or Notes in the name of the
----------
assignee or assignees and in the denominations specified in such
instrument or assignment, and shall issue to the assignor a new Note
evidencing the portion of this Note not so assigned, and this Note
shall promptly be cancelled. A Conversion Right in a new Note that is
properly assigned in compliance with Section 15, may be exercised by a
----------
new Payee for the purchase of shares of Common Stock without having
the new Note issued.
b. DIVISION AND COMBINATION. Subject to Section 15,
------------------------ ----------
this Note may be divided or combined with other Notes upon
presentation hereof at the aforesaid office or agency of Maker,
together with a written notice specifying the names and denominations
in which new News are to be issued, signed by Payee or its agent or
attorney. Subject to compliance with Section 9.a. and with Section
------------ -------
15, as to any transfer which may be involved in such division or
--
combination, Maker shall execute and deliver a new Note or Notes in
exchange for the Note or Notes to be divided or combined in accordance
with such notice.
c. EXPENSES. Maker shall prepare, issue and deliver
--------
at its own expense (other than transfer taxes required to be paid by
Payee under Section 8.c., if any) the new Note or Notes under this
------------
Section 9.
---------
<PAGE>
<PAGE>
d. MAINTENANCE OF BOOKS. Maker agrees to maintain,
--------------------
at its aforesaid office or agency, books for the registration and the
registration or transfer of the Notes.
10. CERTAIN CORPORATE EVENTS.
------------------------
a. REORGANIZATION, RECLASSIFICATION, MERGER,
-----------------------------------------
CONSOLIDATION OR DISPOSITION OF ASSETS. In case Maker shall
--------------------------------------
reorganize its capital, reclassify its capital stock, consolidate or
merge with or into another corporation (where Maker is not the
surviving corporation or where there is a change in or distribution
with respect to the Common Stock of Maker), or sell, transfer or
otherwise dispose of all or substantially all its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition
of assets, shares of Common Stock or other securities or property of
any nature whatsoever (including warrants or other subscription or
purchase rights) in addition to or in lieu of common stock of the
successor or acquiring corporation ("Other Property"), are to be
--------------
received by or distributed to the holders of Common Stock of Maker,
then Payee shall have the right thereafter to receive, upon exercise
of this Note, the number of shares of Common Stock of the successor or
acquiring corporation or of Maker, if it is the surviving corporation,
and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition
of assets by a holder of the number of shares of Common Stock for
which this Note is exercisable immediately prior to such event, it
being agreed that if such event occurs before the Payee has exercised
the Conversion Right, this Note shall be treated as being exercisable
as of the date immediately prior to such event as if such date where
the Conversion Date. In case of any such reorganization,
reclassification, merger, consolidation, or disposition of assets, the
successor or acquiring corporation (if other than Maker) shall
expressly assume the due and punctual observance and performance of
each and every covenant and condition of this Note to be performed and
observed by Maker and all the obligations and liabilities hereunder.
For purposes of this Section 10, "common stock of the successor or
----------
acquiring corporation" shall include stock of such corporation of any
class which is not preferred as to dividends or assets over any other
class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the
arrival of a specified date or the happening of a specified event and
any warrants or other rights to subscribe for or purchase any such
stock. The foregoing provisions of this Section 10 shall
----------
similarly apply to successive reorganizations, reclassifications,
mergers, consolidations or disposition of assets.
<PAGE>
<PAGE>
11. NOTICES TO PAYEE.
----------------
a. NOTICE OF ADJUSTMENTS. Whenever an event
---------------------
specified in Section 10 shall occur, Maker shall forthwith prepare a
----------
certificate to be executed by the chief financial officer of Maker
describing, in reasonable detail, the event requiring the giving of
such notice and describing the number and kind of any other shares of
stock or Other Property for which this Note is exercisable. Maker
shall promptly cause a signed copy of such certificate to be delivered
to Payee in accordance with Section 19.d. Maker shall keep at its
-------------
principal office referred to in Section 19.d. or the office or agency
-------------
designated pursuant to Section 19.d. copies of all such certificates
-------------
and cause the same to be available for inspection at said office
during normal business hours by any Payee or any prospective purchaser
of a Note designated by a Payee thereof.
b. NOTICE OF CORPORATE ACTION. If at any time;
--------------------------
(i) Maker shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a
dividend (other than a cash dividend payable out of earnings or earned
surplus legally available for the payment of dividends under the laws
of the jurisdiction of incorporation of Maker) or other distribution,
or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities
or property, or to receive any other right, or
(ii) there shall be any capital reorganization of
Maker, any reclassification or recapitalization of the capital stock
of Maker or any consolidation or merger of Maker with, or any sale,
transfer or other disposition of all or substantially all the
property, assets or business of Maker to, another corporation, or
(iii) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of Maker;
then, in any one or more of such cases, Maker shall give to Payee at
least 30 days' prior written notice of the date on which a record date
shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up.
<PAGE>
<PAGE>
Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, the date on which the holders
of Common Stock shall be entitled to any such dividend, distribution
or right, and the amount and character thereof, and (ii) the date on
which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation
or winding up is to take place and the time, if any such time is to be
fixed, as of which the holders of Common Stock shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation
or winding up. Each such written notice shall be sufficiently given
if addressed to Payee at the last address of Payee appearing on the
books of Maker and delivered in accordance with Section 19.d.
-------------
12. NO IMPAIRMENT.
-------------
Maker shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, seek to avoid the observance or performance of any of the
terms of this Note, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions
as may be necessary or appropriate to protect the rights of Payee
against impairment. Without limiting the generality of the foregoing,
Maker will (a) not increase the par value of any shares of Common
Stock receivable upon the exercise of the Conversion Right above the
amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that Maker may validly and legally issue fully
paid and nonassessable shares of Common Stock upon exercise of the
Conversion Right, and (c) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable maker to
perform its obligations under this Note.
Upon the request of Payee, Maker at any time during the
period this Note is outstanding shall acknowledge in writing, in form
satisfactory to Payee, the continuing validity of this Note and the
obligations of Maker hereunder.
<PAGE>
<PAGE>
13. RESERVATION AND AUTHORIZATION OF COMMON STOCK.
---------------------------------------------
Maker shall at all times reserve and keep available for
issue upon the exercise of the Conversion Right such number of its
authorized but unissued shares of Common Stock as will be sufficient
to permit the exercise in full of the Conversion Right. All shares of
Common Stock which shall be so issuable, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive
rights.
14. TAKING OF RECORD; STOCK AND NOTE TRANSFER BOOKS.
-----------------------------------------------
In the case of all dividends or other distributions by Maker
to the holders of its Common Stock with respect to which any provision
of Section 15 refers to the taking of a record of such holders, Maker
----------
will not at any time, except upon dissolution, liquidation or winding
up of Maker, close its stock transfer books or Note transfer books so
as to result in preventing or delaying the exercise of any Conversion
Right or transfer of any Note.
15. RESTRICTIONS ON TRANSFERABILITY. The Notes shall only
-------------------------------
be transferred, hypothecated or assigned to the same extent the
Conversion Stock may be transferred, hypothecated or assigned under
the Stockholders Agreement. Any purported transfer in violation of
this Section 15 shall be void ab initio and of no force or effect.
---------- -- ------
Payee, by acceptance of this Note, agrees to be bound by the
provisions of this Section 15.
----------
16. LOSS OR MUTILATION.
------------------
Upon receipt by Maker from Payee of evidence reasonably
satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Note and indemnity reasonably
satisfactory to it, and in case of mutilation upon surrender and
cancellation hereof, Maker will execute and deliver in lieu hereof a
new Note of like tenor to Payee; provided, in the case of mutilation,
--------
no indemnity shall be required if this Note in identifiable form is
surrendered to Maker for cancellation.
17. LIMITATION OF LIABILITY.
------------------------
No provision hereof, in the absence of affirmative action by
Payee to purchase shares of Common Stock, and no enumeration herein of
the rights or privileges of Maker hereof, shall give rise to any
liability of Payee for the purchase price of any Common Stock or as a
stockholder of Maker, whether such liability is asserted by Maker or
by creditors of Maker.
<PAGE>
<PAGE>
18. APPRAISAL.
---------
The determination of the Appraised Value per share of Common
Stock shall be made by an independent investment banking firm of
nationally recognized standing selected by Maker and reasonably
acceptable to Payee or the holders of the Conversion Stock
representing a majority of the Conversion Stock issued or issuable
upon exercise of the Conversion Stock. Maker shall retain, at its
sole cost, such investment banking firm as may be necessary for the
determination of the Appraised Value required by the terms of this
Note.
19. MISCELLANEOUS.
-------------
a. GOVERNING LAW. This Note, including, without
-------------
limitation, the interpretation, construction, validity and
enforceability hereof, shall be governed by the laws of the State of
New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of
another jurisdiction would be required thereby.
b. NO USURY INTENDED/SPREADING. All agreements
---------------------------
between the undersigned and the holder hereof, whether now existing or
hereafter arising and whether written or oral, are hereby limited so
that in no contingency or event whatsoever, whether by reason of
demand or acceleration of the maturity hereof or otherwise, shall the
amount contracted for, charged, received, paid or agreed to be paid to
the holder hereof for the use, forbearance, or detention of the funds
evidenced hereby or otherwise, or for the performance or payment of
any covenant or obligation contained in any instrument securing the
payment hereof, if any, exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the holder hereof in excess of the maximum
lawful amount, the interest payable to the holder hereof shall be
reduced to the maximum amount permitted under applicable law; and if
from any circumstance the holder hereof shall ever receive anything of
value deemed interest by applicable law in excess of the maximum
lawful amount, an amount equal to any excessive interest shall be
applied to the reduction of the principal hereof and not to the
payment of interest, or if such excessive interest exceeds the unpaid
balance of principal hereof, such excess shall be refunded to the
undersigned. All interest paid or agreed to be paid to the holder
hereof shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full period of the loan
evidenced hereby until payment in full of the principal (including the
period of any renewal or extension hereof) so that
<PAGE>
<PAGE>
the interest hereon for such full period shall not exceed the maximum
amount permitted by applicable law. This paragraph shall control all
agreements between the undersigned and the holder hereof.
c. OFFICE OF MAKER. As long as this Note remains
---------------
outstanding, Maker shall maintain an office or agency (which may be
the principal executive offices of Maker) where the Note may be
presented for exercise of the Conversion Right, registration of
transfer, division or combination as provided in this Note.
d. NOTICES. All notices and communications under
-------
this Note shall be in writing and shall be (i) delivered in person,
(ii) sent by telecopy or telegraph, or (iii) mailed, postage prepaid,
either by registered or certified mail, return receipt requested, or
(iv) delivered by a nationally recognized overnight express carrier,
addressed in each case as set forth below or to such other address or
telecopy number, as to any of the parties hereto, as such party shall
designate in a written notice to the other parties hereto. All
notices sent pursuant to the terms of this Section 19.d. shall be
-------------
deemed received (i) if personally delivered, on receipt, (ii) if sent
by telecopy or telegraph, on the day sent if a Business Day, or if
such day is not a Business Day, then on the next Business Day,
(iii) if sent by overnight, express carrier, on the next Business Day
immediately following the day sent, or (iv) if sent by registered or
certified mail, on the fifth Business Day following the day sent.
If to Maker:
FM Acquisition Corp.
--------------------
--------------------
Attention:
----------
Telecopy No.:
-------
If to Payee:
FoxMeyer Corporation
--------------------
--------------------
Attention:
----------
Telecopy No.:
-------
<PAGE>
<PAGE>
e. SUCCESSORS AND ASSIGNS. Subject to the provisions
----------------------
of Sections 6, 9 and 15 this Note and the rights evidenced hereby
--------------------
shall inure to the benefit of and be binding upon the successors of
Maker and Payee. The provisions of this Note are intended to be for
the benefit of Payee and any other holder from time to time and shall
be enforceable by any such Payee or holder.
f. SEVERABILITY. Wherever possible, each provision
------------
of this Note shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Note
shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Note.
g. HEADINGS. The headings used in this Note are for
--------
convenience of reference only and shall not, for any purpose, be
deemed a part of this Note.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Maker has executed this Note to be
effective for all purposes as of the date set forth hereinabove.
MAKER:
FM Acquisition Corp., a Delaware
corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE>
<PAGE>
EXHIBIT A
---------
SUBSCRIPTION FORM
[To be executed only upon exercise of Conversion Right]
The undersigned registered owner of this Note irrevocably
exercises the Conversion Right therein for the purchase of _____
Shares of Common Stock of FM Acquisition Corp. and herewith makes
payment therefor, all at the price and on the terms and conditions
specified in this Note and requests that certificates for the shares
of Common Stock hereby purchased (and any securities or other property
issuable upon such exercise) be issued in the name of and delivered to
whose address is .
-------------------- -------------------------------
---------------------------------------------
(Name of Registered Owner)
---------------------------------------------
(Signature of Registered Owner)
---------------------------------------------
(Street Address)
---------------------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the
name as written upon the face of the within Note in every
particular, without alteration or enlargement or any change
whatsoever.
<PAGE>
<PAGE>
EXHIBIT B
---------
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Note
hereby sells, assigns and transfers unto the Assignee named below all
of the rights of the undersigned under this Note, with respect to the
number of shares (or, if the date hereof is prior to the Conversion
Date, the percentage of the Fully-Diluted Outstanding Common Stock) of
Common Stock set forth below:
No. of Shares
(or percentage)
Name and Address of Assignee of Common Stock
---------------------------- ---------------
and does hereby irrevocably constitute and appoint
_____________________ attorney-in-fact to register such transfer on
the books of FM Acquisition Corp. maintained for the purpose, with
full power of substitution in the premises.
Dated: Print Name:
-------------- ----------------------------------
Signature:
-----------------------------------
Witness:
-------------------------------------
NOTICE: The signature on this assignment must correspond with the
name as written upon the face of the within Note in every
particular, without alteration or enlargement or any change
whatsoever.
DAFS02...:\58\46058\0001\2474\NTS8166N.11D
<PAGE>
<PAGE>
EXHIBIT B
---------
STOCKHOLDERS' AGREEMENT
-----------------------
STOCKHOLDERS' AGREEMENT, dated as of , 1996 (this
--------
"Agreement"), by and among FM Acquisition Corp., a Delaware
---------
corporation (the "Company"), FoxMeyer Corporation, a Delaware
corporation ("Fox Corp"), the individuals, corporations or other
entities set forth on Annex A hereto and such other persons who may
become party to this Agreement pursuant to the terms hereof.
W I T N E S S E T H:
--------------------
WHEREAS, the Company is authorized to issue 1,000 shares of
common stock, $0.01 par value ("Common Stock");
WHEREAS, each of the individuals, corporations and other
entities listed on Annex A hereto has acquired the number of shares of
Common Stock set forth opposite his, her or its name on such Annex A,
which constitute all of the issued and outstanding shares of Common
Stock as of the date hereof;
WHEREAS, pursuant to that certain Stock Purchase Agreement,
dated as of August 19, 1996, by and between Fox Corp and the Company
(the "Purchase Agreement"), and in accordance with and subject to the
terms thereof, simultaneous with the execution and delivery of this
Agreement, the Company is issuing to Fox Corp a Subordinated
Convertible Note in the principal amount of $15,000,000 (the "Note"),
convertible into shares of Common Stock, as adjusted from time to
time;
WHEREAS, it is a condition precedent to the Company's and
Fox Corp's respective obligations to consummate the transactions
contemplated by the Purchase Agreement that the parties hereto shall
have entered into this Agreement; and
WHEREAS, the parties hereto desire to enter into certain
agreements for the purpose of regulating certain aspects of their
relationships with regard to each other as stockholders of the
Company.
NOW, THEREFORE, in consideration of the agreements and
mutual covenants contained herein, the parties hereto agree as
follows:
SECTION 1. Definitions. In addition to the terms defined
-----------
elsewhere herein, when used herein the following terms shall have the
meanings indicated:
(a) Affiliate shall mean, with respect to any Stockholder,
---------
(i) any Person, who directly or indirectly, is in control of, is
controlled by or is under common control with, the Stockholder, and
(ii) any natural person who is a director or officer of the
Stockholder or of any Person described in clause (i) above.
<PAGE>
<PAGE>
(b) Board shall mean the Board of Directors of the Company.
-----
(c) Debt shall have the meaning ascribed to such term in
----
the Purchase Agreement.
(d) New Stockholders shall mean the Stockholders listed on
----------------
Annex A hereto, any Permitted Transferee of any such Stockholder and
each subsequent Permitted Transferee thereof.
(e) 1933 Act shall mean the Securities Act of 1933, as
--------
amended.
(f) 1934 Act shall mean the Securities Exchange Act of
--------
1934, as amended.
(g) Permitted Transferees shall mean (i) in the case of a
---------------------
natural person, such person's estate or legal representative, such
person's spouse and/or children, or trusts created solely for the
benefit of such person and/or such person's spouse and/or children,
and (ii) in the case of any other Person, any Affiliate of such
Person; provided that any Transfer to any such Person was not
--------
consummated in contemplation of a transaction intended to circumvent
the restrictions on Transfer of shares of Common Stock set forth in
this Agreement. After a Permitted Transferee becomes a party to this
Agreement pursuant to Section 2(b) hereof, each reference herein to a
party hereto shall be deemed to include such Permitted Transferee of
such party.
(h) Person shall mean a natural person, corporation,
------
limited partnership, general partnership, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust,
business trust or other organization, whether or not a legal entity,
or a government or agency or political subdivision thereof.
(i) Stockholders shall mean, collectively, Fox Corp, the
------------
Stockholders listed on Annex A hereto and any other Persons who become
parties hereto pursuant to Section 11 hereof.
<PAGE>
<PAGE>
(j) Subsidiary shall mean with respect to any Person, any
----------
corporation or other business entity of which an aggregate of 50% or
more of the outstanding stock is, at the time, directly or indirectly
owned by such Person.
(k) Transfer shall mean any direct or indirect transfer,
--------
sale, assignment, pledge, encumbrance, hypothecation or other
disposition, whether with or without consideration and whether
voluntarily or involuntarily or by operation of law.
SECTION 2. Restrictions on Transfer and Sale.
---------------------------------
(a) Transfer Restricted. No Stockholder may transfer any
-------------------
interest in any of the shares of Common Stock held by him, her or it
except in accordance with Section 2(b) hereof. No Transfer of shares
of Common Stock in violation of this Agreement shall be made or
recorded on the books of the Company and any such attempted Transfer
shall be void and of no force or effect.
(b) Permitted Transfers. The parties hereto acknowledge
-------------------
and agree that any of the following Transfers of shares of Common
Stock are deemed to be in compliance with this Agreement:
(i) a Transfer by any Stockholder in compliance with
Sections 3 and 4 hereof; and
(ii) a Transfer by any Stockholder to a Permitted Transferee
of such Stockholder;
provided, however, that, except for Transfers to Stockholders in
-------- -------
accordance with this Agreement, no Transfer pursuant to this Section
2(b) shall be permitted (and any such Transfer shall be void and of no
effect) unless and until each transferee delivers to the Company an
executed copy of this Agreement, which signature page shall specify
that such Person is bound by and takes such shares of Common Stock
subject to all the terms of this Agreement.
(c) Notwithstanding anything to the contrary contained
herein, no Transfer to any transferee or by any Stockholder shall be
made if, as a result thereof, the Company would be required to
register any shares of Common Stock under the 1933 Act, the 1934 Act
or any applicable securities laws of any jurisdiction.
<PAGE>
<PAGE>
SECTION 3. Rights of First Offer.
---------------------
(a) General. No Stockholder may Transfer any of its
-------
interest in any shares of Common Stock other than to a Permitted
Transferee without first offering to sell such shares of Common Stock
pursuant to the provisions of this Section 3.
(b) If a Stockholder (each, a "Seller") desires to Transfer
------
any or all of the shares of Common Stock then owned by such Seller
(the "Offered Shares"), other than to a Permitted Transferee, such
--------------
Seller shall deliver a written notice (the "Sale Notice") to the
-----------
Company and the other Stockholders who then own shares of Common
Stock. The Sale Notice shall describe in reasonable detail the number
of shares being offered, the purchase price requested and all other
material terms and conditions of the proposed Transfer. First the
Company may elect to purchase and/or designate another Person or
Persons (none of whom is a Stockholder) to purchase (jointly with the
Company or individually) all (but not less than all) of the Offered
Shares at the price and on the terms specified in the Sale Notice by
delivering written notice of such election to the Seller and the other
Stockholders within ten (10) days after the delivery of the Sale
Notice.
(c) If the Company has not elected to purchase and/or
designate another Person or Persons to purchase all of the Offered
Shares within such ten (10) day period, each of the other Stockholders
who then hold shares of Common Stock (each, an "Offeree Stockholder"
-------------------
for purposes of this Section 3) shall have the right and option, but
not the obligation, to purchase up to such Offeree Stockholder's
"Proportionate Share" (as hereinafter defined) of the Offered Shares,
at the price and upon the terms and conditions set forth in the Sale
Notice. The option provided for herein shall be exercisable by the
Offeree Stockholders by giving written notice to the Seller and each
other Offeree Stockholder within thirty (30) days after receipt of the
Sale Notice. Any Offeree Stockholder shall also indicate in such
notice whether such Stockholder desires, in the event that any other
Offeree Stockholder elects not to purchase his or its full
Proportionate Share of the Offered Shares, to purchase any additional
shares in excess of such Offeree Stockholder's Proportionate Share
("Excess Shares"), specifying the number of such additional shares
that it desires to purchase (not to exceed the total number of Offered
Shares). In the event that any Offeree Stockholder does not elect to
purchase its or his full Proportionate Share of the Offered Shares,
then the participations of each Offeree Stockholder that has indicated
in its written notice that he or it desires to purchase Excess
<PAGE>
<PAGE>
Shares shall automatically be deemed to be accepted by each such
Offeree Stockholder in an amount not greater than their respective
number of Excess Shares, such acceptance to be allocated among such
Stockholders in proportion to their respective Proportionate Shares
and, if the number of shares of Common Stock allocable to any such
Offeree Stockholder exceeds its Excess Amount, such excess shall be
allocated among the remaining Offeree Stockholders electing to
purchase an Excess Amount in proportion to their respective
Proportionate Shares, and such procedure shall be repeated until the
entire number of Excess Shares of each Offeree Stockholder electing to
purchase Excess Shares has been satisfied or all shares have been
allocated.
(d) If the Offeree Stockholders decline to purchase all of
the Offered Shares subject to the options described in this Section 3
within the option period described herein, the Seller shall have the
right for a period of sixty (60) days following the expiration of such
option period to Transfer any or all of the Offered Shares, free and
clear of the restrictions or limitations of this Agreement, in a bona
fide transaction or transactions; provided, however, that such
-------- -------
Transfer may be only pursuant to terms and conditions not more
beneficial to the third party than those contained in the Sale Notice;
and provided further, that the transferee shall agree in writing to be
-------- -------
bound by all of the terms and conditions of this Agreement as though
the transferee had been an original signatory hereto. If any Offered
Shares are not sold pursuant to the provisions of this Section 3 prior
to the expiration of the sixty (60) day period specified in the
immediately preceding sentence, such Offered Shares shall become
subject once again to the provisions and restrictions hereof.
(e) As used herein, the term "Proportionate Share" of an
-------------------
Offeree Stockholder entitled to exercise an option to purchase Offered
Shares pursuant to this Section 3 shall mean the number of shares
constituting Offered Shares multiplied by a fraction, the numerator of
which shall be the aggregate number of shares of Common Stock then
owned by such Offeree Stockholder and the denominator of which shall
be the aggregate number of shares of Common Stock then owned by all of
the Offeree Stockholders.
(f) Any purchase of Offered Shares pursuant to this Section
3 shall be closed at the Company's executive offices on a date
specified by the purchaser(s) upon at least ten (10) business days'
notice that is within sixty (60) days after the date of the expiration
of the option to purchase the Offered Shares under this Section 3. At
the closing, which shall occur
<PAGE>
<PAGE>
on the same date with respect to all Offered Shares, the purchaser or
purchasers will pay the Seller the purchase price for the Offered
Shares set forth in the Sale Notice in cash, and the Seller shall
deliver the certificate or certificates evidencing such shares,
together with a stock transfer form duly executed in favor of the
purchaser or purchasers or their nominee(s), provided that such
--------
nominee is a Permitted Transferee of such purchaser.
SECTION 4. Rights of Inclusion (Tag-Along Rights).
--------------------------------------
(a) No Stockholder or group of Stockholders (each a
"Selling Stockholder" and, collectively, the "Selling Stockholders")
------------------- --------------------
shall, individually or collectively, in any one transaction or any
series of related transactions, directly or indirectly sell or
otherwise dispose of to a third Person any or all of such Selling
Stockholder(s)' shares of Common Stock unless (i) the Company and the
other Stockholders have not exercised their rights of first offer with
respect to such shares under Section 3 hereof and (ii) in the case of
a Transfer of a number of shares of Common Stock which would account
for 10% or more of the aggregate outstanding shares of Common Stock,
the terms and conditions of such sale or other disposition to such
third party shall include an offer to each of the other Stockholders
who then own shares of Common Stock (each in the circumstances of this
Section 4(a), an "Offeree") to include, at the option of each Offeree,
-------
in the sale or other disposition to the third party, a number of
shares of Common Stock owned by each such Offeree, determined in
accordance with Section 4(b) hereof. If any Selling Stockholder or
group of Selling Stockholders receives and intends to accept a bona
fide offer from a third party to purchase or otherwise acquire a
number of shares of Common Stock which would account for 10% or more
of the aggregate outstanding shares of Common Stock, such Selling
Stockholders shall then cause the third party's offer to be reduced to
writing (which writing shall include an offer to purchase or otherwise
acquire shares of Common Stock from each Offeree according to the
terms and conditions of this Section) and shall send written notice of
the third party's offer (the "Notice") to each Offeree, which notice
------
may be the same notice and given at the same time as the Sale Notice
under Section 3. The Notice shall be accompanied by a true and
correct copy of the third party's offer. At any time within 30 days
after receipt of the Notice, each Offeree may accept the offer
included in the Notice (an "Accepting Offeree") for up to such number
-----------------
of shares of Common Stock as is determined in accordance with the
provisions of Section 4(b) by furnishing written notice of such
acceptance to the Selling Stockholders and delivering to the Selling
Stockholders the certificate or
<PAGE>
<PAGE>
certificates representing the shares of Common Stock to be sold or
otherwise disposed of pursuant to such offer by such Offerees,
together with a limited power-of-attorney authorizing the Selling
Stockholders to sell or otherwise dispose of such shares pursuant to
the terms of such third party's offer.
(b) Each Offeree shall have the right, pursuant to Section
4(a) hereof, to sell pursuant to the third party's offer a number of
shares of Common Stock (rounded down to the nearest whole number of
shares) equal to the product of (A) the total number of shares of
Common Stock to be acquired by the third party, and (B) a fraction,
the numerator of which shall be the aggregate number of shares of
Common Stock then owned by such Offeree and the denominator of which
shall be the aggregate number of shares of Common Stock then owned by
the Selling Stockholders and all of the Offerees that are entitled to
exercise such option. The Selling Stockholders shall reduce the
number of shares of Common Stock they are to sell accordingly to allow
for the shares of Common Stock of the Accepting Offerees to be sold.
(c) The purchase from each Accepting Offeree pursuant to
this Section shall be on the same terms and conditions, including the
per share price and the date of sale or other disposition, as are
received by the Selling Stockholders and stated in the Notice provided
to the Offerees by the Selling Stockholders.
(d) Simultaneously with the consummation of the sale or
other disposition of the shares of Common Stock of the Selling
Stockholders and the Accepting Offerees to the third party pursuant to
the third party's offer, the Selling Stockholders shall notify the
Accepting Offerees thereof, shall cause the third party purchaser to
remit to each Accepting Offeree the total sale price of the shares of
such Accepting Offeree sold or otherwise disposed of pursuant thereto,
and shall furnish such other evidence of the completion and time of
completion of such sale or other disposition (which shall be on the
same date with respect to all shares of Common Stock sold in such
transaction) and the terms thereof as may be reasonably requested by
the Accepting Offeree. The Selling Stockholders may deduct from the
sale price payable to each Accepting Offeree pursuant to this Section
4 such Accepting Offeree's pro rata portion of the reasonable out-of-
pocket fees and expenses payable by the Selling Stockholders in
respect of the completion of such sale, including, without limitation,
brokers', legal and accounting fees and expenses.
<PAGE>
<PAGE>
(e) If within thirty (30) days after the receipt of the
Notice, any Offeree has not accepted the offer contained in the
Notice, such Offeree will be deemed to have waived any and all rights
with respect to the sale or other disposition of shares of Common
Stock described in the Notice and the Selling Stockholders shall have
thirty (30) days in which to sell or otherwise dispose of not more
than the amount of shares of Common Stock described in the Notice, on
terms not more favorable to the Selling Stockholders than were set
forth in the Notice. If, at the end of sixty (60) days following the
receipt of the Notice, the Selling Stockholders have not completed the
sale or other disposition of shares of Common Stock of the Selling
Stockholders and any Accepting Offeree in accordance with the terms of
the third party's offer, the Selling Stockholders shall return to each
Accepting Offeree all certificates representing the shares of Common
Stock which such Accepting Offeree delivered for sale or other
disposition pursuant to this Section 4, and all the restrictions on
sale or other disposition contained in this Agreement with respect to
shares of Common Stock owned by the Selling Stockholders shall again
be in effect.
SECTION 5. Registration Right.
------------------
(a) If the Company shall determine to effect any
registration of its securities under the 1933 Act pursuant to a
registration statement on Form S-1 (or its equivalent if such form is
not in effect or on an alternative form if such form is then
authorized for the sale to the public of the Company's securities),
the Company will, at its expense (which shall include, without
limitation, all registration and filing fees, printing and mailing
expenses, fees and disbursements of counsel and independent
accountants for the Company, fees and expenses incident to compliance
with state securities laws, fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but shall not
include underwriting discounts and commissions and transfer taxes, if
any, properly allocable to securities included in such registrations
statements by any person other than the Company), promptly give
written notice of such registration to each Stockholder and include in
such registration those shares of Common Stock held by each
Stockholder as shall be specified in a written request received by the
Company from Fox Corp within 30 days after the date upon which the
Company gave the aforementioned notice.
(b) If the Company effects a registration of Common Stock
pursuant to an underwritten public offering and if a Stockholder
elects to include his, her or its shares of Common Stock in such
offering in accordance with Section 5(a) (an
<PAGE>
<PAGE>
"Electing Stockholder"), and if any lead underwriter reasonably
determines that the number of shares to be included in such
registration exceeds the number of shares that can be sold in such
offering without materially and adversely affecting such offering,
then the number of shares of Common Stock held by any Electing
Stockholder to be included in such offering shall be allocated among
the Electing Stockholders pro rata on the basis of the relative number
of shares of Common Stock held by each such Electing Stockholder.
(c) In the event of the filing of any registration
statement under the 1933 Act with respect to shares of Common Stock,
the Company will indemnify and hold each Electing Stockholder
participating in such registration and the directors, officers and
controlling persons (within the meaning of the 1933 Act ("Controlling
Persons")) of each such Electing Stockholder (each, a "Stockholder
Indemnitee") harmless from and against any losses, claims, damages or
liabilities, joint or several, to which each such Stockholder
Indemnitee may become subject under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained, on the
effective date thereof, in any registration statement under which
shares of Common Stock held by an Electing Stockholder were registered
under the 1933 Act, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or arise out of or are
based upon the failure by the Company to file any amendment or
supplement thereto that was required to be filed under the 1933 Act,
and will reimburse each such Stockholder Indemnitee for any legal or
any other expenses reasonably incurred by such Stockholder Indemnitee
in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will
-------- -------
not be liable to any Stockholder Indemnitee in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made (i) in such registration statement,
preliminary prospectus, final prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to
the Company through an instrument duly executed by such Stockholder
Indemnitee specifically for use in the preparation thereof or (ii) in
any preliminary prospectus or any final prospectus later amended or
supplemented if (A) such Stockholder Indemnitee failed to deliver
<PAGE>
<PAGE>
a copy of the final prospectus or the final prospectus as then amended
or supplemented, as the case may be, to the Person asserting such
loss, claim, damage or liability at or prior to the written
confirmation of such sale, (B) such delivery was required by the 1933
Act and (C) the untrue statement or alleged untrue statement or
omission or alleged omission in such preliminary prospectus or final
prospectus was corrected in the final prospectus or the final
prospectus as then amended or supplemented, respectively. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any such Stockholder Indemnitee
and shall survive the transfer of such shares of Common Stock.
Each Stockholder agrees that if such Stockholder requests
the inclusion of shares of Common Stock in a registration, such
Stockholder will execute, and the Company's obligation to take any
action pursuant to Section 5(a) hereof is specifically conditioned on
the Company's receipt of, an undertaking satisfactory to the Company
to indemnify and hold harmless (in the same manner and to the same
extent as set forth in the preceding paragraph of this Section 5(c))
the Company, all other Stockholders and any underwriter of such
offering, and their respective directors, officers, general and
limited partners and Controlling Persons (each, an "Indemnitee"), with
respect to any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any
registration statement under the 1933 Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement
thereto or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by such
Stockholder specifically for use in the preparation of such
registration statement, preliminary prospectus or final prospectus or
amendment or supplement; provided, however, that such Stockholder will
-------- -------
not be liable in any such case to any Indemnitee to the extent that
any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission in any preliminary prospectus or any final prospectus
later amended or supplemented if (i) such Indemnitee failed to deliver
a copy of the final prospectus or the final prospectus as then amended
or supplemented, as the case may be, to the Person asserting such
loss, claim, damage or liability at or prior to the written
confirmation of such sale, (ii) such delivery was required by the 1933
Act and (iii) the untrue statement or alleged untrue
<PAGE>
<PAGE>
statement or omission or alleged omission in such preliminary
prospectus or final prospectus was corrected in the final prospectus
or the final prospectus as then amended or supplemented, respectively.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any such Indemnitee and shall
survive the transfer of such shares of Common Stock.
SECTION 6. Share Certificates.
------------------
(a) Each certificate representing the shares of Common
Stock now or hereafter held by a Stockholder shall be stamped with a
legend in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER SUCH ACT
OR THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT
OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMENT DATED _______, 1996, A COPY OF
WHICH IS ON FILE AT THE OFFICE OF THE ISSUER AND WILL
BE FURNISHED TO ANY PROSPECTIVE PURCHASERS ON REQUEST.
SUCH STOCKHOLDERS' AGREEMENT PROVIDES, AMONG OTHER
THINGS, FOR CERTAIN RESTRICTIONS ON THE SALE, TRANSFER,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
SHARES REPRESENTED BY THIS CERTIFICATE.
Each Stockholder agrees that he will deliver all
certificates for shares of Common Stock owned by him to the Company
for the purpose of affixing such legend thereto.
SECTION 7. After-Acquired Shares. All of the provisions of
---------------------
this Agreement shall apply to all of the shares of Common Stock now
owned or hereafter issued or transferred to a Stockholder or to his or
its Permitted Transferees in consequence of any additional issuance,
purchase, exchange, exercise of conversion rights or reclassification
of shares of Common Stock, corporate reorganization, or any other form
of recapitalization,
<PAGE>
<PAGE>
or consolidation, or merger, or share split, or share dividend, or
capitalization issue, or which are acquired by a Stockholder in any
other manner.
SECTION 8. Severability; Governing Law. If any provision
---------------------------
of this Agreement shall be determined to be illegal or unenforceable
by any court of law of competent jurisdiction, the remaining
provisions shall be severable and enforceable in accordance with their
terms. The corporate law of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity and
interpretations of this Agreement shall be governed by and construed
in accordance with the laws of New York, without giving effect to any
conflict of laws principles thereof.
SECTION 9. Benefits of Agreement. Neither this Agreement
---------------------
nor any right, remedy, obligation or liability arising hereunder or by
reason hereof shall be assignable (whether by operation of law or
otherwise) by any Stockholder except as expressly permitted herein;
any attempted assignment contrary to the provisions of this Agreement
shall be null and void. This Agreement does not create, and shall not
be construed as creating, any rights enforceable by any other Person
who is not, or who does not become, a party to this Agreement.
SECTION 10. Notices. All notices and communications to be
-------
given or otherwise to be made to any party to this Agreement shall be
deemed to be sufficient if contained in a written instrument delivered
in person, telecopied or mailed, first class registered or certified
mail or by a recognized national or international courier service,
postage or charges prepaid, return receipt requested, addressed to:
<PAGE>
<PAGE>
(a) If to Fox Corp
FoxMeyer Corporation
[Address after closing]
Telephone:
Facsimile:
Attention: Abbey J. Butler
Melvyn J. Estrin
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Attention: Stephen E. Jacobs, Esq.
(b) If to any other Stockholder to the address set forth
opposite such Stockholder's name on Annex A hereto.
With a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Telephone: (212) 309-6000
Facsimile: (212) 309-6273
Attention: Samuel B. Fortenbaugh III, Esq.
SECTION 11. Modification. Except as otherwise provided
------------
herein, neither this Agreement nor any provision hereof may be
amended, modified, changed, discharged or terminated without the
written consent of all stockholders, in which event such amendment or
modification shall be binding upon all Stockholders in accordance with
its terms; provided, however, that this Agreement shall be deemed to
-------- -------
be modified to add as signatories to this Agreement, Persons who may
acquire shares of Common Stock from the Company or other Stockholders
in accordance with the terms hereof. This Agreement shall
automatically terminate upon ten years from the date of this
Agreement.
SECTION 12. Captions and References to Sections. The
-----------------------------------
captions herein are inserted for convenience only and shall not
define, limit, extend or describe the scope of this Agreement or
affect the construction hereof. Sections mentioned by number only are
the respective sections of this Agreement.
<PAGE>
<PAGE>
SECTION 13. Availability of Equitable Remedies. Each
----------------------------------
Stockholder acknowledges that a breach of the provisions of this
Agreement could not adequately be compensated by money damages.
Accordingly, any party shall be entitled, in addition to any other
right or remedy available to it, to an injunction restraining such
breach or a threatened breach and to specific performance of any such
provision of this Agreement, and in either case no bond or other
security shall be required in connection therewith, and the parties
hereby consent to such injunction and to the ordering of specific
performance.
SECTION 14. Entire Agreement. This Agreement sets forth
----------------
the entire understanding of the parties with respect to the subject
matter hereof.
SECTION 15. Waiver. Any waiver by any party of a breach of
------
any provision of this Agreement shall not operate as or be construed
to be a waiver of any other breach of that provision or of any breach
of any other provision of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on one or
more occasions shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term
or any other term of this Agreement. Any waiver must be evidenced by
a writing signed by the party against whom the waiver is sought to be
enforced.
SECTION 16. Pronouns. Any masculine personal pronoun shall
--------
be considered to mean the corresponding feminine or neuter personal
pronoun, and vice versa, as the context requires.
---- -----
SECTION 17. Counterparts. This Agreement may be executed
------------
in two or more counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the
same instrument.
[THE REMAINDER OF THIS PAGE IS
INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as a deed on the date first above written.
FOXMEYER HEALTH CORPORATION
By:
-------------------------------------
Name:
Title:
FM ACQUISITION CORP.
By:___________________________
Name:
Title:
______________________________
William F. Taggert
[Other Stockholders]
<PAGE>
<PAGE>
ANNEX A
-------
Name and Address Number of Shares
of Stockholder of Common Stock
-------------- ---------------
William F. Taggert 40
c/o York Management Services, Inc.
37 Northfield Avenue
Edison, NJ 08818-6388
Gary A. Nacht 20
c/o York Management Services, Inc.
37 Northfield Avenue
Edison, NJ 08818-6388
William T. Taggert, as Trustee 8
of Trust F/B/O
William F. Taggert, Jr.
c/o York Management Services, Inc.
37 Northfield Avenue
Edison, NJ 08818-6388
Teresa Taggert Vogel 8
c/o York Management Services, Inc.
37 Northfield Avenue
Edison, NJ 08818-6388
Patricia Bellis 8
c/o York Management Services, Inc.
37 Northfield Avenue
Edison, NJ 08818-6388
Robert C. Taggert 8
c/o York Management Services, Inc.
37 Northfield Avenue
Edison, NJ 08818-6388
John Edward Taggert 8
-----
c/o York Management Services, Inc.
37 Northfield Avenue
Edison, NJ 08818-6388
100
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<PAGE>
Contacts: FoxMeyer Health Corporation
---------------------------
Edward Massman
Chief Financial Officer
(214) 446-4866
Morgen-Walke Associates
Betsy Brod/Alex Gleeson
Media: Michelle Zawrotny
(212) 850-5600
William Taggart Investor Group
------------------------------
Michael Freitag
Kekst and Company, Inc.
(212) 593-2655
FOR IMMEDIATE RELEASE
---------------------
FOXMEYER HEALTH CORPORATION ANNOUNCES DEFINITIVE AGREEMENT WITH
INVESTOR GROUP TO SELL DISTRIBUTION SUBSIDIARY
- Investor Group to Form Joint Venture with Neuman Health
Services, Inc.-
Dallas, TX and Edison, NJ -- August 20, 1996 -- FoxMeyer Health
Corporation (NYSE: FOX) today announced the signing of a definitive
agreement to sell its distribution subsidiary, FoxMeyer Drug Company,
to a private, New Jersey-based investor group led by William F.
Taggart. Separately, the investor group and Neuman Health Services,
Inc., the nation's largest privately held wholesale pharmaceutical
distributor, announced that they have reached an agreement in
principle to form a joint venture to manage and operate FoxMeyer Drug
after the sale is completed.
Under the terms of the agreement, the investor group will acquire
100 percent of the common stock of FoxMeyer Drug Company from FoxMeyer
Corporation, a subsidiary of FoxMeyer Health Corporation, in exchange
for $25 million in cash and securities. Of the $25 million, FoxMeyer
Corporation expects to receive $10 million in cash upon closing and a
$15 million, five-year note convertible into a 15 percent interest in
the common stock of the new entity. In addition, the agreement calls
for the investor group to raise $50 million in new financing which
will be invested in the new distribution company to strengthen its
financial condition. The investor group has retained the investment
banking firm of Dillon, Read & Co., Inc., as its financial advisor.
<PAGE>
<PAGE>
The transaction, which is expected to close on or before October
19, 1996, is subject to obtaining various approvals and other
customary closing conditions.
Abbey J. Butler and Melvyn J. Estrin, Co-Chairmen and Co-Chief
Executive Officers of FoxMeyer Health Corporation, said, "We believe
that the agreement with the investor group led by William Taggart is
the most attractive opportunity for FoxMeyer Health Corporation, its
shareholders, and the distribution company's customers, vendors and
employees. Mr. Taggart and his colleagues have a long and successful
history of delivering strong results and returns from their financial
and operating investments. Their track record includes turnarounds at
Purolator Courier's U.S. Courier division, Pilot Freight Carriers, NBO
Stores and most recently, Pic 'N Pay Stores."
"As a result of this transaction," they continued, "the
distribution operations will now receive additional management
expertise to complete the planned turnaround, while allowing FoxMeyer
and its shareholders to participate in the operating improvements that
we are confident Mr. Taggart and his team will achieve going forward.
Mr. Taggart and his team will become immediately involved in the
business as consultants to FoxMeyer Drug Company in order to begin
implementing initiatives to restore the distribution operations to
profitability."
Mr. Taggart said, "FoxMeyer Drug has a very strong asset base,
leading technology and a dedicated group of employees. With some fine
tuning of its strategy, consolidation of facilities, and elimination
of duplicate infrastructure costs, the Company can resume its long
history of profitable growth. We look forward to working closely with
Neuman to assure FoxMeyer Drug's customers and suppliers that we are
committed to rebuilding the Company and maintaining a strong, mutually
beneficial business partnership with them."
Samuel Toscano, Jr., Chairman and Chief Executive Officer of
Neuman Health Services, Inc., said, "The planned strategic alliance
with Mr. Taggart's investor group represents an extraordinary
opportunity for us as we continue to expand our presence in the
pharmaceutical distribution industry."
Headquartered in Ridgefield, N.J., Neuman Health Services, Inc.
ranks among the top 500 on Forbes' list of the largest privately held
companies in the U.S. Neuman has an extensive pharmacy network
serving more than 2,000 independent pharmacies and chain drug stores
and approximately 350 hospitals and managed care organizations.
FoxMeyer Health Corporation is a leading provider of health care
products and information-based services in North America.
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